Some Doctors Vaccinate at a Loss

Some doctors are considering dropping vaccinations because some are vaccinating at a loss from insurance reimbursement.

About one in 10 doctors who vaccinate privately insured children are considering dropping that service largely because they are losing money when they do it, according to a new survey.

A second survey revealed startling differences between what doctors pay for vaccines and what private health insurers reimburse: For example, one in 10 doctors lost money on one recommended infant vaccine, but others made almost $40 per dose on the same shot.

The survey was revealing even to some doctors. "Many physicians really weren't aware and that they were getting reimbursed so little," said Dr. Gary Freed of the University of Michigan, a co-author of both articles published in the December issue of the journal Pediatrics.

The studies are the first to attach numbers to doctors' long-simmering complaints that they are only breaking even -- or even losing money -- when they give shots.

"It's a pleasure to see a real study to show we're not just making this up," said Dr. Herschel Lessin, a pediatrician in Hopewell Junction, N.Y. who said his practice's spending on vaccines has more than doubled from 2006 to 2007.

Experts say there's no evidence that significant numbers of doctors are quitting the vaccination business yet because of financial concerns.

My first impulse is to say that this is a simple problem of insufficient reimbursement, and on one level it is. Insurance -- both public and private -- failing to provide adequate reimbursement for vaccination is incredibly short-sighted. How much more will it cost if the person you are insuring gets a bad case of meningitis? Simple problems have simple solutions -- like demanding more reimbursement or you will stop doing the procedure.

But my intuition says that there has to be something more complicated about this.

First, you have to wonder why there is such large variation in the reimbursement rate for vaccines from insurance company to insurance company. Is there large variation in the cost of these vaccines?

Second, why people are going to their insurance company for reimbursement for these vaccines? I will tell you a story. When I was back in CO for Thanksgiving this year, I walked across the street to this little urgent care office in a supermarket near where my parents live. You could walk-in, and within 20 minutes walk out with a flu shot. (I was having trouble getting a flu shot in New York, so I decided to do it when I was home.) Total cost: $22 -- which is pretty cheap and easy if you think about it.

So my question to think about is: why aren't more people choosing the option of not going through their insurance because the shots are relatively cheap and easier to get? Part of it, I suspect, is because there are so many vaccines that you have to get when you are a kid, and several of them cost a lot more than $20 bucks. I think the new HPV vaccine is around $300 for all three shots.

But part of the problem is also that people are being shielded from the costs of the vaccines (by billing their insurance), which causes insurance to respond by lowering reimbursement, which causes doctors to respond by not covering the procedures. If people were paying for many of these shots directly -- no insurance middle-man -- then the business model of the private urgent care facility would become more prominent. Costs would come down because of the volume of vaccination, and we wouldn't be having this argument about forcing insurance companies to raise reimbursement.

In a way, it is a vicious cycle. Vaccines are expensive, so people charge their insurance companies. Going through insurance companies prevents the volume that would be required to make other venues for vaccination profitable, and thereby lowering the cost of administering the vaccines.

I don't think I have a good solution about how to get from a model of expensive insurance-paying vaccination to cheap patient-paying. But it does surprise me that more of these private urgent care facilities aren't around. I don't think I have ever seen one in NYC. Does anyone know? Is there some sort of law against these things in some states?