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20Q: OTC Hearing Aids and a 21st Century Pricing and Delivery Model - A Change Is Gonna Come

20Q: OTC Hearing Aids and a 21st Century Pricing and Delivery Model - A Change Is Gonna Come
Kim Cavitt, AuD
June 11, 2018

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From the Desk of Gus Mueller

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We’ve been talking about over-the-counter (OTC) hearing aids for a long time. Some of the speculation and what-ifs were put to rest when the Over-The-Counter Hearing Aid Act of 2017 was signed into law nearly a year ago.  We now know it’s going to happen, although not exactly when, and many of the details are yet to be determined.

There has been a wide range of opinion regarding how the introduction of OTC products will impact the audiology profession, in particular, clinics and practices that rely on hearing aid dispensing as a large part of their revenue. Pretend OTC products don’t exist?  Make the counter, your counter?  Or, maybe something in-between?

Some in our profession believe that audiology and audiologists cannot only survive, but thrive, in an OTC hearing aid world. One of those is Kim Cavitt, AuD, our guest author this month. Dr. Cavitt is President, Audiology Resources, Inc., a company that provides comprehensive operational, compliance and reimbursement consulting services to hearing healthcare providers.  As most of you already know from her seminars and workshops over the past two decades, Kim has been actively involved in issues related to all aspects of audiology practice operations and management, coding, billing, third-party reimbursement and managed care issues. She has written numerous articles and provided many webinar training events—you can find several of her excellent webinars here at AudiologyOnline.

Dr. Cavitt currently serves as the Interim Chair of the Audiology Quality Consortium (AQC), Vice-President of Government Affairs for the Illinois Academy of Audiology and is Chair of the State of Illinois Speech Pathology and Audiology Licensure Board. She is a past president of the Academy of Doctors of Audiology.

Kim is the only audiologist I know who conducts her own two-day “Boot Camp.” While she reportedly is a fan of both baseball (Cubs) and beer, her boot camp has nothing to do with fielding grounders, or selecting the best two-row malting barley. For those of you who have attended, you know that one of the topics involves how to develop a pricing and delivery structure that is evidence-based, but is also code and time driven. In this 20Q article, she discusses how OTC hearing aids just might fit into this model.

Gus Mueller, PhD
Contributing Editor
 

Browse the complete collection of 20Q with Gus Mueller CEU articles at www.audiologyonline.com/20Q

20Q: OTC Hearing Aids and a 21st Century Pricing and Delivery Model - Change Is Gonna Come 

Learning Outcomes 

After this course, readers will be able to:

  • Describe terms and concepts relating to various pricing and delivery models of hearing aids, including: bundled model, itemization, unbundling, hybrid model.
  • Explain potential positive effects of OTC hearing aids on consumers, professionals, and the provider-delivery model of hearing aids.
  • Explain how a professional could utilize a hybrid pricing and delivery model in a market where hearing aids are available over the counter.
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  Kim Cavitt, AuD 

1. I’ve heard you have some views on how over the counter (OTC) amplification products might impact our profession? 

I do. As you know, the Over the Counter Hearing Aid Act was signed into law by President Trump in August, 2017.  Many audiologists were opposed to this bill but I actually was supportive of the legislation. Why? First, I began to see technologies such as personal sound amplification products (PSAPs), headphones, and other audio applications emerge that looked like a hearing aid and/or “quacked” like a hearing aid, but that were not, technically, a hearing aid. They were lower cost but still offered hearing impaired individuals access to sound and communication. The realities of technology had and possibilities finally came to audiology. These devices offer consumers the opportunity to have easy, affordable access to sound. Do we deny individuals, who currently have not begun their amplification journey, access to tools that could assist them? How do we differentiate an amplified earphone from a hearing aid? How do you regulate specification, technical safeguards, and intended use when it “amplifies” but is not a “hearing aid” in its legal and regulatory definition?

