This article appeared in the January/February 2003 issue of Hearing Loss: The Journal of
Self Help for Hard of Hearing People.
Cochlear Implants and Insurance Reimbursement: Consumers and Industry
By Donna L. Sorkin
A close look at an important issue concerning health insurance reimbursement.
Advocacy for Hearing Technology Reimbursement: It Began with SHHH
Reimbursement for hearing technology has long been a concern for the
membership of Self Help for Hard of Hearing People. The SHHH national office,
chapters, and members across the country first took on the issue of insurance coverage
for hearing aids at a time in the mid-1990s when there was little organized effort to push
for coverage of hearing aids under private health insurance policies. The SHHH national
office developed guidance materials that were extensively used by local and state
organizations -- SHHH state associations and chapters and other groups as well.
Coalitions of consumers, parents and professionals, working together to advocate for
insurance coverage of hearing aids, formed in large part because of leadership from
Today, it is still true that the majority of health insurance policies do not cover
hearing aids but at least there has been significant movement in the right direction. Some
insurance plans have now begun to offer hearing aid coverage as an option in private
plans -- for the first time. Further, several states (e.g., Maryland, Kentucky) recently
passed legislation requiring that private insurance policies issued in the state include at
least partial reimbursement for children’s hearing aids. Increasingly, consumer and
professional organizations are collaborating to increase public understanding of the
importance of viewing hearing health as a critical and cost-effective component of
general health. Such coalitions between professionals and consumers on this issue were
not common when we began such advocacy activities at SHHH. Now, they are the
hallmark of state efforts for insurance coverage.
Cochlear Implants, Insurance Coverage, and Candidacy Trends
Cochlear implants have traditionally been treated differently than hearing aids
with most private health insurance plans covering the device, surgery and follow-up since
the early 1980s. Cochlear implants provide valuable access to spoken language and
environmental sounds for those children and adults who do not gain sufficient benefit
from hearing aids. Although cochlear implant surgeries in the United States are growing
at 20 percent or more per year, there is considerable room for growth. The estimated
25,000 CI users in the United States still comprise a small proportion of the estimated
500,000 potential candidates for the procedure. Expanding candidacy criteria and
improved outcomes have made the technology an important option for many more
children and adults in recent years. (See cover article of the July/August 2002 issue of
Hearing Loss for more information on candidacy and outcomes.)
The most rapid growth in cochlear implant surgeries in recent years has occurred
in children. As of May 2002, 69 percent of babies born in the Unites States had been
screened for hearing loss as part of universal newborn hearing screening programs. Such
early identification of infant hearing loss represents a dramatic change from the situation
that existed only six to eight years ago when most children with hearing loss were not
identified until they were 2-1/2 years of age. Children who are identified late, whether
they use hearing technology combined with spoken language approaches, or sign
language, typically experience delayed language development. Many such children never
catch up to their normal hearing peers.
The situation today is considerably different. With identification occurring within
days of birth, it is not unusual to fit hearing aids on a baby with hearing loss at one month
of age. For the child with a profound loss who is not making sufficient progress with
traditional amplification, a cochlear implant is now an option for children as young as 12
months of age. There is increasing evidence that children who are appropriate candidates
fitted with cochlear implants under 18 months of age perform, on average, better than
those who are fitted later. Many profoundly deaf children who receive cochlear implants
at an early age actually end up performing, after several years of appropriate
rehabilitation, much like a child with a mild to moderate hearing loss.
Increasing awareness of the technology and its importance for people of all ages
has produced widespread interest in cochlear implants. Clearly there are important
benefits for the appropriate adult or pediatric candidate and their family. But there are
societal benefits as well. Cost effectiveness studies conducted by scientists at Johns
Hopkins have demonstrated that there is a net cost savings ranging from $30,000 to
$100,000 per child, even including the full cost of the cochlear implant.
