1
Introduction

The future of the national immunization partnership, especially the status of the public health infrastructure for immunization within the states, is the focus of this report of the Institute of Medicine (IOM). We propose a national strategy to guide the federal and state partnership in supporting immunization efforts, improving coordination, and allocating costs between the public and private health care sectors. We also consider how the roles and responsibilities for this partnership should be shared among federal and state agencies.1

BACKGROUND

Immunizations that protect children and adults from the dangers of vaccine-preventable diseases are one of the genuine triumphs of basic medical science and the health care delivery system within the United States. Disease morbidity rates declined dramatically for nine vaccine-preventable diseases (smallpox, polio, diphtheria, pertussis, tetanus, measles, mumps, rubella, and Haemophilus influenzae type b) during the 20th century (Centers for Disease Control and Prevention [CDC], 1999a). According to current data, smallpox has been eradicated, the number of polio cases has been reduced to 5,500 worldwide, and each of the other seven diseases occurs only sporadically throughout the United States (CDC, 1999a) (see Table 1–1 for disease mortality trends).

Three key strategies have contributed to this success in disease prevention: (1) the discovery and commercial production of vaccines; (2) the



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Calling the Shots: Immunization Finance Policies and Practices 1 Introduction The future of the national immunization partnership, especially the status of the public health infrastructure for immunization within the states, is the focus of this report of the Institute of Medicine (IOM). We propose a national strategy to guide the federal and state partnership in supporting immunization efforts, improving coordination, and allocating costs between the public and private health care sectors. We also consider how the roles and responsibilities for this partnership should be shared among federal and state agencies.1 BACKGROUND Immunizations that protect children and adults from the dangers of vaccine-preventable diseases are one of the genuine triumphs of basic medical science and the health care delivery system within the United States. Disease morbidity rates declined dramatically for nine vaccine-preventable diseases (smallpox, polio, diphtheria, pertussis, tetanus, measles, mumps, rubella, and Haemophilus influenzae type b) during the 20th century (Centers for Disease Control and Prevention [CDC], 1999a). According to current data, smallpox has been eradicated, the number of polio cases has been reduced to 5,500 worldwide, and each of the other seven diseases occurs only sporadically throughout the United States (CDC, 1999a) (see Table 1–1 for disease mortality trends). Three key strategies have contributed to this success in disease prevention: (1) the discovery and commercial production of vaccines; (2) the

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Calling the Shots: Immunization Finance Policies and Practices TABLE 1–1 Comparison of 20th-century Baseline and Current Morbidity, Vaccine-Preventable Diseases Disease 20th Century 1999 Provisional Percent Decrease Smallpox 48,164 0 100.0 Diphtheria 175,885 1 100.0 Measles 503,282 86 100.0 Mumps 152,209 352 99.8 Pertussis 147,271 6,031 95.9 Polio (paralytic) 16,316 0 100.0 Rubella 47,745 238 99.5 Congenital Rubella Syndrome 823 8 99.0 Tetanus 1,314 33 97.5 Haemophilus influenzae Type b and unknown (<5 years) 20,000 146 99.2   SOURCES: CDC, 1999a; Cochi et al., 1985. integration of immunization services (including vaccine purchase and delivery) within private and public systems of personal health care services; and (3) the development of a public health infrastructure that can monitor disease patterns and improve immunization coverage rates, especially among vulnerable populations. The combination of these three strategies has resulted in unprecedented high levels of vaccination coverage for a growing number of vaccines for both children and adults within the United States (see Table 1–2). The U.S. immunization system has also demonstrated an ability to achieve high immunization coverage levels among all age groups, across economic and social class lines, and spanning all racial and ethnic populations (CDC, 1998a). To sustain this success is difficult, however, requiring constant vigilance to detect signs of erosion and decline in coverage rates among vulnerable populations. Costs of Achieving Current Levels of Immunization Coverage Enormous effort is required within the U.S. health care system to maintain high levels of immunization coverage for a growing number of vaccines and among various age groups. The effort is especially challenging since a new birth cohort of 11,000 infants born each day requires attention within the routine immunization schedule. The first 2 years of life is perhaps the most vulnerable period for transmission of infectious diseases; thus it is crucial that this population be brought up to date as quickly as possible with regard to immunization status. Indeed, immuni-

