1. The design and implementation of an effective disease surveillance and immunization system, including assessment, education, performance monitoring, and information services that benefit and protect the population as a whole.

The federal government pursues these objectives through several initiatives. In the first area of vaccine purchase and delivery, the federal government plays major roles in the financing of vaccines, the negotiation of vaccine purchase prices on behalf of the states, and the delivery of vaccines to service providers who administer the vaccines to disadvantaged children. The principal federal programs in this area are the Vaccines for Children (VFC) program (created by the Omnibus Budget Reconciliation Act as Section 1928 of the Social Security Act in 1993) and the vaccine purchase system authorized under Section 317 of the Public Health Services Act. The federal government also helps finance the delivery of immunization services though Medicaid (which provides coverage for vaccines for adults as well as for recommended vaccines that are not yet covered through a VFC contract) and most recently, the new State Children's Health Insurance Program (CHIP). Finally, federal grants programs that support primary health care and preventive health services in uninsured and disadvantaged communities are another component of a national immunization strategy.

The second area involves a more diverse, less well understood, but important series of federal, state, and local public health efforts, to which the Section 317 program alone contributes programmatic guidance and financial assistance. Federal initiatives in this area (such as the National Immunization Survey; the incentive awards for communities that demonstrate significant improvements in immunization rates; linkages with the Women, Infants, and Children (WIC) program; and support for the development of immunization registries) are designed to supplement and strengthen state efforts in developing disease surveillance, immunization oversight, and performance monitoring activities. Both federal and state programs have increasingly focused on the importance of education, outreach, assessment, and information exchange to improve immunization coverage rates in the entire population.

THE CARRYOVER ISSUE IN SECTION 317 EXPENDITURES

Congressional appropriations for the Section 317 program experienced significant increases and decreases in the period 1991–1999 (see Figures 1 and 2; Tables 1 and 2) during a time when public health agency grantees also had to adapt to changing roles and to assume new responsibilities for performance monitoring in the community (IOM, 1997). The sudden and unplanned growth in federal investment in state immunization programs in the early part of this period (1992–1995) occurred at a time when many states had restraints on their hiring and procurement practices, making it difficult for them to launch broad programmatic initiatives. During some years, federal funds were awarded late in the state budgetary years (CDC, 1999c). As a result of these administrative delays, large amounts of Section 317 federal funds were not obligated within the 12-month grant award cycles in 1994–1996.6 These shifts in the availability of resources have caused both



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Preliminary Considerations Regarding Federal Investments in Vaccine Purchase and Immunization Services: Interim Report on Immunization Finance Policies and Practices The design and implementation of an effective disease surveillance and immunization system, including assessment, education, performance monitoring, and information services that benefit and protect the population as a whole. The federal government pursues these objectives through several initiatives. In the first area of vaccine purchase and delivery, the federal government plays major roles in the financing of vaccines, the negotiation of vaccine purchase prices on behalf of the states, and the delivery of vaccines to service providers who administer the vaccines to disadvantaged children. The principal federal programs in this area are the Vaccines for Children (VFC) program (created by the Omnibus Budget Reconciliation Act as Section 1928 of the Social Security Act in 1993) and the vaccine purchase system authorized under Section 317 of the Public Health Services Act. The federal government also helps finance the delivery of immunization services though Medicaid (which provides coverage for vaccines for adults as well as for recommended vaccines that are not yet covered through a VFC contract) and most recently, the new State Children's Health Insurance Program (CHIP). Finally, federal grants programs that support primary health care and preventive health services in uninsured and disadvantaged communities are another component of a national immunization strategy. The second area involves a more diverse, less well understood, but important series of federal, state, and local public health efforts, to which the Section 317 program alone contributes programmatic guidance and financial assistance. Federal initiatives in this area (such as the National Immunization Survey; the incentive awards for communities that demonstrate significant improvements in immunization rates; linkages with the Women, Infants, and Children (WIC) program; and support for the development of immunization registries) are designed to supplement and strengthen state efforts in developing disease surveillance, immunization oversight, and performance monitoring activities. Both federal and state programs have increasingly focused on the importance of education, outreach, assessment, and information exchange to improve immunization coverage rates in the entire population. THE CARRYOVER ISSUE IN SECTION 317 EXPENDITURES Congressional appropriations for the Section 317 program experienced significant increases and decreases in the period 1991–1999 (see Figures 1 and 2; Tables 1 and 2) during a time when public health agency grantees also had to adapt to changing roles and to assume new responsibilities for performance monitoring in the community (IOM, 1997). The sudden and unplanned growth in federal investment in state immunization programs in the early part of this period (1992–1995) occurred at a time when many states had restraints on their hiring and procurement practices, making it difficult for them to launch broad programmatic initiatives. During some years, federal funds were awarded late in the state budgetary years (CDC, 1999c). As a result of these administrative delays, large amounts of Section 317 federal funds were not obligated within the 12-month grant award cycles in 1994–1996.6 These shifts in the availability of resources have caused both

