5
Immunization Finance Policies and Practices

This chapter examines the finance policies and practices that enable the performance of the five roles of the national immunization system discussed in Chapters 2 through 4. Recognizing that immunization is the shared responsibility of the private and public sectors, including federal, state, and local governments, we consider how roles and responsibilities for immunization are distributed across different levels of government. We give particular attention to how current policies and practices establish the set of arrangements used to manage the community health system, target needy groups, ensure accountability within the public and private health care sectors, and allocate costs for these efforts. Our emphasis in this chapter is on children, since childhood immunization initiatives have been a major area of emphasis within the Section 317 program and the exclusive focus of the Vaccines for Children (VFC) effort. Although the federal government has established national goals to improve the rate of coverage for adult immunization among different age groups and special populations, financial resources to support this effort have been extremely limited and remain largely undocumented at the federal and state levels.

When public health clinics served as the primary point of service for delivering immunizations directly to disadvantaged populations, they had self-contained programs that performed multiple functions, including the purchase and administration of vaccines, the measurement of infectious disease patterns, the analysis of vaccine coverage rates and safety concerns, the development of programs to improve immunization



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Calling the Shots: Immunization Finance Policies and Practices 5 Immunization Finance Policies and Practices This chapter examines the finance policies and practices that enable the performance of the five roles of the national immunization system discussed in Chapters 2 through 4. Recognizing that immunization is the shared responsibility of the private and public sectors, including federal, state, and local governments, we consider how roles and responsibilities for immunization are distributed across different levels of government. We give particular attention to how current policies and practices establish the set of arrangements used to manage the community health system, target needy groups, ensure accountability within the public and private health care sectors, and allocate costs for these efforts. Our emphasis in this chapter is on children, since childhood immunization initiatives have been a major area of emphasis within the Section 317 program and the exclusive focus of the Vaccines for Children (VFC) effort. Although the federal government has established national goals to improve the rate of coverage for adult immunization among different age groups and special populations, financial resources to support this effort have been extremely limited and remain largely undocumented at the federal and state levels. When public health clinics served as the primary point of service for delivering immunizations directly to disadvantaged populations, they had self-contained programs that performed multiple functions, including the purchase and administration of vaccines, the measurement of infectious disease patterns, the analysis of vaccine coverage rates and safety concerns, the development of programs to improve immunization

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Calling the Shots: Immunization Finance Policies and Practices coverage, and the performance of immunization policy and leadership roles within their communities. The public clinics were able to draw on patient revenues for specific services to help finance multiple types of public health activities. The emphasis on providing vaccines as a fundamental part of primary health care in the private sector and the creation of the VFC program separated these roles. Vaccine purchase and service-delivery responsibilities were shifted largely to the private sector (although many public clinics continue to immunize children under Medicaid contracts and other service arrangements to meet the needs of children in local communities who do not qualify for federal assistance). Public health agencies were expected to sustain their traditional prevention and measurement efforts, while also assuming new responsibilities for administering the VFC program by enrolling private providers and monitoring a much larger set of immunization records. The policy role of public health agencies was thus expanded to include encouragement and oversight of private-sector performance in meeting national immunization goals; however, the VFC program did not provide the additional administrative resources that would enable the exercise of these functions at the local level. This redefinition of roles and responsibilities occurred during a time when federal resources for state immunization infrastructure efforts were diminishing, and greater reliance was being placed on the states and the private sector to meet national health needs. States took on new responsibilities for the health care of infants and children through programs such as the State Children’s Health Insurance Program (SCHIP), for example, which provided greater opportunity to work with managed care organizations in providing primary health care services (including immunizations) for Medicaid families. These transitions and shifts in roles and responsibilities have resulted in ambiguity with regard to leadership, measurement, and finance responsibilities for the national immunization system. Resolving this ambiguity will require careful consideration of the level of oversight and resources necessary to ensure that the private and public health sectors can each contribute effectively in addressing national immunization needs. The new system of private-sector responsibility for clients who were once served by public health clinics is still evolving, and an array of issues is emerging that requires careful consideration before judgments are made about the successes or limitations of this new approach. In this context, the following sections review in turn the immunization roles and responsibilities and associated finance policies and practices of the private sector, local health departments, the states, and the federal government.

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Calling the Shots: Immunization Finance Policies and Practices PRIVATE-SECTOR ROLES AND RESPONSIBILITIES As noted earlier, most children receive their immunization services today from a private health care provider. Although the federal and state governments purchase more than half of the childhood vaccines distributed in the United States, private-sector health plans play an equally important role in determining how immunizations are delivered and influence how the costs of vaccine purchase, vaccine administration, and record keeping are distributed across the different levels of the immunization system. Three important concerns deserve attention in considering the roles and responsibilities of the private sector within this system: (1) whether immunization is a covered benefit within primary care health plans offered in the private sector, (2) whether private health plans monitor the immunization coverage levels of their members to determine whether their rates are up to date, and (3) whether private health plans are prepared to take action to improve coverage rates if disparities are found within their membership or their members’ communities. Immunization as a Covered Benefit Most but not all private health plans include immunizations, but health plans and insurers do not cover all immunizations fully as a covered benefit. Private plans are more likely to cover immunizations for infants and children than for adults.1 A preliminary draft of the Healthy People 2010 report included a goal of increasing to 90 percent the number of 2-year-old children who receive vaccinations as part of comprehensive primary care (baseline: 66 percent in 1996), which would constitute a 50 percent improvement over the year 2000 objectives (Department of Health and Human Services [DHHS], 1998). To achieve this goal, immunizations must be covered within primary care health plans. But even though earlier health objectives (DHHS, 1999) included a proposal to have all private plans cover immunizations fully as a basic benefit (Objective 20.15), many plans do not do so.2 Coverage of adult vaccines as a benefit within private health plans is highly variable and remains largely undocumented. The Healthy People 2010 objectives include increasing the level of coverage to 90 percent for annual influenza vaccinations (baseline: 63 percent in 1997) and for one-time pneumococcal vaccinations (baseline: 43 percent in 1997) for noninstitutionalized adults aged 65 and older (DHHS, 2000). The 2010 objectives also propose increasing the level of coverage to 60 percent for annual influenza vaccinations (baseline: 25 percent in 1997) and for one-time pneumococcal vaccinations (baseline: 11 percent in 1997) for noninstitutionalized high-risk adults aged 18 to 64. However, no initiative has been