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Calling the Shots: Immunization Finance Policies and Practices TABLE 1–2 Vaccination Coverage Levels Among Children Aged 19–35 Months, by Selected Vaccines (1995–1999a)   1995 1996 1997 1998 1999c Vaccine/Dose % (95% CIb) % (95% CI) % (95% CI) % (95% CI) % (95% CI) DTPd ≥3 Doses 94.7 (±0.6) 95.0 (±0.4) 95.5 (±0.4) 95.6 (±0.5) 95.9 (±0.4) ≥4 Doses 78.5 (±1.0) 81.1 (±0.7) 81.5 (±0.7) 83.9 (±0.8) 84.0 (±0.8) Poliovirus ≥3 Doses 87.9 (±0.8) 91.1 (±0.5) 90.8 (±0.5) 90.8 (±0.7) 90.0 (±0.6) Haemophilus influenzae Type b (Hib) ≥3 Doses 91.7 (±0.6) 91.7 (±0.5) 92.7 (±0.5) 93.4 (±0.6) 93.7 (±0.5) Measle-Containing Vaccine (MCV) ≥1 Doses 89.9 (±0.7) 90.7 (±0.5) 90.5 (±0.5) 92.1 (±0.6) 92.0 (±0.6) Hepatitis B ≥3 Doses 68.0 (±1.0) 81.8 (±0.7) 83.7 (±0.6) 87.0 (±0.7) 87.9 (±0.7) Varicella Vaccine 1 Dose N/Ae   16.0 (±0.7) 25.9 (±0.7) 43.2 (±1.0) 52.1 (±1.0) Combined Series 4 DTP/3 Polio/1 MCVf 76.2 (±1.0) 78.4 (±0.8) 77.9 (±0.7) 80.6 (±0.9) 86.2 (±0.7) 4 DTP/3 Polio/1 MCV/3 Hibg 74.2 (±1.0) 76.5 (±0.8) 76.2 (±0.8) 79.2 (±0.9) 78.8 (±0.9) aChildren were born during February 1992-May 1994 (1995 survey), February 1993-May 1995 (1996 survey), February 1994-May 1996 (1997 survey), and February 1995–May 1997 (1988 survey). bCI=confidence interval. cFirst two quarters of 1999 and last two quarters of 1998. Data can be found at http://www.cdc.gov/nip/. dDiphtheria and tetanus toxoids and pertussis vaccine/diphtheria and tetanus toxoids. eNot available; data collection for varicella began in July 1996. fFour or more doses of DTP/DT, three or more doses of poliovirus vaccine, one or more doses of MCV. gFour or more doses of DTP/DT, three or more doses of poliovirus vaccine, one or more doses of MCV, and three or more doses of Hib. SOURCE: Information provided by CDC.

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Calling the Shots: Immunization Finance Policies and Practices zation coverage assessments commonly focus on 2-year-olds because older children are usually well immunized as a result of child care or school requirements, because most childhood vaccines must be administered within 24 months after birth, and because the immunization status of this population can reveal shifting health care patterns in different geographic areas and health care settings. The current vaccine schedule (see Figure 1–1 and Table 1–3) recommends that each infant born today receive between 19 and 23 doses of vaccine, most of which should be administered by 18 months of age, to be fully immunized. In 1987, the cost of fully immunizing a child was $116 in the private sector and $34 in the public sector. One decade later, in 1997, the total costs for the vaccines recommended for children had increased to $332 in the private sector and $176 in the public sector (Orenstein et al., 1999).2 These costs can escalate rapidly. The manufacturer’s list price for the new pneumococcal conjugate vaccine (which is effective against meningitis, bacteremia, pneumonia, and otitis media) is $58 per dose, and the Advisory Committee on Immunization Practices (ACIP) has recommended that infants receive 4 doses of the vaccine before age 2 to complete their immunization (Lieu et al., 2000). Finally, while vaccine purchase costs have increased in both the public and private sectors, it is important to note that the public sector now bears a larger share of the cost of vaccines. The public-sector discount declined from 75 percent of catalog prices in 1987 to 50 percent in 1997 (Orenstein et al., 1999). A smaller number of vaccines recommended for adults differ by age group (see Table 1–3). Annual influenza vaccine is currently recommended for two categories of adults: (1) all persons aged 50 and older, and (2) all persons younger than 50 with certain chronic conditions, such as diabetes, heart disease, and lung disease (CDC, 2000a). One-time pneumococcal vaccines are recommended for adults aged 65 and older and for younger adults with chronic health conditions. ACIP is considering lowering the age range for this vaccine as well, but as of this writing had not made a revised recommendation. ACIP has also made recommendations regarding adult immunization for hepatitis B, hepatitis A, tetanus, diphtheria, measles, mumps, rubella, varicella, polio, and Lyme disease. National cost data for adult vaccines are generally not available. According to one estimate, the cost for influenza vaccine ranges from $4.16 to $4.87 in the New York City area and for pneumococcal vaccine from $11.54 in upstate New York to $13.02 in Queens (Poland and Miller, 2000). In addition to the costs of purchasing vaccines, payers must support many other expenses, including the costs of administering the vaccines (which may or may not be billed separately), and record-keeping costs

