Medicaid Program; Charges for Vaccine Administration Under the Vaccines for Children (VFC) Program

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

[MB-84-NC]

RIN 0938-AG77

Medicaid Program; Charges for Vaccine Administration Under the

Vaccines for Children (VFC) Program

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Notice with comment period.

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SUMMARY: This notice with comment period lists, by State, the interim

regional maximum charges that providers may impose for the

administration of pediatric vaccines to Federally vaccine-eligible

children under the Pediatric Immunization Distribution Program, more

commonly known as the Vaccines for Children (VFC) program. This notice

also specifies the methodology that HCFA used to establish the maximum

administration charges.

In addition, the notice provides States that purchase vaccines for

all children the option to use these maximum charges or devise their

own, and clarifies that State Medicaid agencies may establish lower

fees than these maximums if they can provide assurances of access to

immunizations for Medicaid eligible children to the same extent as the

general population.

The publication of these administration charges is essential to

implementation of the VFC program, which is mandated by law to become

operational on October 1, 1994. We intend that this list be used on an

interim basis until we issue a separate Federal Register document that

will finalize these maximum regional charges and respond to any

relevant public comments.

EFFECTIVE DATE: October 1, 1994.

FOR FURTHER INFORMATION CONTACT: Marge Sciulli, (410) 966-0691.

SUPPLEMENTARY INFORMATION:

I. Background

The Omnibus Budget Reconciliation Act of 1993 (OBRA '93), Public

Law 103-66, created the Pediatric Vaccine Distribution Program (more

commonly known and hereafter referred to as the Vaccines for Children

(VFC) Program), which takes effect on October 1, 1994. Section 13631 of

OBRA '93 added section 1902(a)(62) to the Social Security Act (the Act)

to require that States provide for a program for the purchase and

distribution of pediatric vaccines to program-registered providers for

the immunization of vaccine eligible children in accordance with

section 1928 of the Act. Section 13631 redesignated the existing

section 1928 as section 1931 and inserted a new section 1928. The new

section 1928 requires each State to establish a VFC Program (which may

be administered by the State department of health) under which certain

specified groups of children are entitled to receive qualified

pediatric immunizations without charge for the cost of the vaccine.

Federally purchased vaccines under the VFC Program will be made

available to children who are 18 years of age or younger and--

Who are eligible for Medicaid;

Who are not insured under any form of health insurance;

Who are not insured with respect to the vaccine and who

are administered pediatric vaccines by a federally qualified health

center (FQHC) or in a rural health clinic; or

Who are Indians, as defined in section 4 of the Indian

Health Care Improvement Act.

Under the VFC program, vaccines must be administered by program-

registered providers. Section 1928(c) defines a program-registered

provider as any health care provider that--

Is licensed or authorized to administer pediatric vaccines

under the law of the State in which the administration occurs without

regard to whether or not the provider is a Medicaid-participating

provider;

Submits to the State an executed provider agreement in the

form and manner specified by the Secretary; and

Has not been found by the Secretary or the State to have

violated a provider agreement or other requirements that may apply that

are established by the Secretary or the State.

Providers may participate in the VFC program without participating

in Medicaid if they are qualified to administer vaccines under

applicable State law. However, such providers will not be reimbursed by

Medicaid for their services in administering the vaccine.

Under the VFC Program, a provider may impose a fee for the

administration of a qualified pediatric vaccine as long as the fee, in

the case of a Federally vaccine-eligible child, does not exceed the

cost of such administration (as determined by the Secretary based on

actual regional costs for such administration). However, a provider may

not deny administration of a qualified pediatric vaccine to a vaccine-

eligible child due to the inability of the child's parents or legal

guardian to pay the administration fee.

II. Provisions of This Notice With Comment Period

A. General Statement

This notice announces interim regional maximum charges. These

represent the maximum amount that a provider in a State may charge for

the administration of qualified pediatric vaccines to Federally

vaccine-eligible children under the VFC Program. It also specifies the

methodology that HCFA used to establish these regional maximum charges.

