Abstract
Objective. To describe costs to providers of delivering childhood immunizations.
Methods. We collected variable costs—costs that vary with the amount of services rendered—including cost of practitioner and staff time and supplies, using a cost accounting method, from 12 practices (4 pediatric practices, 4 family practices, and 4 public health agencies) in rural and urban areas in Colorado. For private practices, we estimated fixed costs—costs that do not vary with the amount of services, eg, rent and insurance). We also collected reimbursement information for vaccinations for private practices.
Results. Variable costs per shot (excluding vaccine cost) were $8.15 for pediatric practices, $5.79 for family practices, and $5.41 for public health agencies. Total costs per shot, including fixed costs, were $10.67 for pediatric practices and $7.57 for family practices. Average reimbursement for pediatricians and private family practices was $8.27 and $6.68, respectively. For pediatric practices, average variable costs were barely exceeded by average reimbursement, and reimbursement was 22% less than average total costs. This contrasts with an earlier study of the rural practices investigated here, in which there was a comfortable margin between reimbursement and variable costs.
Conclusion. The decline in the ratio of reimbursement to cost for private practices, particularly for pediatric practices, suggests that referral to public agencies by private providers for vaccinations may increase and that if vaccinations are not as frequently provided in the child's medical home, then the currently high childhood immunization rates may be in jeopardy.
Although overall vaccination levels for children younger than 3 years are higher than ever in the United States, there is substantial variability among states and cities1 and among socioeconomic strata.2 Maintaining high vaccination levels and improving them in areas where they are low is a priority for the Centers for Disease Control and Prevention's National Immunization Program and the public health community.3 Increasing the proportion of children who receive all vaccinations in the context of comprehensive primary care or in their medical homes is a goal of the Vaccines for Children Program4,5 and is a policy of the American Academy of Pediatrics,6 because referrals out of the medical home can result in scattered immunization records,7 delayed immunization, and a reduction in continuity of care.4,5,8–10 Moreover, providing all vaccinations in the child's medical home improves vaccination rates and other aspects of primary care.4,10–12 Increasing provision of vaccinations in the medical home is especially important at a time when the public health infrastructure that supports the country's immunization system has become less stable in the face of both an expanded immunization schedule and reduced resources. Some states have even scaled back their public immunization programs.13
The US health care system uses financial incentives to affect the practices of health care providers. These incentives consist primarily of private and public reimbursement practices and amounts. The willingness of clinicians to administer vaccines has been found to be influenced by both the availability of alternatives such as free public health clinics and the availability of free vaccines for uninsured and Medicaid patients.5,8,9 Financial incentives have been shown to improve both immunization rates in the elderly14,15 and up-to-date immunization rates in children.16 We hypothesized that different types of providers incur different costs and have different cost structures that could influence their ability or willingness to deliver vaccinations under current reimbursement levels. To investigate whether providers had different cost structures, we collected detailed information on provider costs and reimbursement from rural family practices/community health centers (CHCs) and public health agencies that participate in the Colorado Rural Immunization Services Project (CRISP) as well as from urban pediatric practices. In addition to creating a regional immunization registry for 2 multicounty areas of Colorado, a primary purpose of the CRISP project was to determine whether providing vaccinations is in the economic interest of medical practices under current reimbursement conditions. We reasoned that if medical practices can cover their variable costs (costs that fluctuate with the number of services provided, ie, the cost of supplies and personnel required to provide vaccinations) and make any contribution to fixed costs (costs not related to the amount of services provided, eg, overhead), then providing childhood vaccinations is in their economic interest. We were also interested in whether there were differences in the cost of providing vaccinations among the 3 types of providers that deliver vaccinations (family practices/CHCs, pediatricians, and public health agencies) that might affect their willingness to give vaccinations. This information has not heretofore been available in the research literature.
METHODS
Participants
Two rural private family practice sites and 2 rural CHCs that participate in the CRISP registry project took part in the current cost study. For the purposes of this cost analysis, both the private rural family practices and the CHCs were considered together as family practices because they both provide primary care, serve entire families, employ family medicine practitioners, and face similar labor market conditions with respect to hiring and paying physicians, nursing, and other staff. Four rural health departments/county nursing services took part in the study; 2 of these participated in the CRISP registry project. Four urban private pediatric practices that use the CRISP registry also participated. In many states, it is rare to find pediatricians in rural areas; they are typically concentrated in urban areas, whereas in rural areas, family medicine practitioners dominate.17 A total of 12 practices participated in the study.