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Calling the Shots: Immunization Finance Policies and Practices FIGURE 1–1 (Opposite) Recommended childhood immunization schedule— United States, January-December 2000.a Vaccines are listed under routinely recommended ages. Bars indicate range of recommended ages for immunization. Any dose not given at the recommended age should be given as a “catch-up” immunization at any subsequent visit when indicated and feasible. Ovals indicate vaccines to be given if previously recommended doses were missed or given earlier than the recommended minimum age. Approved by the Advisory Committee on Immunization Practices (ACIP), the American Academy of Pediatrics (AAP), and the American Academy of Family Physicians (AAFP). On October 22, 1999, the Advisory Committee on Immunization Practices (ACIP) recommended that Rotashield® (RRV-TV), the only U.S.-licensed rotavirus vaccine, no longer be used in the United States (MMWR, Volume 48, Number 43, Nov. 5, 1999). Parents should be reassured that their children who received rotavirus vaccine before July are not at increased risk for intussusception now. aThis schedule indicates the recommended ages for routine administration of currently licensed childhood vaccines as of 11/1/99. Additional vaccines may be licensed and recommended during the year. Licensed combination vaccines may be used whenever any components of the combination are indicated and its other components are not contraindicated. Providers should consult the manufacturers’ package inserts for detailed recommendations. bInfants born to HBsAg-negative mothers should receive the 1st dose of hepatitis B (Hep B) vaccine by age 2 months. The 2nd dose should be at least one month after the 1st dose. The 3rd dose should be administered at least 4 months after the 1st dose and at least 2 months after the 2nd dose, but not before 6 months of age for infants. Infants born to HBsAg-positive mothers should receive hepatitis B vaccine and 0.5 mL hepatitis B immune globulin (HBIG) within 12 hours of birth at separate sites. The 2nd dose is recommended at 1–2 months of age and the 3rd dose at 6 months of age. Infants born to mothers whose HBsAg status is unknown should receive hepatitis B vaccine within 12 hours of birth. Maternal blood should be drawn at the time of delivery to determine the mother’s HBsAg status; if the HBsAg test is positive, the infant should receive HBIG as soon as possible (no later than 1 week of age). All children and adolescents (through 18 years of age) who have not been immunized against hepatitis B may begin the series during any visit. Special efforts should be made to immunize children who were born in or whose parents were born in areas of the world with moderate or high endemicity of hepatitis B virus infection. cThe 4th dose of DTaP (diphtheria and tetanus toxoids and acellular pertussis vaccine) may be administered as early as 12 months of age, provided 6 months have elapsed since the 3rd dose and the child is unlikely to return at age 15–18 months. Td (tetanus and diphtheria toxoids) is recommended at 11–12 years of age if at least 5 years have elapsed since the last dose of DTP, DTaP or DT. Subsequent routine Td boosters are recommended every 10 years. dThree Haemophilus influenzae type b (Hib) conjugate vaccines are licensed for infant use. If PRP-OMP (PedvaxHIB® or ComVax® [Merck]) is administered at 2 and 4 months of age, a dose at 6 months is not required. Because clinical studies in infants have demonstrated that using some combination products may induce a lower immune response to the Hib vaccine component, DTaP/Hib combination products should not be used for primary immunization in infants at 2, 4, or 6 months of age, unless FDA-approved for these ages. eTo eliminate the risk of vaccine-associated paralytic polio (VAPP), an all-IPV schedule is now recommended for routine childhood polio vaccination in the United States. All children should receive four doses of IPV at 2 months, 4 months, 6–18 months, and 4–6 years. OPV (if available) may be used only for the following special circumstances: 1. Mass vaccination campaigns to control outbreaks of paralytic polio. 2. Unvaccinated children who will be traveling in <4 weeks to areas where polio is endemic or epidemic. 3. Children of parents who do not accept the recommended number of vaccine injections. These children may receive OPV only for the third or fourth dose or both; in this situation, health-care providers should administer OPV only after discussing the risk for VAPP with parents or caregivers. 4. During the transition to an all-IPV schedule, recommendations for the use of remaining OPV supplies in physicians’ offices and clinics have been issued by the American Academy of Pediatrics (see Pediatrics, December 1999). fThe 2nd dose of measles, mumps, and rubella (MMR) vaccine is recommended routinely at 4–6 years of age but may be administered during any visit, provided at least 4 weeks have elapsed since receipt of the 1st dose and that both doses are administered beginning at or after 12 months of age. Those who have not previously received the second dose should complete the schedule by the 11- to 12-year-old visit. gVaricella (Var) vaccine is recommended at any visit on or after the first birthday for susceptible children, i.e., those who lack a reliable history of chickenpox (as judged by a health care provider) and who have not been immunized. Susceptible persons 13 years of age or older should receive 2 doses, given at least 4 weeks apart. hHepatitis A (Hep A) is shaded to indicate its recommended use in selected states and/or regions; consult your local public health authority. (Also see MMWR Oct. 01, 1999/48(RR12); 1–37). SOURCE: CDC, 2000b.