We are interpreting ``regional'' as specified in the statute to be the

``State'', as discussed in section II.B.2. of this notice. In addition,

this notice gives Universal Purchase States (that is, where the

vaccines are purchased by the State for all children in the State) the

right to develop administration charges that differ from those

established by HCFA, provided they are reasonable. Therefore, Universal

Purchase States are provided the flexibility to accept the maximum

charges established by the Secretary or to develop their own maximum

charges. In either case, the statute gives State Medicaid agencies the

option to establish and apply vaccine administration fees that are

lower than the specified maximum charges if they provide assurances

that Medicaid children have access to immunizations to the same extent

as the general population. Section 1902(a)(30)(A) of the Act, as

amplified by section 1926, requires States to pay enough for

obstetrical and pediatric services (which include immunization

services) so that those services are available to the ``Medicaid

population'' to the same extent that are available to the general

population in the geographic area. These assurances must be submitted

to HCFA as part of the appropriate State plan amendment to impose the

fees. This notice specifies guidelines for States to use in setting

lower administration fees.

The administration charge cap applies to all VFC Program-registered

providers that administer the vaccine to a Federally vaccine-eligible

child. It does not apply to children receiving free vaccines under

State purchase programs or any other arrangement.

In accordance with the statute, physicians participating in the VFC

Program can charge non-Medicaid eligible children the maximum

administration charge (if that charge reflects the provider's cost of

administration) regardless of whether the State has established a lower

administration fee under the Medicaid program. However, there would be

no Federal Medicaid matching funds available for such administration.

Although the cost of the vaccines for the VFC Program is funded under

Title XIX of the Act, Medicaid will not pay for the administration of

vaccines provided to children under the VFC Program who are not

eligible for Medicaid. A provider may only bill Medicaid for the

administration of a vaccine if the child is Medicaid eligible.

Because the VFC program is mandated by law to become operational on

October 1, 1994, we are announcing these regional maximum

administration charges and guidelines for documenting access on an

interim basis, subject to comment and revision. We will issue a final

Federal Register document setting forth the applicable requirements and

responding to public comments on the provisions of this notice that we

receive on a timely basis.

B. Methodology Used to Establish Administration Charges

We used the following methodology to establish the regional maximum

charges for administration of qualified pediatric vaccines set forth

under section II.C. of this notice.

1. Basis for Using Charge Data versus Cost Data

As noted above, the statute provides that these maximum charges are

to be based in the actual costs of vaccine administration, as

determined by the Secretary. This provision posed a serious

implementation problem for HCFA because of the unavailability of usable

actual cost data on a nationwide basis and the urgency of promulgating

maximum fees before the VFC program begins operation. We searched

thoroughly for appropriate data on the costs of vaccine administration.

We also consulted with several organizations and with individuals with

knowledge and expertise in issues regarding physician payment,

including the Physician Payment Review Commission (PPRC). We were

informed that there are no data readily available on physicians' actual

costs that would provide a valid basis for setting these maximum

charges on a nationwide scale. It also was apparent to us that it would

not be possible to generate such data via field research within the

time available to implement the VFC program on October 1, 1994. A

proper analysis would require detailed, expensive, and time-consuming

collection and evaluation of data on each element of both direct and

indirect costs, including equipment, supplies and labor, as well as an

appropriate verification and allocation of ``overhead'' costs.

On the basis of this information, we concluded that we should

explore setting the maximum charges based on data regarding actual

charges for the administration of vaccines in physicians' offices.

This, too, posed a problem. We consulted with insurance companies,

physicians' groups, trade associations, the PPRC, and other

knowledgeable experts. Again, we concluded that accurate, consistent

data on charges were not readily available. There are a number of

concerns about the data that are available, including inconsistencies

in the coding of procedures and the fact that most payers do not

differentiate, or pay separately for, the cost of the vaccine and its

administration. In light of these problems, we were unable to construct

a reliable data base by integrating data from existing information

sources.

