How to Implement Itemization in an Audiology Practice

Abstract

The hearing aid delivery landscape has dramatically changed over the past several years, with a commercial payer, the Internet, and big box stores dispensing hearing aids directly to patients. The audiology community needs to modify the bundled billing model. This session will describe how to optimize the services you provide to current and new patients and change the hearing aid delivery and hearing aid pricing model to remain competitive with these new market trends. This activity will educate participants on itemized billing, sometimes referred to as unbundling, its pros and cons, and how it could aid audiologists in differentiating themselves in the hearing aid delivery landscape.

Learning Outcomes: As a result of this activity, the participant will be able to (1) identify the changing landscape of hearing aid delivery; (2) create fee schedules for their individual practice based on the hourly rate formula; (3) identify how to implement itemizing hearing aid and professional services in their facility.

In less than a decade, the hearing aid delivery landscape has witnessed a dramatic cultural shift from the conventional face-to-face patient visit to obtaining hearing aids via the Internet, discount warehouse stores, as well as directly from a commercial payer who decides what device should be offered to the patient simply based on an audiogram.

In 2011, and as a follow-up in 2012, the American Academy of Audiology surveyed members on their hearing aid billing practices. The first survey question on both surveys (“Does your clinic bundle professional services into the price of hearing aids?”) demonstrated significant movement from bundling to itemizing in just 1 year. In 2011, 80% of academy members responding to the survey indicated that they did bundle. In 2012, the same question revealed 67% bundled their services. This indicates that 13% of the members surveyed had changed their hearing aid billing practices to itemizing their services in just 1 year's time.

Although there has not been an updated survey to date to see if this trend has continued, the national organizations' discussion boards continue to garner a lot of attention on the topic of unbundling or itemizing. One continual theme that often concerns practitioners who are only familiar with a bundled model is whether patients will return for follow-up if they have to pay for subsequent visits. The academy's billing practice survey revealed this was a major concern. However, there is evidence that itemization, when framed and presented appropriately, can be very beneficial for both the patient and audiologist alike. There are many different models a practice could elect to use, from strict fee for service models to offering extended service packages that include a select number of follow-up visits and lengthened warranty times. Finding the model that works best for each clinic will offer more transparency and establish the value of the professional while maintaining patient loyalty. When the audiologist provides excellent professional service, including verification measures such as real ear probe microphone measurements, a billable service, it is a win-win for everyone. Value-added service is a key component of what appeals to patients. Interestingly, in August 2012, the largest consumer organization for hearing-impaired individuals, the Hearing Loss Association of America, called for increased transparency for consumers regarding the cost of devices and promoted itemizing services as the recommended methodology.¹

As Bob Dylan said years ago, “The times, they are a changin'” and to remain viable, audiologists must be part of the change. The retail model of hearing aid sales versus the professional model of hearing aid delivery continues to be a point of debate and would appear to collide with the professional model of doctoral-level status of over half of the audiologists in the United States. The impact of big box stores, Internet sales, and what other future changes will continue to challenge practice viability.

Itemization can be successful in every office where audiology services are provided, be it in a private practice, a university or hospital setting, or an otolaryngology office. It does not take extra time after one has established the fee schedules and should prove to be the key in optimizing hearing aid reimbursement.

The First Step in Developing a Fee Schedule: Establish The Hourly Rate

Although one may think the first step is to know which Healthcare Common Procedure Coding System (HCPCS) codes to use, the first step is to know the hourly rate to establish the fee schedule appropriate for one's particular clinic setting. For example, two practices are located down the street from one another. One may be inclined to establish similar fees to remain competitive, but if one practice has higher overhead costs, their fees will need to be higher to remain a viable business, not to mention a profitable one.

Practices may vary in their approach, but there are common elements to setting fees that all practices should follow. First, identify all services and products including hearing aids that are offered in the practice. Professional service fees typically include costs incurred to provide services, such as overhead expenses (rent, staff costs including salaries and benefits, utilities, equipment, supply costs, and so on), and time providing the service (to include charting, calls on behalf of the patient to other health care providers, and other follow-up care). To establish fees, calculate the cost of doing business on an hourly basis and apply that rate to services. Following are suggested key steps.

