Current issues in immunization reimbursement

June 2003

Clinicians familiar with the current routine immunization schedule are also familiar with the schedule’s complexity, in that numerous separate dose administrations with numerous antigens are recommended. Combination vaccine products are beneficial in reducing the required number of dose administrations.

The approval of Pediarix, a combination vaccine of five separate antigens, in December of 2002, adds to the growing list of combination vaccines available. To reduce the number of separate vaccine dose administrations and to increase schedule compliance, the AAP recommends and prefers that combination vaccines be used instead of the equivalent component vaccines (Pediatrics, May 1999). Even though administering combination vaccines may reduce the complexity of separate antigen immunization administration, the use of combination vaccines can exhibit a complexity all its own.

For example, questions may arise about equivalence of combination products from different manufactures or administration of extra antigens when a child has previously received doses of one of the combination vaccine’s antigen components. This month’s column will not address these issues in detail, and readers are referred to the above AAP article. Another interesting issue that arises with the advent and further development of combination vaccines relates to vaccine reimbursement, for reimbursement for vaccine immunization is, to some degree, associated with the number of separate antigens and doses administered. Thus, ironically, administration of a combination vaccine, while reducing some costs of the clinician’s practice, may actually also reduce the amount the practice is reimbursed by third-party payers. This issue forms the basis for this month’s column.

Reimbursement determination

The process of determining reimbursements for immunization services is quite complex. The fee schedule currently used by most public and private payers is the Resource-Based Relative Value Scale (RBRVS), which was adopted in 1992 by the Medicare system. This scale replaced the previous scale of “customary” charges. Even though not all aspects of medical care involve the Medicare system, with pediatrics the most obvious example, this system has been widely adopted.

The Medicare RBRVS is based upon the “relative value” of services provided to patients and the resources that are consumed. The relative value of these services provided by physicians is further based upon three distinct components, referred to as relative value units (RVUs): the amount of physician work of the service, the practice expense of the service, and the professional liability expense for provision of these services. Examples include, physician work — counseling given by a physician on immunizations (their benefit, adverse effects, etc.); practice expense — clinic staff time, cost of medical equipment and supplies; and professional liability — cost of malpractice insurance.

Specifically, the components of the physician work RVU include physician time required to perform the service, the technical skill and physical effort, mental effort and judgement, and the psychological stress associated with the physician’s concern about the iatrogenic risk to the patient. The physician work component equates to 55% of the total RVU of the service, while practice expense represents 42%, and professional liability equates to 3%. A cost index based on the geographic location of the physician’s office is then factored in, termed the Geographic Practice Cost Indices (GPCI). Examples are given in the Table.

These components are then compiled and converted through an annually adjusted conversion factor (Medicare Conversion Factor, MCF) into a dollar amount, which represents the payment received by the physician’s office. Various other factors may additionally affect the specific reimbursement a physician’s office receives (eg, incentive payments for physician services in medically under served communities). Third-party payers other than Medicare may decide not to use all components of the RBRVS when determining specific reimbursements.

The physician work component of RBRVS is maintained by the Centers for Medicare and Medicaid Services (CMS), formally known as the Health Care Financing Administration. A committee of the American Medical Association (AMA) provides input to the CMS. One of 29 members of this AMA committee is represented by the AAP. The RVU for physician work, as determined by the CMS and AMA subcommittee, is modified as necessary to establish payment policy. Changes in these policies are published in the Federal Register. Current RVUs for specific current procedural terminology codes (CPT) can also be found in the Federal Register. CPT codes for immunization administration are 90471 (first immunization) and 90472 (each additional immunization). Access to the Federal Register can be found through the AAP Web site.

As an explanation of the above, assume the following example of a procedure performed in a community pediatrician’s office. The procedure, “kissing a toddler to make an ‘ouwee’ go away,” has the CPT code of 12345. The RVUs for this CPT code are, physician work – 0.67; practice expense – 0.69; malpractice – 0.03. The respective GPCIs for “anytown” and “anystate” are 0.975, 0.946, and 1.265. The RUVs and GPCIs are multiplied together and then added to give 1.34394. This is then multiplied by the Medicare Conversion Factor of $38.7325 to yield $52.05, which the physician’s office receives as reimbursement for the procedure. Some third-party payers may use different calculations to determine reimbursement amounts, such as using their own conversion factor or not using GPCIs.