We concluded that it would be necessary to generate a data base

specifically for this purpose. For the reasons stated above, it was not

feasible to generate a data base using actual costs, but it was

feasible to do one based on charges. In the absence of valid studies to

the contrary, we think that, for this particular service, charge data

is a reasonable proxy for setting these maximum fees until we are able

to obtain cost data. Our conclusion is reinforced by the provision of

the statute requiring physicians to agree not to refuse to vaccinate a

child because of the family's inability to pay the administration fee

and by the knowledge that many physicians currently either do not bill

indigent patients their full charge or accept less than full payment

from them.

Given the statutory requirements that the administration fees not

exceed the costs of administration, we recognize the importance of

utilizing cost data in developing the regional maximum charges. We also

realize that the use of charge data in developing the maximum charges

may result in maximum charges that are too high. While it appears that

there are no useable cost data readily available, our goal is to obtain

information that can be used in setting maximum charges in the future.

We will be conducting a study to accumulate accurate cost data, and

will revise the maximum charges based on cost as soon as possible.

The fiscal year 1995 Department of Health and Human Services

appropriations bill specifically addresses the use of charge versus

cost data. (140 Cong. Rec. H9306, Sept. 20, 1994) The Secretary is

directed to compute the actual cost of administering vaccines and to

revise the fees in accordance with the requirements of the law. Because

the appropriations bill also states that this directive is not intended

to delay the start-up of the VFC program, we will utilize the interim

maximum charges. However, as stated above, we will conduct a study with

the goal of obtaining accurate cost data and will issue revised maximum

charge amounts as soon as possible.

2. Charge Data Methodology

To obtain a data base of physician charges, we contracted with the

American Academy of Pediatrics (AAP) to purchase data on the normal fee

charged by its members for administering the vaccines to be covered by

this program. (We note that AAP did not believe it could obtain cost

data by directly surveying its membership.) The AAP had gathered these

data from a national, sample survey of its members. The sample was

large enough (approximately 1,114 responses) to give us confidence in

the national average, but not large enough in each State to allow us to

set state-by-state maximum charges without further adjustment. The

preliminary results of the survey indicated that the overall average

administration charge was $14.48. The final national average

administration charge we obtained from the AAP was $15.09.

In order to adjust this national average for regional variations,

we concluded that the most reliable means available was the Geographic

Practice Cost Indices (GPCIs) established for the Medicare physician

fee schedule.

The GPCI is an index developed by a joint effort of the Urban

Institute (UI) and the Center for Health Economics Research (CHER) to

measure the differences in resource cost among localities compared to

the national average in the three components of the relative value

units--physician work, practice expenses, excluding malpractice, and

malpractice. These three components are weighted 54.2 percent, 40.2

percent, and 5.6 percent, respectively. The resource inputs and their

weights were obtained from the American Medical Association's (AMA)

Socioeconomic Characteristics of Medical Practice. The weights for the

current GPCIs are from the AMA's l989 Socioeconomic Monitoring System

(SMS) Survey.

If there is more than one GPCI for a State, we used the GPCI with

the highest values to derive the maximum charge in order to assure that

the administration charge for providers in high cost areas would fall

within our established maximum.

The GPCIs are grouped by State and substate areas. For purposes of

developing the regional maximum charges, we interpreted the term

``regional'' used in the statute to mean ``State'' because of the

specific grouping of the data using the GPCIs. While the GPCI is

grouped by State and substate areas, we decided to use the State

grouping only. The geographic area of a State is clearly identifiable

by boundary lines recognized nationwide, as opposed to a substate area.

In other words, substate areas do not necessarily represent counties,

which would be an easily identifiable geographic area. Therefore, we

believe using substate geographic areas would be confusing to both

States and providers.

We derived the amounts specified in the chart under section II.C.

of this notice as the maximum charges that may be charged for the

administration of qualified pediatric vaccines for each State on the

basis of the following formula: National charge data x total weighted

GPCI = maximum charge.