2. I agree, but are OTC products the answer?

I have been an audiologist for close to 30 years, and in that timeframe, I have seen hearing aid prices climb to levels that make amplification cost prohibitive to many consumers. I have noted very little change in hearing aid delivery models, pricing structures, and strategies implanted by audiologists and dispensers. As a result, we have seen very little to no movement in hearing aid adoption rates. To me, poor hearing aid adoption means poor access to communication. Also, the potential risks associated with non-treatment (increased risk of dementia, cognitive decline, isolation, depression, and falls) began to far outweigh the potential risks of patient-directed care, self-treatment and, maybe, less than perfect hearing aid selection and fitting. I became an audiologist to assist individuals in communication and listening and to reduce their likelihood of falling down. I want to see hearing adoption increase. I want to see individuals begin their amplification journey on their terms, when they are younger and have lesser degrees of hearing loss. I want OTCs. 

3. How can the profession survive when hearing aids are available direct to consumer?

Audiology existed as a viable profession and ironically, had an unbundled pricing structure, prior to 1977 when we were granted the legal right to dispense hearing aids. In the “old” days, audiologists evaluated patients and created a plan of care, which may have included aural rehabilitation. Then, we referred patients to a hearing aid dispenser or mail order company to obtain the devices based upon our recommendation. The patient was then either fit by hearing aid dispenser or they brought the aids to the audiologists to fit and adjust. Patients came to audiologists for aural rehabilitation, counseling, hearing aid management, and diagnostics. They typically paid privately for the services provided. I am not sure how hearing aid selection, fitting and delivery veered so far away from where we were when we started down this dispensing road. I believe we tied too much of our identity and the monetization of our practices to the device rather than to our care and services.

4. Ok maybe we can survive the coming OTCs, but can we actually be successful?

Audiology and audiologists are well more than the widget. Audiology cannot only survive, but thrive, in an OTC world. How? It can be accomplished through the delivery and consistent practice of evidence-based audiologic and vestibular evaluation, management and treatment. Audiologists need to assign value to their education, expertise, and time rather than merely assign value to a product. A large class of consumers are willing to pay for the evidence-based, patient-centric care they will not be able to receive online or over the counter (evaluation, communication needs assessments, fitting and orientation, verification, modification, repairs, and rehabilitation).

5. Is this type of practice feasible? 

Most certainly. We see that in our offices now. Individuals who procured their devices from the VA, big box retailers, their insurer, or online, bring in these hearing aids and personal sound amplification products now for evaluation, training, adjustment, verification, or batteries. Many audiologists welcome them into their practices and treat them just like a patient who just moved into their community with pre-existing amplification. These individuals pay, typically privately, for the care that is provided.

6. Will our everyday practice and services change?

I think they should, yes. We need to expand the services we provide and practice audiology to its current, state-defined scope of practice. There is a huge need in our communities for aural rehabilitation, auditory processing evaluation and management, tinnitus evaluation and management, vestibular services (screening, evaluation, management and treatment), pediatric evaluation and management including newborn hearing screening and early intervention, and auditory prosthetic device candidacy determination, programming, and management. This is audiology just as much as conducting audiograms and dispensing hearing aids! 

7. But there is not insurance coverage for a lot of the stuff you mentioned. How do we financially support ourselves and our practices if hearing aid sales are reduced?

First, how do we know that hearing aid sales are going to be reduced? When reading glasses went over the counter, prescription eyeglass sales increased. Also, as I have indicated before, there will be a class of consumers who seek out our services for the care they still need.