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Calling the Shots: Immunization Finance Policies and Practices

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Calling the Shots: Immunization Finance Policies and Practices (sometimes including the cost of registry development and maintenance). Other costs, such as outreach, education, training, data collection, and surveillance of coverage rates and vaccine safety, are incurred by public health agencies (as discussed later in this chapter). The American Academy of Pediatrics has estimated that its members charge approximately $15 per dose for vaccine administration (Fleming, 1995). Vaccine administration fees for adults are significantly lower, and range from $3.95 to $5.38 within the Medicare program, depending on the provider’s location (Health Care Financing Administration, 1999a). Such expenses are difficult to monitor, however, because they may or may not be billed separately within well-child visits or other office procedures, depending on

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Calling the Shots: Immunization Finance Policies and Practices TABLE 1–3 Universally Recommended Vaccinations Population Vaccination Dosage All young children Measles, mumps, rubella Diphtheria-tetanus toxoid and pertussis vaccine Poliomyelitis Haemophilus influenzae type ba Hepatitis B Varicella Hepatitis A (in selected areas)b 2 doses 5 doses 4 doses 3–4 doses 3 doses 1 dose 2 doses Previously unvaccinated or partially vaccinated adolescents Hepatitis Bc Varicella 3 doses total If no previous history of varicella, 1 dose for children aged<12 years, 2 doses for children aged≥13 years   Mumps, measles, and rubella Tetanus-diphtheria toxoid 2 doses, total If not vaccinated during previous 5 years, 1 combined booster during ages 11–16 years All adults Tetanus-diphtheria 1 dose administered every 10 years All adults aged≥65d Influenza 1 dose administered annually   Pneumococcal 1 dose aOnly children below age 5 receive Haemophilus influenzae type b. bHepatitis A was added to the schedule after the original table’s publication. cAn optional two-dose schedule for adolescents aged 11 to 15 was recently approved by the Food and Drug Administration. dThe Advisory Committee on Immunization Practices has recommended that all adults aged≥50 receive an influenza vaccination. SOURCE: Briss et al., 2000. insurance requirements and local practice guidelines. Some health practices may also charge separate fees for the production and copying of immunization records, fees that are commonly not reimbursed by health plans. Moreover, the shift in many states from fee-for-service to managed care plans (which has occurred swiftly within Medicaid), makes it more

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Calling the Shots: Immunization Finance Policies and Practices difficult to track vaccine administration fees as a separate cost indicator because such fees now are generally included in the capitated payments. The U.S. federal government currently spends more than $1 billion annually to purchase vaccines for disadvantaged children and adults and to support immunization programs within the 64 grantees, which include the 50 states, 6 municipal regions,3 and 8 U.S. political jurisdictions (see Table 1–4).4 These funds are allocated primarily by two federal agencies: CDC, which administers the National Immunization Program, established by Section 317 of the Public Health Service Act (see Appendix A); and the Health Care Financing Administration (HCFA), which administers the Medicaid and Medicare programs and the new State Children’s Health Insurance Program (SCHIP) in collaboration with the states. In addition, the Vaccines for Children (VFC) program, created in 1993 through an amendment to the Social Security Act, is financed through HCFA and administered by CDC. CDC supplies VFC vaccines and provides Section 317 vaccines and financial assistance awards to the states annually in response to state requests for assistance and estimates of vaccine need (see Boxes 1–1 and 1–2). In fiscal year (FY) 1998, the VFC program, which provides federally financed vaccines for four categories of disadvantaged children, spent $437 million in federal funds for vaccines and operational costs; Medicaid program expenditures for immunization in this same year were an additional $127 million, $70 million of which was federal. In addition, CDC provided $418 million in support of vaccine purchase for the states, financial assistance for state immunization programs, and CDC program TABLE 1–4 Total Federal Immunization Funding, FY 1999 ($ in millions) Program Federal State Total Section 317a 448 Unknown 448 VFCb 467 Not applicable 467 Medicaid 70 57 127 Medicare 115 Not applicable 115 TOTAL 1,100 57 1,157 aTotal Section 317 federal immunization funding, FY 1999 (actual) as reported in the Department of Health and Human Services FY 2001 Centers for Disease Control and Prevention Justification of Estimates for Appropriations Committees. bTotal VFC federal immunization funding, FY 1999 (enacted), as reported in the Department of Health and Human Services FY 2001 Centers for Disease Control and Prevention Justification of Estimates for Appropriations Committees. SOURCE: Information provided by CDC.

