An Analysis of Fee-For-Service Models in Audiology Practices (LM505)

1. An Analysis of Fee-For-Service Models in Audiology Practices (LM505) John A. Coverstone, AuD Sentient Healthcare Erin L. Miller, AuD Northeast Ohio Au.D. Consortium

2. Outline of Presentation • Legal issues related to audiology practice • Anti-kickback Statutes • Gifts / inducements to beneficiaries • False Claims Act • Stark law • Regulatory Issues • Fee structures in an audiology practice • Bundled • Packaged Service Options • Completely unbundled

3. Outline of Presentation • Legal and ethical issues of fee structures • Will changing fee structures make sense for you? • Comparison of business/financial implications • Marketing with each type of fee structure • Implications for third party payer systems • Questions and answers

4. Goals for today’s session… • Open dialogue about why audiologists might consider changing their pricing structure. • Review some possible strategies for doing this.

5. Review of legal issues related to audiology practice

6. Legal Issues and Audiologic Practice • Antikickback Statute • Stark Law • Gifts or Inducements to Beneficiaries • The False Claims Act and Related Laws • Regulatory Issues (audiology and dispensing statutes/applicable COEs)

7. Laws and Statutes • Anti-Kickback Statute (AKS) (42 U.S.C. 1320a-7b(b) • It is a felony for any person (including an audiologist) to knowingly and willfully solicit or receive remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in return for purchasing, leasing, or ordering (or recommending the purchase, lease or ordering) of any item or service reimbursable in whole or in part under a federal health care program (except for the Federal Employees Health Benefits Program.) Hahn 2005, Audiology Today

8. Kickbacks in Audiology • Remuneration - “Broadly defined to include anything of value.” (Hahn 2006, Risky Business: What you need to Know About HA Commissions) • In audiology…can include gifts, points, vacations, equipment, entertainment, gift cards, and other incentives tied into purchasing patterns with manufacturers.

9. Laws and Statutes • Violations are a felony with punishment including imprisonment, heavy fines, and or exclusion from federal health care plans. • Enforced by the Office of the Inspector General Capturing Reimbursement 2006 AAA

10. Stark Self Referral • “Prohibits a physician or physician’s immediate family member from referring patients for designated health services to an entity in which the physician or his/her immediate family member has a financial relationship, unless a specific exception applies.” Capturing Reimbursement, AAA, 2006

11. Stark • Civil law not criminal • CMS regulations implement the law • Limited application to audiologists

12. Stark and Anti-Kickback Statutes • Most states have enacted Anti-Kickback and Stark Laws. • State versions may be more strict then the Federal version. • Always know your state laws and seek legal counsel.

13. Laws and Statutes • Gifts or Inducements to Beneficiaries • It is unlawful to knowingly offer or give remuneration to Medicare or Medicaid beneficiaries to influence their choice of provider for any item or service covered by Medicare or a state health care program (42 U.S.C. 1320a-7a(a)(5)). • The law prohibits such gifts because they increase costs to the Medicare and Medicaid programs by inducing beneficiaries to obtain items and services they do not need. • Penalties include civil fines and exclusion from participation in the Medicare and Medicaid programs.

14. Free Hearing Tests • Offering FREE hearing tests as a “marketing tool” to increase patient flow may violate the “Gifts or Inducements to Medicare Beneficiaries” statute. Some Medicare Beneficiaries might seek services they do not need.

15. Laws and Statutes • Gifts of nominal value are permitted (i.e. no more than $10 per item or $50 in the aggregate per year per beneficiary.) • Waivers of co-payments or deductibles are also permitted provided they are not advertised, not routine and made after an individualized determination of financial need or the failure of reasonable collection efforts

16. Laws and Statutes • The False Claims Act and Related Laws • Federal criminal laws prohibiting false claims and false statements to U.S. government agencies (18 U.S.C. 287 and 1000) • Medicare and Medicaid Fraud (42 U.S.C. 1320a-7b(a)(1)) • The False Claims Act (31 U.S.C. 3729 et. seq.) • Knowingly submitting a false claim to a federal health care program (violation of 18 U.S.C. 287 and 1000) • Submitting claims for services not performed, for medically unnecessary services, and for “upcoding” (i.e., coding at a higher level or for more services than were provided) (violation of 31 U.S.C. 3729 et. seq.)

17. Laws and Statutes • If an audiologist were to perform cerumen management (a service not reimbursed by Medicare for audiologists) and then performs another procedure that is unnecessary and bills Medicare for the other procedure (CPT) code to guarantee some form of payment for the visit, the audiologist has submitted a false claim.

18. Other laws… • Health Insurance Portability and Accountability Act/HIPPA • State Licensure

19. Historical perspective of audiology fee structures

20. History of Pricing Structures • Business and Health Professions • The very nature of a health profession (medicine, optometry, and audiology to name a few) is that they conflict with profit motive.

21. Business and Health Professions • The goal of a health care professional, such as an audiologist, is the selfless ( for the most part) care of patients. • The primary purpose of a business (this may be private practice, for-profit hearing clinics, hospital departments, etc) is the maintenance of profit.

22. Business and Health Professions • Do these positions conflict… • Of course they do!

23. So what do we do… • We manage the conflict as much as possible. • And yes, Audiologists deserve to be well paid for the services the provide to their patients!

24. Differences between retail and health care practices: • According to the American Medical Association (AMA) • “…As a member of this profession, a physician must recognize responsibility to patents first and foremost as well as to society, to other health professionals, and to self...” • This statement lists the order in which the physician must ethically function.

