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Building the immunization Infrasiruelure he next session of the workshop featured speakers representing per- spectives from state and local health departments in different areas of the United States. These speakers highlighted concerns about ex- isting problems in the immunization infrastructure and the impact of the Institute of Medicine (IOM) report on future finance strategies to support the immunization system. The speakers included Donald Williamson, director of the Alabama Department of Public Health; Natalie Smith, di- rector of the Immunization Program for the state of California; Dianne White Delisi, state legislator from the Texas State House of Representa- tives; and Jonathan Fielding, director of the Los Angeles County Health Department. STATE PERSPECTIVES Dr. Williamson observed that "the IOM report could not have come at a worst time" in terms of the impact of recent downturns of the national economy on state health budgets. According to a recent report of the National Association of State Budget Officers, more than 50 percent of states are experiencing severe financial problems in the form of Medicaid increases and revenue shortfalls. This difficult fiscal environment dis- courages additional state investments in immunization programs and re- sults in cuts in many important areas, including registries and outreach programs, reminder/recall efforts, and immunization linkages with Women, Infants, and Children (WIC) nutritional programs. In addition, 15

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6 SETTING THE COURSE the suggestion in the IOM report that the Centers for Disease Control and Prevention (CDC) develop a federal formula grant for support of an infra- structure program may serve as a disincentive that causes states to reduce their support because of a perception that a formula would require a "lock-in" by states at their current funding levels. On a more positive note, Dr. Williamson observed that the IOM re- port successfully drew national attention to the problems of immuniza- tion infrastructure, and legislative champions emerged to support the recommendations in budget negotiations. The IOM recommendations were consistent with a 1999 report by the National Vaccine Advisory Committee, which called for a $200 million annual budget for the state infrastructure program. At the state level, the IOM report provided a vehicle for conversations about the complexity of immunization infra- structure and provided an important rationale to support state advocacy efforts for increases in public health budgets. The IOM report also stimu- lated more attention to the absence of resources to support efforts to achieve higher levels of immunization among adults. Dr. Williamson in- dicated that the Association of State and Territorial Health Officials had received some anecdotal reports about a few states increasing their vac- cine purchase budgets, but such efforts tend to occur among states that already have sizable investments in immunization. He commended CDC on the improvements in the draft guidance efforts for Section 317 awards. Despite these gains, Dr. Williamson observed that several outstand- ing issues still require attention. The creation of the new State Children's Health Insurance Plan (SCHIP) program, for example, has shifted the vaccine delivery systems for certain populations from a federal entitle- ment to a health benefit that is supported in part by state budgets and is subject to change based on SCHIP eligibility requirements. A number of private health plans also do not offer full coverage for all recommended vaccines, creating further fragmentation in the immunization system. The introduction of higher priced vaccines, such as the new infant pneumo- coccal conjugate vaccine, is creating a two-tiered vaccine delivery system in some states. Certain populations are eligible for state-purchased vac- cines if they meet key criteria, while others who have minimal health care insurance (such as indemnity plans) must pay for vaccine if it is not cov- ered in their health benefits. One particularly grave concern within the states is the impact of recent vaccine shortages on school entry require- ments. The modification of the immunization schedule in some jurisdic- tions will result in students moving through the health care system with- out the recommended vaccines. This situation can prolong their period of exposure to vaccine-preventable disease. These shortages are occurring during periods of public health cutbacks, further reducing chances for capturing vulnerable populations in a systematic manner.

