Medicaid Reimbursement Of Hearing Services For Children

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Medicaid Reimbursement Of Hearing Services For Children

Transcript Of Medicaid Reimbursement Of Hearing Services For Children

By Margaret A. McManus
Margaret S. Hayden and
Harriette B. Fox
Maternal and Child Health Policy Research Center 750 17th St., NW, Suite 1025 Washington, D.C. 20006
July 2001

This study was funded by the federal Maternal and Child Health Bureau (MCHB) through the National Center for Hearing Assessment and Management (NCHAM). Karl White, director of NCHAM; Terry Foust, Region VIII coordinator of the Early Hearing Detection and Intervention technical assistance network; and Hallie Morrow, Public Health Medical Officer at the Children's Medical Services Branch of the California Department of Health Services, provided invaluable expert assistance. We also gratefully acknowledge Mary Reichman of the MCH Policy Research Center for her research assistance and both Bonnie Strickland and Irene Forsman of the MCHB for their support and guidance.


I. Introduction and Methods .......................................................................................1

II. Reimbursement Findings .........................................................................................4 A. Audiologic Diagnostic Evaluation and Treatment Services .................................4 B. Audiologic Function Tests....................................................................................5 C. Hearing Aid Services ............................................................................................5 D. Cochlear Implant Services ....................................................................................7 E. Assistive Communication Services.......................................................................7 F. Changes in Medicaid Reimbursement Policies Pertaining to Newborn Hearing Screening.................................................................................8

III. Conclusions................................................................................................................9

Tables Table I: Table II:
Table III:

State Medicaid Payment Arrangements, 1999
State Medicaid Fee-for-Service Reimbursement Policies for Hearing Detection and Intervention Services, 2000
State Medicaid Fee-for-Service Payment Amounts for Hearing Detection and Intervention Services, 2000

I. Introduction and Methods
State Medicaid agencies pay for hearing services either as part of a monthly capitated payment to a managed care organization (MCO), or as a fee-for-service (FFS) payment to a provider directly. Direct provider payments are made under three types of arrangements: when a child is not enrolled in any type of managed care and the state Medicaid agency reimburses all Medicaid services; when a child is enrolled in a primary care case management system (PCCM) and the state Medicaid agency reimburses all or most Medicaid services; or when a child is enrolled in an MCO and hearing services are carved out of the managed care contract.
In 1999, 20% of all children were insured by Medicaid.1 Although state Medicaid agencies vary widely in their use of MCOs, the bulk of children are enrolled in fully capitated MCOs. Of the 44 state Medicaid agencies that responded to our survey, 38 (86%) enrolled some or all eligible children into MCOs on a limited or statewide basis in 1999, 2 as shown in Table I. Five of the 38 states relied exclusively on MCOs. Twentyseven of the 44 states in our survey (61%) enrolled some or all eligible children into PCCMs on a limited or statewide basis in 1999, and 38 states (86%) retained FFS arrangements, but mostly on a limited basis. Only six states relied exclusively on PCCMs or FFS arrangements in 1999.
State Medicaid agencies establish their fees according to CPT,3 HCPCS,4 or statespecific codes. Just over half of the states in our survey used CPT or HCPCS codes
1 American Academy of Pediatrics. Children's Health Insurance Status and Public Program Participation. Elk Grove Village, Il: American Academy of Pediatrics, 2000. 2 Fox HB, Austrian JS, Hsu W and Limb S. An Analysis of States’ Medicaid Managed Care Enrollment Policies Affecting Children, 1996-1999. Washington, DC: Maternal and Child Health Policy Research Center, October 2000.
3 American Medical Association. Physicians’ Current Procedural Terminology, Standard Edition. Chicago, IL: American Medical Association, 2000.

exclusively, the remaining states used state-specific codes, but usually for only a handful of services, including hearing aid services. About 40% of states use different rate structures for specific hearing services, depending on whether they are furnished in an inpatient hospital setting, outpatient hospital setting, or clinic setting.
The Maternal and Child Health Policy Research Center, with funding from the federal Maternal and Child Health Bureau through the National Center for Hearing Assessment and Management at Utah State University, was asked to examine variation in state Medicaid payment methods and amounts for a comprehensive set of hearing services for children enrolled in MCOs, PCCMs, and FFS arrangements. In a previous report, we analyzed Medicaid managed care contract specifications for hearing services under the Early and Periodic Screening, Diagnosis and Treatment (EPSDT) benefit.5
This study addresses four research questions. First, what hearing service codes do states consider allowable for reimbursement purposes? Second, what are the average and range of Medicaid payment amounts for specific hearing services reimbursed on a feefor-service basis? Third, what hearing services are most likely to be carved out of MCO contracts and paid for on a fee-for-service basis? Fourth, what recent Medicaid reimbursement changes have been made pertaining to newborn hearing screening and follow-up tests?
The MCH Policy Research Center obtained state Medicaid reimbursement information for 2000 based on a mail survey questionnaire conducted between November 2000 and February 2001. A comprehensive list of hearing services was identified by Karl White of the National Center for Hearing Assessment and Management and Terry Foust of Intermountain Health Care Community Clinics. In each state, we contacted the EPSDT director to identify the Medicaid staff person responsible for reimbursement policy or hearing services. Once identified, the survey was faxed or mailed to that individual. Forty-four states responded to our survey, giving us an 84% response rate. We asked states to provide us with reimbursement information for a comprehensive list
4 Health Care Financing Administration. Alpha-Numeric HCFA Common Procedure Coding System. Washington, DC: Government Printing Office, 2000. 5 McManus M, Hayden M, and Fox H. Medicaid Managed Care Contract Provisions Pertaining to Early Hearing Detection and Intervention Services. Washington, DC: Maternal and Child Health Policy Research Center, January 2001.

