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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. Outline of Presentation. Legal issues related to audiology practice Anti-kickback Statutes

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an analysis of fee for service models in audiology practices lm505

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

outline of presentation
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
outline of presentation1
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
goals for today s session
Goals for today’s session…
  • Open dialogue about why audiologists might consider changing their pricing structure.
  • Review some possible strategies for doing this.
legal issues and audiologic practice
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)
laws and statutes
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

kickbacks in audiology
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.
laws and statutes1
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
stark self referral
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

stark
Stark
  • Civil law not criminal
  • CMS regulations implement the law
  • Limited application to audiologists
stark and anti kickback statutes
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.
laws and statutes2
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.
free hearing tests
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.
laws and statutes3
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
laws and statutes4
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.)
laws and statutes5
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.
other laws
Other laws…
  • Health Insurance Portability and Accountability Act/HIPPA
  • State Licensure
history of pricing structures
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.
business and health professions
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.
business and health professions1
Business and Health Professions
  • Do these positions conflict…
    • Of course they do!
so what do we do
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!
differences between retail and health care practices
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.
differences between retail and health care practices1
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.
differences between retail and health care practices2
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?
audiology history
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.
audiology history1
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.
audiology history2
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.
audiology history3
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.
audiology history4
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.
audiology history5
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.
retail health care business difference
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.
the profession of audiology
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.
the profession of audiology1
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…
audiology fee structures
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?
benefits of bundling
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

drawbacks to bundling
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

drawbacks to bundling1
Drawbacks to bundling

Prices may be higher than those who are unbundling

what is unbundling
What is unbundling?
  • intransitive verb:
    • to give separate prices for equipment and supporting services
  • transitive verb:
    • to price separately

(Mirriam-Webster online)

unbundling options
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
an example of complete unbundling
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
an example of complete unbundling1
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
an example of complete unbundling2
An example of complete unbundling:
  • Patient loses instrument after 11 months
    • New ear impression charge
    • Deductible, if applicable
    • Office visit charge
    • Re-programming charge
advantages to complete unbundling
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

drawbacks to complete unbundling
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

drawbacks to complete unbundling1
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.
an example of partial unbundling
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
an example of partial unbundling1
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
an example of partial unbundling2
An example of partial unbundling:
  • Fitting/dispensing appointment:
    • Hearing instruments charged at cost or with a predetermined markup
    • Dispensing fees charged
    • Options included in mid-range service package are provided to the patient
an example of partial unbundling3
An example of partial unbundling:
  • Follow-up visits
    • Necessary services are performed
      • In our example, these are included in the dispensing fee
      • Re-programming and re-verification
      • Additional counseling
      • Troubleshooting
an example of partial unbundling4
An example of partial unbundling:
  • 6-month check
    • Included in our mid-range package
    • H.I. checked, cleaned, usage discussed w/ patient
  • Patient loses an instrument after 11 months
    • New ear impression taken
    • L&D claim processed
    • No service fees (they are included in the mid-range package)
    • Deductible paid upon fitting of new instrument

(deductible is not included in our mid-range package)

benefits to partial unbundling
Benefits to partial unbundling
  • Patients get to choose without being overwhelmed
  • Diagnostic fees are still separated (usually), for insurance billing
    • Lower cost to patient than bundled plans
  • Clinic typically gets paid up front
benefits to partial unbundling1
Benefits to partial unbundling
  • Patient pays primarily for services rendered (more than bundled, less than completely unbundled)
  • Audiologist may include cost of time that is difficult to bill (consultation, etc.)
  • Patients will usually return for included visits
    • Improved final outcome
    • Possibly higher retention rate
    • Satisfied patients refer more friends!
benefits to partial unbundling2
Benefits to partial unbundling
  • Audiologist services are highly valued
  • Services are separated from products, therefore patient can receive combination of device(s)/services to meet their needs
    • Experienced user may choose top instrument, not need as many visits as new user
    • Cost-constrained patient may decrease cost without sacrificing necessary services
  • Overall, audiologist is paid consistently

with time spent

drawbacks to partial unbundling
Drawbacks to partial unbundling
  • Still difficult for many people to justify the cost of their time and expertise
  • More difficult for patients to compare pricing
    • May be good or bad……
partial unbundling options
Partial unbundling options
  • Instrument(s) + all services
    • Dispensing fees are included in the “package”
  • Instrument(s) + dispensing fees + after-care
  • This is an individual choice, based on your philosophy and the needs of your clinic
charging for instruments
Charging for instruments
  • Selling hearing instruments at cost:
    • This method offers complete transparency
    • Would need to be sure that costs related to delivery of the instrument are included with other fees
charging for instruments1
Charging for instruments
  • Selling hearing instruments with a mark-up:
    • Allows a clinic to recover related costs in addition to the invoiced amount
      • Shipping
      • Ear impressions
      • Staff time to check-in & pre-program
      • Any relevant taxes
charging for instruments2
Charging for instruments

