On May 1, 1993, the costs of influenza vaccine and its administration became a covered benefit under Medicare Part B. In 1988, the Health Care Financing Administration (HCFA) and the Centers for Disease Control and Prevention (CDC) began a congressionally mandated 4-year demonstration project to evaluate the cost-effectiveness to Medicare of providing influenza vaccine to Medicare beneficiaries. This report presents final results of the Medicare Influenza Vaccine Demonstration conducted during 1988- 1992.

Pneumonia and influenza (P&I) are the sixth leading cause of death in the United States (1), and persons aged greater than or equal to 65 years and persons with chronic conditions (e.g., lung or heart disease, diabetes, or cancer) are at greatest risk for P&I. During major epidemics, hospitalization rates for persons at highest risk may increase twofold to fivefold (2). However, only 30% of persons aged greater than or equal to 65 years responding to CDC’s National Health Interview Survey for 1989 reported having received the influenza vaccine during the previous year (3).

Using intervention and comparison areas in Arizona, Illinois, Massachusetts, Michigan, New York, North Carolina, Ohio, Pennsylvania, and Texas and the entire state of Oklahoma (total Medicare population: approximately 2 million), the demonstration sought to 1) increase the provision of annual influenza vaccination among Medicare beneficiaries and 2) measure the accrued benefits of vaccination in terms of reduced morbidity and mortality and the difference in the cost to Medicare of health services use. Levels of vaccination coverage were assessed at baseline and annually at all sites. The cost-effectiveness indices were calculated using morbidity and mortality data from the demonstration and published studies and compared with cost-effectiveness of other Medicare benefits.

The number of doses of vaccine administered during the 4-year demonstration and the percentage of the Medicare population vaccinated in the intervention areas increased from 477,316 (26%) during 1989-90 (the first full year of the project) to 995,884 (51%) during 1991-92. Because some Medicare beneficiaries received influenza vaccines from sources not reimbursed by Medicare, annual surveys were conducted to accurately estimate vaccine coverage in each intervention and comparison site.

The demonstration’s success in vaccine delivery resulted from focused interventions to overcome common barriers to adult vaccination, including the absence of a comprehensive vaccine delivery system, limited reimbursement mechanisms, and lack of vaccination programs where adults congregate. No statutory requirements mandating vaccination of Medicare beneficiaries were necessary to implement this program. The results of the cost-effectiveness analysis varied because of the variability of influenza from season to season in causing disease outcomes and the difficulty of attributing these outcomes to influenza. Nonetheless, provision of influenza vaccine was cost-effective for Medicare and may be cost-saving, depending on the effectiveness of the vaccine and the level of vaccination coverage.