Data Collection
Estimates of physician practice costs have typically been based on historical charges,18,19 which may not reflect actual costs of rendering services. Latimer and Becker19 made a persuasive argument for measuring practice costs using a cost-accounting approach (measuring actual costs, including labor, associated with each service). They demonstrated that other methods result in distorted payments that provide financial incentives to perform better reimbursed services rather than other services that may be more appropriate. The developers of the Resource-Based Relative Value Scale also acknowledged the desirability of determining practice costs using a cost-accounting approach.20 We therefore took a cost-accounting approach to measuring the variable practice costs of delivering vaccinations, ie, labor and supplies.
Forms on which office staff and nonphysician providers were to record the time spent on vaccination-related activities were developed in conjunction with the practices, pilot-tested, and modified. Rural practice staff kept track of time spent on all vaccination-related activities for 1 calendar month in 2001. Urban pediatric practices kept track of time for 1 week in 2002. The principal concern in the decision regarding the length of time during which records were kept was that there be enough vaccinations given to allow stable estimates of the time required per shot, hence the differing lengths of time for record-keeping between rural and urban practices. The CRISP registry came on line in 2001 in rural areas and in early 2002 in Denver. We measured costs ∼6 months after the practices had begun to use the registry. Tasks measured are shown in Table 1.
Vaccination-Related Activities Recorded by Practice Staff, Family Practices, Pediatric Practices, and Health Departments/County Nursing Services, Colorado
Billing staff kept track of the time they spent on billing for visits in which a vaccination was given. Some of these visits were for vaccinations only, and some were for more comprehensive well-child visits. There was no way available to us to separate billing for vaccinations that occurred during a well-child visit from billing for other services, because only 1 bill would be submitted for such visits.
Physicians and midlevel practitioners (4 of the 8 family and pediatric practices employed nurse practitioners or physician assistants who provided some vaccinations) did not keep track of time spent on vaccination-related activities. Instead, a CRISP project nurse interviewed each physician and midlevel practitioner, using a standard interview form, about vaccination activities performed before, during, and after a typical well-child visit and the time required for each. These activities included immunization history review, providing vaccine information/education to parents, completing the superbill, and completing immunization logs in patients' medical records, among others.
The forms completed by practice staff specified the time spent on vaccination-related activities that occur during each visit in which a vaccination was provided. For nonphysician staff, hourly salary and benefits costs were obtained from the practices. Time spent by each staff member was multiplied by applicable salary and benefits; the products of this operation were added together and divided by the total number of vaccinations provided by the practice during the study month to arrive at cost per shot. A shot can be given for a single antigen or combination vaccine.
To estimate physician and midlevel practitioner cost, for rural practices, we applied average salary and benefits for family medicine practitioners in the area of Colorado in which they worked to their time estimates. For pediatricians, we applied average pediatrician salaries and benefits for the Denver metropolitan area to their time estimates (salary.com). To reach a cost per shot, we divided the total time spent per visit on immunizations by the average number of shots given per visit.
The only nonlabor costs that we measured were supplies, including syringes, needles, alcohol wipes, cotton balls, and adhesive bandages. We surveyed participating sites to obtain their actual supply costs.
Estimating Fixed Costs
Fixed costs for private practices, including rent, medical equipment, professional liability, and other professional expenses, were based on the American Medical Association's Physician Socioeconomic Statistics, 2000-2002 Edition,21 which collected data from physicians on all fixed and variable costs of practice. We found that fixed costs represented 25.5% of gross revenues for family practitioners and 23.6% for pediatricians. We were unable to find a source of data on fixed costs for public providers.
Measuring Insurance Reimbursement
Private insurance as well as Medicaid and Child Health Plan Plus (Colorado's State Children's Health Insurance Program) reimbursement information was gathered for the vaccinations given during the study period from all private practices. These actual receipts reflected applicable provider discounts. We were unable to collect receipts for vaccinations that occurred at CHCs from Medicaid and the state's Indigent Care Program, which pay for the great majority of immunizations provided by CHCs, because immunizations are not billed as a separate service but are included in a calculated overall per-visit cost that is billed to these programs.
Adjusting for Inflation
To compare cost data collected during different time periods, it is necessary to adjust for inflation. All cost data were adjusted to 2002 dollars using the Consumer Price Index for medical care for the Denver-Boulder-Greeley area.22
Statistical Analysis
When estimates of the average cost of delivering vaccinations are based on a small number of observations, they may not represent the entire range of costs for each type of practice.23 To compensate for the small number of practices in this study, we performed stochastic risk analyses using Crystal Ball 200024 to estimate the range and probabilities of outcomes by randomly varying the cost variables about which there was some uncertainty. These variables included costs of provider time, nursing time, billing time, reminder/recall time, chart pulling time, and time for nonroutine activities. We modeled these costs as lognormal distributions based on the distribution of our data, by substituting in a Microsoft Excel25 spreadsheet the appropriate lognormally distributed random variables for corresponding estimates for the practices, using the Crystal Ball program. To generate the random variables, we used Monte Carlo sampling to simulate values for the probability distributions contained in the spreadsheet. To find the range of possible outcomes and their probabilities, we recalculated the spreadsheet 1000 times. This is, in effect, a very comprehensive sensitivity analysis. Separate simulations were performed for the 3 practice types.
