Posted tagged ‘who pays for vaccines’

Vaccines, Part II

February 11, 2011

This week a skeptical parent wanted the low down on whether doctors (we pediatricians) made money on “pushing vaccines.”  The short answer would be ‘no.’  He was thinking in terms of kickbacks, which are illegal.  He thought that doctors got some money, in the form of a check, directly from pharmaceutical companies fo giving vaccines.   Trust me, the lawyers and the gov’ment are all over our case, breathing down our necks; that never happens.  Here is how it really works…

First, lets talk about govment interference, i.e., mandates.  Federal law requires that all children in the US get vaccines regardless of economic or legal status.  The reccommended vaccines are determined by an “Advisory Committee” made up of pediatricians and vaccine researchers (who researches vaccines? people who are paid to research).  Is there true independence?   What is the governments’ financial interest?  No, pharmaceutical companies do not cut checks out to government entities (not that I know of, it’s just not how it works); they do cut checks to spokespeople, people who represent them.  It is the other way around…the federal government is the largest purchaser with deep pockets (and its own press to print paper money) that pharmaceuticals try to sell to the government at a premium when it is “proven” safe and efficacious.  The federal governements interest is not to protect you the individual;  The government looks out for the large populations of immigrants that are at risk, poor to no prenatal care, living in crowded conditions that can potential spread an outbreak.

Lets  talk about the compensation source, who pays whom for what when your child gets one vaccine.  Say you have a PPO insurance.  You take your child in and get 1 vaccine.  You pay a $20 copay.  Maybe you don’t pay anything at all, upfront.  But, where did that vaccine come from?  Poof, out of thin air?  No.  The pediatrician (me) has to stock it in my refrigerator.  Where did I get it?  I had to purchase from a vaccine manufacturer at any price which they choose to set.  Then they don’t send it one at a time.  I have to buy it in bulk, between $200 to $600 for a box of 10 of one type of vaccine.  Look at the vaccine schedule, I have to stock one of every possible vaccine at the appropriate recommended vaccination period.  Before I even see your kid, I have to outlay, out of my own pocket, to stock the refrigerator a couple thousand.  So, your $20 copay, does that really help me offset my upfront costs?  I did not give the vaccine yet, so I can not even get you or the insurance company to prepay.  When your child gets the vaccine and you leave, then we can bill the insurance company.  If the office is pretty streamlined with electronic billing and the biller posts that charges that day (which usually never happens), theoretically we might get a payment in 2 wks.  In the real world, even with inhouse billing, it usually doesn’t go out for a week or two.  Also, based on contracts and payment, legally, the payer is allowed 90 days to pay.  In any sector of society, where does a professional providing a service have to wait to get reimbursed for costs related to providing that service?  Now, that is the supposed to be the good insurance. 

Suppose you have an HMO.  Same scenario, kind of.  With volume buying power within the network/HMO, sometimes the pharmaceuticals will cut a deal for volume purchases and they are not allowed to gouge us doctors (should we be thankful?).  As in any business (construction, interior design, landscaping), when we buy a wholesale item legally (and even ethically) we cannot and should not mark it up exorbitantly.  Most decent reputable people do not do mark ups of more than 10% and insurances don’t reimburse for more than that.  In fact a trend is for them to pay even less than the cost price.  [ Aside: do you know why chain pharmacies are popping up around every corner; they are flush with cash to buy real estate because…you guessed it…their markups are astronomical; think Walmart…if they can make a profit, selling people without insurance generics for $4, that means that their cost for that generic is…probably…under $2-3.  Not huge profit per unit, but in terms of volume, fairly decent.  Think of credit card companies right now.  They borrow money from the government pretty much for free, in this horrible economic environment.  They turn it around and your interest rate has now skyrocketed to 20-25%; that is called loansharking, but it is perfectly legal].

Let’s now talk about the poor who have no insurance.  They can go to a community health center and get all the vaccines without paying a copay, no questions asked.   I don’t begrudge this for the poor at all.  I just think that it is so sad, is the government really looking out for them?  With insidious marketing campaigns for formula, the uninformed think that formula is great, and it is free, from WIC.  And the women who work for the state government programs, they can’t educate other women about the benefits of breastfeeding?  The assumption is that the at risk population does not breastfeed.  Community health centers get their shipments of vaccines for free.  They are charged with vaccinating and protecting the public.  So if you want free vaccines, take your kid in, but you will be subjected to the vaccination rules/schedule.   If you go to a private office that accepts Medi-Cal, then that pediatrician did not have to buy those vaccines out of pocket.  Unfortunately, again, once you accept government monies, you have to follow govmt rules.  Any office that offers free vaccines, free physicals (for the poor) must abide by that vaccine schedule; they are regularly audited.  To make things much simpler, any office that takes a mix of payors, PPOs, HMOs and Medi-Cal all mingled together are more likely to uniformly apply the vaccination schedule rigorously.  There is no time to figure out those at risk to need vaccination and quite frankly, most offices are too busy to care to cater to anyone.

I hope this sheds some light for those of you who are skeptical of the motivations for pediatricians who “push” vaccines.  In my office, my feeling is that I lose when I give a vaccine and I also lose when I don’t.  Its a wash.  What happens in those other offices?  Wait for upcoming posts…