Clinician’s concerns and actions

Infectious Diseases in Children commonly receives letters from readers expressing concerns over fair reimbursement for immunizations. The published literature includes reports of clinicians referring children to public health immunization clinics for routine immunizations to minimize expenses of immunization administration. This practice invokes new problems, such as loss of the medical home for immunization practices and an increased potential for missed immunizations — as caregivers must then make and keep additional appointments.

The published literature contains numerous reports on the economic evaluation of immunization practices and it is beyond the scope of this column to review this literature. A recent report highlights the economic concerns of immunization practices. Glazner evaluated the adequacy of reimbursement for pediatric immunizations in two rural regions of Colorado. Costs for providing immunizations to children younger than 3 years of age were measured and compared with reimbursement in six private practices, four health department clinics, and three federally qualified health centers. Data were collected in 1997.

One of the regions evaluated had significant managed care penetration in the evaluated private practices and had average reimbursement rates that were less than total costs for most vaccines. Overall, five of six private practices participating in this study reported referring some patients to health departments for immunizations. Reimbursement rates to public providers were less than average delivery costs.

Although combination vaccines may simplify the immunization schedule and reduce the number of injections children receive, their use entails new potential economic concerns. The current method of relating the physician work and practice expense RVUs to immunization administration using combination vaccines is to some degree inappropriate. Physician work (and thus reimbursement) is linked to the number of antigens in the immunization, where as practice expense is linked to the number of dose administrations given (ie, injections). Thus, to some extent, a disincentive arises to administer combination vaccines.

The AAP has offered proposals to address these concerns and is currently working toward this end. The AAP Committee on Coding and Nomenclature (COCN) serves to review CPT coding changes and the Medicare RBRVS, and assesses the implications of these upon pediatric practice.

More information about this committee can be found on the AAP Web site. The CPT codes described above for immunization administration, commonly used in pediatric practice, are not specific for pediatric immunization administration, and this adds to the reimbursement concerns that pediatric clinicians have. The COCN is attempting to create pediatric specific CPT immunization codes for relative value scale-based physician fees, and it is hoped that this will increase the physician work RVU. The CMS has recently admitted that the current model for immunization practice and administration differs in the pediatric versus adult population, and is considering potential coding changes that address these differences.

The concerns of reimbursement issues surrounding combination vaccines are additionally being reviewed. The AAP established the Pediatric RBRVS Project to assess these issues. The AAP COCN has recently been successful in increasing the practice expense RVU for the CPT immunization codes 90471 and 90472. The practice expense RVU for CPT code 90471 for 2003 has increased nearly 100% as compared with 2002, while the increase for 90472 has increased only slightly. Additional proposals by the AAP to the CTP Editorial Panel are to be considered in August.

Because pediatric immunization practice is a dynamic field, with newly introduced vaccines for new antigens and new combination vaccine products, the economic implications become increasingly complex. Clinicians providing immunization services to infants and children should evaluate the costs unique to their practices, including practice expense, malpractice cost and staff income and benefits. Balancing this information against the frequency of immunization administration services provided, reimbursements and RVUs, clinicians could better assess their specific economic picture.

For more information:

• Glazner JE. Is reimbursement for childhood immunizations adequate? Evidence from two rural areas in Colorado. Public Health Rep. 2001;116(3):219-225
• American Academy of Pediatrics. Combination vaccines for childhood immunization: recommendations of the Advisory Committee on Immunization Practices, the American Academy of Pediatrics, and the American Academy of Family Physicians. Pediatrics. 1999;103(5 Pt 1):1064-1068.
• American Academy of Pediatrics. 2003 RBRVS, what is it and how does it affect pediatrics (www.aap.org/visit/codingrbrvs.htm).