Establish Annual Contact Hours

Determine how many hours per week are spent in providing direct patient care (Fig. 1). Although the practice may operate 40 hours per week, one must remember some of that time is non–revenue-generating. Direct patient care is the time that has potential to generate income.

Figure 1.

How to calculate annual hours.

Calculate the number of weeks per year that patient care services are actually provided (factor in holidays, vacation, sick and professional leave).

Determine the number of providers in the practice.

Multiply the hours per week by weeks per year by the number of providers.

Calculate the Operating Costs for the Practice

Ideally this would be broken down into several different expense categories, such as: personnel (salary/benefits), expenses (rent, utilities, phone, advertising, and so on), and cost of goods (all things you buy for resale).

Determine the break-even hourly rate (Fig. 2). Compute the cost of all clinic expenses except cost of goods. Divide this amount by the annual contact hours established in step 1. This is the break-even hourly rate in an unbundled or itemized model.

Figure 2.

How to calculate break-even hourly rate.

Add in desired profit margin (Fig. 3). Take annual expenses less cost of goods, add desired profit, and divide this number by the annual contact hours. This is the hourly rate including the desired profit margin.

Figure 3.

How to calculate break-even hourly rate with desired profit margin.

The cost of goods is not factored in, because at a minimum, one should pass the actual invoice cost on to the patient. In a truly transparent model, the patient cost would be the manufacturer's invoice cost. However, a practice must be mindful to analyze if there are times their services would not add up to their break-even hourly rate. For example, if the practice payer mix is predominantly Medicare patients, it is possible the practice would not recoup its necessary hourly rate for the hearing evaluation. This would need to be offset somewhere else. One way to recoup this is through a markup on the price of the hearing aid(s), but the point of calculating the hourly rate is to determine the value of one's services and to apply this to the various services offered, rather than suggesting the things you do for your patients are free.²

The Next Step: Codes Toolkit

The vehicle to itemize services is the HCPCS. In practical terms, itemization is defined as placing each component of all the services and devices related to the delivery of the hearing aid(s) on the hearing aid purchase agreement as well as itemized on each line in the Current Procedural Terminology (CPT)/HCPCS column on the Center for Medicare and Medicaid Services (CMS) 1500 billing claim form with the corresponding dates of service and fees. What may have once been bundled into one fee for devices and services is now delineated as individual line items, including the devices, the dispensing fee(s), the conformity evaluation (real ear, functional gain measures), the fitting/orientation/checking fees, assistive listening devices including personal frequency-modulation systems and components, and, if applicable, earmolds and earmold impressions.

The American Academy of Audiology has these pertinent codes available in a template online (http://www.audiology.org/sites/default/files/2015_EncounterFormHCPCS.pdf) and shown in Fig. 4. Historically, the HCPCS code list includes several procedures, such as assessment for hearing aid, which has a CPT counterpart. There are several hearing aid services related within the CPT code set:

Figure 4.

American Academy of Audiology hearing aid services template. Abbreviations: ALD, assistive listening device; BICROS, bilateral contralateral routing of signals; BTE, behind the ear; CIC, completely in the canal; CROS, contralateral routing of signals; HAE, hearing aid evaluation; ITC, in the canal; ITE, in the ear; TDD, telephone device for the deaf.

• 92590—hearing aid examination and selection, monaural

• 92591—hearing aid examination and selection, binaural

• 92592—hearing aid check, monaural

• 92593—hearing aid check, binaural

• 92594—electroacoustic evaluation for hearing aid, monaural

• 92595—electroacoustic evaluation for hearing aid, binaural

The code set preference required by any third party for billing should be noted in any payer contract.

To demonstrate the ease of itemization as noted in the American Academy of Audiology's Guide to Itemizing Your Professional Services,³ here are several common examples of services, including monaural behind the ear, binaural open fit, and traditional behind the ear hearing aids with earmolds. The codes included are reimbursed by many third-party payers and, of course, by private pay patients. As noted previously, audiologists have indicated concern with patients not returning if they are expected to pay for postfitting/postwarranty visits. An extended warranty package is an excellent way to offer services to ingratiate patient loyalty and alleviate patient and provider concerns. This can be structured for the patient to choose between a basic extended warranty (e.g., 1 additional year of warranty and one to three visits in that year) or a premium warranty package (e.g., 2 additional years of warranty and three to six visits in that 2-year time frame). A written agreement of what services are covered with the length of time with beginning and end dates should be discussed in detail with the patient, then signed, dated, and a copy given to the patient with the original retained by the office.