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Calling the Shots: Immunization Finance Policies and Practices BOX 1–1 Funding of State Activities Under Section 317 Grant Program CDC provides annual immunization project grants to 64 separate grantees, including 50 states, the District of Columbia, New York City, Chicago, Houston, San Antonio, Puerto Rico, the Virgin Islands, American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the Federated States of Micronesia, the Republic of Belau, and the Republic of the Marshall Islands. Immunization grant funds are intended to supplement but not supplant ongoing state and local immunization efforts. Each grantee’s funding level is contingent on a number of factors, including historical funding levels, the population size, the size of the state and local public health infrastructure, the size of the grantee’s immunization program, the geographical area of the grantee, the proportion of the childhood population served by the public sector, the level of state and local support for the immunization program, the occurrence of vaccine-preventable disease outbreaks, and the grantee’s ability to develop programs and expend funds. Vaccine is available as Direct Assistance (in lieu of cash), as requested by the applicant, in the form of a “credit line.” Grantees may order childhood or adult vaccines until the credit line is exhausted. CDC also considers requests for CDC personnel (and their travel) and other forms of direct assistance to purchase goods and services through General Services Administration contracts in order to develop and implement immunization registries. Grant funds in the form of Financial Assistance may be used for costs associated with planning, organizing, and conducting immunization programs. Grantees use financial assistance to pay for project personnel, travel, supplies, contracts, other miscellaneous costs, and indirect charges. Grantee personnel carry out programmatic functions such as conducting audits and surveys; investigating vaccine-preventable disease outbreaks; assisting with outbreak control measures; coordinating program efforts with other federal, state, and local governments and private and community-based organizations; and carrying out a variety of professional and community educational efforts. CDC has always specified that immunization grants are intended to supplement and may not supplant state and local resources. The immunization grants are “discretionary,” and no formula exists for the allocation of CDC funding to grantees. Each grantee’s funding level is contingent primarily on the grantee’s need as expressed in the amount requested annually. Matching funds from the states or territories are not required for the federal grants, and grantees need not allocate any of their own funds to purchase or distribute vaccines or pay for other operational costs. CDC does rely on some grantees to assume a larger share of the responsibility so that a greater proportion of the available funds can be allocated to other grantees. CDC adjusts the grant awards to meet each grantee’s operational needs and unique circumstances in each project area. In general, CDC is unable to provide grantees with as much funding as they request. In the past, the funds have been distributed among geographic regions and earmarked for specific program activities, such as perinatal hepatitis B prevention. Since 1998, CDC has determined the size of grant awards for each state by applying a uniform percentage reduction to all grantees’ operational funding needs.

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Calling the Shots: Immunization Finance Policies and Practices The requested amounts are adjusted, if necessary, during CDC’s review of the applications to exclude budget items outside the scope of the grants and to adjust any amounts considered excessive or unreasonable. The resulting amounts constitute a funding base to which grantee-specific incentive funds are added. In recent years, Senate appropriations language has instructed CDC to distribute $33 million of the grant funds (termed “incentive funding”) using a formula that rewards grantees with the highest vaccine coverage rates. Grantees usually receive funding in two or three installments, although the bulk of operational funds has been awarded in the initial installment since 1996. Vaccine funds continue to be awarded in several large installments. SOURCE: information provided by CDC. BOX 1–2 Section 317 Grant Guidance Annually, CDC’s National Immunization Program (NIP) publishes guidance for immunization grant applications. This guidance describes activities the grantees are required to undertake, as well as those NIP recommends if resources are available. The year 2000 grant application guidance includes 38 required activities and 28 recommended activities. In their applications, grantees describe how they will carry out these activities and provide a detailed budget and budget justification. Grantees are always instructed to request in their applications the amount of funding they will need, at a minimum, to implement the activities required in the guidance regardless of the federal budget situation. At present funding levels, CDC is not able to provide enough federal funds to support full implementation of all programmatic activities required by the grant guidance (see Box 1–1). Therefore, grantees are allowed the flexibility to pursue activities that are considered most appropriate and effective in their jurisdiction. Grantees must submit the following reports to CDC: Vaccine Adverse Event Reports Supplemental Measles/Pertussis/Tetanus/Rubella/Congenital Rubella Syndrome/Haemophilus influenza type b Case Reports Reports of Discarded Measles Cases (quarterly) Program Progress Reports (annually) Immunization Registry Status Reports (annually) Reports of Perinatally Related Hepatitis B Prevention Data (annually) School and Day Care Entry Assessment Surveys (annually/biennially) School and Day Care Validation Surveys (report not required) VFC Population Estimate Surveys (annually) SOURCE: Information provided by CDC.

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Calling the Shots: Immunization Finance Policies and Practices tion policy is still concentrated primarily on service-delivery roles; VFC, for example, is narrowly restricted to vaccine provision and some small amount of operational costs. The VFC program does not have the flexibility to supply resources to the states that could be used to support oversight of public- and private-sector performance in meeting the immunization needs of vulnerable groups. Section 317 appears to be the only federal program, at present, that provides opportunities and resources to support the states in developing performance measures that can help in managing the immunization system itself and responding to shortcomings within the private sector, rather than simply providing vaccines to individuals who request them or conducting short-term outreach programs. SIX ROLES OF THE NATIONAL IMMUNIZATION SYSTEM To address the questions under its charge, the IOM committee constructed a new analytic framework to represent the fundamental roles of the national immunization system. At present, this system is often described in terms of the federal and state agencies that administer immunization services and programs (see, e.g., Figure 1–4) or the components of the state programs that are administered with Section 317 funds (termed “core functions” by CDC) (see Figure 1–5). The committee found that these representations inadequately illustrate the dynamics of the national immunization system because they do not address the interactions among public and private roles and responsibilities. Most important, the presence or absence of private health care services (including insurance coverage and benefits that encompass immunization services for children, adolescents, and adults at reasonable cost) influences the burden of effort required within the public sector to assure access to vaccines recommended for widespread use. Changes in the recommended vaccine schedule, as well as shifts in the quality of and access to primary care services for disadvantaged groups in any community, necessitate responses by the public sector to “gear up” or “gear down,” often in the face of static or declining resources.9 In examining current policies and practices in the public and private health care sectors, the committee identified six fundamental roles of the national immunization system: Assure the purchase of recommended vaccines for the total population of U.S. children and adults, with a particular emphasis on the protection of vulnerable groups. Assure access to such vaccines within the public sector when private health care services are not adequate to meet local needs. Control and prevent infectious disease. Conduct population wide surveillance of immunization coverage

