to purchase the vaccine at a retail cost of nearly $60 per dose without provisions for reimbursement or additional capitation payments under their existing health plan contracts. This financial liability sometimes leads providers to refer children to the health department to obtain immunizations that their health plan is supposed to cover.

Both increasing vaccine costs and inadequate reimbursement from public and private insurers are contributing factors. Dr. Kieu noted that the cost per child of the vaccines in the recommended pediatric immunization schedule has risen from $36 in 1982 to $628 in 2001. The current shortage of some vaccines is also helping to increase prices. She also reported that for fall 2001, she had to purchase influenza vaccine at $12.50 per dose because a distributor that had offered the vaccine at a lower price had no vaccine available. The AAP has estimated that the cost of administering each vaccine dose is about $15.

Although vaccine can be obtained through VFC for children enrolled in Medicaid, providers must bear the cost of purchasing vaccine for other children and then seek reimbursement. Under the Healthy Families Program, for which VFC vaccine cannot be used, providers are reimbursed at Medicaid rates for the cost of the vaccine, but receive no payment for vaccine administration costs. For children with private insurance, providers must purchase vaccine at retail rates. Reimbursements may not cover the full cost of vaccine, and some private insurance plans may have limited or no coverage for immunizations. Furthermore, business failures among managed care plans and provider organizations can leave the individual provider with unrecoverable claims for vaccine that already has been administered.

Costs related to immunization services are adding to a general increase in the financial burden for providers (see Box 1). Since 1990, the average capitation payment by managed care plans to cover the cost of all pediatric care has declined by 35 percent in California. Dr. Kieu noted that such payments are less than those in many other states. With the current costs and capitation payments, physicians face a loss of about $270 per year for each child to whom they provide care.

Dr. Kieu also suggested that the growing prominence of concerns about vaccine safety—reflected in a scheduled California State Senate hearing on the subject—contributes to the financial challenges for providers. The additional time needed to address parents’ concerns is not reflected in reimbursement rates for immunization services.

Administrative Burdens

Offering immunization services includes a substantial administrative overhead for physicians and their office staff. To support the clinical task

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