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BUILDING THE IMMUNIZATION INFRASTRUCTURE 17 Natalie Smith, director of the Immunization Branch of the California Department of Health Services, presented highlights from recent immu- nization data analyses. Data from the National Immunization Survey in- dicate that California has maintained a 5-year (1996-2000) average level of 75 percent immunization coverage in the 4:3:1:3 schedule for 2 year olds. In addition, a rapid uptake of the varicella vaccine has occurred in California, rising from 26 percent coverage in 1996-1997 to 76 percent in 2000. Hepatitis B immunization levels among seventh-grade students have also increased during this same period, from 15.8 percent in 1998 to 73.4 percent in 2001. Significant gains also have occurred in the annual flu and "ever" pneumococcal rates among adults, from 54 percent and 35 percent coverage in 1993 for influenza and pneumococcal, respectively, to 70 percent and 61 percent, respectively, in 2000. Despite these positive trends, several worrisome trends persist. A recent state health budget cut has eliminated support for the infant pneu- mococcal conjugate program. The costs of flu vaccine contracts in Califor- nia have increased significantly, rising from $1.625 per dose in 1999 to $4.488 per dose in 2001. The new SCHIP program in California is a stand- alone entity. Because the children are not enrolled in Medicaid, they are no longer eligible for the federal entitlement provided through Vaccines for Children (VFC), and the state has not budgeted funds to purchase vaccines for the providers. The increasing scope and complexity of the childhood immunization schedule is particularly troubling. Dr. Smith illustrated how the concep- tual framework of the IOM report could be adapted to the array of pro- grams that constitute the immunization system in California. In some cases, the public health department will supplement federal vaccine pro- grams with purchases from state revenues (this was done in purchasing hepatitis A and pneumococcal conjugate vaccine). In other situations, the state health department will offer immunizations directly to high-risk populations, as was done with the distribution of flu vaccines to high-risk persons. Dr. Smith illustrated the relationship between public health budgets and communicable disease levels with a graph that compared trends in federal grant funds for immunization in California with the incidence of measles cases (Figure 3~. Although infectious disease outbreaks remain low, the recent decline in the size of federal awards (from a high of $36.5 million in 1996 to $18.3 million in 2001) is troubling. She suggested sev- eral financial strategies that could help break the disturbing cycle of out- breaks associated with lowered immunization budgets, including stable and multi-year funding, targeting some awards to pockets of need, the extension of VFC coverage to the SCHIP population, a stable vaccine supply, and an emphasis on immunization across the lifespan.

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18 o ._ Ct - Q o o o o - o O 15 0,) 10 ._ ~ - SETTING THE COURSE FIGURE 3 Measles incidence per 100,000 population compared to available fed- eral grant funds (S in millions), California, 1988-2000. SOURCE: Natalie Smith, California Department of Health Services, TOM work- shop, 2002. Dianne White Delisi, a state legislator from Texas, provided an addi- tional perspective in addressing the problems of immunization finance and public support for infrastructure. She observed that political dynam- ics such as the effects of census figures on redistricting efforts have cre- ated a sense of flux in many state legislatures throughout the country. Many new political leaders have emerged who are unfamiliar with public health concerns and the intricacies of the federal-state financial partner- ship. The impact of increasing Medicaid expenses resulting from both increased costs as well as wider enrollment cannot be ignored because these higher expenses are a key factor in state funding increases for health. Keeping the rising costs of health care under control also has been cited among the top public concerns in recent national polls. But the growing costs of public health insurance programs create pressures to reduce spending in other areas of health, such as immunization. The recent cases of anthrax exposure in Washington, DC and elsewhere have called na- tional attention to the deterioration and gaps in public health infrastruc- ture in responding to infectious disease outbreaks. But the public is also concerned about the growing complexity and cost of the immunization schedule. It is difficult to address the tremendous variation in health plan benefits for vaccines without considering insurance regulation such as "first dollar coverage" policies that have been adopted in some states.

