When is a Vaccine Contract Invalid?

May 5, 2007

Submitted by Edward B. Feehan, M.D.

The authorities that make recommendations about vaccines have recommended that two Varicella vaccines be given.

Recent Blue Cross-allowances for a 90716 have been $88.70. Another insurance with contracts in place throughout the nation has currently been allowing $55.71 The cost per dose with taxes and with Pediatric Federation, LLC timely payment discount is 68.99. This means that the non-Blue Cross plan is allowing 80% of cost. It cost you a little something each year to join Pediatric Federation, LLC so the allowance is actually a little below the 80% mentioned above.

When one calls the claims department to look into the payment below cost phenomena you will sometimes hear the phrase contract pricing. The implication is that you signed an agreement and now stick with the agreement.

In order for a contract to be binding there has to be something in it for all parties to the contract. When you start getting stonewalled about the price is within what you agreed to it is not too far fetched to return with a comment along the line that contracts have to have something in it for all parties involved. When a contract offers an allowed amount that is 20 percent or more below cost the insurer has gone a long way towards invalidating the contract as least as far as it applies to covering the particular vaccine in question.

Four years ago this same insurance company had an allowed amount for a Menomune (90733) of greater than $100.00. Blue Cross is currently allowing 108.88 for a Menomune and also for the Menactra. Recent payments for a Menomune for the subject insurer have been $59.00. I don’t think the price of Menomune has gone down. Current cost of one dose of Menomune is $91.16. The allowed amount of $59.00 is 64% of cost. All this can vary slightly depending on how the order was placed and whether the bill is paid in a timely fashion and so on. The point is that some companies either know not what they are doing or are low balling the allowed amount.

One answer is that some insurance companies require close watching. The staff who process the posting needs to have a handle on current cost of purchased vaccines. And they need to take some kind of action approved by you when a company tries to pay below cost. It is not always easy to take such action and one might want to be careful about rattling the cage too much. But you do not have to sit back and eat the payment below cost without any attempt at corrective action.

The parents of some patients actually have some influence at contract renegotiations time for example. You could also let Mr. Lou Terranova at AAP headquarters know about seeming low balling.

(Disclaimer: The comments written here are solely those of the author and are not the official position of California Chapter 1 of the American Academy of Pediatrics or California Chapter 1.)