Now, who “covers” this care? Currently, in the world of Medicare, audiology is a diagnostic-only profession in terms of coverage; hearing aids and their related services are excluded from coverage. That means that if we provide care to a Medicare beneficiary, some of that care, audiometric testing for the sole purpose of fitting or modifying a hearing aid, cerumen removal, tinnitus management, and aural rehabilitation becomes the financial responsibility of the patient. Does that mean we do not provide it because it lacks coverage? No. That means, like dentistry, chiropractic care and optometry, which also have little to no Medicare coverage, that we provide the evidence for and value of the care to the patient. We charge the patient a fair market value, a usual and customary fee for a service. Audiology needs to follow the example of our other doctoral level colleagues, such as dentists, chiropractors, optometrists and podiatrists by practicing to the fullest extent of their state defined scope of practice and to stop giving away our expertise for the sake of a sale. The patient, at the outset, may balk at paying for audiologic care because, to them, it is solely tied to the hearing aid.  We have to show them that a hearing aid is a hearing aid but, in our skilled hands and with our interventions, we can maximize their communicative abilities.

8. How do you see the OTC landscape playing out?

Honestly, as I have indicated from the outset, I think this will be good for consumers and audiologists.  So far, the Food and Drug Administration (FDA) and Over the Counter Hearing Aid Act language has followed the roadmap of the President’s Council of Advisor’s on Science and Technology (PCAST) and National Academies of Science, Engineering and Medicine (NASEM) reports on improving accessibility and affordability to hearing healthcare.

As a result, in my uninformed crystal ball, I see the creation of a new class of OTC, direct to consumer devices, with established, stringent manufacturing and technical specifications and labeling and intended use requirements.  I also see the creation of a new guidance on personal sound amplification products. The OTC Act mentioned formulation of regulations by the FDA.

There will be common sense regulations that, finally, regulate an industry that needed regulation. Once we saw the convergence of technologies in both the consumer electronics (mobile phones, ear and headphones) and hearing aid spaces, a regulatory, technical and consumer protection framework became a must.

9. Any thoughts on what the actual OTC product might be like?

As mentioned in the NASEM report, I see these OTC devices being open platform. In other words, any consumer or provider will be able to make adjustments. I see these devices being open fit or, like the current Eargo or iHear products, small, in-the-canal type devices. As a result, some of the less than stellar OTC products available today will either be re-engineered or be relegated to PSAPs, as they will not be able to meet the technical and manufacturing requirements of an OTC and stay at their current price point.

10. Do you think that there will be OTCs for more severe losses?

I see a situation where devices intended for individuals with moderate to profound individuals, which are available now through online and mail order retailers, may no longer be able to be purchased direct to consumer.  This class of hearing aids, which, I guess, primarily constitutes the current class of hearing aids, will only be available for purchase via a provider-driven delivery. The amplification landscape will stop being the “wild, wild west” it is today.

11. Do you think that the FTC will get involved?

Good question. Things would be different if the Federal Trade Commission (FTC) also got into the mix and, like eyeglasses and contact lenses, started regulating the delivery of hearing aids. This was suggested by both the PCAST and NASEM. What if providers had to make prices transparent and/or offer an itemized or with an unbundled pricing structure? That would revolutionize the hearing aid industry for consumers and providers alike. For the past decade, I have believed that a technology and pricing revolution could be the game changer in the hearing aid adoption battle.

12. What exactly do you mean by “adoption battle"?

Look, the reality is that the needle of hearing aid adoption has not significantly moved in decades. Now, I appreciate that lots of factors influence adoption but, time and time again, consumers bring up cost and access. This was emphasized in both the PCAST and NASEM reports and by communications by the Hearing Loss Association of America. Maybe OTC devices will be the “gateway drug” into amplification and, finally, expand the market. I think this is the bet being taken by the venture capitalists and major corporations entering this space.

13. But isn’t it true that in countries where hearing aids are free, adoption rates never exceed 40% or so?

In countries with socialized medicine, where the government covers the cost of amplification, there are still significant barriers to consumer access. First, there is a bureaucracy in obtaining government funded amplification. This means that consumers still have to navigate a system of time consuming processes, wait times, and appointments.  Time IS money and, in today’s global economy and world, regulations mean lost wages, inconvenience, and hassle. Will individuals make this commitment if their handicap is not severe? The amplification journey is still on someone else’s terms, not their own. Individuals are used to having the instantaneous ability to purchase items and seek healthcare. Hearing aids though are still, in these environments, only available through provider delivery channels.

