Knowing Cost

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Knowing Cost​​


Vaccine financing includes the costs of purchasing and storing vaccines, and administering vaccines.

Vaccine Purchase Cost

For patients with private sector plans, offices must purchase vaccine product and bill for it. There are additional expenses that are incurred when maintaining stock that also need to be accounted for. These expenses are separate from the supply and personnel costs associated with administering the vaccine.

Vaccine Product-Related Expenses

This is separately reportable from the immunization administration. Some payers mistakenly try to maintain that inadequate vaccine payments can be made up by nominal immunization administration fees. However, these are two separate expenses, and both need to be appropriately covered by payers. The payment for vaccines is a legitimate expense that must cover the total direct and indirect expenses as listed below.

    Purchase price (acquisition cost) of the vaccine

    This is the amount paid by the physician for the vaccine. Although discounts may exist, these are not available to all pediatric practices and may be time limited. An accurate and verifiable public source on the current manufacturer's price for vaccines can be accessed on the CDC vaccine price list for the private sector. The AAP believes that the CDC private payer vaccine price list should be used as a transparent methodologic basis for vaccine acquisition and invoice cost as part of the total cost of the vaccine. 

     

    Please note:  The CDC does its best to keep this list updated with private sector costs; however, manufacturers are not obligated to provide private sector costs, so they may not be up-to-date.

    Personnel costs for ordering and inventory

    This cost is for Medical office staff (clinical and administrative) time to monitor vaccine stock; place orders; negotiate costs, delivery, and payment terms; bill for and collect payments; and ensure safe storage procedures (locks, alarms, temperature controls, etc).

    Storage costs

    Vaccines must be stored at very specific temperature ranges and, therefore, require special monitoring and storage equipment. The practice expense component of the total immunization administration code pays for part of the vaccine storage costs; however, there are certain expenses that are not included that must be compensated: freezer(s), freezer lock(s), freezer alarm system(s), and generators for continued electrical supply (all of which are depreciated).

    Insurance against loss of the vaccine

    Professional liability malpractice insurance does not cover vaccine product, so additional insurance coverage is needed by the practice.

    Recovery of costs attributable to inventory shrinkage, wastage, and nonpayment

    In the retail market, inventory shrinkage refers to the uncompensated loss of product due to theft, vendor error, and administrative error. Additionally, there is an estimated wastage/nonpayment of 1-2% (this should be accurately accounted for in each office). This includes drawing up the vaccine and having the patient/family reconsider and refuse, resulting in subsequent nonpayment, or a loss of dose that may occur in attempting to vaccinate an uncooperative/combative patient. This would also include collection costs in response to nonpayment by the patient or third-party payer.

    Lost opportunity costs

    This is the cost of maintaining a large vaccine inventory. Between $10,000 and $15,000 in inventory is maintained per pediatrician or other provider of vaccines. Every business with this level of money tied up in product inventory must receive an appropriate return on its investment, and so should every pediatric practice.

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Payment

When the direct and indirect expenses are totaled for the vaccine product, estimates on total cost range from 17% to 28% above the vaccine cost, depending on the practice. Therefore, payments for the vaccine should be at the level that covers the total vaccine expenses. So what would be appropriate payment for vaccine product expenses for the total direct and indirect costs? Payments must:

  • Be free of any discounts and based on a transparent and verifiable data source, such as the CDC vaccine price list for the private sector
  • Cover the vaccine product purchase price as well as all related office expenses as noted above and a return on the investment for the dollars invested in vaccine inventory.
  • Be at least 125% of the current CDC vaccine price list for the private sector

This information was borrowed from the AAP. The Business Case for Pricing Vaccines. 2012

Immunization Adm​inistrati​on Expenses:

This service is separately reportable from the vaccine product. Some payers mistakenly maintain that inadequate vaccine payments can be made up by nominal immunization administration fees. However, these are two separate expenses and both need to be appropriately covered by payers.

The Centers for Medicare and Medicaid Services (CMS) uses its Medicare Resource-Based Relative Value Scale (RBRVS), which assigns relative value units (RVUs) to services based on the resources utilized. The RVUs of a Current Procedural Terminology (CPT) code take into account the physician work, practice expenses, and professional insurance liability expenses associated with that service. For immunization administration, these components are detailed below.

    Physician Work Component
    The total value of physician work contained in the Medicare RBRVS physician fee schedule includes:
    • Physician time required to perform the service
    • Technical skill and physical effort
    • Mental effort and judgment
    • Psychological stress associated with the physician’s concerns about the iatrogenic risk to the patient
    Practice Expense Component

    Medicare RBRVS uses both direct and indirect practice expenses to determine practice expense RVUs, including the resources used within the facility or physician's office (or patient's home) in providing the service. The practice expense component of the immunization administration fee includes: 1) clinical staff time (RN/LPN/MA blend, including time for vaccine registry input, refrigerator/freezer temperature log monitoring/documentation, and refrigerator/freezer alarm monitoring/documentation); 2) medical supplies (1 pair non-sterile gloves, 7 feet of exam table paper, 1 OSHA-compliant syringe with needle, 1 CDC information sheet, 2 alcohol swabs, 1 band-aid); and 3) medical equipment (exam table, dedicated full size vaccine refrigerator with alarm/lock [commercial grade], and refrigerator/freezer vaccine temperature monitor/alarm).

