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Impact of Removing Part D Vaccine Cost-Sharing on the Federal Budget

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The COVID-19 pandemic has brought renewed attention and urgency to mitigating access barriers to recommended vaccines.

In Medicare, coverage of vaccines is currently split, with a defined group of vaccines covered under Medicare Part B without cost-sharing and other vaccines covered under Part D with variable cost-sharing. As a result, many Part D beneficiaries pay deductibles, co-pays, or co-insurance to receive routinely recommended vaccines. Studies indicate such cost-sharing can serve as a barrier to uptake.

Efforts to address cost-related access challenges for Part D beneficiaries include the recently reintroduced Protecting Seniors Through Immunization Act (H.R.1978; Protecting Seniors Act), which would eliminate cost-sharing for Part D-covered vaccines recommended by the Advisory Committee on Immunization Practices (ACIP) and improve information about available vaccines for beneficiaries.

To inform ongoing policy discussions about Medicare vaccine coverage, Avalere modeled the federal budget impact of a policy reform scenario that would eliminate cost-sharing for ACIP-recommended vaccines covered under Part D. This budget impact analysis also considers the costs associated with increased vaccine uptake and the potential savings associated with reduced spending on treating vaccine-preventable diseases (VPDs). Notably, our model does not account for the introduction of COVID-19 vaccines due to the timeframe during which this analysis was conducted.

Estimating the Federal Budget Impact of Eliminating Vaccine Cost-Sharing in Part D

To inform baseline model assumptions under this scenario, Avalere conducted an analysis that examined current uptake levels of 7 vaccines routinely recommended for individuals ages 65+ (influenza, pneumococcal, herpes zoster, pertussis, hepatitis A hepatitis B, and tetanus) and the costs to Medicare of treating diseases potentially preventable by these vaccines. The analysis also examined the costs to Medicare of 2 additional diseases—Clostridium difficile and respiratory syncytial virus—that may be prevented by pipeline vaccines currently in late-stage trials and projected to enter the market within the model’s 10-year budget window.

Using the output from this analysis, we estimated that eliminating cost-sharing for Part D-covered vaccines would result in increased net costs to Medicare of approximately $300 million over 10 years, reflecting increased government expenditures for plans to cover these out-of-pocket costs and additional costs due to higher vaccine uptake ($5.5 billion), offset by reduced government expenditures associated with a reduced burden of VPDs among Medicare beneficiaries ($5.1 billion; Figure 1). Savings associated with improved disease prevention largely offset costs from expanded beneficiary access and improved uptake of recommended vaccines. A significant portion of potential savings would be derived from diseases for which vaccines are still in development, particularly respiratory diseases, though savings expected from achieving adequate uptake may hinge on beneficiary and provider willingness to receive and administer them.

Figure 1: Impact of Eliminating Part D Cost-Sharing on Federal Medicare Spending, 2020–2029
Costs and Savings Impact (in Billions of Dollars)
Additional Medicare Vaccine Costs +$5.5
Medicare Savings due to Reduced VPD Disease Burden -$5.1
Net Medicare Cost Impact +$0.3

Additionally, our analysis focuses on the immediate effects of the reform and does not consider potential indirect effects, nor does it consider broader economic and societal benefits to increased vaccination uptake that could impact the federal budget.

Considerations for Medicare Vaccine Coverage Reform

The COVID-19 pandemic is sharpening policymakers’ focus on vaccine access. Our analysis provides policymakers with insight into the implications of removing access barriers in Medicare. Specifically, we examined the cost impact of a policy that directly eliminates Part D vaccine cost-sharing, which the Protecting Seniors Act seeks to accomplish.

Our analysis represents 1 of several possible reforms lawmakers are considering. Recently, the Medicare Payment Advisory Commission  recommended that Congress shift vaccine coverage entirely to Part B, though this structural change to benefit coverage of vaccines in Medicare has not been introduced as legislation. Such a reform would both eliminate cost-sharing and address separate operational challenges for most physicians who have no direct way to bill for Part D and may otherwise be deterred from purchasing or offering vaccines to patients.

Beyond Medicare, the Helping Adults Protect Immunity Act (H.R.2170) would require vaccine coverage and prohibit cost-sharing in traditional Medicaid. Similar to our Medicare analysis, previous analyses of vaccine cost-sharing in Medicaid have shown that cost-sharing negatively influences uptake in low-income populations.

Ensuring increased access to vaccines and an ultimate reduction in VPD burden requires particular attention to the impact of cost-sharing on communities with historically high rates of unvaccinated individuals, including low-income communities and communities of color. Equity considerations related to social determinants of health will need continued attention beyond the elimination of cost-sharing for Medicare-covered vaccines.

Funding for this research was provided by the Biotechnology Innovation Organization. Avalere Health retained full editorial control.

To learn more about the impact of changes to Medicare policy, connect with us.

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