Whatever method you use, be sure that you account for ancillary time & costs of bringing instruments to the patient

In an unbundled model, all services provided directly to the patient are billed out (complete unbundling) or included in a package (partial unbundling).

is unbundling always good
Is unbundling always good?
  • NO! Unbundling diagnostic services to Medicare or Medicaid is illegal!
    • Example: A patient is evaluated using pure tone air, bone, SRT and WR
      • You should bill 92557 - a bundled charge for a comprehensive evaluation.
      • You cannot bill 92553 for air and bone conduction testing plus 92556 for spondee thresholds and word recognition testing.
then why are we discussing unbundling for hearing instruments and dispensing services
Then why are we discussing unbundling for hearing instruments and dispensing services?
  • “Unbundling the cost of the hearing aid from the related dispensing services is not illegal, and may eventually be required if Medicare reimburses for hearing aid services” (Loavenbruck & Fabry, 2002).
why unbundle
Why unbundle?
  • Allows the patient to better appreciate the services involved in amplification and treatment.
    • The knowledge and skills of the audiologist are critical to the patient’s success and have economic value.
why unbundle1
Why unbundle?
  • Distance audiologists from the “salesmanship” mentality.
    • Patients trust recommendations when they recognize there is no financial incentive to recommend a particular product.
why unbundle2
Why unbundle?
  • Will help third party payers understand the nature and importance of our services and time.
    • If insurance companies elect to cover hearing instruments in future, unbundling is to our advantage!
  • Help patients get over the initial sticker cost.
why unbundle3
Why unbundle?
  • Patients would only pay for the services they need.
    • Some patients need much more of our time, returning often for troubleshooting/follow-up visits
    • Some patients need relatively little time
    • Both pay the same price for the hearing aid.
      • Some patients are subsidizing the visits of others.
the cons of unbundling
The CONS of unbundling?
  • Patients may not return for necessary follow-up services
  • Patient may not contact their audiologist when problems occur.
    • Without the encouragement and support occurring in these repeated visits, many patients would either discard their aids or not realize their full benefits
    • This may be a PRO for partial unbundling
the cons of unbundling1
The CONS of unbundling?
  • Some professionals report hearing aid evaluations take longer than other evaluations.
    • Discuss style
    • Discuss level of technology
    • Discuss prices for technology
    • Discuss cost of services
the cons of unbundling2
The CONS of unbundling?
  • Other audiologists and dispensers in your community are not unbundling…how will patients compare prices?
    • This could be a pro or con!
      • You provide a greater range of options
      • However, patients may be skeptical about hidden fees
what makes partial unbundling different
What makes “partial unbundling” different?
  • Different components of the total bill are listed
    • Hearing instruments
    • Ear molds
    • Impression fee
    • Professional service fee, etc.
  • The professional creates a “package plan”.
    • Package 1 includes…A, B and C.
    • Packages 2 includes…A, B, D and E…
    • Etc…..
partial unbundling
Partial Unbundling
  • As the professional you can decide what is included in these plans:
    • You have control over the low-end package. You decide what are the least amount of follow-up visits necessary to ensure “most” patients success with amplification.
what we learn from retail
What we learn from retail:
  • We can learn something from retail businesses regarding partial unbundling.
  • Take your car for an oil change. You tell them, “I just want the oil and filter changed.”
your partially unbundled or itemized bill
Your partially unbundled or itemized bill:
  • Cost of Oil
  • Cost of Filter
  • Cost of disposal of old oil
  • Cost of labor
  • = Total Bill
partially unbundled or itemized bill
Partially unbundled or itemized bill
  • The consumer sees that there is value to the service provided as they are paying a separate fee.
why is change so difficult
Why is change so difficult?
  • Many people like the idea, but don’t unbundle

Why?

  • Fear of change
  • Uncertainty about revenues/profitability
  • Uncertainty about structuring a fee schedule
  • Fear of patients all choosing the cheapest option
implications of the anti kickback statute
Implications of theAnti-Kickback Statute

Bundled Model

Unbundled Model

Discounts may easily be passed to patient by adjusting instrument prices

End-of-month pricing based on volume cannot be legally done

Gifts or incentives cannot be legally accepted

  • Discounts on instruments probably not passed to patients
  • End-of-month pricing based on volume cannot be legally done
  • Gifts or incentives cannot be legally accepted
implications of the anti kickback statute1
Implications of theAnti-Kickback Statute