Following is an example of application of the formula for Hawaii:

Average national administration

charge = $15.09

Work expense = 1.003

Practice expense = 1.094

Malpractice expense = 1.025

Using Medicare weights to weigh components of--

Work expense = 54.2 percent

Practice expense = 40.2 percent

Malpractice expense = 5.6 percent

Calculation:

Work expense..................... 1.003 x 54.2 percent = .5436

Practice expense................. 1.094 x 40.2 percent = .4398

Malpractice expense.............. 1.025 x 5.6 percent = .0574

--------

1.0408

Hawaii's maximum charge for administration of the vaccine is:

$15.09 x 1.0408 = $15.71

Given the circumstances discussed in the beginning of section II.B.

of this notice, the maximum charge will be based on charge data and

will be applicable until we are able to obtain cost data. Our goal is

to obtain information that can be used in setting maximum charges in

the future. We will revise the regional maximum charges as we determine

it is necessary, or in response to public comments.

C. Maximum Regional Charges for Vaccine Administration by State

Based on the methodology described, the maximum administration

charges are as follows:

------------------------------------------------------------------------

Regional

State maximum

charge

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Alabama.................................................... $14.26

Alaska\1\.................................................. 17.54

Arizona.................................................... 15.43

Arkansas................................................... 13.30

California................................................. 17.55

Colorado................................................... 14.74

Connecticut\1\............................................. 16.56

Delaware................................................... 15.13

District of Columbia....................................... 16.55

Florida.................................................... 16.06

Georgia.................................................... 14.81

Hawaii..................................................... 15.71

Idaho\1\................................................... 14.34

Illinois................................................... 16.79

Indiana.................................................... 14.47

Iowa....................................................... 14.58

Kansas..................................................... 14.80

Kentucky................................................... 14.17

Louisiana.................................................. 15.22

Maine\1\................................................... 14.37

Maryland................................................... 15.49

Massachusetts\1\........................................... 15.78

Michigan................................................... 16.75

Minnesota.................................................. 14.69

Mississippi................................................ 13.92

Missouri................................................... 15.07

Montana.................................................... 14.13

Nebraska................................................... 13.58

Nevada..................................................... 16.13

New Hampshire\1\........................................... 14.51

New Jersey................................................. 16.34

New Mexico................................................. 14.28

New York................................................... 17.85

North Carolina\1\.......................................... 13.71

North Dakota............................................... 13.90

Ohio....................................................... 14.67

Oklahoma................................................... 13.89

Oregon..................................................... 15.19

Pennsylvania............................................... 15.76

Puerto Rico................................................ 12.24

Rhode Island\1\............................................ 14.93

South Carolina............................................. 13.62

South Dakota\1\............................................ 13.56

Tennessee.................................................. 13.70

Texas...................................................... 14.85

Utah....................................................... 14.52

Vermont\1\................................................. 13.86

Virginia................................................... 14.71

Virgin Islands............................................. 15.09

Washington\1\.............................................. 15.60

West Virginia.............................................. 14.49

Wisconsin.................................................. 15.02

Wyoming\1\................................................. 14.31

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\1\According to available information, these are Universal Purchase

States. The Universal Purchase States may accept the maximum charges

listed or develop their own maximum fees, as indicated under section

II.D. of this notice.

D. Maximum Charges for Administration of Vaccines in Universal Purchase

States

States that have programs under which the State purchases vaccines

for all children in the State (Universal Purchase States) have the

flexibility to accept the maximum charges developed by HCFA or to

develop their own maximum charges. We believe it is necessary that

Universal Purchase States are provided sufficient flexibility in

developing charges in order to ensure that there is equal access to

immunizations for all children. In these States, we believe the State

may wish to set one overall charge cap in order to encourage adequate

provider participation. Furthermore, it is our understanding that

providers should experience no cost differences between VFC program

eligible children and all other children inasmuch as the provider never

incurs the cost of the vaccine.

While Universal Purchase States have the flexibility to develop

their own caps, they must develop these by utilizing a reasonable

methodology based upon the requirements of section 1928(c)(2)(C)(ii) of

the Act. The amount of the cap is not required to be set in State law.

However, the authority to set an amount must be based in State law.

E. Optional Lower Medicaid Administration Fees

State Medicaid agencies are not obligated to set the Medicaid

payment for vaccine administration at the level of the maximum charges

set forth in this notice. Section 1928(c)(2)(C)(ii) of the Act allows

them to set their payment at a lower level, according to their own

judgment. State Medicaid agencies typically set payment rates taking

into consideration a variety of factors, including the need to assure

adequate participation by providers. Since the maximum charges in this

notice are based on the normal charges billed by physicians, rather

than on the amounts actually collected by physicians from insurers or

patients, State Medicaid agencies may determine that a lower payment

level is appropriate.