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BUILDING THE IMMUNIZATION INFRASTRUCTURE LOCAL PERSPECTIVES 19 Jonathan Fielding, director of public health for Los Angeles County, described recent immunization trends in his county that warrant atten- tion. Federal funds currently support about 70 percent of the county's budget for immunization services. The remainder is financed through state revenues (20 percent) and local funds (10 percent). California in general and Los Angeles County in particular are facing bleak financial prospects. As a result, overall cuts in public health programs, including immunization programs, are expected. Although the county has achieved high rates of immunization cover- age, occasional outbreaks of vaccine-preventable disease are a persistent problem. Recent cases of pertussis have been reported, for example. The public must become reacquainted with the importance of immunization, and ways must be developed to provide continuing, reliable support for both vaccine supplies and program activities. Outreach to immigrant and transient populations is especially important. Dr. Fielding indicated that the rising costs of the newer vaccines are troubling, and these increases raise many questions about the extent to which vaccines are a public or private good. The goal of universal access to immunization has solid public support, but the increased splintering in the ways in which immunization services are financed requires attention. Although states have important roles in this area, they should not be expected to carry the burden of costs beyond a specified amount. The federal government is viewed as the primary supplier of vaccines for the safety net population. Certain components of the immunization infrastructure also require federal attention and support. The development of immunization regis- tries, for example, requires financial assistance if local health departments are to improve their monitoring and surveillance of key health indicators. Yet it is difficult for counties to bear these infrastructure costs when they are also expected to cover safety net services for indigent populations. For example, a managed care plan in Los Angeles recently announced that it would not reimburse costs for hepatitis A vaccines for adolescents; the local health department is expected now to provide that vaccine for the plan's subscribers. Finally, Dr. Fielding pointed out that the economics of vaccine fi- nance require closer attention to how current vaccine prices affect invest- ments in the production of future vaccines. Concerns about recent vaccine shortages have called attention to the problems that some companies ex- perience in sustaining the production of low-cost vaccines when invest- ments in such products must compete with higher rates of return for more profitable pharmaceutical products.

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20 SETTING THE COURSE NATIONAL SURVEY OF STATE-LEVEL IMMUNIZATION POLICIES, PROGRAMS, AND PRACTICES In collecting background materials for Calling the Shots, the IOM Com- mittee on Immunization Finance Policies and Practices commissioned a national survey of the ways in which states financed immunization poli- cies, programs, and practices in the 1990s. Gary Freed, Sarah Clark, and Anne Cowan in the Division of General Pediatrics at the University of Michigan conducted the survey through a series of structured telephone interviews with state immunization officials. The results of the survey, published in the American Journal of Preventive Medicine in October 2000 (Freed et al., 2000), are summarized here to provide additional perspec- tive on state-level experiences in providing financial support for infra- structure activities. The survey data provide a deeper understanding of the rationale behind key decisions at the state level, the major influences on state immunization program goals and priorities, the effects of federal policies and fluctuations in federal funding on state programs, and other factors affecting state immunization efforts in the 1990s. The survey re- sults focus on three key areas: vaccine purchase, immunization program infrastructure, and other programs and regulations. (1) Vaccine Purchase. States use different funding sources to support their vaccine purchases according to the nature of their immunization delivery system (see Table 2~. Prior to the creation of the VFC program in October 1994, most states had one of three systems of immunization de- livery: public clinics only, Medicaid replacement, or universal purchase (UP). These efforts could be grouped according to the populations served. States that had public-clinics-only policies delivered vaccines that were purchased with federal or state funds only to populations (primarily chil- dren) who presented for immunizations in local clinics. States that partici- pated in Medicaid replacement efforts were able to supply private pro- viders, in addition to their public clinics, with replacement vaccines for Medicaid-enrolled children. Contributions from state Medicaid agencies varied considerably, ranging from no contribution to full funding for all vaccines delivered to Medicaid enrollees. In the universal purchase states, vaccines were supplied to public clinics and participating private provid- ers for all children in the state. In the UP states, state revenues provided a significantly larger proportion of financing for state-supplied vaccines. Following the implementation of the VFC program, states realigned their policies and practices. The federal government is now responsible for supplying vaccines for children in certain populations: the uninsured, Medicaid eligible, Alaska Native and Native American, and underinsured children who received vaccines at designated public clinics (federally qualified health centers). As a result, states expanded their efforts into programs that can now be grouped within the following categories: VFC

