Academy Reaches Out to Insurers to Resolve Vaccine Payment Issues

August 04, 2009 05:20 pm Sheri Porter

The Academy's Practice Support Division works on behalf of family physicians on many fronts, including vaccine payment issues. The division's close interaction with both family physicians and the country's major health plans led AAFP News Now to pose a series of questions to staff members in the division.

Q: What are family physicians' biggest concerns regarding vaccine pricing and payment issues?

A: Inadequate third-party payer payments for vaccines and vaccine administration are causing many family physicians to lose money on immunization services. The situation has led some FPs to stop offering immunizations altogether or to limit the number of vaccines available to patients. Unfortunately, statistics show that when a patient is referred away from his or her physician's office -- for instance, to a county health department or community health center -- the patient is less likely to receive the vaccine.

Q: What vaccine payment issues is the Academy currently addressing?

A: The AAFP is fighting to ensure that physicians are paid at least enough to cover the full cost of providing recommended vaccines to patients. That includes reasonable payment for administration of vaccines. On the public payer side, the Academy is collaborating with other medical specialty organizations to urge the federal government and HHS to shift vaccines that fall under Medicare Part D -- such as the herpes zoster vaccine -- to Medicare Part B. The administrative complexities involved with providing vaccines covered under Medicare Part D have decreased the number of physicians who offer those vaccines to their Medicare patients.

Q: What obstacles does the AAFP encounter in discussions with private payers?

A: Private insurers argue that their payment rates are sufficient and that they use a variety of formulas to come up with pricing. For instance, some payers calculate payment based on 105 percent of the average wholesale cost of vaccines. Others pay physicians a rate that is 120 percent of the average sales price. Nonetheless, members continue to report that they incur significant financial losses on immunizations. It's important to note that insurers don't always include the physicians' indirect costs, such as administrative staff time, vaccine storage and waste. The challenge for the Academy is to compile authenticated data that reflect those real physician costs. It's a difficult task given that family physician practices vary in their size, location, ownership arrangements and patient population.

Q: How often do private payers review and adjust their vaccine fee schedules?

A: The national plans typically update their payment systems for all CPT codes, including vaccines, on a quarterly basis. However, when vaccine costs increase, it takes time for the health plans to update their claims payment systems. In the meantime, physicians continue to purchase vaccines at the higher price. Setting appropriate payment levels for new vaccines is particularly problematic because of the lack of historical pricing data.

Q: What methodology do private payers use to determine how much they will pay physicians for vaccine administration?

A: Vaccine administration payment rates usually are based on the relative value units in CMS' Resource-Based Relative Value Scale. Unfortunately, payers don't always use the formula for the most current year, a practice that can lower a physician's payment rate.

Q: How can physicians negotiate with private payers for better payment for vaccine purchase and administration?

A: This is the $64,000 question. It is challenging for physicians to prove their case that they should receive higher payment levels for vaccines without hard data on vaccine product costs and per-dose vaccine carrying costs. Private payers insist they already pay a percentage above the vaccine purchase price to cover practice overhead. The Academy advises members to calculate their practice costs for providing care, including, but not limited to, vaccines and be prepared to share those details with private payers during contract negotiations or when a new CPT code is issued. With respect to vaccine administration, many payers base their payment rates on a percentage of the Medicare fee schedule.

Q: What role do CPT codes play?

A: Physicians must code appropriately and fully to ensure proper identification of the vaccine administered, as well as the number of vaccines administered. The AAFP has created extensive coding resources related to vaccines and other health services to assist physicians.

Q: How do Medicare and Medicaid's payment rates affect private insurers' payment rates?

A: Private payers may or may not use Medicare payment rates for certain vaccines covered under Medicare Part B, such as those for influenza, pneumococcal pneumonia and hepatitis B. This is part of the problem because there isn't a single industry standard for vaccine payment rates as there is for most CPT codes billed by physicians.

Q: What actions has the Academy taken to improve vaccine payment rates?

A: The AAFP meets regularly with the country's largest health plans; in those discussions, we put a variety of topics on the table, including vaccine payment. Those meetings have resulted in some positive outcomes. For example, Humana, WellPoint Inc. and UnitedHealthcare have increased, or intend to increase, their payment levels for immunization administration. Specifically, in 2008, Humana announced it would pay physicians an additional $11 for administration of pediatric combination vaccines containing four or more components. The Academy applauded the change because current coding mechanisms allow the reporting of only one administration code despite the added physician work of counseling the patient or parent about each vaccine component.

The Academy also has ongoing discussions with vaccine manufacturers to consider strategies for increasing immunization rates. As a result, some manufacturers have tweaked their business procedures. For example, when the cost of a vaccine increases, some manufacturers have agreed to honor the old price for as long as 30 days, giving physicians an opportunity to stock up at the lower rate. Merck & Co. Inc. has decreased physicians' financial risk in providing the company's quadrivalent human papillomavirus vaccine, Gardasil, by offering a patient rebate on the product.