    Professional Liability Insurance Expense Component:
    The professional liability insurance RVUs assigned to a code are based on CMS historic malpractice claims data.

    These three components are combined to create total RVUs (see Table below).

    2017 Medicare Relative Value Units for Immunization Administration

     

    CPT code and description​Physician
    Work
    RVUs
         		Practice
    Expense RVUs (Non- Facility)         		Professional
    Insurance
    Liability RVUs         		Total
    RVUs (Non- Facility)​
         		Total RVUs x
    2012 Medicare
    conversion factor ($34.0376)  = Medicare Amount (Non-Facility)
    90460 Immunization administration through 18 years of age via any route of administration, with counseling by physician or other qualified health care professional; first vaccine/toxoid component *

     

     

    0.17

     

     

    0.54

     

     

    0.01

     

     

    0.72

     

     

    $25.84

    90461 Immunization administration through 18 years of age via any route of administration, with counseling by physician or other qualified health care professional; each additional vaccine/toxoid component *

     

     

    0.15

     

     

    0.20

     

     

    0.01

     

     

    0.36

     

     

    $12.92

    90471 Immunization administration, one injection **

    0.17

    0.54

    0.01

    0.72

    $25.84

    90472 Immunization administration, each additional injection**

     

    0.15

     

    0.20

     

    0.01

     

    0.36

     

    $12.92

    90473 Immunization administration by intranasal/oral route, first administration**

     

    0.17

     

    0.54

     

    0.01

     

    0.72

     

    $25.84

    90474 Immunization administration by intranasal/oral route, each additional vaccine **

     

    0.15

     

    0.20

     

    0.01

     

    0.36

     

    $12.92

    * CPT codes 90460 and 90461 are reported for patients under 19 years of age and when counseling is performed on the patient by the physician or other qualified health care professional. It should also be noted that the following codes are reported per vaccine component rather than per injection/administration and make no distinction between routes of administration (i.e., injectable versus oral/intranasal).

    **These codes are reported for older patients (i.e., those 19 years and older) or if there is no counseling performed on the patient or the healthcare professional counseling does not meet state requirements for an “other qualified healthcare professional”. It should also be noted that the following codes are reported per injection/administration and allow distinction between routes of administration (i.e., injectable versus oral/intranasal).

    As a separately reported service, payments for immunization administration need to:

    • Adequately cover those costs to the practice which are separate from the direct and indirect costs associated with the vaccine product
    • Be at least 100% of the current Medicare Resource Based Relative Value Scale (RBRVS) physician fee schedule

    Insurers understand business principles including the concept of return on investment and expect it in their business. There is no reason physicians should accept carrier refusal to pay separately and adequately for the vaccine product and the administration/counseling. Viable businesses pass on their increased costs to their purchasers to maintain profitability. The pediatric practice has a legitimate business case to make for separate and adequate payment for vaccines and immunization administration and carriers need to provide adequate payments to cover the total direct and indirect expenses for both the vaccine product and the administration.

    Pediatric practices are the public health infrastructure for the nation’s childhood immunization program. It is imperative to incentivize pediatricians to participate in immunization efforts by appropriate payment for immunization administration.

​

AAP. The Business Case for Pricing Vaccine Administration. 2016

Vaccine Administration of State-supplied Vaccine

Federal and state provided vaccines represent benefits and challenges for vaccinating children. In the Vaccines for Children (VFC) program, a federal program administered by the states, the vaccine product is provided at no cost to physician offices to administer to children meeting eligibility criteria. Some states have created universal purchase programs, which purchase all vaccine for all children in the state and distribute it to immunization sites, including pediatric practices. The greatest benefit of the VFC and universal purchase programs is that the vaccine product is provided to practices at no upfront cost, thus relieving the provider of the financial outlay to purchase the vaccine product. However, practices incur additional overhead expenses for vaccines, including storage, maintenance, inventory, administration, and vaccine spoilage and loss. In the private sector, those expenses would be covered through the vaccine product payment. As the vaccine product payment does not exist for VFC vaccine or in a universal purchase state, all overhead costs related to the vaccine product still must be paid either through enhanced payment of the immunization administration fee, or some other arrangement by the payer. It is important for payers, particularly for public payers, to recognize and cover all costs associated with the vaccine and its administration, even if the vaccine product is provided at no cost.