Children with cochlear implants are increasingly being educated in mainstream
settings using spoken language. A decade ago, a high proportion of deaf children would
have been placed in a separate educational facility (i.e., state school for the deaf) at
considerably greater cost to society than a full or partial mainstreamed setting. For
appropriate adults, cochlear implants allow individuals to function in the workplace and
participate fully in the hearing world -- in much the same way that hearing aids provide
access to people with lesser hearing losses.
Given the increased prevalence of cochlear implants today as well as their
demonstrated cost effectiveness in children and adults, it is particularly ironic that
consumer access to the technology may now be threatened by inadequate reimbursement
by public health insurance programs, specifically Medicare and Medicaid. Medicare is
the federal health plan for citizens 65 years of age and older and/or those with significant
disabilities while Medicaid typically serves children from families of low income and
other individuals with chronic medical problems.
While Medicare reimbursement rates are determined at the federal level under the
auspices of the Centers for Medicare and Medicaid Services (CMS), under Medicaid,
each state determines the level of reimbursement using state legislated formulas and
limited by state budget parameters. Hence, for Medicare there is a uniformly low level of
reimbursement for cochlear implants while reimbursement for the device under Medicaid
varies state by state with CI reimbursement ranging from 3 percent to 100 percent of
Why Should I be Concerned about Medicare or Medicaid Reimbursement Rates?
In 2002, the Medicare reimbursement rate for CI surgery (cochlear implant device
and hospital facility cost excluding the surgeon’s fee) was approximately $6,000 below
actual cost. The proposed 2003 reimbursement rate for cochlear implantation under
Medicare, had it been enacted as proposed, would have further widened the
reimbursement shortfall to the point that hospitals would have lost approximately
$10,000 per surgery. Although such a shortfall cannot be shifted to the individual
Medicare patient, when such differentials exist there is an incentive for under-provision
of care (i.e., hospitals place informal limits on how many surgeries a physician can
perform) in order to limit losses.
The same is true for Medicaid. In those states where cochlear implant
reimbursement is particularly poor, families may be discouraged by clinics placing
children on waiting lists or by using other methods of rationing care. Because children
tend to derive the greatest benefit with early implantation, clearly this is less than
desirable. It is inherently wrong for us, as a society, to provide children with an inferior
level of health care simply because they are from low-income families.
There is another reason for concern. Many commercial insurers and other public
insurers view Medicare practices as the “gold standard” and adopt those practices in
setting payment rates. When payment rates fall substantially below actual cost, there is an
economic disincentive to provide a particular procedure, which can result in less care to
patients, foster rationing generally, and at the extreme, facilitate closure of cochlear
implant surgical programs.
Consumer-Industry Collaboration: Our Best Chance for Success
When I was executive director of SHHH, we continued the tradition begun by
SHHH Founder Rocky Stone of cooperating with other consumer and professional
organizations, encouraging grassroots activities by SHHH Chapters and state
organizations, and collaborating with industry to find common ground and work toward
positive solutions for everyone. Our greatest successes were generally those in which
consumers were able to collaborate with industry. Hence, it has been particularly
satisfying to me to work with SHHH staff and members, on behalf of Cochlear Americas,
on reimbursement for cochlear implants.
We have engaged in multiple collaborations to address both Medicare and
Medicaid. Along with the other two cochlear implant companies -- Advanced Bionics
and Med-El Corporation -- Cochlear Americas contracted with a health care consultant to
analyze the data used by CMS to arrive at the proposed 2003 payment level. It was
determined that the reasons for the low-cost figure proposed were two-fold: 1) the data on
which the analysis was based was flawed due to numerous coding and charge errors by
hospitals due to the confusing nature of the system; and 2) cost compression inherent to
the CMS system in which very expensive items within a bundle are paid proportionately
less than inexpensive items. Because the cochlear implant device is such a high
proportion of the total surgical cost, the hospitals have no place to shift cost. As an
industry, we submitted corrected data to CMS in late September 2002.
