Insurance Primer

By Granville Brady, AuD

Insurance coverage for audiology and hearing aids is relatively recent, especially for private practitioners. As more audiologists enter private practice, the need to understand the workings of insurance companies becomes of paramount importance. The primary goal of any insurance company is to make a profit for their shareholders. Paying for benefits, including audiology services and hearing aids, cuts into that profit.

The second thing audiologists ought to realize is that patients who have insurance do not want to pay anything that is not a covered benefit. They all come in with the idea that "my insurance will cover it."

Thus, we have two conflicting philosophies: the insurance carrier that is reluctant at best to pay you and the patient that believes he/she is entitled to the best possible services at no cost. If we extend this mentality to our present Medicare system, it is very easy to see how much trouble our nation will have trying to satisfy these two masters. Unfortunately the audiologist is right in the middle. How can you make a profit and still provide excellent care to meet your patient's needs?

In order to understand the system, you need to be familiar with some terminology:

HMO stands for health maintenance organization, an insurance company licensed to provide subscribers enrolled in their plan with health coverage at the lowest possible cost. HMOs contract with healthcare professionals to become providers of treatment to their insured clients. Audiologists must apply to the HMO for provider status. If the audiologist is accepted, he/she is termed "in network" and will be paid at a rate determined by the HMO for diagnostic services. Sometimes a hearing aid benefit is added. The HMO dictates fees, with the provider having no input. HMO patients cannot have direct access to specialists like audiologists and must be referred by their primary care physicians.

PPO stands for preferred provider organization, a group of physicians and other specialists that contract with the insurance company to provide diagnostic and treatment services. PPOs usually do not require a referral from the primary physician. The patient might have a co-pay, co-insurance or deductible to pay. Hearing aids are usually not covered unless it is a part of an employee benefits package.

POS stands for point of service, which applies to the patient who needs a referral to go to a provider. The audiologist provider bills the insurer directly for services. Hearing aids may or may not be included as a benefit, but they are usually excluded.

Traditional insurances are indemnity plans such as the Blue Cross/Blue Shield plans that pay a fee for service. The participating audiologist bills the traditional plan for the service. There may or may not be a co-pay and no deductible applies. The audiologist accepts assignment of benefits.

Par provider stands for a participating provider with a health plan. As a par provider, the audiologist agrees to accept the payment made by the insurer and agrees not to charge the patient.

Non-par provider stands for a non-participating provider, an "out-of-network" specialist that provides services but does not have an agreement with the insurance company. The patient pays the audiologist and sends a receipt to the insurer for reimbursement.

Deductible is the amount the patient pays out-of-pocket before insurance coverage kicks in. Patients must meet their deductibles before the insurance pays you.

UCR stands for usual, customary and reasonable, referring to the amount typically charged for a service. Some hospital charges are based on time units, or the blocks of time it takes for the patient to be seen by the therapist or audiologist. The amount charged to insurance companies by providers might be greatly reduced from what a private patient pays, based on the leverage insurance companies have with providers. In theory, the insurance company sends a lot of cases to the provider and negotiates a reduced rate based on anticipated volume. Insurance carriers may negotiate rates or, more recently, rely on the fees set by Medicare.

MSRP stands for manufacturer's suggested retail price, referring to the price suggested for patient purchase, not the wholesale cost of the instruments.

Disclaimer: The information contained in this article is not to be construed as legal advice. Every insurance company is different and each state has its own regulations.

Granville Y. Brady, Jr., AuD, practices in East Brunswick and Clifton, NJ. Contact him at drgranbrady@optonline.net