Bundled Model

Unbundled Model

Discounts may easily be passed to patient by adjusting instrument prices

End-of-month pricing based on volume cannot be legally done

Gifts or incentives cannot be legally accepted

  • Discounts on instruments probably not passed to patients
  • End-of-month pricing based on volume cannot be legally done
  • Gifts or incentives cannot be legally accepted
implications of the anti kickback statute2
Implications of theAnti-Kickback Statute

Bundled Model

Unbundled Model

Discounts may easily be passed to patient by adjusting instrument prices

End-of-month pricing based on volume cannot be legally done

Gifts or incentives cannot be legally accepted

  • Discounts on instruments probably not passed to patients
  • End-of-month pricing based on volume cannot be legally done
  • Gifts or incentives cannot be legally accepted
gifts or inducements to beneficiaries of federal healthcare plans
Gifts or Inducements to Beneficiaries of Federal Healthcare Plans

Bundled Model

Unbundled Model

Free hearing tests should never be offered

Discounts offered to induce patients may be illegal

Gifts to patients must fall within acceptable guidelines

  • Free hearing tests ALWAYS done – may be illegal
  • Discounts provided to induce patients may be illegal
  • Gifts to patients must fall within acceptable guidelines
gifts or inducements to beneficiaries of federal healthcare plans1
Gifts or Inducements to Beneficiaries of Federal Healthcare Plans

Bundled Model

Unbundled Model

Free hearing tests should never be offered

Discounts offered to induce patients may be illegal

Gifts to patients must fall within acceptable guidelines

  • Free hearing tests ALWAYS done – may be illegal
  • Discounts provided to induce patients may be illegal
  • Gifts to patients must fall within acceptable guidelines
gifts or inducements to beneficiaries of federal healthcare plans2
Gifts or Inducements to Beneficiaries of Federal Healthcare Plans

Bundled Model

Unbundled Model

Free hearing tests should never be offered

Discounts offered to induce patients may be illegal

Gifts to patients must fall within acceptable guidelines

  • Free hearing tests ALWAYS done – may be illegal
  • Discounts provided to induce patients may be illegal
  • Gifts to patients must fall within acceptable guidelines
implications of ethical practices
Implications of Ethical Practices

Bundled Model

Unbundled Model

Only charge patients for services rendered.

No concern for violation of Rule 4b: Individuals shall not charge for services not rendered.

  • Some argue that with this method you are charging patients for services not provided
  • Rule 4b: Individuals shall not charge for services not rendered.
one example
One example:
  • Four Service Plans Available
  • Lowest priced service plan includes the minimum service and warranties to create a successful outcome.
  • Highest end package creates “Worry Free” experience.
the package plans
Basic Package

Hearing Aid Dispensing Appointment

Real ear measurements and/or

Speech mapping

One Week Follow Up Appointment

Modifications of earmold and shell as needed

Adjustment of hearing instrument as needed

Functional Gain Measurements

One month hearing aid check

One year manufacturers’ warranty

Limited Extended Care Package

All items included in Basic Package

Dri-Aid Kit

One year supply of batteries

Reduced Charge for Audiologic Rehabilitation Program

One Year of Follow-Up care included

We encouraged routine/preventative maintenance checks for all of our patients every six months. This plan includes 2 additional appointments at minimum.