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Preliminary Considerations Regarding Federal Investments in Vaccine Purchase and Immunization Services: Interim Report on Immunization Finance Policies and Practices CDC and the state health agencies to experiment with different approaches in supporting disease surveillance and immunization assessment, education, monitoring, and information efforts in the public and private sectors (see Figure 3). Section 317 funds are awarded for two primary categories of support: vaccine purchase and state immunization program activities. Funding for vaccine purchase is referred to as “direct assistance” (DA); other funds awarded through the Section 317 program (referred to as “financial assistance ” or FA) support a varied array of program activities. Congress appropriates separate funds within each category; CDC retains this distinction in state grant awards. DA funding allows grantees to purchase vaccines at reduced prices negotiated by the federal government with vaccine manufacturers. Prior to the creation of the Vaccines for Children (VFC) program, Section 317 DA funds were the only federal vaccine purchase program available for the states. The Section 317 funds are used today to purchase vaccine for children, adolescents, and adults who are not eligible for VFC. Unlike most grant awards, these funds remain with CDC rather than being transferred to the grantees, and represent a “line of credit” for vaccine purchase. DA funds may also be used to appoint CDC personnel within the states who provide technical expertise for the state's immunization project. Section 317 DA funding showed some variation at mid-decade when the VFC program began, but in general funding awards have remained relatively stable during the past decade, remaining close to about $130 million per year in the period 1996–1999 (see Table 1). In 1995, the first year for full implementation of vaccine purchase under the VFC program, the proportion of total grantee expenditures of Section 317 DA award funds dropped below 60 percent.7 Since then, state expenditure levels have risen steadily to 95 percent for 1998. Financial assistance (FA) funds awarded through the Section 317 program support a more complex array of program activities. In contrast to the DA funding history, rapid increases and sudden decreases in the level of FA funds are the source of most of the budgetary variation in the Section 317 program over the past decade. In 1990 and 1991, FA funding and state expenditures were about one-fourth the level of those for DA (Tables 1 and 2). At mid-decade, FA levels increased substantially, rising to twice the levels for DA. New money for FA grants awards increased more than seven-fold from a total of $37 million awarded for 1990 to $261 million for 1995. In the aftermath of the rapid and unplanned build-up of Section 317 FA funds, significant amounts of carryover emerged within the state immunization budgets. Although the states had acquired extensive experience over several decades in working with the federal DA vaccine purchase funds, the large increases in support for additional immunization services appeared in areas that required new efforts (such as outreach, record assessment, performance measures, and the development of immunization registries) without careful consideration of how these funds would be used within existing state administrative and management systems.8 Although unable to respond immediately, states experimented with and built new immunization programs that drew upon federal resources. High rates of immunization coverage were sustained in the wake of these efforts, even with the addition of new vaccines to the childhood immunization schedule. However, the delay in expenditures during the start-up period, accompanied by mid-decade pressures to reduce the costs of federal discretionary programs, led Congress