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The Changing Nature of Healthcare Reimbursement: Are You Ready?

The Changing Nature of Healthcare Reimbursement: Are You Ready?
Robert C. Fifer, PhD
April 29, 2013

Editor’s Note: This text course is an edited transcript of a live seminar.  Download supplemental course materials.

It is my pleasure to be here.  This is going to be a different presentation from what I have done on AudiologyOnline in the past.  In large part, this is not about how to code or how to document.  This is going to be on healthcare economics and the factors that come into play as we look at why our reimbursement models are changing.  The first half of the presentation will focus primarily on the whys and wherefores of the necessity of change for healthcare economics.  The second half will focus on several of the models under discussion and how they have already impacted us or how they will continue to impact us. 

Healthcare Costs

The percentage of gross domestic product (GDP), or the totality of all productivity in the country, that is devoted to healthcare in the United States (16%) is much greater than all of the other industrialized nations of the world (OECD, 2009).  This is something that is very important as a marker to begin this presentation.  The growth of healthcare spending in the United States really started taking off around 1980, during the decade where healthcare began to become more expensive.  There are two things that happened during this timeframe.  One of them is that computers became commercially available for the office setting and also the clinical laboratory settings.  A lot of our diagnostic equipment started coming to us as computer-based, whereas before it was vacuum tube and hardwired.  Is there anyone out there old enough to remember the old Allison model 22 audiometer?  I know I have just dated myself.  Computers opened up many new procedures that had never been available before. 

As these procedures became available and we could do more, the machines started becoming more numerous in terms of how many were built. That is one factor that began the process of cost increase.  This was not just audiology that I am talking about; this was radiology, appliances like cochlear implants, things that we could do throughout healthcare that we never could do before.  The other thing that happened in 1982 and really took off around 1985 was the ability of attorneys to direct-advertise to the public.  I remember leaving the military in 1986 and moving to Illinois.  We got cable for the first time and there were many commercials out of Chicago saying, “Was your child born with cerebral palsy?  This should never have happened.  Call us and we will make it right for you.  We will get you a financial reward to justify the suffering that you are going through.”  Malpractice really started increasing at the point when attorneys could advertise direct to the public. 

There were other factors that took place as we went into the 1990s and in the 2000s.  One of the major factors was the direct marketing of pharmaceuticals to the public.  The cost of pharmaceuticals is one of the major factors in the rise of healthcare costs in general.  As I go through these factors, you are wondering, “What does this have to do with audiology?”  The answer to that is, directly, not a whole lot, but indirectly, it is everything because we are part of healthcare; many times we do not think of ourselves as part of a much larger picture called healthcare.  We think in terms of our own little silo called audiology, but we are part of the healthcare community, and all of these factors are causing some fallout that is impinging upon the entirety of healthcare of which we are member.  The impact brought about by pharmaceuticals is going to indirectly impact us.  That is what this is all about. 

We have heard that we have the best healthcare system in the world; during election time you hear that often.  Why do we need to change it?  As you will see shortly, we really do not have the best healthcare system in the world.  There are many issues and problems with it.  Access to care is one of them, and from the consumer viewpoint, we are often compared to Canada with its form of universal health care and Great Britain with its form of universal health care.  With regard to access to healthcare, in a US survey by Gallup, 25% said that they were very satisfied or satisfied, compared to 57% for Canada, for example.  On the other hand, 44% in the US said they were unsatisfied with the access to affordable health care, compared to 17% for Canada and 25% for Great Britain.  Getting into the system is probably one of the greatest challenges that we face in this country.  Once you are in, the satisfaction of the quality of healthcare remains about equal or relatively close between the three countries, and the dissatisfaction, again, is pretty close to being equal among the three countries.  So the biggest issue at hand is simply accessing affordable healthcare. 

Out-of-pocket costs have risen tremendously since the year 2000.  This is based upon an average family of four and what the out-of-pocket costs run on average, which means there are some less and there are some who are much more for a family of four.  In 2002, out-of-pocket costs averaged about $9,000 a year (Milliman, 2012).  This would include your share of the premium, any co-payments that you would make if you had an HMO (health maintenance organization) for example, the cost of pharmaceuticals that were not covered, also the cost of non-covered healthcare services such as cosmetic surgery.  Removing a blemish from the skin is one example. 