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Calling the Shots: Immunization Finance Policies and Practices announced within the federal or state governments that would advocate mandatory coverage of these vaccines within private health plans. The National Vaccine Advisory Committee (NVAC) has recommended that the private health sector assume greater responsibility for improving and sustaining high levels of immunization coverage. For example, NVAC concluded in 1999 that the nation’s immunization system is incomplete and cannot ensure the timely vaccination of the 11,000 U.S. infants born each day with a schedule that incorporates newly recommended vaccines (NVAC, 1999a). NVAC offered 15 recommendations for improving the immunization delivery system in both the public and private health sectors, including efforts to expand the scope of immunization coverage in private health plans (NVAC, 1999a). Among these recommendations were the following: All health insurance plans, including Employee Retirement Income Security Act (ERISA) self-insured plans, should offer first-dollar coverage for childhood vaccines recommended in the harmonized immunization schedule (NVAC, 1999a).3 Managed care organizations and managed Medicaid plans should ensure complete immunization of their members based on the harmonized schedule. These efforts should include the use of effective strategies to improve and maintain immunization coverage rates, such as reminder and/or recall systems, practice-based coverage assessments, and provider incentives and education (see Chapter 4). All immunization providers, public and private, should assess the immunization coverage levels within their practices annually with assistance from state and local health departments, professional associations, and managed care organizations and other insurers. One source of continuing uncertainty within both private and public health plans is the changing nature of the recommended immunization schedule (see Chapter 2). The federal government does not set universal immunization standards for the entire population. National recommendations are developed through collaboration among governmental bodies (e.g., the Advisory Committee on Immunization Practices [ACIP]) and professional advisory organizations (e.g., the Committee on Infectious Diseases of the American Academy of Pediatrics [AAP]), whose recommendations influence the scope of coverage benefits within federal programs such as Medicaid/Early and Periodic Screening, Diagnosis, and Treatment (EPSDT), SCHIP, and VFC. These same recommendations are considered by private health plans and state health agencies, which issue guidelines and enact requirements for their own populations, including immunization standards for school entry, day care licensing, and insur-

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Calling the Shots: Immunization Finance Policies and Practices ance coverage. As a result, immunization coverage requirements are not mandatory, and benefits vary by state and by health plan (see Appendix G). Difficulties in Achieving Immunization Coverage Goals In negotiating Medicaid or SCHIP contracts with private health care plans, many states have included immunization rates as key performance measures. Recent legislation, such as the Balanced Budget Act of 1997, has required health maintenance organizations (HMOs) that provide services for public beneficiaries to develop internal quality assurance processes that can be reviewed externally to assess contractor performance in meeting certain goals. To assist this effort, the Health Care Financing Administration (HCFA) has undertaken several quality-of-care activities, including a quality improvement system for managed care (known as QISMC). These initiatives are designed to help the states comply with their legal requirements to develop and implement quality assessment and improvement strategies. Public health officials have technical skills and expertise that can support these initiatives, but financial resources to support collaborative efforts involving HCFA, CDC, and state officials are not readily available within each state. State health finance agencies can hold providers accountable for outcomes and performance in areas such as quality of care and basic benefits coverage through health contract negotiations as well as the use of incentives or penalties. State officials have indicated, however, that they often avoid adding such requirements to Medicaid health plans because doing so would make the plans unduly burdensome, and could discourage private providers or managed care organizations from participating in Medicaid at all or enrolling hard-to-reach participants. Similarly, private health plans with Medicaid or SCHIP contracts may incur additional costs in the use of evidence-based prevention strategies, such as recall and/or reminder systems, immunization registries, practice-based coverage assessments, and provider education. In theory, physicians within a managed care system will offer preventive services (including immunization) that reduce the probability of costly illnesses. In the ideal world, managed care’s emphasis on population-based health outcomes, analysis of small-area variations, data tools, provider profiling and accountability, coverage of prevention services, and benchmarking should promote the achievement of high immunization coverage rates for enrolled populations (Mullen, 1999). In practice, however, frequent changes occur in the mix of clients, providers, and health plans. Half of those enrolled in managed care plans do not remain for longer than 3 years. The transience of hard-to-reach patients contributes to a diffusion of responsibility, since providers are not obligated to check

