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Reimbursement for hearing technology has long been a concern for by sofiaie


									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

actual cost.

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

cochlear implants.

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

hearing loss.

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
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

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