Monaural Behind-the-Ear Hearing Aid, with Earmold

The choice of the code may be payer-dependent.

• 92590 (hearing aid examination and selection, monaural), or V5010 (assessment for hearing aid), or S0618 (audiometry for hearing aid evaluation (HAE) to determine the level and degree of hearing loss)

• V5011 fitting/orientation/checking of hearing aid

• V5020 conformity evaluation

• V5241 dispensing fee, monaural hearing aid, any type

• V5257 hearing aid, digital, monaural, behind the ear

• V5264 earmold/insert, not disposable, any type

• V5266 battery for use in hearing device

• V5267 hearing aid supplies/accessories (can include hearing aid drying kits and other supplies)

• V5275 earmold impression, each

• V5299 hearing service, miscellaneous (e.g., extended warranty packages)

Binaural Open-Fit Behind-the-EAR Hearing Aids

The choice of the code may be payer-dependent.

• 92591 (hearing aid examination and selection, binaural), or V5010 (assessment for hearing aid), or S0618 (audiometry for HAE to determine the level and degree of hearing loss)

• V5011 fitting/orientation/checking of hearing aid

• V5020 conformity evaluation

• V5160 dispensing fee, binaural hearing aid

• V5261 hearing aid, digital, binaural, behind the ear

• V5266 battery for use in hearing device

• V5267 hearing aid supplies/accessories (can include hearing aid drying kits and other supplies)

• V5299 hearing service, miscellaneous (e.g., extended warranty packages)

For receiver in the canal technology, the receiver could be billed with V5267, hearing aid supplies/accessories.

Binaural Behind-the-Ear Hearing Aids, with Binaural Earmolds

The choice of the code may be payer-dependent.

• 92591 (hearing aid examination and selection, binaural), or V5010 (assessment for hearing aid), or S0618 (audiometry for HAE to determine the level and degree of hearing loss)

• V5011 fitting/orientation/checking of hearing aid

• V5020 conformity evaluation

• V5160 dispensing fee, binaural

• V5261 hearing aid, digital, binaural, behind the ear

• V5264 earmold/insert, not disposable, any type (will need to be filed with two units for two earmolds)

• V5266 battery for use in hearing device

• V5267 hearing aid supplies/accessories (can include hearing aid drying kits and other supplies)

• V5275 earmold impression, each (will need to be filed with two units for two earmold impressions)

• V5299 hearing service, miscellaneous (e.g., extended warranty packages)

As noted in each of the previously listed hearing aid scenarios, the hearing aid examination, fitting, dispensing fee(s), and conformity fee(s), which includes verifying amplification results as a function of returned audibility for that patient by way of real ear measurements, are included and are value-added. These are listed separately from the actual device. Many insurance plans will pay the professional fees separately from the device, and these fees should be itemized for hearing aid reimbursement to be optimized. Embedding the professional services in one bundled fee dilutes the value of the services and as a result, third-party reimbursement may be for the device only.

Billing for Services

Out of Network

Many available codes show the value of audiology services. The following section discusses how the University of North Carolina Hearing and Communication Center (UNC-HCC) utilizes best practice in an itemized billing model. This is their 10th year of itemizing. As a disclaimer, UNC-HCC is a nonprofit clinic, and although a university training clinic for doctoral students of audiology, the clinic is self-supported. The clinic is located in the community and receives no state funding, so it functions essentially like a private practice clinic. The UNC-HCC has its own budget and must pay rent, overhead, salaries, and so on. The UNC-HCC is facing the same economic times as clinics in the private sector, and the training program is relying more on revenue generated by clinical services to help offset academic program expenses.

