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Big Concerns Linger in Countdown to Medi-Cal Hearing Aid Reimbursement Changes

Lindsey, Heather

doi: 10.1097/01.HJ.0000429448.77609.8f


California audiologists and hearing aid dispensers are anxiously awaiting changes to their state's hearing aid reimbursement policy, scheduled for April 15. The new policy will consider the hearing community's outcry over revisions that the California Department of Health Care Services (DHCS) announced at the end of last year.



Costs to hearing providers add up over time, and when the community learned that the reimbursement policy of Medi-Cal, California's Medicaid program, would eliminate manufacturer discounts starting January 15, “we knew that would be the last straw,” said Tracy Peck, AuD, President of the California Academy of Audiology (CAA). “Audiologists said, ‘If you're going to do that, we're going to drop out of the program. It's just not sustainable.’”

After hearing from patient advocates, individual providers, the CAA, and other hearing and audiology associations about the impact of the new policy, the DHCS temporarily and retroactively suspended its decision at the end of February.

“Because of the additional information that has been provided since the change was implemented and the potential [beneficiary] access concerns, DHCS has determined it necessary to place a moratorium on any changes pending further review,” wrote Kara M. Siepmann, public information officer IIin the DHCS Office of Public Affairs, in an e-mail to The Hearing Journal. Delaying the policy change for three months gives DHCS time to determine appropriate adjustments that would account for discounts, rebates, repairs, replacements, earmolds, and other covered services, she said.

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The DHCS originally decided to amend its hearing aid reimbursement policy because manufacturer-provided rebates and discounts reduce device costs below retail, and it's “inappropriate to reimburse providers more than the actual cost of the device,” Ms. Siepmann said in her e-mail.

This decision was based on a DHCS assessment of 55 claims from hearing providers, in addition to a 2012 State Controller's Office (SCO) review.

Medi-Cal used to reimburse providers for the list price or one-unit wholesale cost, plus a markup of $326.08 or $256.37 for a binaural or monaural fitting, respectively, which is intended to include coverage of up to six patient follow-up visits. Ceilings were $1,480.32 for binaural and $883.80 for monaural devices.

While details of the DHCS audit were not made available to The Hearing Journal, the SCO report released on Feb. 27, 2012, examined 60 claims filed in 2009 by five Medi-Cal audiologists and hearing aid providers. The review found that manufacturers offered discounts and rebates to providers that resulted in a significant difference between the acquisition cost and the wholesale cost reported to DHCS. For example, one provider paid $436 for a hearing aid and was reimbursed for a wholesale cost of $1,218, according to the report.

The SCO report also provided several options for new reimbursement guidelines, with a projected savings of up to $27 million over three years.

The providers represented in the Controller's report “are definitely not the norm,” Dr. Peck said. Consequently, many audiologists feel the changes to hearing aid reimbursement are unfair to providers and patients.



“There's some history of maybe some providers who are not seeing patients as ethically as other providers,” commented Linda H. Smith, RN, CEO of the Providence Speech and Hearing Center and Newport Language and Speech Centers in Orange, CA. Regardless, “I don't see any rational way that the State Controller could conclude that providers are making any bonus off of these patients other than trying to cover their costs. Most of the hearing aids used are low-end, so if a percentage is rebate, it's still not much money.”

Like any audit, the Controller's review relied on a sample of claims to determine whether payments were being made inappropriately, wrote Jacob Roper, an SCO spokesman, in an e-mail. In the vast majority of those examined cases, the Controller found that providers were being compensated based upon inflated costs.

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About 80% of 300 providers in a CAA survey said they would leave the Medi-Cal hearing aid dispensing program if the proposed DHCS changes were implemented.



Amnon Shalev, a licensed hearing aid dispenser and co-owner of Supertone Hearing Aid Center in Woodland Hills, CA, stopped accepting Medi-Cal beneficiaries because under the proposed policy, reimbursement dropped from $1,363 for fitting two hearing aids to $699, “which is below the cost of operation,” he said.

Additionally, larger academic centers like the Audiology Clinic at the University of California, San Francisco, (UCSF) Medical Center are examining how they would be affected by potential reimbursement changes.



“We would love to be able to serve every patient who comes through the door,” said J. Andrew Dundas, PhD, the center's director of audiology, as well as clinical and assistant professor of otolaryngology at UCSF. However, under the proposed policy, by the time a patient has come in for a hearing aid fitting and selection and three follow-up visits, “we are in the red about $800.”

While Providence Speech and Hearing Center has already seen “a huge increase” in its Medi-Cal beneficiary load because other providers have left the program, “we are continuing to see these patients because that's part of the mission of the organization,” Ms. Smith said. As a nonprofit organization, Providence plans to help cover new patients with fund-raising and grant writing, she said.

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There are already parts of California with very few or even no Medi-Cal providers, as some dropped out due to previous DHCS reimbursement cuts, Dr. Peck said. “We feel that maintaining access to care for beneficiaries is a very serious and pressing issue and are hoping this gets resolved soon.”

The DHCS is still assessing data from the health care community to determine appropriate reimbursement changes, Ms. Siepmann wrote. “With the additional information that has been provided, it is our intent to develop a reimbursement policy that is transparent, fair, and maintains access for our beneficiaries,” she said.

Mr. Shalev expressed optimism that the updated reimbursement policy would not hurt patient access.

“We have high hopes that the DHCS will make corrections so that reimbursement will not be cut to the point that providers can no longer serve Medi-Cal beneficiaries,” said Mr. Shalev. If the policy pays a net acquisition cost to avoid the contentious issue of rebates, DHCS should consider increasing markups or paying a dispensing fee to cover costs, he added. Reimbursing $750 for one hearing aid and $1,400 for two—a proposal of the Hearing HealthCare Providers of California, of which Mr. Shalev is a member—would enable providers to remain in the Medi-Cal program, he said.

CAA submitted a proposal to the DHCS on March 15 that acquiesced to getting rid of hearing aid discounts, which the “state finds unseemly,” Dr. Peck said. However, CAA wants DHCS to consider what the marketplace will bear. As a suggested reimbursement rate, “we looked at what average provider makes profitwise and cut that in about half.”

In the meantime, Dr. Peck advises audiologists to stay informed of the latest policy changes through CAA's website and its Facebook and LinkedIn pages. She also encourages audiologists to write to DHCS Director Toby Douglas about the cost of running a practice.

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Stay Tuned to HJ

An updated article with details on the final reimbursement policy will be featured on the HJ website and in the May print issue.

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Reimbursement Trends in Other States

States pay for hearing aids in a variety of ways, said Lisa Satterfield, MS, director of health care regulatory advocacy at the American Speech–Language–Hearing Association. Some reimburse for the catalog price plus markup, some pay the acquisition cost plus markup, while others contract with manufacturers and pay only a dispensing fee to providers, she explained.

“It wouldn't surprise me if we saw more states move away from reimbursing for the list price toward the acquisition cost,” Ms. Satterfield said. “They're looking for ways to save money.”

When updating and clarifying hearing aid policies, states of similar size like California, Texas, New York, Florida, Minnesota, Illinois, and Ohio look to each other's reimbursement plans, said Ms. Satterfield, who is the former California DHCS audiology consultant.

“Audiologists and audiology organizations need to monitor their state reimbursement policies and look for opportunities to work with state representatives to make positive changes,” Ms. Satterfield said.

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