of 39 hearing services. In a few instances states did not provide us with information for all of these services, and were excluded from the relevant service analysis. When statespecific codes were used, we translated these codes into comparable CPT or HCPCS codes. When states paid different amounts depending on the setting, we collected the rates paid to clinics.
Although the reimbursement information we received from states is certainly accurate, the responses we received on hearing services carved out of managed care contracts may be less reliable, particularly for services that may be financed separately under early intervention or health-related special education services, despite the fact that all states not reporting carve-outs for cochlear implants or assistive listening devices were called back for confirmation purposes.
Study results on Medicaid reimbursement policies are presented according to diagnostic and treatment services, audiologic tests, hearing aid services, and cochlear implant and other services. A review of average payment amounts and ranges follows. The report ends with a summary of state reimbursement changes and issues related to newborn hearing screening.
II. Reimbursement Findings
A. Audiologic Diagnostic Evaluation and Treatment Services
The two audiologic diagnostic evaluation and treatment services examined were special otorhinolaryngologic services not usually included in a comprehensive otorhinolaryngologic evaluation or office visit. These are: 1) evaluation of speech, voice, communication, auditory processing, and aural rehabilitation status (CPT 92506) and 2) treatment of these disorders (92507). All but two state Medicaid programs in our study sample (95%) allowed qualified providers to bill on a fee-for-service basis for an audiologic evaluation of speech, language, voice, communication, auditory processing, and aural rehabilitation status in 2000, as shown on Table II. A somewhat smaller proportion of states (86%) had a billable code for treatment of speech, voice,

communication, and auditory processing disorders. Only one of the 36 states (California) that contracted with MCOs carved these two services out of their capitated rates and paid for them on a fee-for-service basis.
Payment amounts for diagnostic evaluation were 50% higher than for treatment, as shown in Table III. For diagnostic evaluation, state Medicaid agencies reimbursed, on average, $40.20, but fees ranged from a low of $11.66 to a high of $63.46. If the difference between highest and lowest amount -- $51.80 -- were divided into thirds, we would find that 19% of states were paying in the lowest third, 53% were paying in the middle third, and 28% were paying in the highest third. For treatment, state Medicaid agencies reimbursed, on average, $26.79, with the lowest fee of $7 and the highest fee of $47.23. Importantly, differences in Medicaid payment rates for these two special audiologic services may be attributable in part to the length of the visit (15, 30, or 60 minutes), which was not taken into account in the CPT codes. Unfortunately, few states provided us with visit duration information.
B. Audiologic Function Tests
The 13 audiologic function tests with medical diagnostic evaluation that we analyzed use calibrated electronic equipment. Other hearing tests (such as whispered voice, tuning fork) considered part of the general otorhinolaryngologic services were not reported separately. Our survey revealed that almost all states had billable codes for each of the 13 audiologic function tests, as shown on Table II. The few that did not lacked codes for visual response audiometry, select picture audiometry, and evoked otoacoustic emissions (limited). Not unlike the findings described above for audiologic diagnostic evaluation and treatment, we found very few states allowed audiologic function tests to be carved out of their capitated managed care arrangements. The exceptions were California, for all 13 tests; Florida, for 10 tests; and Maryland, for four tests.
Fees for audiologic function tests varied significantly by test, as shown in Table III, with payments for auditory evoked potentials reimbursed at the highest average rate ($97.72) and acoustic reflex testing at the lowest average rate ($10.48). Comprehensive hearing evaluation fees, which typically include otoscopic inspection, puretone testing,