In the year 2011, healthcare costs have gone from $9,000 to more than $19,000.  It has more than doubled over the course of 10 years, and the out-of-pocket health care costs now run an enormously large proportion of a family's annual salary.  This is one of the factors that is capturing a lot of attention in Washington, which means that more and more families are having to pay more for the premium as employers shift more of the cost to them.  They are having to pay more in co-pays or deductible before the insurance starts kicking in.  They are having to pay for more procedures that are not covered, and they are having to pay more for pharmaceuticals that are not covered unless they use generic products.  Even then, depending upon what ails you, a number of those are not covered.  To go from $9,000 year to more than $19,000 a year over the course of 10 years is quite dramatic and eye-catching.  It certainly got the attention of the folks in Washington. 

The other question to be answered is, “Are we getting what we pay for?”  France, in terms of healthcare ranking, is number one in the world; they rank number four for per-capita spending.  Italy, in terms of quality of healthcare is number two, and is number 11 for per-capita spending.  Canada ranks number 30 in terms of quality of healthcare and number 10 in terms of healthcare spending.  We are number 37 for health care ranking, and we spend far more than any other country in the world.  The factors that went into this include such things as mortality, the death rate due to disease, morbidity, if you have a disease and it has complications, pharmaceuticals, quality of life, disability or handicap after an injury or disease, effectiveness of healthcare treatment so that you are fully able to engage in life and your job once you are “cured," as well as  infant mortality and infant morbidity and premature births.  What is not part of this is the healthcare costs associated with children born with genetic or recognized syndromes or handicap classifications.  This deals with people who are well, got sick and were under treatment, or babies who were born and then what happened to them later on. 

We spend much more than any other country, but yet there are so many other countries on this comparison scale that are considered ahead of us in terms of things like infant death, for example.  Here are some of the factors that have been noted that cause access disparities to healthcare.  Race and ethnicity are one of the major factors, because ethnic minorities as a whole population, not speaking of individual people that you may know, receive less consistent and generally lower quality healthcare then those who are of race or ethnic majorities.  Hispanic Americans have less access to health insurance than do white Americans.  

I know someone who used to work for me who is a stage-IV breast cancer survivor.  She lost her job in the process of going through breast cancer treatment, and, as a result, also lost her insurance.  While she was working for me, she came in as a temp and I tried to convert her to regular full-time with benefits, but because of the situation here at the University of Miami, I could not do that.  She needed desperately to seek care for her oncology follow-up for the breast cancer.  She also has very active diabetes, for which she could not access healthcare.  She had to visit the emergency room at least twice during the period of time that she was working for me.  She finally got in under the indigent category for oncology follow-up, and since that time, she was able to get hired on elsewhere in the University and get benefits and visit an oncologist with insurance.  We had breakfast together couple weeks ago and she said, “It is amazing the differences in treatment I got when I had no insurance versus when I walked into the office with insurance.  How much better the treatment was, how much more thorough the exam was, how much they wanted to do to make sure that I did not have cancer recurrence when I had insurance.”  This is very important.  By the way, she is Hispanic. 


There are access disparities in primary care.  Hispanics are about 30% less probable to have a primary care physician, African-Americans about 20% less, and less than 16% of white Americans do not have access to primary care (AHRQ, 2012).  This is where the ethnic minority versus ethnic majority comes in.  There is also a difference in treatment and diagnosis.  I just relayed my technician’s story with cancer.  Heart disease falls there, as does HIV, asthma, and nursing home care.  There is a very distinct difference there.  The overall factors, apart from race and ethnicity, include socioeconomic status, and that would pick up the ones who are on Medicaid versus commercial insurances or HMO, and disparate languages spoken by the patient or the family and the physician.  This is an issue that we run into all of the time here in Miami. 

Miami is a cultural-linguistic mix.  Many Hispanic cultures and languages/dialects are here in Miami, plus Haitian Creole, plus a number of languages from Asia including Tagalog, Vietnamese, many of the dialects from the Philippines, as well as French and Portuguese, which are also very common here.  There are many people who live here in Miami who do not speak English, and the physician says they need to go home and take this, follow up with this, and come back and in about three weeks, and they are sitting there nodding their head like they understand.  You have seen this portrayed in many different situations.  They are nodding their head like they understand, and they do not know a single word of what that physician is saying.  How good is follow-up going to be?  I would submit for your consideration that it is not going to be very good.  Without follow-up care and aftercare for certain treatments, you are going to be just as bad off, if not worse, than you would be otherwise.