The Package Plans
the package plans1
Extended Care Plan

All items included in the Limited Extended Care Package

Two year manufacturer warranty

Two year supply of batteries

Still only one year covered service

Audiologic Rehabilitation Program included

Worry Free Plan

All items included in the Extended Care Package

Three year manufacturer warranty

Three year supply of batteries

Three year covered services

Same day service

The Package Plans
pricing instruments
Pricing Instruments
  • Utilize a set fee for level of technology, not actual invoiced prices.
  • Determined this fee based on highest invoice cost of instruments sold in that level of technology + a percentage over cost
  • Patients could not opt to purchase hearing aid only, had to choose at least the Basic Service Package.
are all patients offered all choices of packages
Are all patients offered all choices of packages?
  • NO!
  • First time users are not offered the basic package.
    • We want to ensure that all “new users” have appropriate support to succeed with amplification.
could this work for you
Could this work for you?
  • Need to determine the costs to do business.
  • Develop a system you are comfortable with.
    • This may look different for each practice.
  • You need to be comfortable with the value of your services
could this work for you1
Could this work for you?
  • You need to be able to counsel patients when a instrument and package are not a good match
    • A high-end instrument and Basic Package are NOT a good match
      • The patient will be under-served
    • A low-end instrument and “Worry-Free” plan are also not a good match
          • The patient is not likely to be satisfied with the performance of the device for the fees paid
          • This is a low value
goal of service plan partial unbundling
Goal of Service Plan/Partial Unbundling:
  • Most patients chose extended care plan– this is what we typically offered patients with bundled pricing.
  • Wanted to net same profit on extended care, slightly more on “Worry Free Plan”.
  • Educate patients that service, not product alone, was key to successful hearing aid use.
  • YOU make the difference – not the device!
pricing instruments1
Pricing instruments
  • Hearing instruments charged at estimated cost (invoice is NOT cost!)
    • Invoiced price
    • Shipping
    • Cost of labor to check-in and pre-program
    • Cost of standard options purchased with instruments (t-coil, d-mic, etc)
structure of unbundled fees
Structure of unbundled fees
  • Dispensing and follow-up services are bundled
    • These fees include what is necessary for proper adjustment to the hearing instrument
    • These services typically do not vary much from one patient to the next
structure of unbundled fees1
Structure of unbundled fees
  • “Care Packages” are chosen, based on the needs of the patient:
    • Amplification needs (based on evaluation)
    • Lifestyle / communication needs
    • Financial constraints
care packages partially unbundled
Care Packages [partially unbundled]
  • 3 Tiers:
    • Economy Care Package
      • Minimum products and services we are willing to provide
      • Lower-cost option for patients who cannot afford more
      • There is a risk of patients wanting the lower price, regardless of need or ability to pay
    • Gold Care Package
      • Similar to a bundled package provided in many clinics
    • Platinum Care Package
      • “Worry-free” package, includes extras
comparison of plans
Comparison of plans
  • Economy Care Package
    • Pay-as-you-go after adjustment period
    • Battery tester
    • Dryer box
    • LACE
  • Gold Care Package
    • Includes most services over life of instrument
      • Bi-annual check-ups
      • 1 in-office repair/year
    • All accessories included in Economy Care Package
    • Minimum 2-year repair/L&D warranty
    • 12 months of batteries
comparison of plans1
Comparison of plans
  • Platinum Care Package
    • Everything included in the Gold Care Package
    • Unlimited services
    • 36 months of batteries
    • Standard 3-year repair/L&D warranty
    • Guaranteed loaner device when manufacturer repair is necessary
    • Waiver of L&D deductible
    • Priority scheduling
how does this compare to bundling
How does this compare to bundling?

Binaural fitting, mid-range instruments. Calculated over 4 years

*billed separately, according to fee schedule

weighing the pros and cons
Weighing the Pros and Cons…

Benefits of this model

Drawbacks of this model

Sometimes need to explain this pricing structure

Need to be able to justify the value of your services (not really a drawback)

  • Patients have a choice
  • Fees collected reflect that actual services provided
  • Patients see and appreciate the true cost of services
  • Patients feel that they have full disclosure (transparency)
  • We have a plan that meets each patient’s needs
  • Insurance billing is a snap!
determining a fee schedule
Determining a fee schedule
  • Step 1: Determine cost of services provided
    • Overhead (electricity, phones, maintenance, etc.)
    • Salaries & benefits
    • Hired labor (billing specialist, marketing help)
    • Equipment (amortized costs, calibration, maintenance)
    • Consumables (office supplies, clinical supplies, etc.)
    • Verify your list with your accounting system
determining a fee schedule1
Determining a fee schedule
  • Step 2: Determine costs in units that can be compared to clinical activities
    • What are the costs on a monthly basis?
    • On average how many times do you perform each procedure per month?
    • What are the fixed costs for each procedure?
    • What are the variable costs for each procedure?
determining a fee schedule2
Determining a fee schedule
  • Step 3: Determine the fee for each procedure
    • Fees should capture all expenses incurred in performing that procedure
      • Includes both direct and indirect costs
      • Need to include preparation, performing the service, counseling the patient, and writing reports
    • Don’t forget to include profit and unforeseen expenses!
benefits of performing cost analysis
Benefits of performing cost analysis

Owners/managers should always know what it costs to operate their business

Audiologists should know what their time is worth

Cost analysis allows management and staff to review cost centers and address any “issues” they detect

analyzing costs and fees
Analyzing costs and fees

Performing this task will change the way you look at your clinic.

If you are not comfortable doing this yourself, there is help!

what is your time worth
What is your time worth?
  • Important Note: Regardless of fee model,

Know what you are worth and

don’t be afraid to ask for it!

NO GUESSING!

references
References

Loavenbruck, A., & Fabry, D. (2002) Ethics in Audiology: Report of the Presidential Task Force. 14th Annual Convention and Expo, American Academy of Audiology: Philadelphia, PA

Abel, D. (2006) Unbundle Hearing Aid Services To Ensure Full Payment. Audiology Coding and Billing Alert. The Coding Institute, Vol. 3, No. 2, pg 10.

Ross, M. (2004) Why do Hearing Aids Cost So Much? Pennsylvania Self Help for the Hard of Hearing. http://www.pa-shhh.org/ross/ross72.html