tympanometry, and speech threshold as well as the professional time of an audiologist, were on average only $35.21, and ranged from a low of $19 to a high of $64.44. The three audiologic function tests with the greatest variation in payment amounts were select picture audiometry, pure tone screening test (air only), and evoked otoacoustic emissions (limited). More than a ten-fold difference was found among states covering each of these services. Although fee distributions differed by test, only a small proportion of states set rates in the upper third. A handful of states reimbursed for specific audiologic function tests as a percentage of billable charges, not according to a set fee schedule.
C. Hearing Aid Services
The 17 hearing aid services that we examined included CPT codes for hearing aid examinations and HCPCS codes for hearing aid fitting and repairs as well as for different types of hearing aids. State Medicaid reimbursement policies for these services were more varied than for diagnostic and treatment services and for testing in that distinct billable codes for these services were not always established. The hearing aid services that were least likely to have allowable billing codes were fitting orientation/checking of aid and ear protector attenuation measurements, as shown on Table II. However, fitting orientation was bundled into a single hearing aid service fee in a third of states. The other service most often bundled with hearing aids was dispensing fees.
Among states using MCOs, eight states carved out one or more hearing aid services. These states were Iowa (which carved out all hearing aid services), California and Maryland (11 out of 17 hearing aid services), New Hampshire (9), Florida (6), Washington (6), Texas (5), and Ohio (2). Hearing aids, of all the services in this category, were the most commonly carved-out service.
The range in state Medicaid payments for hearing aids was dramatic, as shown on Table III. We found a four-fold difference across states in Medicaid fees for a monaural hearing aid -- from $176 compared to $883.80. More than a five-fold difference was found in fees for binaural hearing aids -- from $228 compared to $1,480.32. Most states, however, set their reimbursement amounts for all hearing aid services in the bottom third of the payment rates.

Compared to diagnostic evaluation and treatment services, many more states (32) allowed at least some hearing aid services to be reimbursed according to billed charges or as some percentage of billed charges. The hearing aid services most likely to be paid on the basis of billed charges were unlisted otorhinolaryngologic services or procedures (in 23 states), repair/modification of hearing aids (14 states), and hearing aids (11 states). States reimbursing the largest number of hearing aid services according to charges were mostly western states (Arkansas, Arizona, Idaho, Indiana, Massachusetts, Montana, New Jersey, Oklahoma, South Dakota, and Wyoming). The state of Texas, unlike any other state reporting, purchased hearing aids for its Medicaid recipients directly.
D. Cochlear Implant Services
The three cochlear implant services that we analyzed were the device, its replacement, and aural rehabilitation. Unfortunately, 12 states were excluded from our analysis because no information was provided on cochlear devices or replacements. Of the remaining 32 states, 12% reported that they had no separate or bundled hospital reimbursement codes for cochlear devices and cochlear implant replacements. Among the states with a FFS reimbursement mechanism for cochlear devices, a third paid the hospital directly for the device, its implantation, and surgical fees.
Surprisingly, we found that only six states contracting with MCOs reported carving out cochlear implants. These were California, Florida, Iowa, Kansas, Nebraska, and New Hampshire.
State Medicaid payments in the seven reporting states for cochlear devices averaged $16,430.72, and ranged from a low of $13,398 to a high of $20,000. Eight states paid for cochlear devices on the basis of billed charges. Cochlear replacements were reimbursed at only about a third the amount of the initial device. Aural rehabilitation payments were, on average, $74.12, but ranged from a low of $12.45 to a high of $127.

E. Assistive Communication Services
We examined two services under this category -- adaptive hearing devices and personal FM systems. Like cochlear implant services, a large number of states (13) did not provide us with information about their payment policies. Of the remaining states, as many as two-thirds reported that they did not cover adaptive hearing devices, and almost three-fourths did not cover personal FM systems. Of the states that reported Medicaid FFS payment for assistive devices, eight states reimbursed adaptive hearing devices according to charges and six states reimbursed personal FM systems on the same basis. Only five states reported carving out one or the other service from MCO contracts -California, Iowa, New Hampshire, New Jersey, and Washington.
Medicaid reimbursement levels for these two services differed significantly among the small number of states that reported their Medicaid fee data. The average fee for adaptive hearing devices among the three reporting states was $586, but the fees ranged from $30 to $1,000 -- more than a 30-fold difference. The average fee for personal FM systems was more than three times higher than for adaptive hearing devices.
F. Changes in Medicaid Reimbursement Policies Pertaining to Newborn Hearing Screening
In response to new medical guidelines and state mandates for universal newborn hearing screening, we found that only 13 states (30% of those reporting) had adjusted their hospital payment policies. Nine of these states said that the additional cost of newborn screening was factored into their hospital DRG payments. Three -- Florida, South Carolina, and West Virginia -- said that they gave hospitals a separate payment for each newborn screened (South Carolina paid $26; West Virginia, $20; and no information was provided by Florida). One state -- California -- developed a new HCPCS code for inpatient infant hearing screening and set its FFS reimbursement rate for certified providers at $30.6
6 Two additional HCPCS codes were established in California -- an initial outpatient infant hearing screening and an outpatient infant hearing rescreening, each reimbursed at $30. If a child received an inpatient screen, then only the outpatient rescreening code is payable. If a child received an initial outpatient screen, he/she is not eligible for the outpatient rescreen. California’s program standard is that if a child does not pass an outpatient screen (whether initial or rescreen), he/she needs to have a diagnostic reevaluation done.
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