NVAC Vaccine Finance Working Group Update

41st National Immunization Conference

Gus Birkhead, MD, MPH New York State Department of Health Chair, NVAC Vaccine Working Group

March 8, 2007

HPV

Tdap

Mening

What is the Problem?

• New vaccines added to the schedule and new vaccine recommendations have created a crisis in the delivery system

• This crisis threatens to greatly reduce or eliminate the private provider role in delivery

• Threatens to fragment the medical home• Increased stress on the public sector

What is the Problem?• The crisis is not readily visible

– There is no resurgence of vaccine-preventable diseases due to failure to vaccinate

– Morbidity not yet prevented by new vaccines may not be recognized as a big problem

– Our goal is to prevent tragedies, not to deal with them– Our goal is to assure all children have no financial barriers to

access to all vaccines recommended by the ACIP– Warnings have been sounded. We ignore them at our peril

U.S. Federal Contract Prices for Vaccines Recommended Universally for Children and Adolescents:

1985, 1995, 2006

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

1985 1995 2006 Male 2006 Female

Dol

lars

3 HPV

3 RV

2 Hep A

1 Mening

1 Td/Tdap

4 PCV7

6 Flu

2 Var

2-3 Hep B

3-4 Hib

1-2 MMR

4 Polio

5 DTP/DTaP

Federal contract price shown for 1985 and 1995 are averages that account for price changes within that year.

Does not include the use of combination vaccines.

$45$155

$893.60

$1181.60

2004 Institute of Medicine Report• Study supported by CDC• Committee formed in 2002• Frank Sloan, chair• Four meetings• Commissioned survey of state vaccine finance

practices• Commissioned 8 background papers• Report previewed in late 2003• Report issued in 2004

2004 IOM Report Recommendations

• New insurance mandate, government subsidy, and voucher plan for vaccines recommended by ACIP;

• Alter ACIP membership to associate vaccine coverage decisions with social benefits and costs, including price;

• NVPO convene stakeholders;• CDC initiate a research program to improve measurement

of the societal value of vaccines

2004 NVAC Workgroup

NVACAlan Hinman (co-chair)Bruce Gellin (co-chair)Ann ArvinJerry KleinPat Whitley-Williams

Non-NVACSteve Black (AHIP)Ronan Gannon (GSK)Bronwen Kaye (Wyeth)Sarah Landry (NVPO)David Neumann (PfP)Lance Rodewald (CDC/NIP)Una Ryan (AVANT)Don Williamson (ASTHO)

NVAC Vaccine Financing MeetingJune 28-29, 2004

• 61 participants– Large manufacturers and biotech firms– Fed, state, local health departments– Distributors/purchasers– Health care providers– Consumers

• Pros and cons of options?• Additional options?• Which option supported and why?

Summary of June 28-29 meeting• Agreement on:

– Vaccines are undervalued;– Assure access– Adequate reimbursement– Regulatory harmonization– Strengthen liability protection– Better understand insurance

coverage– Better understand factors

responsible for low immunization coverage in adolescents and adults

• Little support for IOM proposal for mandate, subsidy, and voucher;

• Many favored improvements in current system:– Expanding VFC for underinsured

children– Removing VFC price caps– “Vaccine for Adults”– Increase Section 317 for children,

adolescents and adults.

2004 NVAC Work Group Recommendations

• Expand Section 317 and rapid appropriation when new vaccines recommended, cover adolescents/adults;

• Expand VFC: underinsured children in public and private settings, remove price caps;

• Regulatory harmonization to facilitate vaccines licensed in other countries; increase communication;

• Promote “first dollar” insurance vaccine coverage, administration fees, and prompt coverage of new vaccines.

Where are we now?• IOM proposal for mandate/subsidy/voucher has not

been implemented• ACIP does consider cost effectiveness (but not IOM

emphasis), membership includes health economist• NVAC recommendations:

– 317 essentially the same– VFC expansion proposed but not passed– Foreign vaccines not yet implemented

• Vaccine coverage rates still high (?)

2006-7 NVAC Working GroupCharge

• Obtain input from stakeholders …on the challenges in creating optimal approaches to vaccine financing in both the public and private sectors, and their impact on access.

• Establish a process for selecting and addressing 2 – 3 key topics per year with input from the subcommittee chairs

• By the end of each year, have developed specific and targeted policy options for the first 2 – 3 topics, and be prepared to address another 2 – 3 topics in the next year.

• Present findings and policy options to the full NVAC for discussion and recommendations.

