American Speech-Language-Hearing Association

Medicare Frequently Asked Questions: Audiology

Medicare Prohibitions

When can I perform free hearing tests?

Providing free hearing tests when you are a Medicare provider appears to be a clear violation of Medicare rules and regulations. Medicare prohibits offering free services such as hearing testing as an inducement to generate other services such as diagnostic audiologic services.  

The Centers of Medicare and Medicaid Services (CMS) has a question and answer area available on their website. This exchange from March 3, 2006, addresses the issue of free tests:

Question: "There is an advertisement in my local newspaper that says that if I will come to a particular clinic in town to have my cataract examined, that they will provide a ride to the clinic and will do the examination for free. Is this ok with Medicare?"

Answer from CMS: "You are right to be skeptical. Medicare has rules against providing inducements to beneficiaries to encourage them to use their services. Providing inducements like free transportation or free services is forbidden by Medicare and should be reported to us or the Office of the Inspector General for follow-up."

Chapter 16 §40 of the Medicare Benefit Policy Manual [PDF] describes the prohibition against inducing Medicare beneficiaries (such as providing free services) to Medicare provider settings:

40. No Legal Obligation to Pay for or Provide Services. Program payment may not be made for items or services which neither the beneficiary nor any other person or organization has a legal obligation to pay for or provide. This exclusion applies when items and services are furnished gratuitously without regard to the beneficiary's ability to pay and without expectation of payment from any source, such as free x-rays or immunizations provided by health organizations. However, Medicare reimbursement is not precluded merely because a physician or supplier waives the charges in the case of a particular patient or a group or class of patients, as the waiver of charges for some patients does not impair the right to charge others, including Medicare patients. The determinative factor in applying this exclusion is the reason the particular individual is not charged.

The following sections illustrate the applicability of this exclusion to various situations involving services other than those paid for directly or indirectly by a governmental entity. (For a discussion of the latter, see §50).

40.1 Indigence: This exclusion does not apply when items and services are furnished an indigent individual without charge because of their inability to pay, if the physician or supplier bills other patients to the extent that they are able to pay.

40.2 Provider, Physician, or Supplier Bills Only Insured Patients: Some providers, physicians, and suppliers waive their charges for individuals of limited means, but they also expect to be paid if the patient has insurance which covers the items or services they furnish.

40.3 Medicare Patient Has Other Health Coverage: Payment is not precluded under Medicare if the patient is covered by another health insurance plan or program, which is obligated to provide or pay for the same services.

Also, in August 2002, the Office of the Inspector General (OIG) issued a Special Advisory Bulletin titled, “Offering Gifts and Other Inducements to Medicare Beneficiaries.” This advisory reads:

"Under section 1128A(a)(5) of the Social Security Act (the Act), enacted as part of Health Insurance Portability and Accountability Act of 1996 (HIPAA), a person who offers or transfers to a Medicare or Medicaid beneficiary any remuneration that the person knows or should know is likely to influence the beneficiary's selection of a particular provider, practitioner, or supplier of Medicare or Medicaid payable items or services may be liable for civil money penalties (CMPs) of up to $10,000 for each wrongful act. For purposes of section 1128A(a)(5) of the Act, the statute defines 'remuneration' to include, without limitation, waivers of copayments and deductible amounts (or any part thereof) and transfers of items or services for free or for other than fair market value. (See section 1128A(i)(6) of the Act.).

Offering valuable gifts to beneficiaries to influence their choice of a Medicare or Medicaid provider raises quality and cost concerns. Providers may have an economic incentive to offset the additional costs attributable to the giveaway by providing unnecessary services or by substituting cheaper or lower quality services. The use of giveaways to attract business also favors large providers with greater financial resources for such activities, disadvantaging smaller providers and businesses.

The Office of Inspector General is responsible for enforcing section 1128A(a)(5) through administrative remedies. This Bulletin is intended to alert the health care industry as to the scope of acceptable practices, providing right-line guidance to protect the Medicare and Medicaid programs, encourage compliance, and level the playing field among providers.

Unless a provider's practices fit within an exception (as implemented by regulations) or are the subject of a favorable advisory opinion covering a provider's own activity, any gifts or free services to beneficiaries should not exceed the $10 per item and $50 annual limits."

Go to the OIG Web site [PDF] for further information on the OIG special advisory on offering gifts for inducements.  

May I provide physicians with a referral pad?

The practice of creating practice specific referral pads that are used to elicit the required Medicare physician order for covered diagnostic services from that provider should be avoided as it may be construed to be a solicitation of a referral in violation of the anti-kickback statute.

The Medicare Anti-Kickback Statute provides for severe criminal penalties where you attempt to solicit a Medicare order or Medicare reimbursed services. You should consider obtaining legal advice as to the use of a particular promotional activity that might be construed as a violation of the anti-kickback rules.The Anti-Kickback Statute reads:

"Section 1128B(b) of the Social Security Act (42 U.S.C. 1320a-7b(b)), previously codified at sections 1877 and 1909 of the Act, provides criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit or receive remuneration in order to induce business reimbursed under the Medicare or State health care programs."