As an industry, we also encouraged consumer and professional organizations to
submit their own comments on the impact that a very low reimbursement rate would have
on consumer access to cochlear implants. SHHH submitted excellent comments to CMS
as did the American Academy of Audiology, the American Speech-Language-Hearing
Association, and the American Academy of Otolaryngology-Head and Neck Surgery.
TEAMWORK (founded by Rocky Stone), an organization comprised of the principal
hearing health service providers and the three cochlear implant manufacturers, joined
with consumer organizations to submit important input on the CMS proposal.
Additionally, a number of cochlear implant surgeons and CI audiologists wrote to CMS
noting what their actual clinic costs were, as well as what the projected impact of the
proposal would be on their cochlear implant center.
Coincidentally, Heather Whitestone McCallum, Miss America 1995, was
activated for a cochlear implant at Johns Hopkins during this same timeframe. With
Heather’s keen interest in public policy issues impacting on people with hearing loss, it
wasn’t a hard sell to convince her to come to Washington, D.C., that same afternoon to
meet with Secretary of Health and Human Services Tommy Thompson (under which
CMS falls) as well as Congressional members Thomas Walsh (R-NY) and Carolyn
McCarthy (D-NY) on the pitfalls of low reimbursement for cochlear implants. Heather’s
direct and sincere way of communicating combined with her celebrity status were a
significant help to us in gaining the attention of policy-makers at this key time.
On October 31, 2002, the Centers for Medicare and Medicaid Services (CMS)
published its final rule covering the proposed level of reimbursement for cochlear
implants. The commentary noted that numerous hospitals and clinics, physicians,
audiologists, consumers, and manufacturers had protested the proposed 2003 payment
level of $15,137 indicating that it would not adequately cover the cost of the procedure
and device. While CMS did not agree to set the new rate to reflect the study results
provided by the manufacturers ($25,060), the final figure of $19,173 is a huge
improvement over the original proposal. Hospitals that we have talked to, while not
satisfied with the outcome, are relieved that we have at least kept reimbursement at close
to the 2002 rates.
The cochlear implant industry will continue to collaborate with consumers,
professionals, hospitals and individual clinics to improve the accuracy of the cost data
provided to CMS from hospitals. We will also work together to emphasize to federal
officials the life-changing nature of cochlear implants and how critically important it is
for us to provide full access to the procedure for eligible individuals.
Together, we will have given this issue our best shot working together as a
community -- consumers, industry, and professionals in the field.
SHHH Members Collaborate in Texas
As noted above, although Medicare provides a uniformly low level of
reimbursement for cochlear implants, Medicaid by definition varies state by state. Some
states like New York, Iowa, Connecticut, and Illinois fully reimburse for the cost of the
surgery for Medicaid patients, most of whom are children. Other states, such as Texas,
provide a pitifully small amount for the surgery for families covered by Medicaid.
In an effort to remedy this, a coalition of groups led by Texas SHHH members
joined Cochlear Americas in an effort to push for a more equitable reimbursement level.
At present, Texas Medicaid reimburses hospitals for less than half of the surgical cost.
Some cochlear implant centers have absorbed the cost up until now. Others cope by
putting children on waiting lists -- a method of rationing care and keeping the shortfall
from Medicaid to a manageable level. Clearly, neither approach is desirable or
sustainable. As with Medicare, there is a fear that private insurers will imitate what
Medicaid is doing, thereby making cochlear implants -- at best a break-even business for
hospitals—a hugely unprofitable enterprise. As committed as cochlear implant clinicians
are to what they do, they feel tremendous pressures from hospitals in an era of cost-
cutting and general scrutiny of programs that don’t pay their way. Many clinics note that
they are always just on the edge of being shut down by their hospitals.
The Texas coalition determined that consumers would best lead this effort. We
began with a day of training by Cochlear Americas staff and clinicians from Texas clinics
in August 2002. The following day, two cochlear implant users (Teri Wathen of Houston
and Esther Kelly of Dallas), a father of a child with a cochlear implant (Dave Powell of
San Antonio) and Brenda Battat of the SHHH national office went to visit the Texas
Medicaid office. Armed with statistics and a zeal for what they were hoping to
accomplish, these four SHHH advocates began the process of educating Medicaid
bureaucrats and generally organizing the larger community.