As a training clinic, the UNC-HCC models best practice to students while offering exemplary hearing care to members of the community. Following is an overview of the steps after a comprehensive hearing evaluation and any necessary medical management that may be recommended prior to moving forward with treatment. The hearing aid evaluation (92590/92591) is the next appointment and has been appropriately called a functional communication assessment that takes the emphasis off the device and puts it on solving problems. At this appointment, the patient completes some objective and subjective testing and works with the audiologist to come up with a treatment plan that often includes hearing aids and assistive technology. This model was first discussed by Dr. Robert Sweetow in the Hearing Journal and showcases the knowledge and expertise of the audiologist, with the device taking a back seat.⁴ During this appointment, both objective tests (Loudness Discomfort Level (LDL), Quick Speech-in-noise test (QuickSIN), Acceptable Noise Level (ANL), Cochlear Dead Regions (CDR), and so on) and self-assessment measures (Characteristics of Amplification Tool (COAT), Abbreviated Profile of Hearing Aid Benefit (APHAB), Expected Consequences of Hearing Aid Ownership (ECHO), Client Oriented Scale of Improvement (COSI), and so on) are utilized to evaluate a patient's communication difficulties. At the conclusion of the testing, three to four communication goals are outlined, and the hearing aids that will assist in meeting these goals are selected. When the patient decides to proceed, earmold impressions (V5275 ×2) are taken and earmolds or micro-molds are ordered (V5264 ×2). The out-of-network patient would pay for all of these services at the conclusion of this appointment. If the patient completes the hearing aid evaluation appointment and chooses not to move forward, they would only pay the hearing aid evaluation fee (92590/1). This ensures that the time spent testing and counseling the patient is accounted for, even if they choose not to pursue treatment.

Prior to the hearing aid fitting appointment, all devices should pass electroacoustic analysis (CPT code 92594/92595). Additionally, all hearing aids should pass a directional microphone test and hearing aid check (92592/92593) before the patient arrives for their hearing aid fitting. This testing can be done by a technician and assures the device is working properly prior to fitting. When the patient arrives for the hearing aid fitting appointment, the audiologist verifies the hearing aid fitting measuring audibility through the use of real ear probe microphone measures (V5020) when programming the hearing aids (V5014). This tool is a valid and critical way to demonstrate the need for the professional in an era when much of the media are suggesting one can simply purchase hearing aids online and bypass the provider. The American Academy of Audiology Taskforce Guidelines for the Audiologic Management of Adult Hearing Impairment outlines the validity and specificity of this test.⁵ The audiologists who take a few extra minutes to complete this test at the onset (5 to 10 minutes) will improve their patient outcomes and save time and patient frustration at subsequent follow-up appointments. Although the patient may not go home with the settings at 100% of targets, the use of real ear measures provides the professional with the opportunity to counsel the patient about audibility while using concrete evidence. Follow-up appointments can usually be spent counseling on care and use, communication strategies training, and perhaps adding a customized program or two for unique listening environments (i.e., a loop program). There is less inclination to continue to tweak and retweak as the patient has clearly seen at the initial fitting that the targets were maximized for their hearing loss. As hearing happens at the level of the brain, one can focus on counseling and audiologic rehabilitation and move the focus away from the device.

There are several ways fees can be established for a practice. The UNC-HCC decided that certain services were nonnegotiable during the evaluation and adjustment period (trial period) and therefore chose to bundle those together into a professional service fee. The patient still has the itemized list of all the services and codes, but the patient cannot elect to remove a service because they do not wish to pay. Another method could be to bill separately for each service and each follow-up visit after the initial fitting. The UNC-HCC chose to partially unbundle or itemize for the services they believe are necessary for successful outcomes during the evaluation and adjustment period and have found this to be very successful in the 10 years of using this model. Although occasional patients may worry about getting all their needed services completed within the 45-day window UNC-HCC offers, most come for follow-up appointments at 2 weeks, 4 weeks, and often at 6 weeks postfitting. It cannot be overstated that the use of electro-acoustic analysis (EAA), real-ear probe microphone measures (REM), and all the objective and subjective measures utilized by the UNC-HCC appear to go hand in hand with successful patient outcomes. Less than 1% of UNC-HCC patients return the hearing aids for credit at the conclusion of the evaluation and adjustment period, a pattern that has held steady for over 10 years. In the rare instances the patient returns the hearing aids, they receive a refund only for the cost of the device. All the services associated with the process have been rendered and are therefore nonrefundable.⁶ (State licensure laws in the state where the practice resides should be reviewed for any regulations that may pertain to hearing aid refunds.)

In Network

Many third-party payer contracts reimburse for hearing aids, some of which are not beneficial to the health of a practice. It is not in the purview of this article to discuss the specifics of contracting for services, but rather to discuss several elements for consideration for optimal reimbursement for hearing aids and professional services that will dovetail into the confines of those contracts.

