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Unbundling Hearing Aid Sales

Overview

The conventional method for offering hearing aid devices and services is in a "bundled" or "packaged" format, where fees associated with the hearing aid evaluation, selection, purchase, fitting, follow-up care, and service are billed in a single charge. However, according to ASHA's 2012 Audiology survey, a number of audiologists (ASHA, 2012a [PDF]) are adopting the practice of "unbundling" or "itemizing"-breaking out the costs of the device, accessories, and services associated with hearing aid dispensing and billing for them separately as they occur.

Factors influencing an audiologist's decision to unbundle include

The entrance of insurance companies into the field of hearing health care and hearing aid delivery creates a truly unique dynamic, given that these companies have the infrastructure-including resources and access to millions of subscribers-that may enable them to negotiate lower rates on hearing aids, create direct-to-consumer delivery models, and develop networks that may not necessarily include audiologists.

Creating a fee structure that separates the cost of hearing aid(s) from the services associated with the evaluation, fitting, orientation, delivery, counseling, and long-term care and management of these devices provides audiologists the opportunity to highlight the importance of the professional services they provide, rather than the device. However, based on the local market, practice considerations, and consumer profile, unbundling may not be appropriate for every practice.

Key Issues

Unbundling v. Bundling

Unbundling offers audiologists the chance to provide transparency regarding fees and services associated with hearing aid purchases and to increase their market potential by serving consumers who have acquired hearing aids elsewhere. In addition, in the changing face of health care, unbundling also highlights the importance of an audiologist's professional services, rather than the device.

Below are some advantages and obstacles to this approach.

Unbundling allows audiologists to

Unbundling may require audiologists to

In addition, unbundling may be inconsistent with managed care plan reimbursement methodologies.

Audiologists must weigh the pros and cons to determine if an unbundled approach is best for them. In implementing unbundling, some audiologists offer patients a choice of several packages of services. For instance, the device cost and dispensing fees may be mandatory charges, but the number of follow-up appointments may vary, depending on the package the patient chooses (e.g., mid-range vs. high-range).

Practice Considerations

In order to determine whether to bundle or unbundle services, audiologists must first evaluate current business practices. Successful unbundling requires that audiologists provide treatment that reflects the full scope of practice for hearing aid services and are able to measure and communicate the value of these services to their patients.

To determine whether or not to unbundle, audiologists consider the following issues.

Financial Considerations

To determine if an unbundled approach is appropriate, audiologists evaluate the financial implications of this approach by reviewing current pricing and fees and determining costs associated with hearing aid sales and services.

Evaluate Current Pricing Structures

An evaluation of pricing structures includes the following.

After evaluating current pricing models, the audiologist determines the specific costs associated with hearing aid sales and services, as well as desired profit, to determine an appropriate pricing structure.

Determine Current Income Associated With Hearing Aid Sales and Service

In a practice that bundles hearing aid sales and service in a single fee, determining the current income associated with hearing aid sales begins with determining the hourly rate received from the bundled price. To determine this rate, the audiologist analyses what the practice includes in its bundled rate and how often the services are rendered.Beyond the device, other services included in the bundled price might include initial recommendations, fitting, verification, orientation, ongoing counseling, electroacoustic measures, repairs and modifications, reprogramming, and documentation. Accessories or batteries, walk-in office visits, auditory rehabilitation, warranties, and educational sessions are additional services that may be included in the bundled cost.

Identify the Costs Associated With Hearing Aid Sales and Service

Determining costs associated with hearing aid sales and services requires a detailed cost analysis of both direct and indirect costs. Direct costs are those clearly and directly associated with the provision of the hearing aid, such as purchase of the device and accessories; indirect costs are those costs associated with the fees. Examples of costs to be included in this analysis are

A thorough financial analysis of the practice may be conducted as part of the cost analysis. Indirect costs should be allocated based on the percentage of the practice's overall revenue represented by hearing aid sales and services.