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Calling the Shots: Immunization Finance Policies and Practices on or improve the immunization status of clients who visit their offices only once. At present, little compelling evidence has emerged that managed care plans do any better or worse than fee-for-service systems in improving the immunization status of their members (Fairbrother et al., 1996). More important, variations in measurement and the movement of covered populations make it difficult to compare plan performance in improving immunization rates. The exclusion of providers that serve predominantly low-income clients or hard-to-reach groups from enrollment or assessment measures can contribute to positive measures of immunization coverage that suggest good performance. Such exclusionary practices are difficult to detect, especially in the absence of small-area population-based assessments that have sufficient sensitivity to reveal disparities in coverage rates and service utilization patterns among vulnerable groups. The lack of national or state-level trend data for Medicaid and other disadvantaged populations within private health plans (whether capitated managed care organizations or fee-for-service) also makes it difficult to follow immunization coverage rates within high-risk groups. States and local communities thus rely on special population-based studies to monitor coverage rates and to determine whether private plans within their areas are providing immunizations as expected (see Box 5–1). These special studies are generally financed by state public health agencies or CDC; both types of studies are commonly supported by the Section 317 program. Inconsistencies in the measurement of immunization status within high-risk populations inhibit efforts to monitor community health, as well as the impact of private health plans on client and community outcomes. The absence of reliable data confounds attempts to hold plans accountable for the quality of their performance in improving the health status of their most vulnerable participants. Several factors make it difficult to monitor service-delivery patterns within the private sector: Large numbers of uninsured and Medicaid families shift between public health clinics and private health plans (often as a result of monthly eligibility determinations), and the scattering of immunization records becomes a significant problem in establishing accountability requirements within multiple health plans. In California, for example, 40 percent of children lose Medicaid each year (Kuttner, 1999; Fairbrother, 2000; Fairbrother, 1999). Most health plans do not provide separate reimbursements to service providers for immunizations that are included in capitation payments for primary care or well-baby services for infants and children.

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Calling the Shots: Immunization Finance Policies and Practices BOX 5–1 Small-Area Analysis for Detroit and Newark Detroit, Michigan, and Newark, New Jersey, are cities with high poverty rates and large minority populations. Detroit residents in particular have problems with access to primary care. The immunization coverage rates of both cities are among the lowest for municipalities in the country and are well below the rates in the rest of their respective states. Detroit’s rate for the 4:3:1 series for 2-year-olds in 1998 was 71.6 percent, while the rate for the rest of Michigan was 80.0 percent; Newark’s rate in the same year was 66.3 percent, while that for the rest of New Jersey was 85.9 percent. In Detroit, a multiyear CDC grant funds the university-based Child Health Network Immunization Project (CHNIP), providing $1.5 million for each of 5 years for innovations in practices designed to improve immunization coverage and for evaluation of these practices. The Detroit Medical Center at Wayne State University initially undertook neighborhood-specific door-to-door surveys to determine local health care resources and access to primary care providers. These surveys represented an effort to identify neighborhoods in which children were most at risk for underimmunization, and thus the most appropriate targets for CHNIP’s outreach and facilitation services. This neighborhood-based assessment was conducted independently of the city’s health department, which has neither the technical nor financial resources needed to conduct this type of study. The Newark health department likewise has not conducted any small-area surveys of immunization coverage or access to primary care in recent years. It has, however, applied to the State of New Jersey for Public Health Priority Funds— state-appropriated monies that must be used for state-identified priorities—to conduct a study of immunization coverage rates within selected neighborhoods. City health officials and leaders appreciate the value of small-area analysis of immunization coverage rates in identifying pockets of need and targeting resources and special interventions accordingly. They frequently lack the resources needed to conduct such special studies and interventions as a routine function, however, and thus depend for this purpose on state and federal initiatives and resources. Immunizations for adolescents and adults may generate bills, but such data often are not available in a form that would allow comparisons of service patterns across health plans or regions. Although some plans may incur costs for developing and maintaining medical records data, the costs of compiling (or searching) immunization information are not recorded separately. As noted earlier, such compilation can be labor-intensive if records are scattered across multiple health settings.

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Calling the Shots: Immunization Finance Policies and Practices Improving Performance and Implementing Prevention Methods Managed care organizations based in large group practices (such as Kaiser Permanente and the Henry Ford Health System) have developed comprehensive medical record databases (often in electronic form) that provide information on a patient’s health history, including immunizations. Such databases create provider performance profiles and, on occasion, may generate reminder-recall notices for immunization updates. Managed care organizations that serve Medicaid and other low-income populations (e.g., those served by SCHIP) expanded rapidly in the 1990s. These plans have less fully developed central patient information systems and contend with disenrollments of around 4 percent per month, often the result of monthly eligibility determinations (Kuttner, 1999; Fairbrother 2000; Fairbrother 1999). Thus, the potential for enrollment-based data systems to improve immunization coverage levels for Medicaid and SCHIP enrollees has not yet been realized. Furthermore, given competition among various care networks and cost-containment practices of Medicaid managed care providers, data sharing efforts or performance assessment measures will be difficult to implement in the absence of a broader strategic approach that can provide either stability for clients (e.g., 1- or 2-year eligibility periods for services such as Medicaid or SCHIP); stability in the vaccine schedule; or financial incentives for providers so they can commit administrative resources to promoting high immunization coverage rates, the addition of new vaccines, and efforts to cover hard-to-reach populations. Restructuring financial incentives and payment methods for small inner-city practices in particular so they can implement quality improvement and preventive approaches (such as reminder-recall systems) would help mitigate personal and systemic barriers to care for families that already have access to a medical home and a primary care provider. In ensuring that significant disparities in access to vaccines and coverage do not emerge within vulnerable groups, state public health agencies will need to assume leadership and coordination roles in the assessment, documentation, and improvement of immunization rates in the private sector. Other IOM reports (1988 and 1997) have described in detail the information gathering and analytical functions associated with these roles. Since the delivery of immunization services has shifted from the public to the private sector over the past decade, careful attention will need to be focused on ways to gather and compare data on immunization status, vaccine coverage benefits, and service-delivery costs from both public and private health insurance plans. Key concerns include the following:

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Calling the Shots: Immunization Finance Policies and Practices What is the appropriate measure of coverage of a given population? (the whole population? all of those enrolled with a selected group of providers? those enrolled for a certain length of time with certain providers?) How do we know we have accurate data on selected groups within a given population? What sample size and population characteristics are the appropriate selection criteria? What level of vaccine coverage is an acceptable measure of immunization coverage within a given population? What constitutes a reasonable effort to determine and improve coverage levels within specific population groups? In addition to the assessment of immunization coverage levels, public health agencies are consistently encouraged to exercise leadership in working with private providers to adopt model strategies (such as routine audits and reminder-recall systems) to maintain high rates of coverage. A recent NVAC report, for example, urges indemnity health and self-insured plans to cover immunization benefits for their members, and recommends that all Medicaid-enrolled providers who immunize children participate in the VFC program (NVAC, 1999a). Despite this encouragement, a national consensus about the implications of not meeting certain performance standards does not yet exist. Who is to be held responsible if a large percentage of Medicaid clients do not acquire immunizations in a timely manner? Who is obligated to ensure that high-risk adults are encouraged to receive influenza and pneumococcal vaccines? How to finance such assessment, assurance, and leadership roles lies at the crux of the present study. It is clearly in the national interest to have a strong public health system in place nationwide that can provide reliable data and indicators, and support public and private health care providers and local communities in improving their immunization performance. At the same time, private health plans and providers need to share the burden of incorporating prevention efforts into their practices and programs (see Box 5–2). A shared partnership, responsive to local needs and resources, can integrate public health activities within the complex maze of state health finance and health insurance initiatives to improve the health status of vulnerable groups. Finding 5–1. Child and adult immunization coverage requirements are not mandatory, and benefits vary by state and by health plan. Disparities in covered benefits between public and private health plans and within the private sector make it difficult both to assess immunization levels and to fix responsibility for addressing coverage gaps on a populationwide basis.

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Calling the Shots: Immunization Finance Policies and Practices BOX 5–2 Rochester Private-Public Partnership Approach One example of a coordinated, strategic private-public partnership approach has been demonstrated in Rochester, New York, with favorable results. Szylagyi (1999) prepared a randomized sample of 30,000 charts from Rochester’s 80 pediatric provider practices, and reported 1993 coverage rates as follows: 55 percent in the inner city, 65 percent in the remaining urban areas, and 75 percent in the suburbs. The study tested the impact of an intervention consisting of a tiered reminder-recall-outreach intervention, with outreach (the most expensive approach) targeted to the most hard-to-reach portion (5–10 percent) of the study population. The results of the tiered intervention included a 20 percent increase in immunization coverage and an 11 percent increase in preventive service visits, which had the spillover effect of increasing anemia screening (by 12 percent) and lead screening (8 percent). The same intervention was implemented countywide, and a follow-up survey in 1996 showed significant increases in coverage. The greatest improvements were for inner-city children, whose rates increased from 55 percent in 1993 to 75 percent in 1996. These interventions have been financed by a unique collaboration between the county and state health departments that has allowed county health officials to pool money from several categorical programs. As more clients seek immunizations within their medical homes among private providers, other sources of revenue are able to finance some of the costs of the immunization program. Finding 5–2. Responsibility for ensuring the immunization status of selected communities or at-risk groups is currently diffused among multiple parties, including clients themselves, health care providers, health plans, health finance agencies, and public health agencies. Although the assessment of immunization coverage rates within local communities remains a fundamental responsibility of public health agencies, few local or state agencies have sufficient resources to conduct independent studies, and most must rely on data provided by others. Finding 5–3. Needy populations are increasingly receiving care within the private health sector as Medicaid and SCHIP contract with health plans to provide benefits, including immunizations. However, the absence of reliable indicators of this shift to privately managed care has made it more difficult to monitor immunization coverage levels for the total population as well as vulnerable groups. Both private and public health care providers must be held accountable to a consistent set of measures that can be used to assess and compare their performance in adequately immunizing public program beneficiaries.

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Calling the Shots: Immunization Finance Policies and Practices Finding 5–4. Collaborative efforts with private health plans and local providers can improve the quality of data available to support assessment studies. However, state health agencies must provide the leadership, technical expertise, and independence that are essential to the integrity of assessment efforts. Finding 5–5. The private sector plays a significant role in offering immunization benefits and has the capability to implement prevention practices that would improve and sustain immunization coverage rates among vulnerable groups. To exercise this capability, however, the private sector requires assistance and oversight so that accurate immunization coverage rates can be established, and the causes of coverage disparities can be monitored. Finding 5–6. If immunization assessment is to be enhanced within private provider offices, the private health sector must make behavioral changes that require more than the infusion of federal or state funds. Such efforts must involve partnerships with national, state, and local professional groups and private health plans so that common strategies can be developed and implemented at the local level. States require incentives as well as financial assistance if these public-private partnerships are to be implemented at the local level to improve the quality of local immunization services and sustain high rates of immunization coverage among vulnerable populations. LOCAL HEALTH DEPARTMENT ROLES AND RESPONSIBILITIES More than 3,000 public health agencies across the United States provide a broad array of programs and services staffed by technical, administrative, and support personnel within county, metropolitan, and statewide jurisdictions. As noted in an earlier IOM report, the jurisdictions and authority of local health departments overlap, and their service responsibilities and fiscal capabilities are heterogeneous (IOM, 1988). Significant variation exists in their funding sources, ranging from completely state supported to funded exclusively at the local level. Many states rely on a county system to deliver public health services, and in recent years, many local governments have dealt directly with the federal government to obtain financial assistance in meeting the needs of vulnerable populations. The importance of using federal funds to support local initiatives is reflected in the administration of the Section 317 program within CDC. In addition to the state and other political jurisdiction grants awarded by the National Immunization Program, five metropolitan regions are eligible to receive federal immunization grants (Houston