25. Differences between retail and health care practices: • The AMA Code of Medical Conduct specifies nine principles that define the essentials of honorable behavior for physicians. • These principles are not unlike those found in the American Academy of Audiology or the American Speech-Language Hearing Association Code of Ethics. Or, most likely, the code of ethics within your state licensure law.

26. Differences between retail and health care practices: • Does audiology function in the same manner as the medical profession… • Patient first, society, other health professions and self?

27. Audiology History • In the middle and late 1970’s the pivotal case that enabled audiologists to participate in the active treatment of sensorineural hearing loss involved the society of engineers and the state of New York.

28. Audiology History • A Federal Court in New York determined that a professional organization CANNOT impede or limit consumers rights and free trade. • Essentially this opinion released professionals, audiologists included, from the retail limitations imposed by professional organizations.

29. Audiology History • Until this case, it was considered unethical to dispense hearing instruments. This finding allowed audiologists to dispense! • This was absolutely a turning point for audiology. Private practice audiologists no longer had to refer patients needing hearing instruments to a retail source.

30. Audiology History • Many believe this decision is the single factor that has allowed audiology to grow to the level of autonomy it enjoys today! • In the 1980’s private practice audiologists became largely dependent on hearing aid sales as the major source of revenue.

31. Audiology History • Rather than treating hearing devices in the typical manner of the medical model… • Charging patients and third party payers for services and treating the hearing aid as durable medical equipment. • Most audiologists used the retail model that had been successful for commercial hearing aid dealers.

32. Audiology History • This method for delivering hearing aids competes significantly with the medical model. • Professional fees are the method of the medical model. • Mark up for products are the domain of the business/retail model.

33. Retail/Health Care Business Difference • The public must trust the business principles that make for profitable business. • The public expects and deserves a health care professional to function in their best interest above all else.

34. The Profession of Audiology: • Audiology wants to be included in legislation that enables patients to visit audiologist without referral from a physician. • The Medicare Hearing Health Care Enhancement Act of 2007 (H.R. 1665) – Direct Access.

35. The Profession of Audiology: • Basically, the profession is asking to be viewed in the same manner as physicians. • We are petitioning the government, third party payers and the public to be vested in audiology. • Many believe this trust is already warranted…what else could we do to develop this trust…

36. Fee Structures in an audiology clinic

37. Audiology Fee Structures • Bundle: • “a package offering related products or services at a single price” (Merriam-Webster online) • This is the retail model from commercial hearing aid dealers: One product – one price. • Does it represent the value of a health care provider?

38. Benefits of bundling Maintain status quo – change is difficult! Many patients are used to this model – no extra explaining Patient does not need to make a choice about every aspect and option Clinic receives $$ up front Don’t need to worry about insurance

39. Drawbacks to bundling • Audiologists may under-charge for services connected with low-end devices (assuming % markup) • Audiologist services may be perceived as having no value • There are negative insurance implications • Federal health programs require billing “usual and customary” fees • An audiologist cannot charge federal plans a higher amount than any other patients

40. Drawbacks to bundling Prices may be higher than those who are unbundling

41. What is unbundling? • intransitive verb: • to give separate prices for equipment and supporting services • transitive verb: • to price separately (Mirriam-Webster online)

42. Unbundling Options Completely Unbundled Partially Unbundled Fee packaging Products are charged separately Diagnostic services separated Some fees are bundled (usually those directly related to the product) Fitting / dispensing may be separated from other fees Follow-up care “packaged” with 2/3/4 options • Products and fees are all charged separately • Fees are itemized • Diagnostic services • Fitting/dispensing • Verification of fit • Initial follow-up visits necessary for adjustment • 6/12-month checkups • In-office repairs / parts used • Re-programming/adjustment

43. An example of complete unbundling : • Diagnostic appointment • Diagnostic fees charged according to standard CPT coding schedule (92557/92567/92568/92588/etc) • If performed same-day, charges for ear-impressions • Fitting/dispensing appointment: • Hearing instruments charged according to predetermined schedule • Dispensing fees charged • Real-ear verification charged • Dry-aid box provided at selling price • LACE provided at selling price

44. An example of complete unbundling: • Follow-up appointment(s) • Office visit charged according to fee schedule • Additional verification performed and charged • 6-month check • Office visit charged (limited) • In-office repair charged w/ battery door replacement

45. An example of complete unbundling: • Patient loses instrument after 11 months • New ear impression charge • Deductible, if applicable • Office visit charge • Re-programming charge

46. Advantages to complete unbundling Possible lower cost to patient, if insurance billed Patients are provided with exactly the services needed (case-by-case basis) Competitive pricing Patients get choices to meet their needs Ability to pay is not based entirely on the cost / class of hearing instrument

47. Drawbacks to complete unbundling • Don’t get all your revenues up front • Patients may not be used to this model – need to explain • Need to keep track of more fees/reimbursement • Patients may be overwhelmed with choices • Patient may not return for all necessary visits • Possibly resulting in higher returns • Possibly resulting in lower satisfaction & fewer referrals

48. Drawbacks to complete unbundling • Audiologist may spend time performing activities for which it is difficult to charge fees: • Consultation • Discussion of ALDs • Patients are used to insurance. Paying individual service fees may be a difficult sell.

49. An example of partial unbundling: • Diagnostic appointment • Diagnostic fees charged according to standard CPT coding schedule (92557/92567/92568/92588/etc) • Patient counseling performed: • Patient informed as to hearing instrument costs and prices reviewed from price list • Patient informed as to available service packages • If necessary, ear impressions included in instrument cost

50. An example of partial unbundling: • Patient decisions: • Hearing instrument style/circuit/options are chosen • A service package is chosen with long-term care options (mid-range package, for our example) • Dispensing and follow-up fees are mandatory costs