Access to health insurance or Medicaid relative to enrolled providers is a major issue, and this is happening in virtually all of the states that are going to Medicaid reform.  We had some new, what we call, pop-up Medicaid HMOs come in, and they were enlisting/enrolling patients who lived in the southwest part of Broward county, and they said we have a full panel of physicians and specialists and everything, and the state approved them.  They were enrolling in the southwest part of Broward County, but their panel of physicians were located in the northeast part of Broward County.  So they had the full panel, these patients had access to them, but to get from Southwest Broward to Northeast Broward, they would have to travel some 60 miles one way.  When you do not have a lot of money and transportation is an issue and you are on Medicaid to start with, that is next to impossible to get.  The whole idea about health insurance, whether it is commercial HMO or Medicaid, is that you have to have providers in the area where the people are enrolled. 

By gender, women tend to have a higher incidence of illness, but better access to insurance.  Men lag behind women for access to insurance. There are more uninsured males than there are uninsured females.  With regard to children, the children who are uninsured compared to the adults in 2009 ran 8.6% versus almost 21% for adults.  In 2011, it went down a little bit 7.5%, compared to 21% for adults.  So the uninsured children are fewer than adults, and that is because some of the safety-net programs, like Medicaid, are geared for children up to the age of 21.  When you turn 21, whatever ails you is supposed be cured and you go on your merry way, though.  However, the degree of illness among the uninsured children tends be much greater than it is for adults, and the mortality rates for uninsured children are significantly higher for racial and ethnic minorities in the areas of acute lymphoblastic leukemia, congenital heart disease, and asthma. 

What happens when a child is uninsured?  When you go into an emergency room, they hand you the clipboard and you start filling out your demographic information.  What is that for?  It is to allow the emergency room to send you a bill when it is all done, and they are fully aware of that, having been caught in that many times over.  So they avoid going to the emergency room for as long as they can until that child is on death's doorstep.  Then they go to the emergency room, and that child is much sicker, requires much more treatment, a much longer hospital stay than if that child had routine ongoing healthcare provided.  They are much sicker than adults on emergency admission.  Adults are admitted primarily for the sake of injury.  Children are admitted primarily for the sake of illness.  That is a major difference. 

Timeline of Events

Congress was promised in 1966 that Medicare would never cost more than $61 million in 1966 dollars.  This is one of those Saturday Night Live specials where you can laugh and say, “Yeah right.”  The promise was realized almost immediately to be false.  So Congress said, “What are we going to do?  We do not want to continue spending all this money on healthcare.  We have to figure out some way of taking care of this so that we do not spend all the money that we were promised we would not have to spend.”

The first thing they tried in the 1970s was to freeze payments.  Raising payments and freezing prices was tried in several different arenas and always without success.  In the 1980s, the cost of healthcare began to rise much faster than anything else, including the rate of inflation.  Reimbursement at that time was fee-for-service and was based upon what is called a normal-and-customary fee structure.  What that means is that if your fees for your services were roughly equal to what other people were charging in your geographic area, then it was considered normal and customary, and that is what you were paid.  This normal-and-customary structure was starting to drive up the cost of healthcare.  One of my professional memberships is to the American Academy of Otolaryngology, Head and Neck Surgery.  As an associate member, I remember getting their journals and their bulletins saying that we have to figure a way to control healthcare costs within ourselves.  We have to police ourselves.  This goes back to the 1980s when I was a very young member at that time.  The concern within the healthcare community was very obvious.   

In the 1990s, Congress passed a law that required the American Medical Association (AMA) and Medicare to start working together to develop a system called resource-based relative value scale.  This compares the reimbursement for each procedure across the spectrum of healthcare procedures so that everything is relative to one another.  One case in point: a brow lift takes about the same length of time as clipping a brain aneurysm.  Which one is worth more?  If you said the brain aneurysm, you would probably be right, simply because the skill required and the risks to the patient if something goes wrong is much greater.  If you screw up a brain aneurysm clip, you just ruined that patient’s whole day.  If you mess up a brow lift, you can go back and revise it.  The patient is still alive to talk about it and maybe sue you. 

This based everything relative to everything else.  The initial evaluation for the resource-based relative value scale was based upon a study that the Harvard School of Public health was contracted to perform in 1987, 1988, and 1989.  This came along with the technology explosion of the ‘80s, coming into the early ‘90s.   This is where, officially starting in 1992, Medicare had to start using the resource-based relative value scale system. 