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Calling the Shots: Immunization Finance Policies and Practices ment of immunization registries). Moreover, the increases occurred swiftly without adequate lead time to plan for how the funds would be used within existing state administrative and management systems.14 Although increases in Section 317 funding for infrastructure support in the early 1990s were viewed as a tremendous opportunity, states reported serious administrative impediments to reaping the full benefit of those funds (Freed et al., 1999). For example: Many states had difficulty in predicting the level of funding for any given year. This made it problematic to create accurate budgets for the immunization program, engage in strategic planning, or hire full-time permanent staff. Funds were awarded late in the fiscal year, often as a result of delays in congressional approval of federal health budgets. In some cases, multiple allocations were made within a given year. The federal grant requirements obligated the states to spend their funds before the end of the fiscal year. Statewide internal restrictions in some cases affected hiring, budgeting, or spending. Some state legislatures must allocate or approve all state agency spending, including federal grants, especially if personnel appointments are involved. States were unable to abolish personnel positions once the funding decreased; the result was administrative obligations that inhibited program development. Two overall problems resulted from these circumstances: (1) states did not have adequate time to assess their needs and use federal funds effectively, and (2) states with cumbersome internal procedures for budgeting, spending, or hiring were unable to obligate their funds expeditiously (Freed et al., 1999). Some legislatures meet every other year, creating further delays. Both problems contributed to the buildup of carryover or unexpended funds that had been obligated by the federal government to the states, which Congress eventually viewed as excessive (U.S. Senate, 1995). The delay in expenditures during the startup period led Congress to reduce the state infrastructure grant funds in the period FY 1996–1998.15 These reductions resulted from mid-decade pressures to reduce the size of federal discretionary programs in general, making it more difficult to sustain ongoing efforts while also starting up new initiatives, such as the polio eradication program. The decreases are commonly viewed by state officials as “punishment for factors beyond their control” (Freed et al., 1999:16). Many state officials also noted that the curtailment of Section 317 carryover funds occurred precisely at the point when they believed they had made significant strides in the organization of immunization delivery, outreach, and other activities.

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Calling the Shots: Immunization Finance Policies and Practices When Section 317 grant awards were reduced, state expenditure rates gradually increased, demonstrating the states’ growing capacity to use federal funds for immunization services. The states’ needs eventually became greater than the resources available to them. Expenditure rates of the infrastructure grants during 1997 and 1998 were in the range of 86 percent and 96 percent, respectively, and total carryover of funds is currently estimated at less than $10 million for 1998 Section 317 FA awards. CDC and state officials now report that the current level of federal funds for Section 317 infrastructure support (requested at $117 million for FY 2000) is no longer sufficient to support their efforts (Thompson, 1998). Global Polio Eradication Initiative. Reasoning that the health and economic benefits of polio eradication would be perpetual and that extra funds would be needed for a few years only to achieve this goal, CDC launched a global polio eradication initiative in 1996, with congressional support. The initiative involved an extensive partnership (including funding and technical support) with Rotary International, the United Nations Foundation, the United Nations International Children’s Emergency Fund (UNICEF), the World Health Organization, and governments of other industrialized countries. In the period FY 1996–1998, when budget cutbacks were common throughout DHHS, CDC received explicit guidance from both the House of Representatives and the Senate to fund the new initiative for polio eradication (as well as measles elimination) at the expense of state vaccine purchase and infrastructure development funds (U.S. House of Representatives, 1996). Recognizing that prior increases had occurred in the state infrastructure grants, and disturbed by reports of large amounts of unspent state funds from prior years, the Congress expressed strong support for the global polio eradication program and encouraged CDC to expand the effort using available resources—by reducing the state infrastructure grant awards. This decision to cut the base of the state infrastructure program to support the global polio eradication effort plays an important role in explaining the shortfall now being experienced by the states. Impact of Budget Reductions Reductions in state infrastructure grants have affected each of the six key roles of the national immunization system. For example: Infectious disease prevention and control—At present, the NIP does not have a separate pool of funds within the Section 317 grant program to support the purchase of vaccines for outbreak control (information pro-

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Calling the Shots: Immunization Finance Policies and Practices vided by CDC). Funds are likewise not available within the Section 317 program to support the training needs for outbreak control recommended by NVAC (1999a); such support may be provided by a new bioterrorism initiative financed elsewhere within CDC. Surveillance and monitoring—During the 1990s, CDC maintained support for the NIS (see Chapter 4). CDC also encouraged the development of immunization registries as a key component of the future immunization surveillance system. Between 1994 and 1999, CDC allocated a total of $178.4 million in Section 317 funds within the state infrastructure awards to support immunization registries, but the size of these awards has declined in recent years (see Box 5–4) (A.Bauer, CDC, personal communication, May 21, 1999). Cutbacks in federal grants have caused several states to reduce their own surveillance and monitoring efforts, as discussed earlier. These reduced efforts represent critical omissions in the development of important baseline and benchmark coverage measures in certain key areas, such as the immunization status of Medicaid or VFC-eligible clients. The cutbacks also diminished the states’ abilities to expand surveillance for diseases such as varicella that are now vaccine-preventable while maintaining current surveillance efforts for traditional vaccine-preventable diseases. Furthermore, in areas where states are designated for special immunization initiatives (such as the ACIP recommendation that 11 states universally vaccinate children against hepatitis A), additional funds are not available to help these states with program implementation or enhanced surveillance. In such cases, states are given further program responsibilities by federal agencies without additional federal funding. BOX 5–4 Total Section 317 Funds Awarded to Support Registries as of July 1, 1999 (in millions of dollars)* 1994 $ 6.6 1995 50.9 1996 42.5 1997 35.1 1998 23.8 1999 22.2 *   Data sources varied by source and by year (for 1994, 1995, and 1999, grantees provided data; for 1996–1998, CDC coded data from grant awards). SOURCE: Information provided by CDC.