Now, let’s look ahead.  Maybe through a truly OTC delivery channel, we Americans will change the delivery model and see increased adoption rate and adoption among younger consumers with more milder hearing losses.

14. You brought up itemization and unbundling but you mentioned them separately.  Aren’t they the same thing?

Actually, no. Itemization and unbundling are two, very different things. Itemization is the listing of the individual, distinct costs of items and services. In itemization, all of the individual costs are non-negotiable; they are just listed separately for information purposes only. The patient still pays or is billed in the same manner as they are in the current bundled delivery system: as one lump sum payment, on the date of fitting, for the devices themselves, and for evaluation, fitting, orientation, verification, and one year to lifetime of unlimited follow-up care. In itemization, the consumer does see the costs of the services versus the cost of the devices, but they have no control over the total costs.

15. That sounds like unbundling to me?

Not really. Unbundling, in its truest sense in the audiology space, is itemization with a twist. Yes, in unbundling, all of the individual costs of the items and services are listed separately. However, with unbundling the post fitting services through acceptance, or long-term care, which the consumer may or may not want or utilize, becomes an optional purchase.

Now, does unbundling also have some aspects of itemization, where certain items and services are non-negotiable?  If we are talking about continuing to deliver amplification, especially for the provider driven class of hearing aids, in an evidence-based manner, the answer will be yes. But, let’s call the hearing aid delivery a hybrid itemized/unbundled delivery. A hybrid type of pricing model puts consumers more in the driver’s seat then they ever have been.

16. So, outline a hybrid delivery model for me. How is this good for consumers and providers? I still am having difficulty understanding how this is a win for providers.

Okay, let’s start at the beginning and discuss the evaluation. First, let’s get our nomenclature straight. A hearing evaluation/audiogram and a hearing aid examination and selection are not the same thing.  These are two different services with two, entirely different purposes. The hearing evaluation/audiogram is a diagnostic procedure to determine the presence or absence of hearing loss or communication difficulties and to establish etiology of the hearing or communication difficulty. This encounter creates the potential need, in the plan of care, for a hearing aid examination and selection procedure. Now, insurers typically cover the costs of the audiogram or, in some situations, it is provided to the patient at no charge. Also, in some cases, the plan of care will not include a hearing aid examination and selection, but rather may include things like an otologic or medical referral to a physician or an auditory prosthetic device candidacy determination. In a hybrid delivery, the patient or their health insurer, if medical necessity is met, will cover this procedure. This procedure is never provided at no charge. These test results and the resulting plan of care are provided to the patient.  They can use it to select an OTC product or a product from another provider.  The audiologist was paid for his or her time and expertise.

17. I get that part. That’s pretty straightforward. But what about the hearing aid part of it?

If the patient is a candidate for amplification, the patient can now proceed, if they so choose, with a hearing aid examination and selection procedure. A good term for this process is: The Communication Needs Assessment. In this visit, the patient would be evaluated for their amplification, rehabilitation, and communication needs. This visit, again, would be the financial responsibility of the patient or could be covered by a health insurer who offers a non-inclusive, hearing aid benefit. The resulting plan of care and recommendations would, again, be provided to the patient. They, again, could use this to select an OTC product, a product from a big box retailer, or a device from another provider. It is analagous to the prescription your optometrist provides you when you need glasses or contacts. Again, the audiologist is paid for his or her time and expertise.

18. And if the patient wants to proceed with a hearing aid purchase?

If the patient wants to proceed with provider delivered amplification at this same office, great. Now, the audiologist proceeds with ordering the devices. If a custom earmold is required, the earmold impression is taken on this date of service and the patient or their insurer pays for that service. 