If the State Medicaid agency elects to pay a lower fee, it must

provide assurances to HCFA, as described below, that Medicaid-eligible

children will have access to vaccines. In addition, a State Medicaid

agency may elect to apply the regional maximum charges in selected

areas of the State and a lower fee in other areas. Any lower fees that

a State Medicaid agency elects to apply must be justified using the

guidelines specified in section II.F. of this notice.

In the case of Universal Purchase States that elect to develop

their own maximum charges, State Medicaid agencies have the flexibility

to pay the maximum charge or to pay a lower fee subject to the same

provisions discussed above.

F. Documentation Guidelines for Optional Lower Medicaid Administration

Fees

1. Pediatric Services Defined

As defined in section 1926(a)(4)(B) of the Act, the term

``pediatric services'' means ``services covered under the State plan

provided by a pediatrician, family practitioner, or certified pediatric

nurse practitioner to children under 18 years of age and does not

include inpatient or outpatient hospital services or other

institutional services.''

2. Immunization Rate

In applying any of the guidelines under section II.F.3. of this

notice, we believe it is necessary to identify what children would be

considered immunized. In order to be counted toward the immunization

rate goals discussed, a child must have received, within the year

period of measure for access, all immunizations required for his or her

particular age, including those immunizations under a revised schedule

because of those missed from a previous year.

3. Data Requirements

If the State elects to pay an administration fee lower than the

maximum charge set forth in section II.C. of this notice, it must

provide, via the obstetrical/pediatric State plan amendment submittal,

data that document that the lower or varying fees meet the statutory

requirements of sections 1902(a)(30)(A) and 1926 of the Act and the

implementing regulatory requirements of 42 CFR 447.204. Section 447.204

of the regulations specify that a Medicaid agency's payments must be

sufficient to enlist enough providers so that services under the plan

are available to recipients at least to the extent that those services

are available to the general population.

The State may use one or more of the following guidelines to

document that the statutory and regulatory requirements are met:

a. Comparison of Ratios

Under this guideline, the State would submit a comparison between

the following ratios:

(i) The ratio of the number of children in the general population

immunized to the number of children in the general population; and

(ii) The ratio of the number of Medicaid children immunized to the

number of Medicaid children.

In order for a State to use this guideline as an equal access

assurance, the ratio of Medicaid children immunized to the number of

Medicaid children would have to be equal to or greater than the ratio

of the general population immunized to the number of children in the

general population.

b. Comparison to Private Insurance

Another alternative is for the State to do a comparison of the

Medicaid fees for administration of pediatric vaccines to the

administration fees paid by a major insurance company.

In order for the State to use this guideline as an equal access

assurance, the Medicaid rates for the administration of pediatric

vaccines would have to be set at a rate equal to or greater than the

private insurance company's rates up to the established State maximum

fee.

c. Practitioner Participation

The State also may compare:

(i) The number of Medicaid pediatric practitioners (which includes

practitioners listed in section 1926(a)(4)(B) of the Act) who are

Medicaid program- registered providers and who have submitted pediatric

immunization claims; and

(ii) The total number of pediatric practitioners providing

immunizations to children.

The program registered providers must have at least one Medicaid

pediatric immunization claim per month or an average of 12 such claims

during the year. The State would need 50 percent participation to show

equal access through use of this guideline.

d. Other

States have the flexibility to devise alternative measures of equal

access to immunizations. HCFA will evaluate these other methods by

which States can choose to demonstrate equal access.

G. Submittal of State Plan Amendments

A State Medicaid agency must specify the reimbursement for the

administration of pediatric vaccines (and, if applicable, submit

documentation of equal access) as part of its obstetrical/pediatric

payment rate State Medicaid plan amendment submittal that are due by

April 1 of each year, beginning April 1, 1995 (and which are effective

July 1, 1995). If the State Medicaid agency elects to pay the maximum

regional amount statewide (including that established by the State in

Universal Purchase States), it need only specify this in its State plan

amendment submittal (no additional documentation will be needed).

