One of myths promulgated by the antivaccination cult (and there are so many of these myths) is that through some mysterious financial system, physicians make boatloads of money from vaccinating kids. Like almost all of the myths pushed by these vaccine denier, it does not even have a kernel of truth. In fact, in this case, I’m not even sure it’s in the same planetary system as the truth.
In an article by O’Leary et al., published recently in Pediatrics, we see that there is no evidence that vaccines are a major profit center for primary care physicians (which are usually pediatricians in the case of children). In fact, the article seems to indicate that vaccinations are a financial burden for many pediatricians.
The cost of vaccinating each child from birth to age 18 is around $2500, depending on the vaccines used. Multiply this by the 100’s of patients each practice may manage, and you’re looking at several million dollars in vaccines, all of which has to be purchased by the private physician, then given at cost or even below cost, depending on reimbursement, to patients.
According to the article, approximately half of pediatric vaccines are purchased by private pediatricians and family physicians and are administered to the majority of children in the U.S. As the cost of newer vaccines has increased, it has become one of the top overhead expenses for private pediatric practices. A survey of pediatricians and family physicians on satisfaction with insurance payments for vaccine purchases and administration reported that 10% of physicians had considered halting providing vaccines for privately insured patients due to costs. The highest dissatisfaction levels were seen in physicians regarding Medicaid payments for vaccine administration. The strategy used most frequently by clinicians unsure of how third-party payers would reimburse for new vaccines: informing patients that they may receive a bill for the vaccine.
The problem is that, despite what the antivaccinationists want you to believe, there isn’t a van delivering cash payments to the physician to give vaccines. In reality, pediatricians have to acquire the vaccines in advance, with the pharmaceutical company (or drug distributor) requiring payment for those vaccines within 30 days (standard terms for medical products). However, the physicians may not receive payment from a private insurance company for up to 60 days after submitting paperwork. For Medicaid it can be up to 120 days before receiving payment.
This is a situation of negative cash flow. Let’s say every month a physician purchases $5000 worth of vaccines to give to children. They request reimbursement at cost (meaning they bill for vaccines plus disposables like syringes and alcohol wipes plus amortized portion of the nurse’s or doctor’s time to give the vaccine). If the physician doesn’t get reimbursement for that $5000 for 3 or 4 months, the physician has a negative cash flow for those months. And remember, the next month, the physician has to float another $5000 for that month’s vaccinations, etc. etc.
A private pediatrician makes around $170,000, which seems like a lot (trust me it isn’t, given the educational level and importance of the position). Out of that $170,000 the pediatrician has to pay for medical insurance, school loans, and float loans to the practice to cover negative cash flow. No wonder the article discovered that about 10% of physicians stopped offering vaccines to private insurance patients.
Many managed care organizations (MCO) in the USA negotiate directly with the pharmaceutical company (or distributor) to acquire the vaccine, and it is distributed to their member physicians. In this way, the physicians have no responsibility to finance the purchase of the vaccines. Of course, the vaccines delivered should only be given to the members of that managed care organization. Some pediatricians are employed directly by the MCO, so they don’t worry about any of these issues. Moreover, within the MCO, the physician does not charge the patient directly for the vaccination, so, once again, this isn’t a profit center.
Another issue uncovered by this study was that sometimes insurance companies do not reimburse for new vaccines. New vaccines, such HPV, rotavirus, and MCV4 (meningitis conjugate), may take up to a year or more before insurance companies approve reimbursement, despite health care plans stating that they pay for all vaccinations. The reasons for these delays are slow bureaucracies that take a long time to approve drug formularies (medications that can be reimbursed) for the healthcare organization, intentional non-approval to lower costs of vaccinations within the MCO, and bad medical decisions by the medical directors of MCO’s who may dismiss the usefulness of some vaccines (this is admittedly rare). Because of these issues, for many new vaccines, pediatricians require upfront payment from patients, or they have to bill patients for these vaccines that the patient thought would be covered by insurance. Consequently, some of the newest vaccines are slow to be adopted because of these financial reimbursement issues.
Nowhere in this study did they uncover a huge profit center for the pediatrician. There are no pediatricians who just vaccinate, ignoring all the other parts of pediatric medicine, just to be able to afford their gold plated Ferrari. The reality is that a moderately compensated pediatrician often has to fund, out of his own salary, the negative cash flow that arises from the time difference between acquiring vaccines and being reimbursed.
One more antivaccination trope put to rest. Next!
Visit the Science-based Vaccine Search Engine.
Key citations:
- O’Leary ST, Allison MA, Lindley MC, Crane LA, Hurley LP, Brtnikova M, Beaty BL, Babbel CI, Jimenez-Zambrano A, Berman S, Kempe A. Vaccine financing from the perspective of primary care physicians. Pediatrics. 2014 Mar;133(3):367-74. doi: 10.1542/peds.2013-2637. Epub 2014 Feb 24. PubMed PMID: 24567011.