    Immunization Administration Fees
    The Centers for Medicare and Medicaid Services (CMS) uses its Medicare Resource-Based Relative Value Scale (RBRVS), which assigns relative value units (RVUs) to services based on the resources utilized. The RVUs of a Current Procedural Terminology (CPT) code take into account the physician work, practice expenses, and professional insurance liability expenses associated with that service. For immunization administration, these components are detailed below.
    1. Physician Work Component: The total value of physician work contained in the Medicare RBRVS physician fee schedule includes:
      • Physician time required to perform the service
      • Technical skill and physical effort
      • Mental effort and judgment
      • Psychological stress associated with the physician’s concerns about the iatrogenic risk to the patient
    2. Practice Expense Component: Medicare RBRVS uses both direct and indirect practice expenses to determine practice expense RVUs, including the resources used within the facility or physician's office (or patient's home) in providing the service. The practice expense component of the immunization administration fee includes: 1) clinical staff time (RN/LPN/MA blend, including time for vaccine registry input, refrigerator/freezer temperature log monitoring/documentation, and refrigerator/freezer alarm monitoring/documentation); 2) medical supplies (1 pair non-sterile gloves, 7 feet of exam table paper, 1 OSHA-compliant syringe with needle, 1 CDC information sheet, 2 alcohol swabs, 1 band-aid) and; 3) medical equipment (exam table, dedicated full size vaccine refrigerator with alarm/lock [commercial grade], and refrigerator/freezer vaccine temperature monitor/alarm.
    3. Professional Liability Insurance Expense Component: The professional liability insurance RVUs assigned to a code are based on CMS historic malpractice claims data.
    Additional Overhead Costs Related to the Vaccine Product
    Maintaining a vaccine inventory incurs costs, whether the vaccine is publically or privately purchased. These vaccine related costs to the physician practice are traditionally covered by payers (i.e., patients, third party payers) as consumers of the vaccine product and immunization service. Because vaccine product is not traditionally billed in a VFC or state supplied vaccine environment, these costs must be covered with enhanced payment for immunization administration or other arrangement.

    Personnel costs for ordering and inventory: Medical office staff (clinical and administrative) time to monitor vaccine stock; place orders; prepare reports as required; review safe storage procedures are practice expenses that are not included in the practice expense component for immunization administration RVUs.

    Storage costs: Vaccines must be stored at very specific temperature ranges and, therefore, require special monitoring and storage equipment. The practice expense component of the total immunization administration code pays for part of the vaccine storage costs; however, there are certain expenses that are not included that must be compensated: freezer(s), freezer lock(s), freezer alarm system(s), and generators for continued electrical supply (all of which are depreciated).

    Insurance against loss of the vaccine: Professional liability malpractice insurance does not cover vaccine product, so additional insurance coverage is needed by the practice. This is especially important as states implement recovery programs if a practice can no longer use their vaccine stock due to disasters, equipment failure, etc.

    Recovery of costs attributable to uncontrollable circumstances: If practices are held accountable for lost vaccine, this could include situations of drawing up the vaccine and having the patient/family reconsider and refuse or a loss of dose that may occur in attempting to vaccinate an uncooperative/combative patient.

    Federal or state-specific requirements: In an environment where vaccine is supplied, there are frequently additional inventory and reporting requirements, which adds staff time that must be compensated appropriately.

    Pediatricians must receive adequate payment to cover the total direct and indirect expenses of the vaccine product and the immunization administration service. To account for the indirect (overhead) vaccine expenses, the AAP recommends vaccine payments to be at least 125% of the vaccine cost as reported by the Centers for Centers for Disease Control (CDC) vaccine price list for the private sector. One method to ensure payment of vaccine related expenses in a VFC or state supplied vaccine program would be to enhance payment of the Medicare RBRVS physician fee schedule rate for each immunization administration code. For state supplied vaccines, the payment would cover the total relative value of the immunization administration plus the additional overhead costs of the vaccine product. At a minimum, this rate would be at least 100% of the Medicare RBRVS physician fee schedule rate for each immunization administration code plus an additional percentage to cover the additional overhead costs of the vaccine product An alternative to this method may be paying on the reported vaccine code a surcharge that reflects the overhead expenses of the vaccine (but not the acquisition cost since the vaccine is state supplied) with separate payment for the immunization administration.

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This information was taken from the AAP. The Business Case for Pricing Vaccine Administration in a Federal or State Supplied Vaccine Environment. 2014

Resources

There are many ways to manage the cost of vaccinating. For example, going through a physician buying group (PBG) or group purchasing organization (GPO) can help keep vaccine purchasing costs lower. View the Managing Costs page.

 Resources
  • The Immunization Schedule
    New for 2018! Click here for the current schedule recommended by the CDC, AAP, AAFP, and ACOG.
  • Information for Parents
    Visit HealthyChildren.org, the AAP parenting website, for information for families about immunizations.
  • Tools for Vaccine Conversations
    The CDC offers Provider Resources for Vaccine Conversations with Parents, to help you navigate communication with parents.

 The Latest on Immunizations