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Calling the Shots: Immunization Finance Policies and Practices Assessment and technical assistance—State immunization officials have been strongly encouraged to exercise leadership and technical assistance in a variety of areas, including the immunization of adults, the negotiation of Medicaid managed care contracts, the coordination and regulation of private insurance and VFC benefits, the auditing of private-sector immunization records, and the integration of datasets from multiple sites (NVAC, 1999a). Reductions in federal grants have severely constrained the states’ ability to exercise their current roles, much less assume enhanced responsibilities for monitoring private-sector performance, ensuring vaccine safety, and encouraging the immunization of adults. The cutbacks have also occurred at a time when negotiations regarding the distribution of government-financed vaccines have become more complex; an example is questions that have emerged about the use of VFC for clients who are covered by private (non-Medicaid) SCHIP plans. In most states, public health immunization efforts and public health insurance plans (such as Medicaid and SCHIP) are administered in separate agencies and even separate departments. Opportunities for coordination and integrated efforts are often limited. For example, state immunization programs may have technical expertise that is relevant to contract specifications for the purchase of managed care services for state beneficiaries. But those who are involved in negotiating Medicaid or SCHIP contracts may be unaware of or reluctant to involve other state employees in developing benchmark and performance standards for their contractors. Programs to improve immunization coverage rates—The reductions in federal grants have had significant effects on interventions such as outreach, provider education, and service delivery, as described earlier. Efforts such as WIC linkages, reminder-recall systems, and record audit procedures, all of which have been found to be highly effective in improving immunization rates in disadvantaged communities, have been reduced routinely as a result of federal cuts that decrease resources for state and local programs. Changes in Program Composition Total appropriations for the Section 317 program declined by only about 5 percent in the latter part of the 1990s (decreasing from $464 million in FY 1995 to $448 million in FY 1999). Significant shifts occurred within the major components of the program during this time (see Table 5–6); for example, the program operations category (the portion of the program that is administered directly by CDC) expanded, while the state infrastructure grants were reduced. During FY 1995–1999, the program operations category increased from $104 million (23 percent of the

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Calling the Shots: Immunization Finance Policies and Practices TABLE 5–6 Composition of CDC Immunization Appropriations, 1995– 1999, Amounts and Shares (fiscal years; dollars in thousands) Type 1995 1996 1997 1998 1999 Grants DAa: Vaccine purchase 151,893 139,393 139,393 119,393 139,629 State operations 23,800 23,800 23,800 23,800 23,467 Parent/patient notification 2,900 2,900 2,900 2,900 2,859 Surveillance and response 5,100 5,100 5,100 5,100 5,029 Infrastructure 108,400 108,400 88,400 42,400 41,806 Program-based incentives 33,000 33,000 33,000 33,000 32,537 Assessment activities 3,500 3,500 3,500 3,500 3,451 Immunization information systems 8,232 8,232 8,232 0 0 Adult/adolescent vaccination 0 0 0 0 0 Adult immunization 0 0 0 0 0 Other grants 22,552 23,576 23,361 30,741 30,311 Subtotal, Section 317 grants 359,377 347,901 327,686 260,834 279,089 Program operations Prevention activities 38,660 37,917 37,825 37,825 38,439 Polio technical assistance 5,727 11,227 19,277 19,277 30,874 Polio vaccine 4,116 16,000 28,000 28,000 35,565 Measles technical assistance 0 0 0 0 7,944 Measles vaccine 0 0 0 0 7,944 Adult adolescent vaccination 0 0 0 0 0 Vaccine R&Db/A&Ec/lab support 24,130 23,146 23,146 23,146 22,525 Vaccine safety 4,451 4,451 4,451 4,451 4,389 National Immunization Survey 16,000 16,000 16,000 16,000 12,472 Immunization information systems 1,029 1,004 1,004 1,004 0 Information /education 4,244 4,244 4,244 4,244 4,185 Interagency group research 6,000 6,000 6,000 6,000 5,916 Subtotal, program operations 104,357 119,989 139,947 139,897 170,253 Administrative rescission 0 0 0 0 -1,394 Total, Section 317 program 463,734 467,890 467,633 400,731 447,948 aDirect Assistance. bResearch and development. cAssessment and evaluation. SOURCE: Information provided by CDC. total NIP budget in FY 1995) to $170 million (38 percent of the total budget in FY 1999). In the same period, the grants portion of the budget (which includes state infrastructure and vaccine purchase grants, research support, and congressionally mandated studies) decreased by 20 percent (from $359 million or 77 percent of the total in FY 1995 to $279 million or 62 percent of the total in FY 1999).

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Calling the Shots: Immunization Finance Policies and Practices The committee finds these compositional shifts troubling because they suggest an unintended reorientation of the Section 317 program that diminishes the state assistance role while expanding the federal presence. Although international polio eradication efforts are important, federal support for such efforts should not come at the expense of state immunization grant awards. It may have been reasonable during a period of national budget reductions to start up the polio eradication initiative with carryover funds from the state grants program. This finance strategy has long-term consequences, however, that require attention and merit remedial action. Furthermore, cuts have occurred in the infrastructure grants during a time when VFC vaccine purchase funds have increased. The greater reliance on VFC and the private sector has allowed states to reduce their service-delivery role in the public health sector, but important functions remain and new roles have been added, all of which need to be supported. Finding 5–15. Infrastructure support in the state immunization grants program lacks a strategic vision that can guide federal and state investments. Congress has not made infrastructure support within the states a priority for the national immunization program. Finding 5–16. The federal government has traditionally assisted the states in supporting such areas as outreach and clinical services. A new emphasis is required, however, in areas that involve assurance, access, and policy development as result of the shift in the delivery of immunization services to the private sector. Administrative and staff support is needed in these areas so that local public health agencies can provide leadership and technical assistance in monitoring key indicators of quality of care and disparities in immunization coverage rates within their communities. Finding 5–17. New federal funds for state infrastructure grants were reduced from $261 million annually (1995) to $111 million annually (1999) during a time when the health care system and immunization schedules were becoming more complicated. Resources are not available to help local communities adapt to new vaccines; monitor trends that can influence immunization rates; or implement new initiatives in the areas of assessing private-sector performance, improving coverage of adult vaccines, and conducting vaccine safety education programs. Finding 5–18. Programs such as VFC, Medicaid, and SCHIP have administrative resources that can help states monitor vaccine coverage rates among public and private health providers. However, no coordi-