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Calling the Shots: Immunization Finance Policies and Practices FIGURE 1–4 Federal agencies that support immunization services and programs.

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Calling the Shots: Immunization Finance Policies and Practices Public Health Function Essential Services Immunization Core Functions Immunization Program Components Assessment • Evaluate effectiveness, accessibility, and quality of personal and population-based health services. Assessment • General assessment • Public clinic AFIXa • Private-sector AFIX • Registry • Perinatal hepatitis B prevention   • Monitor health status to identify community health problems. Surveillance • Surveillance of vaccine-preventable disease adverse events • Perinatal hepatitis B prevention Policy Development • Develop policies/plans that support individual and community health efforts. • Enforce laws/regulations that protect health. • Research new insights and innovative solutions to health problems. Management Research • Program management • Partnerships • Program management Assurance • Diagnose and investigate health problems in the community. • Ensure the availability of a competent public health and personal health care workforce. • Inform, educate, and empower people about health issues. • Mobilize community partnerships to identify and solve health problems. • Link people to needed personal health services, and ensure the provision of health care when it is not Outbreak control Assuring service delivery Public Information/education Provider training Vaccine supply • Control of infectious disease • Service delivery • Perinatal hepatitis B prevention • WICb linkage • Outreach • AFIX • Registry • VFCc • Public education • Outreach • Professional information/education • Public clinic AFIX • Private-sector AFIX • Perinatal hepatitis B prevention • Vaccine management • VFC FIGURE 1–5 Immunization core functions. aAssessment, Feedback, Incentives, and eXchange of information. bSpecial Supplemental Nutrition Program for Women, Infants, and Children. Vaccines for Children. SOURCE: Information provided by CDC.

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Calling the Shots: Immunization Finance Policies and Practices levels, including the identification of significant disparities, gaps, and vaccine safety concerns. Sustain and improve immunization coverage levels within child and adult populations, especially in vulnerable communities. Use primary care and public health resources efficiently in achieving national immunization goals. The last of these roles provides overarching support for the other five, and was the focus of the committee’s charge. In conducting the study, we gave particular attention to the responsibilities of federal and state health agencies and the burden of effort required to support each of the above roles in an integrated manner. Figure 1–6 displays these roles as components of the national immunization partnership. We recognize that the U.S. immunization infrastructure involves a broader set of activities than can be incorporated within the six roles described above. For example, the separate cycles of research, development, licensing, and production of vaccines and the selection of vaccines FIGURE 1–6 Six roles of the national immunization system.

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Calling the Shots: Immunization Finance Policies and Practices for the recommended schedule of child and adult immunizations are important parts of the national immunization partnership; however, such efforts are not addressed in this report.10 Efforts to monitor vaccine safety and provide adequate compensation for adverse events related to vaccine use through special government trust funds represent an additional area of concern that lies beyond the framework for this study, although public concerns about the safety of vaccines have major implications regarding the level of resources necessary to sustain high immunization coverage rates.11 The six roles of the national immunization system are complex for three reasons. First, each encompasses an array of specific programs and functions (see Figure 1–7). Programs to improve immunization coverage rates, for example, include interventions to reduce vaccine costs, expand access to immunization services, address missed opportunities, improve documentation of immunization status, increase community demand for vaccinations, and establish requirements and incentives for providers. Likewise, the surveillance of immunization coverage rates may include a variety of tools and methods, including the National Immunization Survey, national surveillance studies, pocket-of-need assessment studies, regional and state immunization registries, and local-area surveillance studies that focus on specific populations.12 Second, the six roles of the national immunization system are not rigid or fixed, and certain other factors add to their complexity. Although they share common features, they are also elastic and decentralized, expressed in different ways over time within the broad array of public health efforts throughout the United States. A successful national immunization system requires that each role be present within each state, but their form, scope, and intensity will vary. For example, certain populations are easier to track than others, and the extent of monitoring efforts required will be proportional to the level of heterogeneity within the population and the complexity of the health service plans that serve their immunization needs. Likewise, the public costs of immunizing the first 10 percent of a large population, who often have private insurance and are motivated to request immunizations from their health care providers, are significantly lower than the costs of immunizing the final 10 percent, who rely fully on public assistance to cover their health care costs and vaccine purchases. The final 10 percent includes significantly larger numbers of individuals who are not routinely connected to health care service centers, who experience consistent disruptions in changes in residence and in health care coverage (and whose health records are consequently scattered across multiple sources), and who are socially isolated or distrustful of services that do not demonstrate a tangible or immediate health benefit. Targeted community assistance efforts are required to connect

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Calling the Shots: Immunization Finance Policies and Practices FIGURE 1–7 Six roles of the national immunization system, broken down by role.