Correct terminology is one of those elements. Audiologists often query third-party payers about balance billing for services and often are told by those payers that it is not allowed by their contract. Balance billing to a payer means that the practice cannot bill the difference of what was allowed for payment and what was paid as this allowed amount was agreed upon in the contract's fee schedule. When verifying the hearing aid benefit for each patient, which must occur before the hearing aid is ordered so that there are no surprises when the payer's check arrives, asking about cost sharing beyond the patient's benefit will result in a more positive approach and a definitive answer.

The next question should be about the use of a waiver. Does the payer allow one to be utilized? Do they have one to offer? If the payer allows a waiver, and they do not have a template for the document, create your own. It should include the patient's name, date of birth, and date of service and should note that they are allowed to share in the cost of an upgrade and any expected out of pocket expense. The waiver also can specify that the patient's explanation of benefits (EOB) will likely indicate they owe nothing, but that is applicable only for covered services (what their benefit will allow or a percentage of what their benefit will allow); an upgrade is a noncovered service, one that is beyond their benefit. The mention of a noncovered benefit beyond their hearing aid benefit should reduce concern for a practice regarding collecting any additional amounts above the reimbursement from the payer. Having the patient sign and date this document verifies their understanding of this process with the practice retaining a copy and one given to the patient.

Some payers offer an in-network benefit of up to specified dollar amounts, the key phrase being up to. It is incumbent upon the practice to understand what this means in terms of reimbursement. Although it suggests one would be reimbursed at that very rate, it can very likely mean much less. This, along with a litany of other reasons, is why it is critical that no hearing aid should leave an office without the patient's hearing aid benefit verified by the practice and all parties aware of what that benefit is and what the patient owes, if anything. Many practices accept contracted discounts to have access to a greater number of patients, a valid practice as long as there are significant patients to support the discount structure and fees are set realistically.

As previously noted, awareness of the hourly rate and profit margin is necessary to know if a contract will be beneficial to a practice. One also will need to understand the contract's requirements for the number of visits and the required length of time of those visits (1 month, 1 year, 2 years, or the life of the device) to decide if the contract is beneficial to the health of a practice. Ensure the understanding of timely payments and the appeal, denial, and termination processes in case the payer does not respond in a timely fashion or pay the rates required by the contract. Check applicable state prompt payment laws to ensure that the contracted payers are within compliance.

When an EOB is received, it is advisable to review it and compare the reimbursed amounts to those agreed upon in the contract. A spreadsheet of the contracted payers and their fees is very helpful for this process. The fees on the EOB should be identical to those in the fee schedule or else an appeal may be necessary. Although writing off of fees may be required by a contract, known as “contractual adjustments,” anything over $10 should be examined. Although it may not seem like a lot of money per payment, it does add up over a weekly, monthly, and yearly basis and could be costly.

As an example, see the EOB in Fig. 5; the procedure and device fees were itemized and reimbursed at 80%. This is a common plan known as 80/20, meaning the benefit is paid at 80% and the patient is responsible for 20%. In the case of an allowed upgrade, the EOB may say “patient responsibility is zero” and, again, it must be noted that this is for covered services only, and the upgrade is a noncovered service as it is beyond the patient's benefit and they have agreed to cost share for that upgrade. Often when patients see that “patient responsibility is zero,” they request the refund of what they paid for the upgrade. This is exactly the reason a waiver is used prior to the dispensing of the aid, and thus can prevent this discussion and both practice and patient angst.

Figure 5.

Sample explanation of benefits.

Patients Who Purchased Devices Elsewhere

The future of hearing care will probably involve seeing more patients who have purchased their hearing aids elsewhere and yet come to a practice for services. Although occasionally someone has a proprietary device that is locked, the goal of helping a patient improve their communication can be reached, even if they did not purchase the hearing aids from us. At the UNC-HCC, a specific protocol was adopted to address patients who come to the clinic with devices purchased elsewhere.