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Calling the Shots: Immunization Finance Policies and Practices nated strategy currently exists for encouraging states to draw on these resources in building their immunization programs. Finding 5–19. Although the federal government has traditionally supported the concept of partnership with the states to achieve national immunization goals, extensive ambiguity exists regarding the scope and forms of infrastructure that are adequate to meet national objectives while also responding to local needs. Some infrastructure services (such as providing immunizations within school health clinics or other community settings) can be undertaken by state and local health departments alone. Others require federal-state collaboration to help local agencies do more with limited resources (such as extending clinic hours). Interventions that are focused on systemic change, such as addressing missed opportunities for immunization assessment and referrals within WIC and Head Start programs, require interagency and community partnerships at the federal, state, and local levels. In implementing these interventions to serve vulnerable families, public health officials must interact with other agencies and offer resources so that high priority is given to the immunization effort. SUMMING UP During the past decade, the federal government assumed increasing responsibility for the immunization of vulnerable populations. The development of new vaccines, their increased costs, and the appearance of new diseases requiring immunization to protect the population have changed the nature of immunization from a niche to an increasingly integral component of the health care universe. At the same time, global travel and increased social mobility have multiplied the probabilities of dangerous infections affecting large populations throughout the United States. As the federal government aggressively assumed a major role in the financing of vaccines, the gap between financing and delivery of primary care health services (including immunizations) expanded for large numbers of children within the United States. Many children who previously did not have access to vaccines or were immunized in public health clinics now receive vaccines in their medical homes in the private sector. Older adults (above age 65) have access to vaccines in the private sector through plans that are financed with Medicare funds. While the expanded role of the private sector in serving disadvantaged populations has served important public health objectives by increasing coverage rates, significant questions remain about the adequacy of existing services, as well as the capability of private providers and health plans to offer timely and routine vaccinations. In addition to the use of VFC funds, many commu-

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Calling the Shots: Immunization Finance Policies and Practices nities rely on the Section 317 program for vaccines to meet residual needs among adults and children. Recent reductions in federal grants for immunization infrastructure and shifts in the Medicaid provider base within the states have reduced the resources available to support immunization programs at the same time that the roles and responsibilities of state and local health agencies have expanded and diversified. The assurance and assessment mission and role of state health agencies require them to take on responsibilities for monitoring and improving provider behavior in the private sector, collecting and evaluating data on immunization trends within private health plans and special populations, adding new vaccines and age groups to the immunization schedule, addressing growing concerns about vaccine safety, and developing regional immunization registries and other sources of surveillance data. Although a few states have supplemented essential activities by drawing on other federal sources, shifting state budget allocations, or developing new sources of revenue (such as tobacco settlement funds), the demand on state public health agencies continues to exceed their current capacity. Policy reforms within the private health care sector (such as the trend toward managed care, the inclusion of immunization services in private insurance benefits, and first-dollar coverage requirements for immunization services) have fostered a climate that encourages greater use of performance standards and assessment of immunization status within private practice. Yet access to reliable and timely data that accurately describe the immunization status of at-risk populations served by private plans remains elusive and uneven. Preventive services (including access to vaccines) in primary care health plans are fragmentary and unpredictable in both quality and scope. As part of their mission, public health leaders and programs bear responsibility for encouraging private providers to incorporate evidence-based strategies and new vaccines into routine primary care services, participating in regional registries, monitoring and improving immunization coverage rates in the public and private health sectors, and addressing concerns about vaccine safety. Local and state governments have demonstrated both interest and ability with regard to developing immunization programs and services that have positive populationwide benefits, but few states have the resources needed to sustain infrastructure programs on their own. Efforts to increase and sustain coverage levels require diversified approaches, including community outreach and linkage programs, as well as systemic interventions, such as provider assessment and feedback systems and reminder-recall services. It takes time to put new management and administrative services in place, particularly when consensus must be developed about how clients,

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Calling the Shots: Immunization Finance Policies and Practices providers, payers, and health departments should collaborate to ensure that immunizations are provided as part of appropriate health care (IOM, 1994b). State efforts to foster public awareness of the importance of immunization coverage are particularly challenged in the current environment with the addition of new vaccines to the childhood immunization schedule, the addition of new population groups (adolescents and adults) to the immunization system, public concerns about vaccine safety, and diminished public perception of the importance of timely immunization coverage in the absence of disease outbreaks (Orenstein et al., 1999). Recent cuts in Section 317 state grant awards have reduced the ability of the states to carry out their traditional surveillance and outreach responsibilities or improve their oversight roles. Although state and local health programs have been urged to assume new leadership and oversight roles (such as strengthening coordination with new health finance practices, monitoring immunization status within private health care plans, and developing registry initiatives), it is unlikely that such efforts can be undertaken on a national scale without federal funding committed to their support. As new vaccines are recommended in the next few decades, health plans, health care providers, and the public will need to confront the problem of recognizing, accepting, and applying these recommendations in routine medical care. Public health interventions at both the provider and community levels are necessary to sustain quality health care services and reduce disparities in coverage that result from barriers to access or attitudes and behavior. In the absence of such interventions: Efforts to track the immunization status of individuals who move across public and private health care plans will become increasingly difficult. Delays may occur in the integration of new vaccines into routine medical care. Further improvements in immunization coverage rates may be reduced, and significant disparities will probably occur in levels of vaccine coverage. The most severe effects are likely to be felt by those who are hard to reach and often most vulnerable to vaccine-preventable disease. States may be unable to develop appropriate immunization benchmarks, impeding their efforts to use appropriate performance measures in purchasing vaccines and health care services for disadvantaged populations and monitoring quality of care within public and private health plans. National and local data systems designed to monitor vaccine coverage status and disease outbreaks may become unreliable. Sustaining public acceptance of vaccines may become more diffi-