From 2000 to 2010, technology advances continued to develop, pharmaceutical direct marketing took place, and malpractice insurance premiums increased for the high-risk specialties to the point that such specialties as neurosurgery and obstetricians are rarely found in independent private practice anymore.  Most often they are affiliated with a medical group, a hospital, or a major medical center or university.  Medicare part D came in, as the cost of pharmaceuticals was partially covered.  But remember that big donut hole that you had to pay out of your own pocket?  Medicare part D was never funded by Congress.  It was an unfunded benefit to Medicare beneficiaries.  Then end-of-life care advancements was another big thing.  I will mention that again in just a little bit. 

Next in line was the congressional “tinkering” of the dollar multiplier for the relative value units (RVUs).  The RVUs are nonmonetary values.  Something with an RVU of 1 has an RVU of 1.  Something with an RVU of 2 is going to be worth twice as much as an RVU of 1, whenever you figure out what dollar multiplier you are going to use to convert it from a nonmonetary to monetary value.  But Congress started tinkering with the dollar multiplier simply because they were trying to artificially decrease what they were paying everybody across the board. 

The 2000’s also saw the RACs and the MICs.  The RAC sounds like some medieval torture, and indeed it is.  It is recovery audit contractors.  They do data mining, and if they find that you have a pattern of suspicious or inappropriate billing, they will send you a bill and give you 30 days to pay the bill.  We have been part of that target for reclaiming overpayments according to their analyses.  In particular, the rotational chair code was hit.  One practice I know of had to repay $135,000 because of the RAC audit.  Another practice elsewhere had to repay $365,000 because of a RAC audit.  The MIC is a Medicaid version of the RAC.  The name was changed to protect the guilty and the location.  MIC is Medicare integrity contractors.  Both the RAC and MIC are bounty hunters and get to keep a portion of everything that they collect and return to Medicare or Medicaid. 

Then in the 2010s, a lot of this really started to show desperation.  There truly was desperation.  We had reached crisis status with regard to cost control for healthcare.  In 2011, there were 800,000 households who declared medical bankruptcy and the overwhelming majority, about 90% of these households, I am not talking about 100,000 people, but households, had health insurance, but the costs of that they pay out of their own pocket was so great, that they literally had to declare medical bankruptcy.  Then the revelation of the uninsured, underinsured, and the cost shifting really became apparent. 

As of about a year ago, some 316 million people live in the United States.  Last year there were 51 million who had no health insurance, another 60 million who had health insurance, but it was simply primary care coverage or it was catastrophic coverage only with no primary care being covered by insurance.  Sixty million.  And the 60 million were comprised of part of those 800,000 households who were declaring a medical bankruptcy, but the 100,000 households also included those were fully insured, not underinsured. 

The Affordable Care Act, a.k.a. Obamacare, was designed by intent to reduce the uninsured from 51 million to approximately 18 million people.  From the beginning, it was not designed to cover everybody, but to reduce the number of those without insurance.  Its primary impact on healthcare cost was to reduce emergency room primary care visits, because the emergency room has a very high fixed overhead.  If you visit the emergency room, by law, they have to see you regardless of your ability to pay.  As such, a lot of people are using the emergency room as primary care.  Remember what I said about the children being much sicker when they visit the emergency room than they would be if they had ongoing medical care.  By being sicker, you raise costs by virtue of intensive emergency treatment, prolonged hospital stay, complications, et cetera.  

Primary Cost Issues

Cost inflation has risen 78% since the year 2000 for healthcare versus 20% for salaries.  That averages about 9% per year.  Defensive medicine under the physician front is part of that, and that is simply to avoid malpractice treatment, but in addition to that, there is basic greed out there.  If I do more, I get paid more, hence, a fee-for-service.  If I bill for one procedure, I get paid for one.  If I bill for five, I get paid for five, so let me do more so I can increase my profit.  As a result, there are some unnecessary procedures that are done under the fee-for-service model in order to increase reimbursement. Ineffective treatment, or sloppy treatment, if you please, is part of all of this, affecting primarily the hospitalization and physician community.  Inefficient service delivery models affect primary care for the most part, and this is where the nurse practitioners are gaining a greater foothold, as well as physician assistants.

What you need to know about end-of-life care is that approximately 15% of the entire Medicare budget, $55 billion, is spent on the individual during the last two months of life, or end-of-life care.   For Medicaid, it is about $11 billion in the last two months of the person's life.  This is, in large part, due to the technology that can keep a person alive even when they are no longer alive.  That is a major factor over the last few years that has increased the cost of healthcare. 

