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Pediatric Council Meeting
with Payers

Our first meeting with payers took place April 1, 2008.  There were Medical Directors from some of the major plans (Aetna, Blue Cross Blue Shield, Humana, TriCare, United) as well as the Medical Director of AHCCCS and representatives from the AZ Department of Insurance,  AZ Department of Health, and The Arizona Partnership for Immunizations. 

We presented our organization and what we as a council were about – to begin a dialogue on issues related to the care of kids.  We started with our most pressing issue... fair payment for immunization acquisition and administration.  We cited the history of vaccination, the recent introduction of many new vaccines, combination vaccines and the dramatic escalation of costs just in the past 5 years.  Jeff Couchman presented the results of the survey he conducted of 13 practices in AZ.   You can find the presentation on the right side of this screen.  Other Pediatric Council participants in the meeting included Ron Fischler, Al Schwartz and Amy Shoptaugh. 

The key survey findings were that it costs about 16% over  purchase price (range was 12-21%) to  break even (costs of ordering, storing, billing for vaccine).  And it costs the average practice about $17 to administer the first vaccine injection (obtaining consent, answering questions, giving and recording).  Most practices reporting losing money on vaccines.

Vaccines now represent about 32% of the revenue of a practice and the largest single expense, and may tie up as much as $25K per provider in inventory!  The AzAAP survey validated The AAP Business Case for Pricing Vaccines and Immunization Administrations (2007) which found that overhead costs of 17-28% over vaccine purchase price and RBRVS values for vaccine administration ($20 initial shot) were needed to assure financial viability. 

There was considerable discussion about these issues and consensus that Pediatricians (who give 70% of vaccines in AZ ) should not lose money on vaccinations.  The key discussion points were

1. Dealing with contracts -- the need for pediatric practices to become more involved in negotiations with payers.  There was widespread agreement that pediatricians need to understand and not sign contracts that are unfavorable.  There was discussion that language could be inserted into contracts that tied payments to actual /realistic costs.
2. Encourage widespread use of the CDC Vaccine Price List in place of other price lists not so readily available or that are disappearing (AWP)
   (www.cdc.gov/vaccines/programs/vfc/cdc-vac-price-list.htm)
3. Encourage manufacturers to provide 4 months notice to payers on new vaccine pricing and price increases to give Payers a chance to make the administrative changes in payments and not squeeze pediatricians  who are caught between price increases by manufacturers and lags in payment by Payers.  This is an issue that will be forwarded to national AAP

The tone of the discussions was respectful, educational and cooperative.  The Medical Directors  seemed as interested in establishing an effective dialogue as we are.  They asked for their "report card" on how they were doing based on our survey, but they did not wish to see data on the other plans.  Members of the Council will follow up with them individually. We asked for suggestions for the next topic and came up with "Medical Home" issues which encompass payments for coordination of care, non face to face care,  after hours care, etc. 

Thanks to everyone who helped…to the Council members who gave up 3 Saturdays to meet in Phoenix over the past year,  to Jeff Couchman for his superb work in collecting and compiling and presenting the data.  Thanks to all the practices that submitted reams of data!

Jeff will give a presentation at Sedona at the Annual Chapter Luncheon and
at the Practice Manager's Seminar.

It would seem that learning to read, understand and negotiate contracts would be the next logical step for the Council to explore and provide learning opportunities for managers and members.  We are looking into experts locally and nationally to help us…please forward names of members or attorneys with experience!

And stay tuned for more news of Pediatric Council activities.

Ron Fischler MD
Chair Pediatric Council
rfischler@nspeds.com