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Calling the Shots: Immunization Finance Policies and Practices cult as a result of decreased exposure to information on the need for immunizations, as well as the complexities involved in documenting increasing numbers of vaccines across the life span. ENDNOTES 1.   A 1997 survey of employer-sponsored health plans (Partnership for Prevention/ William Mercer Survey) indicated that 82 percent of employers’ most popular health plans (i.e., the plans with the highest employee enrollment) provided immunization benefits for infants and children, while 71 percent provided coverage of immunizations for adolescents. The survey also indicated that adult vaccines are least likely to be covered: 57 percent of employers’ most popular health plans included coverage for influenza vaccines, while only 41 percent covered pneumococcal vaccines. 2.   Data collected by the Health Insurance Association of America (HIAA) show that between 1989 and 1992, immunization as a benefit covered by conventional insurance plans increased from 45 to 53 percent, by preferred provider organization plans increased from 62 to 65 percent, and by health maintenance organization plans decreased from 98 to 95 percent (information provided by HIAA). 3.   The harmonized schedule is endorsed by the Advisory Committee on Immunization Practices (ACIP), the American Academy of Pediatrics (AAP), and the American Academy of Family Physicians (AAFP). 4.   These metropolitan regions represent the remnant of a larger group of urban grantees once associated with the Section 317 program. 5.   CASA is a menu-driven relational database developed by CDC as an assessment tool for immunization clinics and providers. CASA provides programmatic feedback that can highlight areas that may have lower levels of immunization coverage, identify the up-to-date immunization status of the age group served by the clinic or practice, describe antigen-specific levels, and disclose the proportion of children that has dropped out of the vaccination schedule or experienced missed opportunities. CASA can also generate reminder and recall letters and postcards for a specified facility. 6.   This one-time transfer occurred in the middle of the budgetary cycle and contributed to the carryover problem in the state grants. States were not able to expend these funds expeditiously and reported them as carryover, and the vaccine transfer funds inflated the infrastructure budget for several subsequent years. 7.   See, for example, a letter from the Association of State and Territorial Health Officials to DHHS Secretary Donna Shalala (Thompson, 1998): “The severe cuts (upwards of 60%) to infrastructure over the last two years have resulted in major cutbacks on the state level including: reductions in every aspect of programs, from development of materials to staffing of clinics; cancellations of contracts with WIC, private providers, community health centers, TANF, and community coalitions; severe reductions in registry development and maintenance; reductions in clinic hours and the delivery of shots; and cancellation of assessment programs, evaluation and surveillance improvements. In addition the severe cutbacks do not allow for states to plan and implement the institutionalization of vaccine delivery strategies that work….” Proposed reductions in state efforts have also been described in materials provided by CDC to NVAC (information provided by CDC). 8.   Such groups included Rotary Clubs (2 states), McDonald’s (2 states), United Way (1 state), and other private foundations (2 states). 9.   Senator Durbin (D-IL) and Senator Reed (D-RI) introduced S.2444 in April 2000 to require such coverage through amendments to the Employee Retirement Income Security Act of 1974, the Public Health Service Act, and the Internal Revenue Code of 1986.

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Calling the Shots: Immunization Finance Policies and Practices 10.   The selection criteria included coverage rates (as determined by the National Immunization Survey), population size, and the proportion of individuals from racial and ethnic minority groups residing in the core city. 11.   The 11 metropolitan areas were New York City, Philadelphia, Newark, Miami, Chicago, Detroit, Dallas, San Antonio, Houston, Phoenix, and Los Angeles. 12.   The grantee reports used different surrogate measures to identify pockets of need, such as proportion of minorities (25 grantees), population density (21), poverty level (19), provider/service shortage (17), proportion of single-parent households (13), educational status (less than 12 years of education or GED) (12), public assistance rates (10), and vaccine-preventable disease morbidity (9). One-fifth of the grantees also used geographic information systems computer software to identify and map pockets of need. The grantees described seven direct measures for identifying pockets of need: retrospective surveys (29), provider-based surveys (21), local immunization registries (20), cluster surveys (12), birth certificate-based surveys (11), statewide immunization registries (11), and random digit dialing surveys (6). In measuring and monitoring immunization coverage in the pockets of need, grantees reported on population-based methods, provider assessments, and the frequency of measurement. Retrospective school-based surveys were used by 50 percent of the grantees to measure and monitor coverage. Most respondents relied on public clinic assessments (51 of 58 grantees) to monitor coverage rates, although private provider assessments (36) and, more rarely, managed care plan assessments (17) were also used. Assessments were usually conducted annually (69 percent). 13.   Additional strategies reported by the grantees as part of their intensive efforts in pockets-of-need areas included outreach (82.8 percent), provider education (75.9 percent), and linkage with other public assistance programs (36.2 percent). Outreach efforts included public education, community awareness campaigns, coalition building, door-to-door canvassing, use of volunteers, and involvement of community-based organizations to contact families of individuals identified as undervaccinated. 14.   Between 1992 and 1995, CDC awarded nearly all carryover funds in addition to, rather than in lieu of, newly appropriated funds. This compounded the problem in grantee areas that experienced difficulty in expending their funds efficiently. CDC reports that during these years, the NIP was trying to resolve the carryover issue by encouraging states to continue to build and sustain the systems needed to raise immunization coverage levels with new funds, while using the carryover funds for one-time expenses (information provided by CDC). 15.   The amount of funds available for infrastructure services within the Section 317 grants in 1997 and 1998 was less than half of what was appropriated in 1996. See Table 5–6.