However, if the State Medicaid agency elects to vary the vaccine

administration fee by geographic areas within the State, the State must

list the administration fee for each area, and specify the methodology,

and provide the data and methodology it used to demonstrate equal

access to the vaccines for each geographic area where the maximum

charges are not applied. This documentation requirement is consistent

with the requirements currently imposed for submittal of State Medicaid

plan amendments for obstetrical and pediatric payment rates under

sections 1902(a)(30)(A) and 1926 of the Act. We also believe that

documenting access to immunizations by each geographic area provides a

more accurate picture of access and areas where access is problematic.

The State plan amendment must be submitted by December 31, 1994 and

be effective on October 1, 1994. For the interim period of October 1,

1994 through March 31, 1995, States may claim Federal matching funds

for the costs of administration of vaccines to Medicaid-eligible

children using the maximum charges or the lower fees established on the

basis of the guidance provided in this notice. For this interim State

plan amendment, the State will not be required to submit the data to

document access to immunizations but will be required to list the

methodology by which Medicaid beneficiary access to immunizations is

assured. Beginning April 1, 1995, documentation of equal access to

immunizations will be required to be included as part of the yearly

Obstetrical/Pediatric State plan amendment submittal in accordance with

section 1926 of the Act.

III. Impact Statement

For notices such as this, we generally prepare a flexibility

analysis that is consistent with the Regulatory Flexibility Act (RFA)

(5 U.S.C. 601 through 612), unless the Secretary certifies that a

notice will not have a significant economic impact on a substantial

number of small entities. For purposes of a RFA, States and individuals

are not considered small entities. However, providers are considered

small entities.

In addition, section 1102(b) of the Act requires the Secretary to

prepare a regulatory impact analysis for any notice of proposed

rulemaking that may have a significant impact on the operation of a

substantial number of small rural hospitals. Such an analysis must

conform to the provisions of section 604 of the RFA. For purposes of

section 1102(b) of the Act, we define a small rural hospital as a

hospital that is located outside of a Metropolitan Statistical Area and

has fewer than 50 beds.

This notice with comment period implements a provision of section

1928 of the Act. Specifically, this notice with comment period

announces interim regional maximum charges that providers may impose

for administering pediatric vaccines to Federally vaccine-eligible

children under the VFC Program. Section 1928 of the Act directs the

Secretary to establish regional maximum fees. As discussed in section

II. B of this notice, HCFA contracted with the American Academy of

Pediatrics to conduct a survey to obtain national charge data for the

administration of pediatric vaccines. HCFA used this data to develop a

national charge amount and then adjusted this amount to take into

account regional variations to establish a charge for each State. The

GPCIs established for the Medicare physician fee schedule were used to

make this adjustment. Universal Purchase States have the flexibility to

accept the maximum charges developed by HCFA or to develop their own

maximum charges. HCFA is also permitting State Medicaid agencies to

develop a lower administration fee than the maximum charge if they can

demonstrate equal access for children to the vaccines.

The impact of implementing the provision of section

1928(c)(2)(C)(ii) of the Act is discussed further below. We do not

believe that this provision will have a significant effect on a

substantial number of small entities.

To the extent that a legislative provision being implemented by a

notice such as this may have a significant effect on recipients or

providers or may be viewed as controversial, we believe that we should

address any potential concerns. In this instance, it is difficult to

predict what the fiscal impact of this notice will be. There are

several unknown factors. Among them are the number of program-eligible

providers who will elect to administer the vaccines. In addition, State

Medicaid agencies are not required to pay the maximum charges. State

Medicaid agencies may establish and apply lower vaccine administration

fees if they document that Medicaid children have access to

immunizations to the same extent as the general population. Given the

availability of free vaccines and the fact that State payments for all

pediatric and obstetrical services, including, presumably, vaccine

administration, have for some time been subject to access demonstration

requirements under 42 CFR 447.204 and sections 1902(a)(30)(A) and 1926

of the Act, we believe that a large proportion of States will be able

to demonstrate equal access for Medicaid-eligible children at rates

lower than the maximum charges. In addition, should a State Medicaid

agency not be able to demonstrate equal access at its current rates,

the State Medicaid agency would only have to increase its rates to

where there would be equal access. The publication of the maximum

charge schedule will certainly create pressure in States with vaccine

administration fees for Medicaid-eligible children lower than the

maximums to raise those fees. However, to the extent that these States

can provide the required assurances, they will not need to raise their

fees. (Currently, it appears that most States pay for vaccine

administration under Medicaid at rates well below the proposed maximum.