Determine an Appropriate Cost and Fee Structure for Services

Determining an appropriate cost and fee structure requires comparing the total costs associated with hearing aid sales and services with the current rate received. A specific cost should be associated with each code billed, and the audiologist should incorporate desired profit into the fee structure. When determining rates, the audiologist considers contracts with private insurers, Medicaid and Medicare allowable payments, and cash payments, as well as a complete list of services and devices, and the most current billing codes. The Medicare fee schedule [PDF] and other fee analyzers can be used to help the practitioner determine what is reasonable for specific services in a given market. Practitioners may want to consult with an accountant or finance specialist regarding the current worth of the practice, future financial goals, and daily revenue necessary for reaching goals.

In addition to cost, audiologists consider the following factors when deciding whether to unbundle hearing aid sales and service.

Increasing Transparency

Regardless of whether audiologists bundle or unbundle, increasing transparency to consumers is an option. If the practitioner determines that bundled billing practices are most appropriate for the specific setting, he or she may develop a bill that itemizes services and equipment to reinforce the value of the audiologic services.

Avoiding Collusion/Remaining Competitive

Instead of asking other providers about their rates and risking collusion, audiologists should consult the Medicare fee schedule and other fee analyzers to determine what is reasonable for specific services in the market being served. See Negotiating Health Care Contracts and Calculating Fees: A Guide for Speech-Language Pathologists and Audiologists for surveyed cost data.

Insurance companies will negotiate reimbursement rates. Before committing to contract obligations with third-party payers, practitioners should understand all of the terms of the contract. See Important Considerations for Audiologists When Reviewing Third-Party Payer Contracts.

State and Federal Laws and Regulations

Before determining whether to itemize hearing aid services, audiologists should check the professional code of ethics, state licensure rules, and legal and regulatory guidelines that impact their specific practice settings (e.g., anti-trust policy, coding and billing practices). Licensure and regulatory requirements for audiologic practices, including hearing aid dispensing, vary by state. Medical clearance, trial periods, return policies, and payment options are often included in the legislation dictating the requirements for audiology and hearing aid dispensing practice. See ASHA's State-by-State pages for summaries of state requirements pertaining to hearing aid dispensers.

Audiologists must follow the specific guidance outlined by their respective Medicaid programs when billing Medicaid.

State regulations regarding dispensing hearing aids may be based on the U.S. Food and Drug Administration's (FDA's) definition of hearing aids as medical devices. This means that all hearing aids must comply with the required conditions for sale mandated in the Code of Federal Regulations (FDA, 2009). The conditions of sale adopted in a specific state may limit an audiologist's ability to unbundle services or charge for returned hearing aids.

When investigating rates and prices for unbundled or bundled hearing aid devices and services, audiologists must keep in mind the obligation to comply with federal and state antitrust laws. The Federal Trade Commission Act established the Federal Trade Commission and gave it rule-making, investigative, and enforcement authority to protect the public from unfair pricing, monopolies, and mergers. Many states also have laws related to unfair business practices. Antitrust laws bar a group of businesses-including, for example, those that dispense hearing aids-from price fixing (i.e., collaborating to set prices for products and services or entering into an inappropriate referral network or monopoly).

Billing and Reimbursement

Although Medicare guides coding and billing practices nationally, hearing aids are not a Medicare benefit; hence, hearing aid codes for treatment are scarce. Many audiologists, private insurances plans, and Medicaid programs use the Healthcare Common Procedure Coding System Level II (HCPCS) codes that represent hearing aids in bundled pricing. HCPCS Level I codes are also referred to as Current Procedural Terminology (CPT) codes, which are procedures classified in numeric format. The HCPCS and CPT codes related to hearing aids, including hearing aid examination and electroacoustic evaluation of hearing aids, can be used to unbundle the services and may be used by private health plans and Medicaid programs (ASHA, n.d.). When pulling out the services from the price of the code, audiologists should adopt codes that are most frequently used by their primary payers and that best represent the service provided. In setting charges for specific service codes, the practitioner must not differentiate between patients based on payer

Codes That Can be Used to Delineate Services

Code

Descriptor

92590/92591

Hearing aid examination and selection; monaural/binaural

92592/92593

Hearing aid check; monaural/binaural

92594/92595

Electroacoustic evaluation for hearing aid; monaural/binaural

92626/92627

Evaluation of auditory rehabilitation status; first hour/each additional 15 minutes