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BUILDING THE IMMUNIZATION INFRASTRUCTURE TABLE 2 Vaccine Supply Policy, January 2000 21 VFC Onlya Enhanced VFCb Universal Purchaser Alabama Arizona Alaska Arkansas District of Columbia Connecticut California Florida Idaho Colorado Georgia Maine Delaware Hawaii Massachusetts Indiana Illinois Nevada Iowa Maryland New Hampshire Kansas Michigan New Mexico Kentucky Minnesota North Carolina Louisiana Mississippi North Dakota Missouri Montana Rhode Island New Jerseyd Nebraska South Dakota Ohio New York Vermont Oregon Oklahoma Washington Pennsylvania South Carolina Wyoming Tennessee Texas Virginia Utah West Virginia Wisconsin Total 19 17 15 aThese states provide publicly purchased vaccine to private health care providers only for VFC eligibles. bThese states provide publicly purchased vaccine to all health care providers for both the VFC and underinsured populations. "Underinsured" is defined as those who have health insurance that does not include immunizations as a covered benefit. CA universal state offers all vaccines recommended by the Advisory Committee on Im- munization Practices to all health care providers to serve all patients, including those who are fully insured. dThe VFC program was implemented in the private sector on January 1, 1999. SOURCE: Institute of Medicine (2000a). Only, enhanced VFC, and UP. Once again, each system represents differ- ent approaches and different levels of investment that frequently reflect variations in the historical public health traditions and resources of each state. Under VFC-only programs, states rely solely on federal vaccine purchase funds to supply vaccines to eligible children in public and pri- vate health settings. These states seek to supply vaccines to all children in public health clinics (including those not eligible for VFC), and use their Section 317 funds to provide vaccines for children who do not meet VFC eligibility criteria. States that fall within the enhanced VFC category make a greater effort to provide state-supplied vaccines for underinsured chil-

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22 SETTING THE COURSE dren who receive vaccines from private providers. The states that have adopted universal purchase practices supply vaccines to public clinics and participating private providers for all children in the state, as was done prior to the creation of VFC. Within this category, children's eligibil- ity for state-supplied vaccine does not differ by their insurance status. (2) Immunization Program Infrastructure. In response to the measles epidemics of 1989 and 1990, the federal government appropriated funds to help states develop Immunization Action Plans to improve their im- munization rates, especially for children. The 1993 Children's Immuniza- tion Initiative subsequently increased funding to support infrastructure investments and allowed states to expand their immunization programs. The rapid increase in these funding patterns presented several challenges, however. States had little time to plan multi-year activities and often received funding late in the fiscal year that needed to be spent before the end of the year. Federal funds were also distributed through multiple allocations that made it difficult to assess needs and determine the most effective use of funds. The states did not have the capacity to make long- term commitments, and in some cases could not hire full-time or perma- nent staff because of individual state budgetary or personnel restrictions. By the mid-199Os, a large amount of "carryover" funds for infrastructure programs remained in the Section 317 budget, causing Congress to re- duce the infrastructure budget and decrease the scale of state grants. As a result, states had diminished resources to implement or complete ex- panded activities that were initiated a few years earlier. The vast majority of state infrastructure activities for immunization are financed through Section 317 funds. Although VFC represents a broader entitlement program focused on vaccine purchase, only a small proportion of the VFC funds can be spent on personnel or activities, and these must be directly related to the administration of VFC vaccine. A few states have used VFC funds to support some infrastructure efforts fo- cused on the eligible populations, but these practices are infrequent and generally require close collaboration between health finance and public health officers at the state level. While about half the states (25 states) receive some direct state funding for infrastructure support, only 4 states are able to finance more than 40 percent of their infrastructure budget with state revenues. These state-generated funds are typically directed toward the support of registry development or immunization program staff. Four states have redirected state funds used for vaccine purchase to infrastructure support. The remaining states (21) receive no direct state funding for program infrastructure. (3) Other Programs and Regulations. The University of Michigan survey identified a broad range of activities within the states that have significant impacts on the financing or functioning of immunization programs. These