Current Recommendations

MedPAC is a Medicare payment advisory commission, an independent counsel to Congress.  They are recommending moving away from fee-for-service.  The Institute of Medicine (IOM) and the Centers for Medicare and Medicaid services (CMS) both agree we have to move away from fee-for-service.  We have to change how we are paid, but the question is how?  This is where the dilemma has come in.  What Medicare has already started doing, that we have been caught up in and the result sometimes does not make complete sense, is saying, “Let’s do some screens to find procedures that are billed together on a regular basis.”  One of the first ones they found was tympanometry and reflexes. Another one they found was 92541 which is spontaneous nystagmus, 92542 positionals, 92544 optokinetics (OPK), and 92545 tracking.  These are billed together a lot, and they are really one procedure, not four.  So let's combine them, because we are overpaying for the chart review and the report that goes along with each code.  That is where 92540 came in.  Once tymps and reflexes were found, reflex decay was also found, and we were forced to develop a code that combined tymps, reflexes, and reflex decay.  That is where 92570 came in. 

They are also looking to re-survey and re-validate a procedure if it is showing increased billing.  92587 for otoactoustic emissions was picked up in that line, and said if anything is showing increased utilization, we have to be overpaying.  They wanted to take a look and see if it is really worth what we say it is worth.  That is why we had to bill 92587, and then 92588 got caught up in that at the same time.  Then we recognized from the survey that we needed a pure screening code as well, so that is where the newest screening code came in.  There is looking to be more bundled payments under Medicaid reform, and so far this is affecting primarily physical therapy (PT), occupational therapy (OT) and speech therapy (ST).  But Medicaid is also looking at this too, and Medicaid tends to follow aspects of the Medicare model. 

Another thing that Medicare is looking at is called value-based purchasing. That sounds very nice, but what does it mean?  It is based upon the Medicare version of the right care, the right amount of care, and the right quality of care for each person every time.  It aligns a payment to the efficiency of service delivery and the outcome that you achieve.  It rewards providers who perform well, and the system will be designed to penalize those who do not perform well with regard to their outcomes.  It is a monetary penalty designed to get rid of the ones who are not efficient with regard to the resources that they use.  Diabetes care was one of the first ones that came under the pilot program.  Cardiac care is another. 

The physician is paid a single amount of money that covers three-months’ worth of visits and supplies for diabetes.  If the physician is very good and keeps the individual under control, then there is enough reimbursement, and the physician makes money.  If the physician does not do good and greater expenditures are made on behalf of the patient, the physician loses money, and if it happens often enough, the physician will be forced to drop out.  It is also designed to promote evidence-based medicine.  What is interesting in audiology is that we have almost nothing that is evidence-based.  You hear that term tossed around all the time, but we have almost nothing in audiology that is evidence-based.  Almost everything that we have is called consensus-based, in that when you do this, you get this result often enough that it adds clinical validity to what you have just done.  The difference between evidence-based and consensus is that evidence-based will stand up against the test of time.  Consensus-based will change based upon what is the newest and greatest out there, when we look and say that we have found a better way.  Let’s change our protocol and focus on this. 

Value-based purchasing also focuses on episodes of care.  An episode has different meanings on different days in different specialties.  It can include a single payment for everything you do to that patient and for the patient on one date of service, or it can be a flat payment that covers everything that is needed for a specified period of time.  Some of the hearing aid contracts are moving to episodes of care.  Better coordination of care is yet another area that is under scrutiny in clinical trial.  This is primarily among the physician community, but we are going to get caught up in it, too.  This is going to deal with the model I will tell you about in just a moment called the medical home.  Payment will be based upon outcomes and the efficiency of how you got to that outcome, not the number of sessions.  You have heard of pay-for-performance; that is really what it is talking about: payment based upon efficiency of outcomes and what resources you used.  When treatment is involved, it is going to look at the effectiveness of treatment.

Medical-Home Model

The medical-home model is where the primary care physician becomes the medical manager.  All referrals will go to the primary care physician, and that is all referrals.  Basically what this means is that things like direct access will not exist for any medical specialty, because the primary care physician will be the source, the coordinator, the medical manager for everything dealing with that patient.  All referrals will go through that primary care physician.  This is different than a gatekeeper that the HMOs instituted, simply because the gatekeeper process was incentivized to deny access to care.  This is incentivized to coordinate care.  The primary care physician will be paid for sitting down and reading your medical record.  What a novel idea!  The primary care physician will be paid for taking the time to talk to you and get to know you, get to know what factors at home and at work can impact your health, and help guide you through the maze of healthcare options.  It is a stark contrast to the factory brand of medicine that we currently experience.  This is why the whole idea of the medical-home model is catching on.  It is not firmly in place yet, but be prepared for it to catch on, at least in some ways, in some areas.  When it does, that means that everything, and I do mean everything, will go through the primary care physician, so that one person coordinates all of your healthcare. 