RESULTS
Cost of Delivering Vaccinations
Variable costs of administration per shot (excluding the cost of vaccine) among the 3 practice types varied from $5.41 for public health agencies to $8.15 for pediatric practices (see Table 2). Variable costs for family medicine practices ($5.79) were similar to those for public health agencies. Total costs per shot for all family medicine practices and pediatricians were $7.57 and $10.67, respectively. We do not report total costs for public health agencies because they are functions of county government in Colorado, and we have no estimate of fixed costs.
Mean Variable and Fixed Costs Per Shot of Providing Vaccinations and Reimbursement for Vaccine Administration: Family Practices/CHCs, Pediatric Practices, and Public Health Departments/County Nursing Services in Colorado, Expressed in 2002 Dollars
Simulation Results
Average total cost per shot obtained using the simulation model was $7.62 (standard deviation [SD]: $1.29) for family/CHC practices; the average for pediatric practices was $10.62 (SD: $1.10). For public health agencies, the variable cost per shot found by the simulation model was $5.36 (SD: $1.40). These figures are only slightly different from those that we computed: $0.05 higher for family practices and $0.05 lower for pediatricians and public health agencies.
Factors Accounting for Cost Differences Among Types of Providers
Salaries
Because all of the public health agencies and the family practices were in rural areas and the pediatric practices were in a major metropolitan area, the question of salary differences between urban and rural areas arises. Among the participants in this study, we found that family practitioner salaries were nearly 25% lower than pediatrician salaries. Nursing staff salaries were 30% lower, and midlevel practitioners' salaries were 22% lower in rural study practices. We also found in a national database (salary.com) substantial average salary differences for all family medicine physicians and pediatricians between the 2 areas: rural physicians' average salaries were 24% lower than those of their urban counterparts. Substantial differences in average salaries were also found for nursing staff, ranging from 24% to 26% lower in rural areas than in urban areas. We also found urban/rural differences in vaccination administration reimbursement for the private practices in our study; average reimbursement for the rural practices was 19% lower than that for urban practices.
Time Spent on Immunization-Related Activities
The major contributor other than labor prices to differences in cost structure among the 3 types of practices was physician and other personnel time allocated to immunization delivery (Table 3). The variation in total time spent per shot is fairly small, but the allocation of time among types of providers varied considerably. Pediatricians spent more time on immunization than did family medicine practitioners. At the same time, in the family practices, much more nursing time was spent on immunization than in pediatric practices. The greater amount of physician time spent on vaccinations by pediatric practices accounts for approximately one fifth of the difference in variable cost between rural family practices and pediatric practices.
Time per Shot in Minutes Spent by Practice Staff on Immunization Activities, Family Practices/CHCs, Pediatric Practices, and Health Departments/Nursing Services, Colorado
Reimbursement
Average administration reimbursement was $6.68 for private family medicine practices and $8.27 for pediatricians. Community health centers' costs were similar to those of private family practices (the difference was <1.5%) and are included here to give more stability to our cost data. We were unable to isolate immunization reimbursement because of the way Medicaid and the state's Indigent Care Program fund these centers' services; therefore, the reimbursement figures shown in the table reflect reimbursement for the private family practices only. These practices serve substantial Medicaid and State Children's Health Insurance Program populations. Public health agencies received little outside reimbursement for immunization. Two of the study agencies did not bill at all; the other 2 billed only Medicaid, which pays them $2 per shot. Public health funding from the federal, state, and county levels directly supports these agencies to provide a number of public health services, including immunizations.
Average current reimbursement exceeds average variable costs for both types of private practice but, in the case of pediatricians, by only a few cents. Among our study sites, there were individual practices whose variable costs exceeded their reimbursement. In no case did reimbursement exceed total costs, and, in the case of pediatric practices, average reimbursement was 22% less than average total costs.