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BUILDING THE IMMUNIZATION INFRASTRUCTURE 23 other activities include the following: Medicaid program policies and practices, SCHIP policy and practice, health insurance regulation, WIC program policies and practices, and school and daycare requirements. These other areas can directly affect the size of the population served by VFC, Section 317 vaccines, and state-supported efforts. In conclusion, Dr. Freed observed that the 1990s expansion of immu- nization efforts and infrastructure programs within the states depended greatly on the availability of increased federal funding. Little state fund- ing was appropriated specifically for immunization delivery infrastruc- ture during this time, and state legislatures frequently rejected specific requests for assistance by state immunization programs. As a result, de- creases in federal immunization budgets (most notably the Section 317 grants) jeopardized the ability of state immunization programs to con- tinue activities that supported increases in their immunization rates among disadvantaged populations. The University of Michigan survey reported that during this same period of federal cuts, states were expected to continue to follow an exten- sive blueprint of mandated programs developed by CDC. State immuni- zation programs expressed frustration about their inability to make choices among competing priorities during periods of fiscal restraint. A1- though CDC was consistently viewed as a valuable source of information, guidance, and technical expertise, the program administration of the state grants became an increasing source of concern. State survey respondents indicated that national leadership must include flexibility for the unique and specific situations that occur across the states and allow greater dis- cretion in establishing immunization priorities at the state level. CASE STUDY FINDINGS In addition to the 50-state survey, the IOM Committee on Immuniza- tion Finance Policies and Practices commissioned a set of eight case stud- ies of state and local immunization programs to examine how states in- corporate federal funds (particularly Section 317 grants) into their local immunization programs. Individual case study reports are available as PDFs online (http://books.nap.edu/html/case_studies) and were subse- quently published in a synthesis article in the American Journal of Preven- tive Medicine (Fairbrother et al., 2000~. The case studies examined policies and practices in seven states: Alabama, Maine, Michigan, New lersey, North Carolina, Texas, and Washington, and one two-county study of Los Angeles and San Diego in California. The case studies relied on mate- rials provided through state and federal administrative records; inter- views with state and local health department officials, including immuni- zation program directors, Medicaid agency and budget analysts, and CDC

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24 SETTING THE COURSE public health advisers to the jurisdictions; and secondary sources for back- ground factors and state-level trends. The synthesis article was distrib- uted to participants in the March 2003 workshop. A critical finding of the case study reports is the transformation that occurred within state and local immunization programs during the l990s. Fairbrother and colleagues (2000) observe that the shifting role of the public health clinics was one of the few generalizations that could be drawn from their study of nine different jurisdictions. This transforma- tion in the immunization system includes several key components: Public-sector clinics are now delivering a decreasing share of im- . . mun~zahons. "Medical homes" have become more important as the site of deliv- ery than free-standing immunization services. The success of immunization efforts depends on forces that are beyond the capacity of state immunization programs. These external forces include the ability of managed care, particularly Medicaid man- aged care, to ensure timely immunizations. As a result of these shifting roles, the nature of the immunization infrastructure supported by Section 317 funds has been transformed from one that focuses primarily on service delivery to a broader and more complex set of functions that involves partnerships among public health, health financing, and other entities in both the public and private sectors. New activities associated with infrastructure investments include invest- ments in immunization registries, quality improvement, coordination with program staff outside public health agencies, and assurance of age- appropriate immunization throughout the lifespan. The declining levels of Section 317 budget awards to the states have forced many health de- partments to make difficult choices between the continuation of older, mainstream immunization services and newer coordinating and program outreach efforts at the state and local levels. The case study authors conclude that immunization programs func- tion as an organic component of local health care financing and delivery systems. Although the Section 317 grants traditionally played a vital role in supporting immunization infrastructure, recent awards are too un- stable and unpredictable to elicit the strategic planning, programming, and own-source spending that would be optimal for state and local pro- grams. Additional support is required for appropriate staffing, inter- agency collaboration, and the development of clearly articulated author- ity to guide immunization activities.