While the Inflation Reduction Act (IRA) may best be known for mandating Medicare drug price negotiation, the act did much more than that. Among its other accomplishments are the elimination of cost sharing for vaccines under Medicare Part D, as well as improved access to adult vaccines for Medicaid and Children’s Health Insurance Program (CHIP) enrollees.
Many vaccines target communicable conditions, and low use of these agents contributes to the diseases’ spread. When people are not vaccinated, they are at higher risk of long-term illness, hospitalizations, and death; overall spending on avoidable medical services increases. From 2010 to 2020, for example, between 140,000 and 710,000 people in the U.S. were hospitalized with the flu, according to the Centers for Disease Control and Prevention (CDC), and there have been between 12,000 to 56,000 flu-related deaths each year.
Medicare Vaccine Coverage
When it comes to Medicare coverage of vaccines, Part B covers inoculation against flu, hepatitis B (for patients at high or intermediate risk), pneumococcal pneumonia, and COVID-19, in addition to other vaccines to treat an injury or exposure to a disease. Part D covers most of the other commercially available vaccines.
Under Part B, preventive vaccines do not require out-of-pocket spending for beneficiaries. Under Part D, however, enrollees traditionally have had to pay a copayment or coinsurance for vaccines. Subjecting these beneficiaries to out-of-pocket spending has led to major disparities in vaccination rates between the Part B and Part D populations.
An HHS report released in March 2023 found that under Part D, 3.4 million enrollees received a vaccine in 2021, costing a total of $234 million in annual out-of-pocket costs — almost $70 per person. Most of these enrollees received a shingles vaccine, with people paying an average of $77 out of pocket. But the report noted that some enrollees pay almost $200 for the shingles vaccines, as well as $51 for the hepatitis B vaccine (for enrollees at low risk of the illness) and $28 for the tetanus, diphtheria and pertussis vaccine, known as Tdap. And some costs were even higher when beneficiaries did not receive the Part D low-income subsidy. This inequitable, inconsistent cost sharing creates an access barrier that inhibits the goal of all beneficiaries receiving their recommended vaccines.
As of January 1, 2023, the IRA has eliminated out-of-pocket costs for vaccines recommended by the Advisory Committee on Immunization Practices (ACIP) for Medicare Part D beneficiaries. If this policy had been in effect in 2021, it “would have resulted in cost-sharing savings across a wide range of demographic groups, including 2.7 million White enrollees, 271,000 Black enrollees, 113,000 Asian enrollees, and 86,000 Latino enrollees,” concluded the HHS report. “Improved affordability may also reduce existing racial and ethnic disparities in access to these vaccines.”
Medicaid and CHIP Vaccine Coverage
The IRA also impacted vaccines covered under Medicaid and CHIP. While CHIP mainly provides coverage to eligible children through concurrent Medicaid and CHIP enrollment, it may also cover certain pregnant and postpartum individuals.
Adult vaccine coverage under Medicaid and CHIP is optional and differs significantly among states. A June 2022 report from the Medicaid and CHIP Payment and Access Commission noted that for almost all vaccines, immunization rates among adult Medicaid members are lower than those with private insurance.
A 2020 study found that among 44 surveyed Medicaid programs, only 22 covered all 13 ACIP-recommended adult vaccines, and 15 had cost-sharing requirements for enrollees. The study also found that provider reimbursement for the purchase and administration of vaccines may not fully cover providers’ costs, which can disincentivize them from vaccinating Medicaid beneficiaries.
To rectify these issues, the IRA mandates that enrollees in traditional Medicaid, medically needy Medicaid enrollees in certain states, and CHIP beneficiaries at least 19 years old receive ACIP-recommended adult vaccines without cost sharing, beginning in October 2023. The law also enhances reimbursement to providers who vaccinate these adults, helping to address that potential barrier to care.
A study published in 2016 found that in 2015 alone, health care spending and lost productivity due to adults with vaccine-preventable diseases cost the U.S. approximately $9 billion. In contrast, the Congressional Budget Office estimated that the IRA’s vaccine provisions will raise federal spending by $7 billion — over 10 years.
By requiring vaccine coverage for all of these vulnerable patient populations, the IRA is helping to seal gaps in coverage that have resulted in huge disparities between most commercially insured people, who receive ACIP-recommended vaccines free of charge, and those with government-provided health insurance.
For more information on vaccines, check out our first post in this series, Spotlight on Vaccines: The Path to Commercial Plan Coverage.