Working Group Membership• NVAC

– Gus Birkhead, chair– Jon Abramson– Jon Almquist– Mark Feinberg– Gary Freed– Lance Gordon– Alan Hinman– Calvin Johnson– Jerome Klein

• AHIP – Alan Rosenberg • Nat’l Business Group on Health

- Liz Greenbaum/Ron Finch • Health Economist - Mark

Pauley• Academia - Walt Orenstein• Agency liaisons

– CDC – Lance Rodewald– CMS – Jeff Kelman

• NVPO– Bruce Gellin, Angela Shen, Ray

Strikas, Emma English

NVAC Working GroupData Gathering

• Interviews with individual manufacturers• Survey of office practice managers on current costs,

charges, and reimbursement experience• Survey of physicians on attitudes on finance issues• Possible survey of insurers, self insured employers• Fact finding with CMS• Stakeholder hearing planned

Finance Working Group Focus

• Public Sector:– Administration fees:

• Medicaid admin fee not adequate in many states• No admin fee in VFC for uninsured (providers may charge

parents but cannot turn anyone away for inability to pay).– 317 Program not keeping pace

• Private Sector:– Pharmaceutical issues – inventory costs– Insurance issues – coverage

Public Sector Medicaid Vaccine Administration Fee

• Maximum allowable fee set by HCFA for each state– Published in Federal Register September 2, 1994– Has never been updated or changed – No minimum administration fee– States match federal funding using their FMAP rate

• VFC providers are not allowed to turn away an uninsured child for inability to pay the admin fee

Medicaid Fee-For-Service Vaccine Administration Fee by State, 2005

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

CMS ContributionState ContributionMaximum Cap

State contribution

CMSmatch

CMScap

State Contributions to Medicaid FFS Vaccine Administration Fees

• < $1.00Hawaii

• $1.00-2.00ColoradoConnecticutIowaKentuckyMaineMissouriNew HampshireNew JerseyNorth DakotaTexasWisconsin

• $2.00-$3.00AlabamaArkansasIndianaLouisianaMississippiMontanaNew MexicoOhioPennsylvaniaSouth DakotaUtahVermontWashington

• $3.00-$4.00AlaskaGeorgiaMichiganNebraskaNevadaRhode IslandSouth Carolina

• $4.00-5.00CaliforniaFloridaIdahoMarylandMinnesotaWyoming

Ideas to Fix Public Sector FFS Administration Fees

• State-by-state lobbying to raise state contribution

• Raise the maximum rate• Require a minimum rate• Increase Fed/State share• Adjust rates to incentivize

combined antigen use• VFC take-over of

administrative fees

• You

• HHS

• Congress• Congress?

• AMA• Congress

What Who• D: FFS rates don’t

impact Managed Care

• D: Most states already not at maximum rate

• D: States will oppose• ?

• ?• A: Covers uninsured

kids in VFCD: Opens up VFC

Ad/Disadvantage

Other Public Sector Issues

• 317 Program funding not keeping pace. Impairs states’ ability to:– Provide universal coverage (in universal states)– Cover State eligible (underinsured) in VFC– Cover adult vaccinations for uninsured (HPV, Tdap)

• Not all State contributions are keeping pace.• 317 Coalition

Private SectorPharmaceutical Issues

• Ways to reduce the financial burden on vaccine providers– Have vaccine manufacturers fund the inventory in

physician practices;– Frequent, small frequent shipments (“just in time”) to

reduce inventory costs;– Defer payment by providers for more than 30-60 days;

Private SectorInsurance Issues

AHIP survey (61/140 - 44% response rate)• 91.8% follow ACIP recommendations• 62% of plans reimburse based on Thompson’s Average Wholesale

Price (published quarterly)• Only 47% of PPO’s who responded act on ACIP recommendations

within 3 months• Most plans wait until final CDC recommendations are published in

MMWR

Source: AHIP Coverage. Immunization Practices and Policies. Jan-Feb 2006.

Insurance Mandates?

• High proportion of insurers say they follow ACIP.• Even states with mandates, it is difficult to

determine how much to reimburse (?AWP+25%)• Mandates don’t always specify administration fee• How is “appropriate” level of reimbursement

agreed upon? – Voluntary guidelines vs mandates• States cannot regulate ERISA (self insured) plans• Explore insurance tax incentives

Federal Impact on Private Sector Coverage

• Many insurers key off of ACIP, but ACIP recommendations are slow to be published;

• Publication in MMWR signifies acceptance of recommendation by HHS;

• Example: HPV – scheduled MMWR publication date is 10 months after ACIP vote;

• More rapid way to signify HHS acceptance than MMWR publication.

NVAC Working Group Process

• Continue discussions with CMS• Physician surveys – Fall 07• Stakeholder hearing – Fall 07• Plan first White Paper with recommendations to

NVAC and Assistance Secretary for Health by Fall 07

• Support adequate 317 funding