Cochlear Americas includes two speech processors in the standard system shipped to hospitals prior to surgery (see e-mails). One is the standard hip-worn processor, and the other is the behind-the-ear (BTE) processor.
Including a second processor in the standard package was a policy Cochlear implemented in order to attempt to conceal from insurance companies the fact that patients were receiving two processors. Medicare and many other health plans explicitly do not allow payment for a back-up or secondary processor.
While this policy allows new cochlear implant users to get two processors at the time of surgery, it also often increases the out-of-pocket costs they must pay for the procedure--many times without their knowledge or consent.
This is because Cochlear inflates the invoice price of the entire system by approximately $5,000 to reflect the secondary BTE processor.
For example, an insurer that pays 80% of invoice price for a cochlear implant system should only reimburse 80% of about $21,000 (or $16,800) for the one-processor system. However, by making the two-processor system their “standard” system and inflating their invoice price by the amount of the back-up processor, Cochlear is forcing the insurer to pay 80% of almost $24,000. (or $19,200). A beneficiary required to pay 20% of the total charge would have to pay $4,800 versus $4,200.
For health plans like Medicare and many Medicaid agencies that pay a pre-determined fee schedule amount, the extra $3,000 charge will not be covered at all. The extra loss in this case will be incurred by the hospital, and under certain plans this loss may be billed to the patient by the hospital.
RAND Corporation and others have determined that hospitals already generally lose at least $6,000 under Medicare everytime they perform cochlear implantation. However, under the two-processor billing policy by Cochlear, hospitals will be forced to lose roughly $3,000 more on every Medicare patient. This is because Cochlear inflates the invoice price to almost $24,000, but Medicare payment remains at the flat prospective payment rate.
Patients who were not granted a choice as to whether they wanted the second BTE processor included at the time of surgery may contact us privately to get more information about how to be reimbursed for the additional out-of-pocket costs they had to incur.
Other cochlear implant manufacturers have but currently do not rely upon this practice.
NATIONWIDE INSURANCE, MEDICARE PART B CARRIER
(CI policy limiting coverage to one speech processor)