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Calling the Shots: Immunization Finance Policies and Practices

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Calling the Shots: Immunization Finance Policies and Practices these groups with immunization services and to sustain that connection over time. Financing that effort is expensive, and pay-offs may be small in terms of absolute numbers of individuals who are brought up to date in immunization coverage. Yet even small improvements in immunization coverage in high-risk areas have broad positive impacts within the general community, since they reduce the risk of outbreaks (and the costs of hospitalization or injury that may result), improve general health status, and demonstrate improvements in the quality of health care services within a selected region. Third, the level of resources required for each state to perform each role effectively is not well understood, since immunization coverage rates are influenced by a broad mix of factors that include national health trends, local demographics and social conditions, and public and private health finance patterns. For example, some states (e.g., Alabama) rely heavily on public health clinics to immunize more than 80 percent of their disadvantaged populations. Such states may spend large amounts on vaccine purchase and direct services and invest little effort in assessing rates of immunization coverage among private providers because vulnerable groups are served directly by the public health system. In contrast, states (e.g., New Jersey) that rely primarily on private managed care plans to supply vaccines to Medicaid clients or other at-risk groups may spend less on direct services, but need to create incentives, regulations, or performance measures that establish accountability within the private health sector for achieving high levels of immunization coverage. The complexity of the national immunization system should not discourage efforts to address the finance policies and practices that can ensure high levels of performance and direct resources to areas of need. Achieving consistency of effort in both service delivery and assessment of performance and coverage patterns is especially important, because history has demonstrated that when levels of protection begin to decline, disease outbreak occurs, and remedial action becomes necessary (NVAC, 1991). As noted earlier, unprotected sectors can unexpectedly become sources of infectious disease outbreaks and can serve as hosts to preventable pathogens such as pertussis. These lapses in public health preparedness have tremendous negative impacts involving loss of life, preventable morbidity, and financial cost. A strong and vigilant infrastructure is necessary to sustain coverage rates in the face of the changes in science, social conditions, and health care systems discussed above. STUDY APPROACH To respond to the six questions listed above, IOM formed the Committee on Immunization Finance Policies and Practices in December 1998.

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Calling the Shots: Immunization Finance Policies and Practices The committee was tasked to conduct an 18-month study that involved both extensive data collection and careful deliberations about the nature, scope, impact, and cost of the national immunization partnership for both children and adults. The committee met five times to consider relevant research data and expert testimony (see Appendix C for a list of sources that contributed to the committee’s deliberations). The committee heard testimony from congressional staff; officials of federal, state, and local health agencies; and organizations representing public and private health care professionals. In May 1999, the committee released an interim report that addressed two key concerns posed by CDC: (1) the experience with carryover (unobligated funds) in the administration of the Section 317 program, and (2) the impact of SCHIP on the need for federal Section 317 funds for both infrastructure initiatives and vaccine purchase (IOM, 1999a). Recognizing that local circumstances and economic and social factors strongly influence the levels of need and the quality and scope of immunization services within the states, the committee organized two major fact-finding efforts to illustrate and compare the ways in which states allocate resources for health care services and infrastructure. These efforts included (1) a national survey of 50 states and the District of Columbia conducted by a research team at the University of Michigan,13 and (2) a set of eight case studies (Alabama, Maine, Michigan, New Jersey, North Carolina, Texas, Washington State, and a two-county comparison of San Diego and Los Angeles counties in California), prepared by a team of project consultants.14 Four site visits were organized to supplement the national survey and case study materials.15 State-level data were also drawn from background materials and data analyses provided by CDC’s National Immunization Program, including proposals submitted by case study states for Section 317 funds in FY 1992, 1995, 1999, and 2000.16 In addition, the committee sponsored a workshop on pockets-of-need issues, held in September 1999. Committee members and staff met frequently with state health officials over the course of the study17 and received materials pertaining to state and private immunization efforts from the American Academy of Pediatrics, the American Association of Health Plans, the Association of Maternal and Child Health Programs, the Association of State and Territorial Health Officers, the Health Insurance Association of America, the National Association of City and County Health Officers, and the National Association of WIC Directors. Additional materials regarding state roles in public health were provided by the National Governors’ Association and the National Conference of State Legislatures. Information on public-and private-sector investments in immunization services was also obtained through literature searches.

