Using an Unbundled Pricing Model to Drive Sustainability in a Large Academic Medical Audiology Clinic: A Case Study

Author: Meagan Lewis, Au.D.

Multiple events such as the 2017 Over-the-Counter Hearing Aid Act and the rising popularity of Medicare Advantage programs in recent years have changed the face and direction of hearing healthcare. Additionally, the Affordable Care Act, changes in Medicare reimbursement, insurance coverage or benefits for hearing aids, and the advent of telehealth will have an impact on the larger healthcare arena. Because hearing aids are often an out-of-pocket expense, many audiology clinics rely on the sale of them to remain financially stable. Given the disruptive factors mentioned above, the financial stability of audiology practices from the dispensing of hearing aids is at risk.

Although hearing aids have an uptake rate among adults with hearing loss of approximately 20%, there is fear that OTC hearing aids will erode the revenue generated from the sale of hearing aids in medical audiology clinics. If OTC hearing aids, which by definition are purchased without the assistance of a licensed professional, erode revenues generated from the sale of traditional hearing aids, it may become essential for these clinics to offset lost revenue by conducting more diagnostics hearing tests on more individuals. The concern for most medical audiology clinics is that they will not be able survive on diagnostic procedures alone – by no means an irrational concern as reimbursement for diagnostics has substantially decreased.

In response to these external forces, the Wake Forest University clinics chose to look at our own services and how to respond in a changing healthcare environment. Wake Forest University clinics are comprised of three audiology centers a that employ 16 audiologists. Historically, the facility has dispensed hearing aids in a bundled manner in which professional services are included in the retail price of hearing aids.

Two years ago, Wake Forest Baptist Health Audiology employed 15 audiologists and 3 clinic locations. At our staff meeting, we started asking each other what we were providing that offered our patients the best outcome and if that was different from what they would receive from an over-the-counter device. While we agreed that quality service was our mission, we did not have solid evidence to present to patients as to what that quality difference looked like. Our aim was to first create an operational protocol that would allow for evidence-based practice and then to make it financially sustainable.

Our task force was comprised of seven audiologists working across the lifespan. They researched guidelines from the American Academy of Audiology and the American Speech Hearing Association in addition to protocols from the University of Memphis and Marketrak data. Their objective was to create an evidence based protocol to be implemented and confidently explain the value to patients. My job was to then take that protocol and assign fees.
Methods and Results
The team spent upwards of 20 hours reviewing protocols and discussing as a group to arrive at a consensus and protocol. While we thought that we were offering a quality product prior to this exercise, it has changed the way in which we practice. We added several metrics, including speech-in-noise testing, electroacoustic analysis, unaided loudness discomfort levels, and subjective lifestyle questionnaires.

After identifying the protocol and key items, we assigned CPT codes to each procedure. With the help of administration, we calculated the break-even cost to the clinic for each audiologist. That break-even figure included salary, benefits, overhead, and vacation. The length of time needed to complete each procedure was estimated for each CPT code in our protocol and assigned pricing based on our break-even plus desired profit.

Many of us had been counseling patients on the purchase of hearing aids for years using a bundled model. Talking with patients about specific services and the value provided required reframing. Once we agreed on an unbundled pricing model, the audiologists, as a group, practiced how they would communicate these unbundled service packages with patients.
Several of my colleagues were concerned, when we first began the discussion of itemization, that patients would be irritated by the idea of paying for services in an “a la carte” fashion rather than in a bundled format. Interestingly, it seems that while there are some questions for established patients, new hearing aid patients do not a have a preference for different types of billing structures, as they are new to the entire hearing aid acquisition process. But it is critical that the audiologist is able to explain the benefit to their patient of each type of service provided. It is much more challenging to list services and tell the patient why each is needed instead of giving a flat fee and telling the patient that fee reflects the cost of the hearing aids. In the bundled model, we told patients the “cost of the hearing aid” without mentioning the time and expertise needed to fit it. In many ways this process is similar to going to the car mechanic. If you need a new part for the car, you also pay for installation, not just the part and it is listed on the bill. There are some consumers who choose an extended service plan for their car rather than paying for service each time they get an oil change. There are some hearing aid patients who prefer to purchase a service plan rather than paying to have the tubing changed periodically. However, I do think we are doing a better job of explaining that a hearing aid wearer does not simply purchase the BTE tubing but, in addition, the expertise of getting it placed into the earmold correctly.

Another key to this process is the involvement of our billing specialist. Itemization of the patient’s charges has allowed us to be more flexible in how we bill payers. Some prefer services to be bundled and others itemized. Having an individual who can research those benefits and counsel patients regarding their benefit has been extremely helpful. While that is something that most patients have access to, through a portal of some type or by calling the insurance company, most do not have any idea if they have a hearing aid benefit or what it might cover. The ability of the billing specialist to research the third party insurance benefits of every individual prior to their appointment has been incredibly helpful for both clinicians and patients.
In the two years since we implemented changes in protocols, the number of hearing aids dispensed has increased and even more importantly, we are better able to serve patients who come in the door with a variety of different hearing aid technology. One could argue that you can see transfer patients in a bundled model, and that is true. However, it is much more transparent to tell a person that you are charging for specific services, rather than charging for a vague office visit. For example, charging for a hearing aid clean and check and hearing aid adjustment (both of which have CPT codes) rather than charging a transfer of care fee. Additionally, if the person has a hearing aid insurance benefit you could bill their insurance instead of charging a transfer of care fee for which there is no CPT code.

I also find it interesting that our particular clinic has sold only a handful of service packages. Patients are given the option at the hearing aid fitting or even at follow-up appointments to purchase a comprehensive service package that would cover an unlimited number of follow-ups during a set time period (usually a year or three years). The vast majority of patients have chosen to pay for services as they receive them. I know there are other clinics that have had exactly the opposite experience. Therefore, one has to think that the difference lies in how the options are presented.    
Dr. Lewis is the clinical manager of Audiology at Wake Forest Baptist Medical Center in Winston-Salem, NC. She can be reached at [email protected]