It is on the date of the fitting and during the evaluation and adjustment period that the delivery veers into the hybrid realm. Services become less negotiable because audiologists want to maintain evidence-based delivery and management through acceptance. At this visit, the patient or their insurer would pay for the devices, the fitting and orientation, verification, counseling, batteries, required accessories, and follow-up care within this evaluation period.

At the end of the evaluation and adjustment period, the patient can decide: do I want to purchase a fixed cost, fixed time frame, all inclusive, service plan or do I want I want to reduce my upfront costs and pay for follow-up or service as it occurs? This decision could significantly lower the costs of amplification to millions of consumers. 

The patient, at any time, could purchase a service plan or package. Heck, any patient, even if they purchased OTCs, or hearing aids from another provider could purchase either individual or packaged service. In this scenario, the patient, ultimately, controls the overall costs of amplification, while audiologists are paid for the actual care they provide.

This greatly helps the provider.  Right now, in a bundled model, providers are seeing many, many patients for prepaid, bundled care every day.  They are making zero dollars for each of these visits. Are they really making the revenue, up front, to truly cover these unlimited visits? What if, instead, every hearing aid patient seen generated the revenue required to break even and make a profit?  This is the reality of a hybrid, unbundled delivery model. Audiologists should be able to see more patients, with the same staff and resources, in this model because of reductions in potentially unnecessary follow-up visits.

This type of approach is going to be vital as consumers begin to procure amplification by alternative means and bring these devices to audiologists for the service, orientation, and verification not available through the original delivery channel. It will give audiologists the opportunity to value the care these consumers need and provide access to our skillset and expertise.

19. If this is so great, then why aren’t more audiologists doing it? Where is the research to substantiate this form a delivery?

Let me first tackle the research question. I agree that research needs to be completed on alternative pricing models. One issue has been the potential anti-trust issues that could develop in doing multi-site, real-world pricing studies. The second is the huge disparities in socio-economics, race, gender, education, and healthcare coverage and benefits that exists in this country today. Is it possible to create a comprehensive pricing and delivery study and have those results easily be applied to different parts of the country?  Finally, it is funding and interest. Are there clinical researchers, with the skill set, background and access to funding, that are interested in taking on a project such as this? To date, no entity has jumped at the chance to truly study hearing aid pricing models.

Subjectively though, in the last decade there has been significant growth in the number of practices using alternative pricing structures.  This is something I personally hope to study in the next year.

20.  What if I want to take the leap?  Where do I start?

Learn as much as you can about your own current practice revenues, patient data, and pricing structures, as well as your managed care commitments. Educate yourselves on the different pricing and delivery philosophies that exist in our industry.  Finally, build a pricing and delivery structure that is patient-centric, code and time driven, and evidence based. And own it!  

Citation

Cavitt, C. (2018, June). 20Q: OTC hearing aids and a 21st century pricing and delivery model - change is gonna come. AudiologyOnline, Article 23137.  Retrieved from www.audiologyonline.com

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kim cavitt

Kim Cavitt, AuD

Kim Cavitt, AuD was a clinical audiologist and preceptor at The Ohio State University and Northwestern University for the first ten years of her career.  Since 2001, Dr. Cavitt has operated her own Audiology consulting firm, Audiology Resources, Inc.  Audiology Resources, Inc. provides comprehensive operational, compliance and reimbursement consulting services to hearing healthcare providers. She is a Past President of the Academy of Doctors of Audiology (ADA). She currently serves as the Interim Chair of the Audiology Quality Consortium (AQC), Vice-President of Government Affairs for the Illinois Academy of Audiology and is the Chair of the State of Illinois Speech Pathology and Audiology Licensure Board.  She also serves on committees through ADA and AAA and is an Adjunct Lecturer at Western Michigan University and an Adjunct Lecturer and Clinical Placement Coordinator at Northwestern University.



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