The Texas Medicaid personnel were willing to listen, and a productive meeting
ensued. As in many states, the Texas Medicaid Program is beset by financial challenges.
Nonetheless, these advocates made the case that cochlear implants for children are highly
cost effective in the long term and we should be facilitating their utilization -- not placing
substantial obstacles in front of those clinics that choose to provide the device and needed
habilitation to children of low economic status.
The next step in this process is much like what we did at the national level with
Medicare. Individual clinics are collecting surgical cost data and transmitting this to the
consumer advocates. They, in turn, will turn the information over to the Texas Medicaid
office. A workshop on Medicaid and cochlear implants was held at the Texas SHHH
State Conference on November 2, 2002, to further broaden the field of people
knowledgeable about the issue. Should it be necessary, these committed advocates are
positioning themselves to go to the Texas legislature when it opens in January 2003 to
press for legislative changes to provide for a more equitable level of reimbursement for
Consumer-Industry Collaboration: Our Best Chance for Change
It was a great honor for me to serve as the executive director of Self Help for
Hard of Hearing People from 1993 to 1999. And it was a delight for my family and me to
know and share experiences with the marvelous membership of this organization. One of
the lasting and most valuable lessons that I learned during my tenure at SHHH was that
we will always be most effective if we approach issues as collaborative partners with
other organizations. I’m proud to continue that collaboration with SHHH staff and
members now -- wearing a different hat but still committed to the same ideals of full
accessibility to appropriate technology and services for all children and adults with
Donna L. Sorkin, M.C.P, was executive director of SHHH from 1993 to 1999 and served
as executive director of the Alexander Graham Bell Association for the Deaf and Hard of
Hearing from 1999 to 2001. She has been an enthusiastic cochlear implant user since
1992 and is now vice president, Consumer Affairs, at Cochlear Americas. In that
capacity, she leads a range of activities aimed at the broad life needs of the cochlear
implant community, including insurance reimbursement, appropriate educational options
for children, early intervention, and accessibility for people with hearing loss. She can be
reached at firstname.lastname@example.org.
SHHH Supports Collaborative Effort
One of SHHH’s goals is to ensure that appropriate technology is available to
anyone with hearing loss who needs it. When SHHH learned that Medicaid was not
reimbursing hospitals enough for cochlear implants in many states, and that children’s
access to this important medical technology was threatened, we were determined to be at
the forefront of advocating to change this inequitable situation.
Covering cochlear implants for children saves society money. According to a
study published in the Journal of the American Medical Association, giving a child a
cochlear implant not only improves the quality of his or her life, but also results in
important monetary benefits such as reduced cost of primary education and increased life
SHHH entered into a collaboration with key stakeholders. A coalition of SHHH
and AG Bell leaders, audiologists, speech pathologists, and staff of Cochlear Americas
worked together to increase Medicaid reimbursement rates for cochlear implants in
children in one state. The coalition’s goal was to train a core group of volunteers who
could present the issues to the Medicaid administration and argue an increase in the
reimbursement rate. The first state targeted was Texas. This was based on its poor record
of Medicaid reimbursement and the enthusiasm and capability of the SHHH volunteers
Though our request to Texas Medicaid is still under review and the outcome not
assured, the collaborative process worked well because we were able to draw on the
specific resources and expertise of each of the coalition members. We developed a model
that can and will be replicated in other states. Over the next few months, SHHH, in an
ongoing collaboration with Cochlear Americas, will target other states with poor
reimbursement records, including Colorado and Michigan.
Apart from impacting on one important issue, in this case, access to cochlear
implants for children, the collaborative model enhances transferable advocacy skills of
SHHH leaders and increases capacity within SHHH state organizations, another long-
term goal of SHHH.
-- Brenda Battat, Director of Public Policy & State Development