92630/92633

Auditory rehabilitation; prelingual hearing loss/postlingual hearing loss

V5010

Assessment for hearing aid

V5011

Fitting/orientation/checking of hearing aid

V5014

Repair/modification of a hearing aid

V5020

Conformity evaluation

V5090

Dispensing fee, unspecified hearing aid

V5110

Dispensing fee, bilateral

V5160

Dispensing fee, binaural

V5200

Dispensing fee, CROS

V5240

Dispensing fee, BICROS

V5241

Dispensing fee, monaural hearing aid, any type

V5264

Ear mold/insert, not disposable, any type

V5265

Ear mold/insert, disposables, any type

V5266

Battery for use in hearing device

V5267

Hearing aid supplies/accessories

V5275

Ear impression, each

V5299

Hearing service, miscellaneous

See the comprehensive list of codes for codes for hearing devices.

Before discussing hearing aid charges with the customer, the audiologist should always verify hearing aid benefits with the insurance plan or other third-party payer, using specific codes. The practitioner should document such conversations (e.g., date, time, and name of the person spoken to, along with the information provided).

Communicating With Patients

Because unbundling represents a change from traditional pricing practices, audiologists may need to provide additional consumer marketing and education as their practice makes this transition. The essential value of the professional audiologic services included in the hearing aid sales process should be incorporated into all forms of marketing and communications.

Audiologists are responsible for communicating the message that hearing health care requires their expertise and skills to ensure patient safety and satisfaction and to provide the best possible outcomes from hearing aid use. Consumers are most interested in understanding what is necessary to achieve good outcomes and how much will it cost. Providing transparency by unbundling and/or itemizing services and the cost of devices can increase consumer awareness of range and importance of services provided.

When a practice owner decides to unbundle hearing aid sales, he or she educates staff on the new billing model so that they can communicate effectively with customers and bill appropriately. The practice should develop understandable, easy-to-read forms and materials that outline billing practices. See Marketing and Promoting Audiology Professional Services.

Resources

ASHA Resources

ASHA's Public Policy Agenda

ASHA's Comprehensive List of Billing Codes

ASHA's State-by-State Page

Healthcare Common Procedure Coding System Level II (HCPCS)

Important Considerations for Audiologists When Reviewing Third-Party Payer Contracts

Negotiating Health Care Contracts and Calculating Fees: A Guide for Speech-Language Pathologists and Audiologists

Paradigm Shift: The New World of Hearing Health Care Delivery

Private Audiology Practice

Quality Improvement for Audiologists

Practice Considerations for Dispensing Audiologists

Additional Resources

Code of Federal Regulations

Federal Trade Commision Act

Is the Reimbursement You're Receiving Enough for Your Audiology Practice?

What is My Time Worth? Part 3: Breakeven Analysis

Organizations

Center for Medicare and Medicaid Service (CMS)

References

American Speech-Language-Hearing Association (n.d.). Health care commom procedure coding system (HCPCS) Level II codes. Retrieved from www.asha.org/Practice/reimbursement/coding/hcpcs_aud/.

American Speech-Language-Hearing Association. (2012a). 2012 Audiology Survey summary report: Number and type of responses. Rockville, MD: Author.

American Speech-Language-Hearing Association. (2012b). 2012 Medicare fee schedule and hospital outpatient prospective payment system for audiologists. Retrieved from www.asha.org/uploadedFiles/2012-Medicare-Fee-Schedule-Audiology.pdf.

American Speech-Language-Hearing Association. (2013). 2013 Public Policy Agenda. Retrieved from www.asha.org/Advocacy/2013-ASHA-Public-Policy-Agenda/.

Romano, T. (2012, October 23). Vast array is challenge in choosing hearing aid. The New York Times, p. D5.

U.S. Department of Health and Human Services Food and Drug Administration Center for Devices and Radiological Health. (2009). Guidance for industry and FDA staff: Regulatory requirements for hearing aid devices and personal sound amplification products. Retrieved from: www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/ucm127086.htm.