DISCUSSION
Cost Differences Among Types of Practice
The difference in costs between pediatricians and family practitioners/CHCs is striking: pediatricians' total costs were 41% higher than were those of family practitioners. A substantial proportion of this difference (>60%) is accounted for by differences in salaries between urban pediatricians and rural family practitioners, but another important difference is that pediatricians spent more time (2.5 times as much) on immunization during well-child visits than did family medicine practitioners. In family practices, nursing staff spent more than twice as much time on vaccinations as did nursing staff in pediatric practices, apparently substituting nurse time for more expensive physician time. It is not possible from this study to determine to what extent these differences are related to differences in the level of vaccine concerns between urban and rural families and therefore a need for more extensive physician counseling or to differences in practice styles between pediatricians and family medicine physicians.
Variable costs for public health agencies were similar to those of family practices. Because these agencies do not employ physicians to give vaccinations and do almost no billing, nearly all immunization-related personnel time is nurse time, making them more similar to family practices/CHCs than to pediatric practices in cost structure.
Adequacy of Reimbursement
Reimbursement for vaccination administration exceeded, on average, variable costs for both types of private practice, but in the case of pediatric practices, the excess was very small. In no case did average reimbursement exceed total costs for these practices. This contrasts with an earlier analysis of the 1997 cost of providing vaccinations, which found that there was a comfortable margin between average reimbursement and average variable costs for rural family practices; reimbursement exceeded variable costs by between $3.25 and $10.34, depending on the vaccine.26 The narrowing gap between average reimbursement and providers' cost is cause for concern about whether private practices will be able to continue providing immunizations if their reimbursement relative to cost continues to decline.
The introduction of more combination vaccine products may also place stress on immunization providers. Although physicians and nurses must continue to counsel families about individual vaccine components, they are likely to receive only a single administration fee.
These trends may induce private physicians to refer greater numbers of children, even those with insurance coverage, to public providers. The goal of increasing the proportion of children who get vaccinations in their medical homes could be jeopardized by inadequate immunization administration reimbursement.
For community health centers, Medicaid bases reimbursement on full costs, but the state's indigent care program reimburses between 20% and 25% of cost. For public health agencies, the reimbursement picture is bleak. They get virtually no immunization reimbursement. The current fiscal condition of most states suggests that neither public reimbursement nor direct state support for immunizations provided by public agencies will increase in the near future without increased federal support.
Limitations
This analysis relied on self-report for all data on time spent on immunization activities. We believe that the use of detailed forms to collect both frequency and length of time for immunization activities minimized error in the data collected, but we cannot, without independent observation, be certain that this was so. Our findings compare favorably with those of a study of time spent on vaccinations that used direct observation of well-child visits.27 The authors measured time per visit spent by primary care providers in immunization activities occurring during well-child visits. The only such activity observed for this group was vaccination discussion; an average of 1.9 minutes was spent on this. In our study, primary care providers in pediatric practices spent 1.88 minutes per visit and those in family practices spent 1.91 minutes per visit on this activity. Our study, however, measured vaccination activities that occurred before and after the visit, including immunization record review, updating the immunization log in the patient's chart, and completing superbills. As a result, our calculations of total time spent on vaccination-related activities were, on average, higher than those in the observational study, but the close correspondence between our per-visit time for vaccine discussion and that of an observational study should reassure the reader about the use of self-report.
A principal study limitation is the small number of practices studied. To compensate for this, we performed a sensitivity analysis that included 1000 recalculations of our cost and time data using random variables generated by Monte Carlo sampling. The similarity between the simulation results and the cost and time figures that we calculated should reassure the reader about the representativeness of the data collected.
We measured the average cost per shot for this analysis. On average, both family practices/CHCs and pediatricians provided 2.5 shots per visit. It may be that costs would not increase directly if more shots were given, assuming some economies of scale, but because the data that we present are averages and include visits in which only 1 shot was given and visits in which 3 or 4 were given, it takes into account the economies of scale that could have been realized in visits in which multiple shots were given.
CONCLUSION
The cost and reimbursement information included here should be useful to policy makers who are considering how providers should bill and be reimbursed for immunization, in particular how vaccine counseling and the administration of multiple shots and combination vaccines should be treated. The coincidence of a decline in the ratio of reimbursement to cost for private providers and the fiscal crisis faced by most states, which could affect public providers as well as private providers who give vaccinations to Medicaid and State Children's Health Insurance Program enrollees, suggests that the currently high childhood immunization rates may be in jeopardy.
Acknowledgments
This research was supported by the Centers for Disease Control and Prevention (Grant Award No. U66/CCU812972).
We thank the private and public medical practices that participated in this study for the substantial amount of time that they devoted to completing this study and ensuring its accuracy.
Footnotes
- Received August 5, 2003.
- Accepted October 15, 2003.
Reprints will not be available from authors.
REFERENCES
- Copyright © 2004 by the American Academy of Pediatrics
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