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Calling the Shots: Immunization Finance Policies and Practices ORGANIZATION OF THE REPORT Five chapters follow this introduction. Chapter 2 explains how today’s U.S. immunization system differs from that of 1990 and earlier decades, and identifies emerging challenges and scientific opportunities in the decades ahead that have finance implications for the national immunization system. Chapters 3, 4, and 5 address the six roles of the national immunization system: vaccine purchase and service delivery (Chapter 3); infectious disease prevention and control, surveillance of vaccine coverage and safety, and efforts to improve and sustain coverage rates (Chapter 4); and immunization finance policies and practices (Chapter 5). Throughout Chapters 2 through 5, the committee’s findings are in italics. In Chapter 6, the committee uses these findings to respond to the six questions posed under our charge and to formulate a final set of conclusions and recommendations. ENDNOTES 1.   Local health agencies play important public health roles, but they are usually not involved in financing vaccine purchase or immunization infrastructure efforts. The analyses in this study also do not include current or former U.S. territories (American Samoa, Guam, Republic of the Marshall Islands, Federated States of Micronesia, the North Mariana Islands, Republic of Belau, Puerto Rico, and the Virgin Islands), even though they are grantees within the National Immunization Program. The analyses are confined to state-level efforts because the committee’s charge focused explicitly on state budgetary roles. 2.   Costs are not adjusted for inflation. 3.   The six municipalities are Chicago, Illinois; New York City, New York; Philadelphia, Pennsylvania; Houston and San Antonio, Texas; and the District of Columbia. 4.   These jurisdictions are American Samoa, Guam, the Marshall Islands, Micronesia, the North Mariana Islands, Belau, Puerto Rico, and the Virgin Islands. 5.   The term mobile populations refers to a variety of groups that have no fixed residence or frequently change residences within a limited period of time. They include immigrants (both legal and illegal), migrant workers, and the homeless. 6.   The 4:3:1:3 series includes four doses of DTaP; three doses of polio; one dose of measles, mumps, and rubella (MMR); and three doses of Haemophilus influenzae type b (Hib). The coverage status of 2-year-olds is measured between 18 and 35 months of age. 7.   The IOM study was requested in U.S. Senate Report 105–300 to accompany S. 2440 (Departments of Labor, Health and Human Services, and Education and Related Agencies Appropriations Bill), which directed CDC to contract with IOM to conduct an evaluation of the recent successes, resource needs, cost structure, and strategies for immunization efforts in the United States. 8.   NVAC (1999a:364), citing research from the Employee Benefit Research Institute (Fronstin, 1996), observes that 54 percent of infants and 62 percent of children aged 1 through 5 are covered by private health insurance. 9.   See the ACIP recommendation for pneumococcal vaccine (CDC, 2000d). 10.   Other IOM committees have addressed some of these issues. See, for example, Vaccines for the 21st Century (IOM, 1999b).

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Calling the Shots: Immunization Finance Policies and Practices 11.   Vaccine safety issues have been addressed by several IOM reports, including Research Strategies for Assessing Adverse Events Associated with Vaccines: A Workshop Summary (IOM, 1994a), Adverse Events Associated with Childhood Vaccines: Evidence Bearing on Causality (IOM, 1993), and Adverse Effects of Pertussis and Rubella Vaccines (IOM, 1991). 12.   In addition, vaccine safety reporting systems (e.g., the Vaccine Adverse Events Reporting System), add another dimension to the role of surveillance. 13.   The survey was conducted by a team that included Gary Freed, MD, MPH, principal investigator; Sarah Clark, MPH; and Anne Cowan, MPH, all in the Division of General Pediatrics at the University of Michigan. See Appendix D for a brief overview. 14.   See Appendix E for a detailed description of the case study selection and preparation methods. 15.   Site visits were conducted within four of the case study states: Detroit, Michigan; Newark, New Jersey; Houston, Texas; and Los Angeles and San Diego, California. 16.   As noted, one case study involved a two-county comparison in California. County-level data were included in California’s statewide grant proposal. 17.   These meetings included a CDC meeting with national partners in March 1999 (Atlanta), a CDC meeting with state immunization directors in April 1999 (Atlanta), and the National Immunization Conference in June 1999 (Dallas). In addition, the following state and local health officers presented testimony at meetings of the IOM committee: David Johnson, Deputy Director and Chief Medical Executive, Michigan Department of Community Health, Lansing; Donald Williamson, State Health Officer, Alabama Department of Public Health, Montgomery; Christine Grant, Acting Commissioner, New Jersey Department of Health and Social Services, Trenton; Steven Friedman, Assistant Commissioner, New York City Health Department; Eleni Sfakianaki, Medical Executive Director, Dade County Health Department, Miami, Florida; Akiko Kimura, Medical Director, Immunization Program, Los Angeles, California; Babatunde A.Jinadu, Kern County Health Department, Bakersfield, California; Edd Rhoades, Chief, Maternal and Child Health Service, Oklahoma State Department of Health, Oklahoma City; and Natalie Smith, Chief, Immunization Branch, California State Health Department, Berkeley.