October 12, 2010 Audiology

Audiology Health Plan Contracting

Contracts presented to private-practice audiologists and audiology clinic directors are often confusing and difficult to understand. This article is designed to amplify information presented earlier ("Tips for Audiologists Contracting with HMOs," The ASHA Leader, July 6, 2010) and to provide additional guidance on contractual agreements with any type of health plan.

Practitioners should read carefully all contracts under consideration, with special attention to a contract from a managed care organization (MCO) because of reimbursement implications for both diagnostic and hearing aid services.

Contract Considerations 

The following advice is from two private-practice audiologists who offered these recommendations based on many years of experience:

  • Review the contract thoroughly. You also may want your office manager or attorney to read it.
  • Get answers in writing to any questions you have about the contract, with the fee schedule as an addendum. You may choose not to participate if the answers would negatively affect your practice because the contract may generate too many or too few patients. Find the number of insured individuals in your geographic area to determine the potential number of referrals under the health plan agreement.
  • Keep the contract accessible. You will probably need to refer to it again when a question arises.
  • Look for a term cancellation period. If you choose to cancel the contract, this term cancellation period will tell you how far in advance you must notify the health plan.
  • Insist on receiving the fee schedule allowance for the Current Procedural Terminology (CPT, © American Medical Association) codes that you bill. You may want to include Healthcare Common Procedural Coding System (HCPCS) Level II V-codes for hearing aids and hearing aid services (see the reimbursement section on ASHA's website) to determine if they are covered. (Suggestion: Send the health plan a list of the service codes performed by your office; do not include your charges in this list.) Review the fees to determine if they are acceptable. If some are not acceptable, negotiate for reasonable levels. Get all negotiated rates in writing and signed by a responsible party.

Hearing Aid Coverage

You should always ask if hearing aids are covered even if the fee schedule does not suggest such coverage. If the health plan does cover hearing aids, find out how the hearing aid benefit is administered. Health plans may offer a number of different types of coverage for hearing aids, including:

  1. A flat fee system: The health plan pays a flat fee toward the purchase of hearing aids; the audiologist may bill the patient for all costs above the flat fee.
  2. An allowance system: The health plan pays a specified allowance for each of the HCPCS Level II V-codes for hearing aids. The patient may still be responsible for a deductible plus a percentage of the allowance, and the health plan carrier pays only after the deductible and a coinsurance are met. The provider may not bill the patient for the difference.
  3. An invoice-plus system: The carrier requires the audiologist to submit the manufacturer-discounted invoice with the audiologist's claim (you may decide that this is not a good business practice), and pays a specific percentage above the cost of the invoice. The health plan may pay for hearing-related services in addition to the actual hearing aid (e.g., there may be separate coverage for dispensing the hearing aid and for a hearing aid check). Audiologists may want to consider the short- and long-term consequences of supplying an invoice and determine whether the percentage is sufficient to provide a reasonable profit.

You also may want to consider future hearing aid coverage if the health plan does not have it when you negotiate your contract. Consider an addendum stipulating that you are not required to participate for hearing aids and hearing aid services unless you agree to a revised contract.

More on MCOs and Caps 

Some points in the July Leader article on MCOs (the vast majority of health plans, including health maintenance organizations and preferred provider organizations) need further discussion. The article stated that "...in a fee-for-service plan, the audiologist is allowed to balance bill the patient." That statement should have said that the audiologist might be allowed to balance bill the patient for hearing aid services (as per the allowance system). Moreover, it is unlikely that an audiologist will contract with a fee-for-service plan today because of the paucity of such plans. According to a United Benefits Advisors (UBA) survey, only 0.4% of employees were enrolled in fee-for-service plans. UBA declared fee-for-service plans all but extinct. Nevertheless careful review of all participating contracts is vital to your practice's economic health and positive rapport with your patients.

The July article also used the term "cap," which might confuse a reader about the meaning of different contract approaches. Contracts for audiology are generally based on fee schedule allowances for diagnostic services and normally do not stipulate a "cap" (a maximum benefit that cannot be exceeded per calendar year); however, hearing aid services may have a maximum flat-fee reimbursement per person, per ear, or per time period. The audiologist needs to be keenly aware of each carrier's contract stipulations for balance-billing the patient for hearing aid costs that exceed the flat rate. The contract should specify the liability of the provider and the enrollee.

High-Deductible Health Plans 

High-deductible health plan health savings accounts (HSAs)—specific types of savings accounts that allow tax-free withdrawals for eligible medical expenses—are growing in popularity. Individuals' contributions to these accounts, implemented in 2004 through a change in the Internal Revenue Code, are deductible. Approximately 15% of employees have the HSA option, according to the Employer Health Benefits 2010 Annual Survey by the Kaiser Family Foundation. Hearing aids, batteries, and diagnostic audiology services are eligible HSA expenses. See ASHA's website [PDF] for more details.   

Steven C. White, CCC-A, director of health care economics and advocacy, can be reached at swhite@asha.org.

cite as: White, S. C. (2010, October 12). Audiology Health Plan Contracting. The ASHA Leader.

Before You Sign

These tips they may help audiologists avoid difficulties with health plan contracts:

  • Make sure the fee schedule per CPT and HCPCS Level II codes (if participating for hearing aid services) is included in the contract.
  • Consider contracting with the health plan for diagnostics but not for hearing aid dispensing (the contract addendum could specify "participating for the listed fees only and not participating for hearing aid services"). Many small or medium health plans or plans that need an audiology provider in your geographical area will adjust the contract for your particular practice; government programs and large health plans, however, usually will not.
  • If you choose not to participate for hearing aid dispensing, make sure you have a document explaining such for your patients and indicate the patient's financial responsibility. Make sure the patient signs the form before the hearing aid trial period, with a copy for you and the patient to retain.
  • Do not sign a contract if you do not understand it completely—including the fine print. Consider having an administrative employee or a consultant (e.g., a lawyer) review it as well.


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