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 Collaborate
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 SHHH.
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 provider 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 dsorkin@cochlear.com.
