8 ways to make adult vaccinations profitable

Physicians know the health value of vaccinations and want to provide patients with this important service. But historically, there’s been a gap between vaccine costs and the reimbursement practices receive for administering them.

Though some physicians still feel vaccinations are cost-neutral or even a financial drain, many practices have taken steps to create robust vaccination programs that actually contribute to their bottom line. 

“One of my biggest challenges is getting physicians to understand that vaccinations are simple, easy and economically they make sense, and we’re doing the right thing for patients,” says Jason Goldman, MD, an internal medicine practitioner in Coral Springs, Florida, and governor of the Florida chapter of the American College of Physicians.

With the Centers for Disease Control and Prevention’s recent update to adult vaccination guidelines urging more immunizations, now is a good time for physicians to review their programs.

The reality of vaccinations in practice 

Physicians agree that vaccinating patients is medically essential, but it takes some understanding of the business of vaccines to do it in a way that makes financial sense. 

Since vaccines are expensive to purchase and reimbursement often was not robust or timely in the past, practices were left paying out-of-pocket for a service on which they often lost money. 

That needn’t happen today. Goldman attributes some of the problems physicians have now to poor business decisions and a lack of knowledge about reimbursement practices.

In fact, practices can actually make a profit based on billing for the vaccination itself, in addition to the administration codes. But to do so, physicians have to understand supply and demand, vaccination recommendations, the reimbursement procedures and they must stay on top of the business of vaccines. 

Here are eight ways physicians can make vaccinations more cost-effective: 

1 Practice good inventory management

If vaccines sit in the refrigerator unused, the practice has incurred an expense it may not recoup. 

While vaccines have long shelf lives, practices that inventory well know how much  they have on hand, how much they need and when to purchase more. In addition, they needn’t pay for the vaccine until long after the payer reimburses them for vaccinating the patient. With deferred billing and timely reimbursements today, there’s no reason to lose money on vaccine purchases.

But someone must track fluctuations in the demand for vaccines by reviewing previous vaccination records and scheduled appointments, then use that data to assess how many vaccinations may be needed in the next 90 days. That way, a practice can keep enough inventory on hand to meet demand. Practice staff should order every two to four weeks to best keep supply in line with expected demand. 

2 Consider a vaccine purchasing group

Buying vaccines through a purchasing group, which takes many independent practices together and negotiates the lowest possible fee for bulk purchases, is the most cost-effective way to buy vaccines. A practice that doesn’t belong to a vaccine purchasing group is missing an opportunity to save money, say experts. 

Purchasing directly from manufacturers is the next-best option for obtaining a good price. The most expensive method is to buy vaccines through a third-party reseller or vendor. Its costs and associated fees are going to be higher than going through the manufacturers directly. Goldman advises avoiding these vendors or resellers who sell the vaccine at a marked-up price.

Goldman always looks for the most economical way to purchase vaccines. “If I pay promptly I get another discount, and if I buy multiple vaccines, I get another discount,” he says. 

3 Manage billing

New ICD-10 codes make billing for vaccines  easier. 

“If you don’t know the codes, you’re not going to get the reimbursement,” says Goldman. Only one diagnosis code-Z23-accounts for immunizations, whereas previously each vaccine needed its own diagnosis code. Each type of vaccine then has an administration code-whether pneumonia, flu, tetanus or hepatitis. 

Federal law mandates that insurance companies reimburse for the cost of all vaccines recommended from the American College of Immunology and the Advisory Committee for Immunization Practices. These groups, along with the CDC, determine the recommendations for patients under 65. But administration of the immunizations is left to payer negotiations for reimbursement.

Goldman explains that Medicare has specific billing guidelines: The pneumonia, hepatitis B and flu vaccines all are reimbursable under part B. As long as physicians follow the guidelines, they will receive reimbursement.

Other vaccines, including those for shingles, hepatitis A and tetanus, fall under Medicare part D. Many physicians mistakenly refer patients to a pharmacy for these vaccinations because they didn’t realize they were reimbursable. There is computer software available that will allow a physician’s office to submit claims under a pharmacy billing code to receive reimbursement for these vaccines. That software, TransactRx, is available for free, will also check if the patient is not covered or if their coverage doesn’t include vaccines. 