First and foremost, it is important to have a current case history and comprehensive hearing evaluation. It is also important to know the law in each state with regard to the age of a hearing test for purposes of fitting/reprogramming hearing aids. Equally important, it must be remembered that a hearing evaluation is not billable to Medicare if it is solely for the purpose of programming or reprogramming hearing aids. At the UNC-HCC, the team is selective when accepting hearing test results from other clinics, as many will not have the detail required in audiograms by the UNH-HCC audiologists. Many of the clinicians prefer to obtain all interoctave frequency thresholds, as this can improve the accuracy of fitting multichannel hearing aids. Thus, a repeat audiogram to obtain these thresholds could be an out-of-pocket expense depending on the patient's insurance. Additionally, there is a fee to measure the patient's individual LDLs and to establish QuickSIN scores and/or any other testing believed warranted prior to reprogramming. At a minimum, the LDLs ensure the patient's loudness preference levels are not exceeded and the QuickSIN will be helpful for counseling, especially if a patient does not do well with their chosen model. There is no magic hearing aid; therefore, having these tools in the toolbox to demonstrate why audiologic rehabilitation is needed is very valuable.

Regardless of where the device is purchased, it is important to complete an electroacoustic analysis (92594/92595) of the hearing aid(s) to ensure devices are working appropriately before any programming is completed. If a repair is required and the device is in warranty, the only fees the patient pays are the service fees to complete another EAA (92594/92595) and a hearing aid check (92592/92593) after the devices are returned from repair to ensure optimal function. A study completed internally at the UNC-HCC in 2009 revealed that 12% of new hearing aids fail inspection and 18% of repaired hearing aids were not fixed.⁷

Even when patients have purchased their device elsewhere, one can demonstrate, and charge for, professional expertise with the use of real ear probe microphone measures when programming any patient's hearing aids. The patients refit at the UNC-HCC often reported their devices were not programmed using REM and this is usually evident as their Speech Intelligibility Index score is much improved when programming to reach prescriptive targets. In all cases, the clinic can levy a charge based on the service provided and in accordance with our fee structure. The codes for each of these services are itemized for the patient on their bill when they check out.

Many of the patients who visit the UNC-HCC and have purchased their device independently are folks who are now trying to figure out how to salvage their investment and have found us after the fact. Despite additional charges related to the services, patients are delighted that their investment in the device, purchased elsewhere, is preserved. Even in these cases, the clinic benefits economically, and the obligation to serve persons with hearing loss is met. Occasionally, there is a patient who is not quite so fortunate and purchases devices that are inappropriate for their use, and thus has to start the process all over again, or live with subpar results if they are unable to make another investment. In these instances, the opportunity presents to counsel the patient on communication management strategies to improve his or her quality of life.

The UNC-HCC did not notice a dramatic decrease in revenues when switching to an unbundled model 10 years ago, although this is often a concern that many providers have about changing their billing policies. Potential decreases were offset through the use of a service plan. The UNC-HCC presents the service plan at the patient's final follow-up visit, and the patient can opt to adopt the plan and pay an additional fee at that time or waive the plan. The patient has to sign a form stating he or she has declined the service plan. In this case, the patient is counseled that he or she will be responsible for any charges incurred at subsequent visits. In another model, a provider could decide to itemize their services and demonstrate the cost of the device itself, what services are required for the upfront fitting, and what fees are for future services. Separating out the device fee leads the patient to realize the total cost is not just the device, but the value of the services provided now and in the future. Utilizing this format with a patient should not change the overall revenue for the provider but offers more transparency on the costs for the consumer. There are many ways of structuring services, and it is important for clinics to find the model that fits their culture and comfort level. The goal with itemization is to move away from a practice that suggests a patient is paying only for the devices and that the audiologist's time and expertise has no value.

Summary: What Can You Do Tomorrow Morning?

Although there will always be some who choose to stay with the traditional model of billing hearing care, the itemization model is an alternative that serves the audiology professional and the patients quite well. The steps in this process include:

• Figure out what it actually costs to run the practice and use the calculated hourly rate to determine the fees.

• Establish fees for all services and keep fees consistent between patients.

• Evaluate each service for which the practice is presently not charging, and determine if it truly is a prepaid service or not. If the patient's warranty expired a year ago, and they are still coming in for services, it is time to charge them for the audiologist's time.

• Send each patient to check out with a super bill, with appropriate services circled, whether there is a charge or not. This is a method of having the patient see in writing the variety of services that were provided.

• If not implementing American Academy of Audiology Task Force recommendations for the fitting of amplification currently, strongly consider how this can add value to a practice and justify charging for services.