This is allowable under the statute.)

Hence, the magnitude of any increase in Medicaid outlays is

difficult to ascertain. Because of the pre-existing equal access

demonstration requirements, we find it hard to estimate how much of any

increase in charges would be attributable to the specific guidelines of

this notice and how much would occur without publication of the notice.

We invite public comment on the impact of both the equal access

assurances and anticipated fee increases.

We are providing a voluntary regulatory flexibility analysis

because of the large number of children and providers who may be

affected. Normally, a regulatory flexibility analysis requires the

agency to discuss various alternatives to the provisions in a notice.

As discussed above, however, HCFA is implementing the provisions of

section 1928(c)(2)(C)(ii) of the Act. The focus of this legislation is

upon expanding the number of children who are eligible to receive free

pediatric vaccines. We have provided State Medicaid agencies with an

option of using a lower fee than the maximum charges set forth in this

notice or using a charge established by a Universal Purchase State at

their option if they can demonstrate equal access of children to the

pediatric vaccines. Because indicated Congressional intent was to

expand the coverage for vaccines, we believe that permitting State

Medicaid agencies to use a lower fee where they can demonstrate equal

access of children to the pediatric vaccines is consistent with the

statute. In addition, we note that this option, if utilized by State

Medicaid agencies, will cost Federal and State governments less money

than if the State Medicaid agencies were using the maximum regional

charges as set forth in this notice, while simultaneously achieving

Congress' goal.

A brief summary of the impact of the provisions of this notice with

comment period upon various groups is provided below.

1. Providers

Each program-registered provider who administers a qualified

pediatric vaccine is entitled to receive the vaccine without charge

either for the vaccine or its delivery to the provider. This notice

specifically establishes maximum regional charges for providers to

administer the vaccines. As a result of these maximum regional charges,

we believe that the number of providers who may be willing to

administer the vaccines would be maintained or increased. In addition

to a potential increase in the number of providers who may be willing

to administer these vaccines, there may be an increase in the number of

patients that they treat since section 1928 of the Act expands the

number of children who are eligible to receive the vaccine without

charge.

2. Children

The greatest benefit of this provision is that it expands the

number of children who are eligible to receive pediatric vaccines

without charge for the vaccines. We believe that there will be an

increase in the number of children receiving pediatric vaccines. As the

number of children who are vaccinated increases, we believe that

savings will accrue as a result of a decline in the number of children

who will require treatment for vaccine-preventable illnesses.

3. States

States may also benefit under various provisions of the VFC

Program. Specifically, this program will provide free vaccines and free

delivery to States thus saving States monies that would otherwise be

spent on purchase and delivery of vaccines. Where they can demonstrate

equal access, State Medicaid agencies are given the option of using the

regional charge as specified in this notice or a lower fee. States

could experience an increase in the number of children who are

receiving the vaccines, thus achieving Congress' goal though increasing

their pediatric immunization costs. As discussed above, fewer children

may be treated for vaccine-preventable illnesses which may provide a

savings to the States.

We are not preparing a rural impact statement since we have

determined, and the Secretary has certified, that this notice with

comment period will not have a significant impact on the operations of

a substantial number of small rural hospitals.

In accordance with the provisions of Executive Order 12866, this

notice was reviewed by the Office of Management and Budget.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical

Assistance Program)

Dated: September 2, 1994.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Dated: September 23, 1994

Donna E. Shalala,

Secretary.

[FR Doc. 94-24433 Filed 9-30-94; 8:45 am]

BILLING CODE 4120-01-P