Editor’s note: Richard Hughes is a member of the firm Epstein Becker Green in the Health Care & Life Sciences practice and a former vice president for Moderna.
In its passage of the Inflation Reduction Act of 2022, Congress has taken the long overdue step of eliminating out of pocket, or OOP, costs for vaccines under Medicare Part D. The OOP prohibition aligns with policies under Medicare Part B and the Affordable Care Act and removes a pharmacy counter barrier that will undoubtedly lead more seniors to be vaccinated against shingles. However, it leaves intact a peculiar split in Medicare vaccine coverage that discourages physicians from offering certain vaccines.
Brief history of Medicare vaccine coverage
For much of the 20th century, vaccination efforts concentrated on the childhood population, resulting in the successful reduction of morbidity and mortality associated with at least nine infectious diseases.
Following the development of the first vaccines for older adults, like influenza and pneumococcal disease, Congress amended the Medicare statute throughout the 1980s to ensure beneficiary access to these new vaccines and the Hepatitis B vaccine for those beneficiaries at intermediate to high risk of contracting the disease. As it enacted these coverage requirements under Part B, Congress took care to prohibit beneficiary cost sharing so that seniors would not be discouraged from receiving vaccines.
Eventually, in 2003, Congress passed the Medicare Modernization Act, creating Medicare Part D, a prescription drug benefit for seniors. Under the MMA, implemented in 2005, Part D sponsors must cover all commercially available vaccines except those covered under Part B. This inexplicable decision to cover future vaccines under the prescription drug benefit while leaving previous vaccine coverage in Part B created a peculiar split in Medicare vaccine coverage. There is no meaningful clinical distinction between Part B and Part D vaccines that justifies the separation. The result is an unevenness of vaccine coverage and access across settings of care and population segments, which will be perpetuated as new vaccines for older adults are licensed and recommended.
Solving the Part D OOP problem
When the MMA was passed, vaccine OOP costs were only a theoretical problem. Then, in 2005, the first pertussis-containing vaccine for adults was licensed, followed by the first shingles vaccine in 2006. A 2011 GAO report showed that relatively few Medicare beneficiaries received these vaccines, and cost sharing was cited as a barrier to access.
A 2018 Avalere Health analysis I led found that uptake of the shingles vaccine was 40% to 60% higher when a Part D plan offered $0 cost sharing. In 2016, 95% of Part D beneficiaries encountered vaccine cost sharing, with OOP costs averaging $85. Other studies have affirmed that cost sharing is a definite barrier to vaccine access, resulting in lower uptake.
Over the years, the CMS has encouraged Part D plan sponsors to offer a $0 or low cost-sharing formulary tier for vaccines, but the offering remained optional. Passage of the Inflation Reduction Act now makes this mandatory and removes a barrier to vaccine uptake.
Fixing Medicare vaccine coverage once and for all
Nonetheless, barriers to vaccine access remain for seniors due to the separate benefit part placement of vaccines in Part B and D. In seeming acknowledgment of the above problem, Congress acted rapidly to provide for coverage of COVID-19 vaccines without cost sharing under Part B when it passed the Coronavirus Aid, Relief, and Economic Security Act in March 2020, a full eight months before the first vaccine was authorized for emergency use.
As early as 2007 and as recent as 2021, the Medicare Payment and Access Commission recommended moving the coverage of vaccines from Part D to Part B. In the 2007 report, MedPAC foresaw the challenges stemming not only from beneficiary OOP costs under Part D, but also the challenges of physician out-of-network status under Part D. While pharmacists have long been permitted to roster bill vaccinations under Part B, easing the hurdle of split benefit part placement, physicians continue to face difficulty in offering Part D vaccines. Because they are out of network, this makes it difficult to ascertain coverage and cost sharing information. This may lead to patients paying the full cost of vaccines up front and seeking reimbursement under Part D later. This exacerbates the already burdensome financial requirements that result in lagging adult vaccine offerings in physician offices.
As Francis Crosson recently observed, the access barriers under the status quo of Part B versus D vaccine coverage will only become more problematic as new vaccines become available. Most obviously, under current law, vaccines for respiratory syncytial virus will be covered under Part D when Part B coverage is ideal. This will cause an important missed opportunity for physicians to discuss and offer patients a slate of respiratory vaccines all at once. Because both physicians and pharmacists are able to easily bill vaccines under Part B, it is logical that vaccine coverage be placed there.
Moreover, Congress could simplify the process for covering vaccines under Medicare. It is odd to legislate specific coverage of vaccines under Part B, requiring constant legislative updates as new vaccines become available, while allowing them to be added automatically upon licensure under Part D. Moreover, the Affordable Care Act’s “first dollar coverage” provision simply defers to the Advisory Committee on Immunization Practices, requiring all recommended vaccines to be automatically covered without cost sharing by private health plans. The Inflation Reduction Act similarly shifts the coverage trigger under Part D from licensure to ACIP recommendation. A similar reform to Part B would eliminate the future legislative hurdle and equalize vaccine access across settings of care.
Nearly two decades after enacting the Medicare prescription drug benefit, Congress has taken a major step to address flawed coverage of vaccines. Additional reform is needed so that all future vaccines are available to older adults.