The ICD-10 (International Classification of Diseases) has been delayed until 2014 by the request of many different parties, primarily Blue Cross/Blue Shield.  The ICD-9 has 18,000 codes, whereas ICD-10 has about 160,000 and growing.  When ICD-10 comes into play, we do expect that we will be required to add a functional level of severity, with regard to what we found and how bad it is.  The current coding system does not allow us to do that.  ICD-10 does open that door, and this, year for the first time, PT, OT, and speech will be required to report ongoing level of severity on a seven-point scale as they see and treat individuals with speech and language, physical, and occupational disorders and limitations.  We anticipate that to be added to more, especially when ICD-10 comes in. 

Sustainable Growth Rate

Let me talk about sustainable growth rate (SGR) for a few minutes.  SGR is what makes the Medicare pot of money budget-neutral.  It basically says that if you overspent in one year, then you have to reduce expenditures in the next year by the percentage that you overspent in the year before.  Let’s say you overspent last year by about 5%; this year you have to reduce everything by 5%.  To get to that number, you have to take into account how many new subscribers there are in Medicare, the prior utilization, and the gross domestic product (GDP).  If the GDP grows by 3%, then the Medicare pot of money can grow by 3%.  All of these things, plus many other factors, come together.  Congress has negated the required cuts in Medicare reimbursement that the SGR has mandated every year since 2001.  This year, we were programmed to take about a 26.5% cut in reimbursement by virtue of the SGR requirements for overspending in all the years previous.  Congress negated that, and kept this at the same reimbursement level through December 31.  They kicked the bucket down the road just a little bit more in an effort to try to give them a little more time to find something to replace the SGR.  

The first entry into that category was submitted on February 7, just about two weeks ago, and is called the Medicare Physician Payment Innovation Act.  What a clever name.  Representatives Schwartz (D-PA) and Heck (R-NV) submitted the bill in the House.  Fundamentally, it is a three-stage replacement for the SGR.  Phase 1 is to repeal the SGR and provide a period of predictable legally statutorily-defined payment rates.  Congress would set arbitrary rates based upon whatever metric they want to use.  Phase 2 is to reform Medicare's fee-for-service payment system to reflect quality of care outcomes.  Phase 3 is to further reform Medicare's fee-for-service payment system to also account for the efficiency of care provided.  How can you provide appropriate care using the least resources possible?

What Does this Mean for Audiology?

While the duration and size of payment rates to be set are not yet determined, this phase will provide physicians time to transition to and play a prominent role in reforming the Medicare fee-for-service system.  However, along with that comes the unpredictability of what Congress will set as a reimbursement rate.  But Congress will set the rate for at least three years under this proposal.  Secondly, after the period of stability, the fee schedule payment updates will be based upon physician-endorsed measures of care quality and participation in clinical improvement activities.  For us, that would be a variation of the Physician Quality Reporting System (PQRS), which is now mandatory if you see Medicare patients, as opposed to voluntary as it was in years earlier. 

As of this year, the 2015 reimbursement rate will depend upon your 2013 reporting of PQRS factors.  The interesting twist here is that the professional societies will be tasked to come up with what reporting standards will be used and clinical improvement in reporting standards.  We now have a consortium that has been in place since 2009 of ten audiology organizations that come together on a monthly basis for telephone conference calls and periodic face-to-face meetings to talk about what is happening with the current PQRS guidelines and what new ones should be developed.  Assuming this goes through, then the Audiology Quality Consortium, as it is called, will probably receive the task of coming up with the standards of quality reporting based upon our profession and our profession only.

The additional payments based upon efficiency of care, perhaps, is assuming that some element of fee-for-service remains in place.  What impact it may have on audiology is what procedures we use to come to a clinical diagnosis.  There are some individuals who practice audiology who do that, that, that, that, and that simply because that is the way they did in graduate school.  It is what I call a graduate school protocol.  It is automatic; every patient gets everything, rather than customizing what you do to and for a patient based upon the presenting symptoms and complaint.  What you find on a previous test that day that would gear you to say they need yet another test. 

