[Federal Register Volume 59, Number 190 (Monday, October 3, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24433]


[[Page Unknown]]

[Federal Register: October 3, 1994]


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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.

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

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  
------------------------------------------------------------------------
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
                                                                        
------------------------------------------------------------------------
\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