The offense is classified as a felony, and is punishable by fines of up to $25,000 and imprisonment for up to 5 years. This provision is extremely broad. The types of remuneration covered specifically include

"kickbacks, bribes, and rebates made directly or indirectly, overtly or covertly, or in cash or in kind. In addition, prohibited conduct includes not only remuneration intended to induce referrals of patients, but remuneration also intended to induce the purchasing, leasing, ordering, or arranging for any good, facility, service, or item paid for by Medicare or State health care programs. Since the statute on its face is so broad, concern has arisen among a number of health care providers that many relatively innocuous, or even beneficial, commercial arrangements are technically covered by the statute and are, therefore, subject to criminal prosecution." 

When is it advisable to use reminder cards for annual and/or routine hearing testing?

The use of reminder cards to solicit a patient for annual or routine hearing testing could be construed as a solicitation of a Medicare referral. Moreover, billing Medicare for annual or routine hearing tests even with a physician order but without true medical necessity is inappropriate and fraudulent, according to CMS.

Per the CMS Manual System, Pub 100-02 Medicare Benefit Policy, Transmittal 84, Change Request 5717 [PDF], dated February 28, 2009, "audiological tests may be ordered for a Medicare beneficiary when the reason for the test is not for the purpose of fitting or modifying a hearing aid."

Per this Update to Audiology Policies, "it is appropriate to pay for audiological services for patients who have sensorineural hearing loss and who wear hearing aids if the reason for the test is anything other than evaluation of the hearing aid. For example, there may be a perceived change in hearing or tinnitus that makes testing appropriate and covered. Such testing might rule out other reasons for the symptoms (auditory nerve lesions, middle ear infections) and result in subsequent evaluation of the hearing aid (not covered) or aural rehabilitation by a speech-language pathologist (covered)." But, per Section 1862(a)(7) of the Social Security Act "no payment may be made under part A or part B for any expenses incurred for items or services where such expenses are for...hearing aids or examinations therefore..." This policy is further reiterated at 42 CFR 411.15(d) [PDF] which specifically states that "hearing aids or examination for the purpose of prescribing, fitting, or changing hearing aids" are excluded from coverage. Medicare contractors deny payment for an item or service that is associated with any hearing aid as defined above.

The payment for audiological diagnostic tests is determined by the reason the tests were performed, rather than by the diagnosis or the patient's condition.

Payment for audiological diagnostic tests is not allowed by virtue of §1862(a)(7) when:

  •  The type and severity of the current hearing, tinnitus or balance status needed to determine the appropriate medical or surgical treatment is known to the physician before the test; or 
  •  The test was ordered for the specific purpose of fitting or modifying a hearing aid. 

Payment of audiological diagnostic tests is allowed for other reasons and is not limited, for example, by:

  • Any information resulting from the test including, for example:
    • Confirmation of a prior diagnosis;
    • Post-evaluation diagnoses; or
    • Treatment provided after diagnosis, including hearing aids, or
    • The type of evaluation or treatment the physician anticipates before the diagnostic test; or
  • Timing of re-evaluation. Re-evaluation is appropriate at a schedule dictated by the ordering physician when the information provided by the diagnostic test is required, for example, to determine changes in hearing, to evaluate the appropriate medical or surgical treatment or evaluate the results of treatment. For example, re-evaluation may be appropriate, even when the evaluation was recent, in cases where the hearing loss, balance or tinnitus may be progressive or fluctuating, the patient or caregiver complains of new symptoms, or treatment (such as medication or surgery) may have changed the patient's audiological condition with or without awareness by the patient.

In summary, Medicare allows for coverage of medically reasonable and necessary testing initiated by the ordering physician or NPP. Billing Medicare for annual or routine hearing tests with a physician order but without true medical necessity, is inappropriate and fraudulent.

Also, the use of reminder cards to solicit a patient for annual or routine hearing testing could be construed as a solicitation of a Medicare referral. The Medicare Anti-Kickback Statute could be applied in instances where you attempt to solicit a Medicare order for Medicare reimbursed services. The initiation of the hearing test through the use of a reminder card could be considered a solicitation. Violations of the Anti-Kickback Statute Section 1128B(b) of the Social Security Act (42 U.S.C. 1320a-7b(b)), previously codified at sections 1877 and 1909 of the Act, provides criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit or receive remuneration in order to induce business reimbursed under the Medicare or State health care programs. The offense is classified as a felony, and is punishable by fines of up to $25,000 and imprisonment for up to 5 years.

It is important for audiologists to be aware of the changes as a result of the Affordable Care Act (ACA) of 2010, also known as the health care reform bill. Overpayments must be returned to the Medicare contractor or Medicaid agency within 60 days after discovery, or the claim will be considered a False Claim and stiff penalties will apply.

The False Claims Act, 31 U.S.C. § 3729 [PDF], addresses filing claims for incomplete procedures. A common example for audiologists is filing a claim for CPT code 92557, comprehensive audiometry, which includes bilateral testing of pure tone air and bone conduction, speech reception thresholds, word recognition testing. If bone conduction is not performed and 92557 is filed, this is a False Claim. In this example, air conduction (92552), speech reception thresholds (92555) and word recognition testing (92556) should be filed.

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