Picking on 92587, the limited otoacoustic emissions code, there are those who incorporate this on every patient as part of the standard battery, regardless of whether it is necessary.  These are some the things that may be looked at.  If you have to do an unlimited otoacoustic emissions test, then do it, but make sure you can justify it in your documentation so that you do not do it automatically every patient and run up the bill arbitrarily.  That is what they are going to be looking for in terms of overuse.  

I jumped ahead of myself with this talk about PQRS and the Audiology Quality Consortium.  At this moment, we have no idea what any quality measures will be.  First of all, we have to wait and see if the bill is passed.  Secondly we have to get together and come to consensus among the 10 audiology organization groups as to what would be appropriate as a quality indicator that we are performing efficiently and effectively in reaching a clinical diagnosis using the least resources possible. 

The enhancement of primary care has already started.  There is cost shifting that is taking place to pay primary care physicians more for the getting to know you, for reading your medical record, for coordinating your care, and to attract more primary care physicians into the field.  But remember the Medicare pot of money is budget-neutral.  It is a fixed pot, so if you pay one group substantially more, you have to pay another group substantially less.  What is happening this year and the next two years is as the primary care people are paid more, the surgical specialties are going to be paid less.  That is cost shifting out of surgical specialty care into primary care.  Guess where our codes are located?  We are located in the surgical specialty part of the CPT (current procedural terminology) manual under special otorhinolaryngologic procedures.  We are under the ENT (ear, nose, throat) section, a.k.a. the surgical section.  Our reimbursement is going down some percentage rate over the next couple years in order to increase primary care.  They are not taking it completely out of our hide, but we are participating in that simply by virtue of what is going on in general in healthcare. 

Federal Issues for Consideration

Other issues for consideration at the federal level are medical liability reform.  This is a runaway freight train, and it has to come under control so that it is no longer playing Russian Roulette with regard to “do I take it to court or do I settle.”  More often than not, they settle, and the settlement is one of the things driving up the cost of healthcare. 

The Independent Payment Advisory Board is a Medicare payment advisory commission with steroids.  Basically it says what procedures Medicare will cover and how much you are going to get paid.  End of discussion.  It is designed to meet targeted reductions.  It came in with the Affordable Care Act.  It is probably one of the worst parts of the Affordable Care Act that needs to be repealed.  

Private contracting and balance billing in Medicare without a penalty to providers or patients hopes to ensure patient choice and access.  This is mostly for a physician.  The government has considered gainsharing for improvements in quality and efficiency across defined patient populations.  At the moment, this is physician-only consideration. 


In summary, we are being affected by the combining and consolidating of codes that we have already passed and valued with lower value than the individual codes by virtue of the Congressional mandate and how we got caught up with it due to Medicare.  We are caught up in the shift reimbursement from surgical specialty codes to primary care codes.  PQRS incentives are becoming more and more important to us and will continue to be important to us as time goes.  Kim Cavitt did a seminar on AudiologyOnline not too long ago on PQRS. Kim is a key member of the Audiology Quality Consortium.  I encourage you to review that.  There is also a lot of information on three Web sites about PQRS:,, and  I want to encourage you to start following that so as changes come over the next few years, you do have some familiarity with what it is all about. 

If the medical-home model comes about, everything will go through the primary care physician.  There will be no direct access to any healthcare providers in any way.  The primary care physician will be the healthcare manager and coordinator for all that happens.  This is just beginning of the story.  As the old Chinese Proverbs say, we do live in interesting times.  Indeed, Congress is in session, which means the circus has come to town. 

I will leave you with this one last thought before I start answering some questions.  We practice according to how we are paid.  Peter Hollmann, who was the chair of the AMA CPT editorial panel in October 2011, made a very profound and prophetic statement when he said that if you are not paid for doing something, then chances are you are not going to incorporate it into your clinical regimen. 

Questions & Answers

Do you see more audiology services and audiologists migrating toward the primary care physician practices?

No, because whether we are in a primary care practice or not, the effect on us will be the same, because we are independent providers in the eyes of Medicare.  The main thing is that the primary care physician is simply going to manage and refer; we have to send our results back to the primary physician, along with our recommendations and our clinical judgment.  That will not decrease.  The patient flow will be much as it is now in many instances for commercial carriers, for HMOs, and as it is now for Medicare, going through a physician referral system. It is just that the primary care physician will play a much larger role in the overall management for the patient than they do now.

Is it too late to shed our paramedical cloaks and participate in patient care as a non-provider?