Software is available from Merck that will check vaccination coverage for Medicare patients and allow physicians to receive reimbursement for vaccinating those patients.

4 Defer payment

Most vaccine manufacturers, along with vaccine purchasing groups, have a 60-day payment term, at the end of which a practice could pay, and do so with a credit card. Since credit card statements come back 30 days later, a practice could wait nearly 90 days before having to pay for its vaccines.

Even better, some manufacturers and most vaccine purchasing groups offer a deferred invoice so practices don’t have to pay for three months. “So you get the vaccine, you administer it, you get the reimbursement and they don’t bill your credit card for three months,” says Goldman.

5 Get a handle on reimbursement 

While physicians often experienced long delays and inadequate reimbursements  in the past, these should not be problems today. 

Typically, it takes about seven to 10 days to get reimbursed for vaccines if physicians are using an electronic system and submit clean claims. Practices that are having problems with reimbursement are either not using their billing software correctly or filing claims incorrectly. The most common billing problems include entering incorrect information, inputting the wrong codes and mismatching treatment and diagnosis codes.

6 Look for pricing deals

Practices can receive email alerts announcing when manufacturers raise their vaccine prices. Before manufacturers raise their prices, they typically offer a grace period. 

To buy vaccines prior to a manufacturer’s price increase, practices should look at when the vaccine’s price is going up, how much the practice has in storage, how many patients are scheduled to receive it during the next 30 to 60 days before deciding whether it’s cost-effective to purchase an additional lot before the price increases. 

Manufacturers’ representatives are also usually good about bringing price sheets to the office in advance of increases. If Goldman sees there is going to be a price increase in the next 90 days, his medical assistant orders more product. “Because if you are vaccinating routinely, you are not going to have expired stock,” he says. If, however, practices have expired vaccines, many manufacturers will take them back and give credit for it.

7 Form an immunization team

Running a profitable vaccination program may take a team-someone to order vaccines and be alert for price increases, someone to monitor inventory and a biller who understands the codes, the software and all the billing systems and stays on top of fee schedules and raises them accordingly. Goldman does it all himself, but many practices prefer their office staff to handle these tasks. Office personnel involved in any aspect of the vaccine program may need additional training.

8 Alert patients when they are due for vaccinations

William Schaffner, MD, MACP, professor of preventive medicine and infectious diseases at Vanderbilt University School of Medicine in Nashville and an infectious disease physician, urges physicians to implement electronic health record systems that include prompts to alert them when a patient needs a vaccination. 

Goldman’s office routinely phones patients to remind them of their vaccination needs. “Flu and pneumonia are probably the most widely-given vaccines, but we also give a number of shingles, hepatitis and tetanus as well,” he says.

To compete with pharmacies or “minute clinics,” physicians should try to bring patients into their practice for vaccinations, even if it means temporarily adjusting practice operations.

“We run flu shot clinics where patients can just drop in to get their shot and not have to make an appointment or fill out paperwork,” says Jeffrey Kagan, MD, an internist in Newington, Connecticut and member of the Medical Economics editorial advisory board. “That’s one way to become more financially viable.” 

Many patients would rather get vaccinated at their doctor’s office if it’s quick and easy, knowing it is being administered by a medical office versus someone at a retail clinic. Kagan gives about half his patient flu shots this way. 

“You can make a profit anywhere from $10 to $50 per vaccine, depending on which vaccine it is,” says Goldman. “But more importantly than that, it is good patient care. It keeps the patient healthy, and prevents them from getting infections and keeps them out of the hospital.”

This should be the standard offering of every practice-to make sure adult patients are vaccinated appropriately as per published guidelines, and as per their individual case when it may differ from guidelines, says Aaron E. Glatt, MD, FACP, chairman of the department of medicine and hospital epidemiologist at South Nassau Communities Hospital in Oceanside, New York. 

“Physicians need to figure out a way to do this in the most economical way for them.”