The provision of vaccines is a key component of the healthcare industry’s acceleration into value-based care.

Vaccines not only protect children against potentially deadly childhood diseases but they also protect the general population from disease resurgence. In 2000, the Centers for Disease Control and Prevention (CDC) detected a resurgence of measles in the United States. The cause was traced to unvaccinated tourists who unknowingly brought the disease with them and infected unvaccinated children. Although herd immunity helps protect vulnerable children unable to receive vaccines due to underlying medical conditions, other children in the community must receive their vaccinations for herd immunity to be effective.

Vaccines are presently purchased and administered on a fee-for-service model, meaning pediatricians are paid based on the number of vaccines administered. This system makes vaccine inventory management and administration very expensive for private pediatric practices. On average, pediatricians in private practices break even or make a small amount of profit from administering vaccines. Pediatricians who are enrolled in the federal Vaccines for Children program generally lose money because the program does not pay them extra for overhead costs.

Unlike fee-for-service reimbursement, the goal of value-based care is to improve patient outcomes and reduce healthcare expenditures by prioritizing preventive care and incentivizing physicians to avoid costly and unnecessary testing, ancillary services, and emergency department visits to treat patients. Pediatricians are paid based on concrete health outcomes rather than by services alone. Vaccines account for up to thirty percent or more of a pediatrician’s practice expenses. What are some of the new and innovative ways pediatricians will be able to maximize their vaccine reimbursement while minimizing expenses?

Vaccines Undergo Value-Based Revolution

• Tying vaccines to quality measurements. A study of the vaccination rate among adults in the United States revealed that despite national programs like the National Vaccine Plan and the National Adult Immunization Plan, “adult immunization rates continue to fall short of national targets.” The study suggested several reasons for this, including uneven coverage of vaccines across both commercial and Medicare medical and pharmacy benefit plans or benefits and the lack of an adult vaccines entitlement program.The study authors believe that “significant opportunities exist within Medicare programs to incentivize vaccine administration uptake among older adults,” including the use of quality measurements to drive adult patient inoculation. The Medicare Advantage Star Ratings system included the influenza vaccine as part of their quality measures for physician reimbursement, while the Merit-Based Incentive Payment System (MIPS) included both influenza and pneumococcal vaccines as part of their quality measures. In 2019, vaccines were reported among participating clinicians’ top ten quality ratings in both programs. While this study focused on an adult population, it is a valuable example of how quality measurements can help address care gaps and incentivize inoculation.
• Inventory Management Systems. Maintaining vaccines, like other medical inventory, involves overhead costs associated with ordering the products and proper storage. Additional costs include insurance against the loss or spoliation of the product, insurance against uncontrollable circumstances and compliance with state and federal law. Implementing a reliable inventory management system can significantly reduce a pediatrician’s costs for administering vaccines.
• Group Purchasing Discounts. Purchasing vaccines is expensive, but buying them in bulk can save pediatricians anywhere from five to twenty-five percent depending on patient volumes. Normally, pediatricians have the option of buying directly from the vaccine manufacturer or participating in physician buying groups. However, vaccine prices vary greatly depending on the market. Physician buying groups are also a strong option, but they are limited to purchasing from one manufacturer because of competition.Group purchasing allows pediatricians to join an organization that negotiates lower prices with vaccine manufacturers on their behalf. Pediatricians can realize savings and administrative efficiencies by aggregating purchasing volume and using that leverage to negotiate discounts with manufacturers, distributors, and other vendors. Organizations such as accountable care organizations (ACOs) can also negotiate directly with payers to negotiate better rates for their members.
• Value-Based Reimbursements for Following Immunization Plans. Pediatricians can earn value-based reimbursements for following immunization plans and exceeding their benchmark. For example, if a pediatrician’s vaccination benchmark is 80 percent, the pediatrician will receive payments if they achieve a vaccination rate higher than 80 percent.

Getting Started With Vaccine Innovation in Your Practice

Efforts to bring value-based care to pediatrics are currently underway, but pediatricians can start  in their own practices by taking several preliminary steps:

Start with the right partner. Switching to value-based care principles is disruptive, but finding the right partner can help. Partnering with an ACO can give pediatricians access to the tools, resources, and talent that pediatricians need to position their practices for success in value-based care. Some ACOs have pediatrician-led and focused workgroups to improve payer-rates; increase efficiency around vaccine management and offer tools for analyzing vaccine costs, rebates, and other key metrics to help pediatricians grow their practices.

Do Some EHR Research. Like many specialists, pediatricians may require a specialized electronic health record (EHR). Pediatricians must have the right technology to enable them to anticipate which vaccines their practices will need. They can also benefit from coding guidance and administrative tools to track their inventory. Pediatric-specific EHRs can communicate directly with state vaccine registries so pediatricians have real-time updates regarding changes in state vaccination requirements.

As reimbursement for vaccines transfers from fee-for-service to value-based care, pediatricians are in a unique position to improve health care outcomes while reducing costs for their practices and maximizing their reimbursements.