By federal law, we cannot opt out of Medicare.  There is no such thing as an opt out for audiologists.  The reason is because the groups that can opt out are declared and listed specifically in section 1861 of the Medicare law.  We are not there, and because we are not there, we cannot opt out.  It would literally take an act of Congress to let us get to where we could be participating in patient care as a non-provider.  Lower reimbursements and higher cost of Au.D. education is not a good combination. 

Will audiology assistants be used more?

I have had practices where I have used assistants, and have had practices where I have not.  If you have a very busy practice with a high volume, an assistant can be of tremendous assistance in doing the repetitive things or by being your second pair of hands.   An assistant really cannot pay for themselves economically if your practice is not high volume.  This is Fifer's humble, highly-biased opinion, which means take it with a big grain of salt.  I do not see a lot of change in use of assistants over the long-term, because we cannot use assistants to provide evaluations to Medicare patients.  We must do that ourselves.  Assistants are really good at some forms of testing, in my experience, like ENG, where you have someone who is well experienced and does nothing but caloric ENGs day in and day out. 

In Illinois, I had a technician who worked for me who did that.  She was wonderful.  In hearing aid dispensing, going through the conversation of how to care for and clean a hearing aid is another example.  Taking ear mold impressions is another thing that does not necessarily require the expertise of an audiologist for the mechanics.  There is a role for an assistant in my perspective, but there are some requirements in order to make an assistant pay for himself or herself. 

In the short term, I do not see a lot of change for this.  What we need to do is to get ourselves to the point that we are coding correctly and documenting correctly so that what we do receive we can keep and will not be caught up in any audits.  The other thing is we have to look at exactly what procedures we do, because time is money, and the more procedures you do, the more money you are spending on the care the patient.  You have to think about developing a protocol based upon the presenting complaint and what you see from the pure-tone audiogram.  Based on that, what will you do next?  Start thinking your way through so you do what is necessary, but no more than what is necessary.

Is there anything that would prevent or inhibit a primary care physician from incorporating audiology in the practices? They currently incorporate a number of other services such as PT and OT. 

No.  There is nothing to prevent or inhibit that.  That would be perfectly fine.  You have to make sure that whatever is done really is medically necessary and not a feeder system just to increase the billing rate to Medicare and your reimbursement.  PT, especially, is getting itself in trouble by virtue of some of this.  If you want to be part of the primary care practice, that is perfectly fine.  There is nothing to prohibit that, but as you receive referrals from that primary care physician, both you and the primary care physician must make sure that whatever is done really is medically necessary based upon patient-initiated complaints or signs and symptoms noted in the office. 

You have to figure out why the patient came to see the doctor in the first place.  That constitutes the foundation of medical necessity, and then it can go from there.  Just make sure that if you are part of a primary care practice, you do what is medically necessary all the way through and document the medical necessity.


Agency for Healthcare Research and Quality (AHRQ). (2012, March).   National healthcare disparities report 2011 (AHRQ Publication No. 12-0006).  Retrieved from

Milliman. (2012, May).  2012 Milliman medical index.  Retrieved from

Organisation for Economic Co-operation and Development. (2009). OECD Health Data 2009 – comparing health statistics across OECD countries. Retrieved from

Cite this content as:

Fifer, R. C. (2013, April). The Changing nature of healthcare reimbursement: Are you ready?  AudiologyOnline, Article #11722. Retrieved from


Oticon Own - October 2022

robert c fifer

Robert C. Fifer, PhD

Director of Audiology and Speech Language Pathology at the Mailman Center for Child Development at the University of Miami

Robert C. Fifer, Ph.D. is currently the Director of Audiology and Speech-Language Pathology at the Mailman Center for Child Development, Department of Pediatrics, University of Miami School of Medicine. He received his B.S. degree from the University of Nebraska at Omaha in Speech-Language Pathology with a minor in Deaf Education. His M.A. degree is from Central Michigan University in Audiology. And his Ph.D. degree is from Baylor College of Medicine in Audiology and Bioacoustics. Dr. Fifer’s clinical and research interests focus on the areas of auditory evoked potentials, central auditory processing, early detection of hearing loss in children, and auditory anatomy and physiology. He is the immediate Past-President of the Florida Association of Speech-Language Pathologists and Audiologists, a member of ASHA’s Health Care Economics Committee, and the ASHA representative to the American Medical Association’s Health Care Professions Advisory Committee for the Relative Value Utilization Committee in addition to being ASHA’s representative to the AMA’s Practice Expense Advisory Committee. Additional responsibilities at the state level include serving as a consultant to the Florida Department of Health’s Children’s Medical Services and the audiology representative to the Genetics and Newborn Screening Advisory Council.

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