Devices & Diagnostics, Payers

How device makers are responding to Medicare Advantage’s quiet revolution in hearing health

With hearing loss considered to be a social determinant of health, Medicare Advantage payers have taken a more comprehensive approach to hearing healthcare over the last five years. And in turn device makers have responded.

With hearing loss considered to be a social determinant of health, Medicare Advantage payers have taken a more comprehensive approach to hearing health over the last five years. Medicare Advantage (MA) enrollees electing plans this season—open enrollment has been in full swing since October 15—have significantly more options and richer benefits for hearing aid coverage, with copays in some cases as little as $100 for a hearing aid.

Given the MA payers’ quiet revolution in addressing hearing healthcare, how have the world’s five global hearing aid manufacturers responded to this market opportunity? In two ways, with hearing aid product innovation and vertical integration into hearing health managed care. 

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A Deep-dive Into Specialty Pharma

A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.

Medicare Advantage Plans with Hearing Aid Benefits

“The healthcare industry is seeing a rising trend in the number of Medicare Advantage enrollees electing a plan that offers a hearing aid benefit,” said Patty Greene, audiologist and director of provider engagement at TruHearing. “In 2018, 73 percent of Medicare Advantage enrollees nationwide chose a Medicare Advantage plan that offered a hearing aid benefit,” a marked increase from the 47 percent of MA enrollees in 2015, Greene reports.

MA payers recognize that hearing loss is a widespread social determinant of health.  The prevalence of mild or moderate plus bilateral hearing loss for people in their 60s is over 25 percent. For members in the decade of their 70s, the prevalence jumps to more than half. Seniors with untreated hearing loss are more likely to experience social isolation, depression, anxiety, and even paranoia, according to a new NCOA study. Yet less than 40 percent of people over 65 use hearing aids.

UnitedHealthcare (UHC), the MA leader with 26 percent of enrollees, announced in June the formation of UnitedHealth Hearing. The announcement publicized “no out-of-pocket cost for some people and a per-device copay for most starting at $200,” for name-brand devices. For the company’s hi HealthInnovations brand, copays start at $100 per device. In contrast, the average hearing aid purchased without coverage cost consumers $2,372 on average, according to a Hearing Tracker survey. UHC views hearing benefits as one component of its “customized wellness experience” for MA members.

Not to be outdone, Humana, the second-largest player in the MA market, with 18 percent of enrollees in 2019, views hearing coverage — along with fitness program memberships and home-delivered meals following an inpatient hospital stay, for example — as a way “to care for the whole person,” according to a press release. Members will “save an average of $890 per hearing aid compared to national retail averages.” Moreover, each hearing aid purchase includes a 45-day money-back guarantee, a 3-year manufacturer’s repair warranty, and a 3-year manufacturer’s coverage for one-time loss & damage.

Product Innovations for MA Market
Since the hearing aid industry has historically viewed its core customer as aged 65 to 75, by definition the industry orients product innovations towards the MA member. Rechargeable batteries, for example, are a recent innovation that is a boon for seniors. With most non-rechargeable batteries at a diameter of 8mm or less, audiologists used to run dexterity tests to make sure older clients could change the batteries. 

However, the Livio AI from Starkey Hearing Technologies has created a product innovation that speaks to a key performance measurement goal of MA payers. This hearing aid’s fall detection capability directly links to the CMS Medicare Advantage Star Ratings program.

In the Star Ratings, CMS’ performance management system, MA payer contracts need to earn at least four out of five stars to receive the annual quality bonus, crucial for plans’ profit margins. Measure C17 in the 2020 Star Ratings, “Reducing the Risk of Falling,” acknowledges that a quarter of seniors fall each year, with falls the leading cause of fatal injury and all fall injuries costing $50 billion a year, according to the NCOA.

Scores for “Reducing the Risk of Falling” measure originate from member surveys, querying whether members have fallen, whether their doctors have discussed problems with falling, and whether their doctors have suggested any preventative interventions. Yet historically, MA plans have stumbled in their ability to reduce members’ risk of falling.  In the 2020 Star Ratings, the fall measure for the average plan was only 2.5 out of a possible 5.0, dead last out of 33 measures. In the two of the three prior years, the measure scored last as well. 

Enter the Starkey Livio AI hearing aid, which contains an ear-level fall detection and alerts system. The Auto Alert feature automatically notifies pre-selected contacts after the hearing aids detect a fall. Alternatively, wearers may tap their hearing aids to activate the Manual Alert to notify their selected contacts of the fall. 

“The Inertial Measurement Unit in Livio AI devices has an accelerometer and gyroscope, both of which are 3D motion sensors, that can measure a user’s body movement and position,” explained Dr. Dave Fabry, chief innovation officer at Starkey, in an email. Essentially, the sensors, combined with artificial intelligence (AI) are “replicating the human vestibular system, which is responsible for balance and spatial orientation,” said Fabry. And no cell phone or other external device is required.

Fabry pointed towards a study conducted by two Starkey Technologies researchers comparing the Livio AI to the Philips Lifeline AutoAlert, a medical alert system that includes a neck pendant and in-home communicator. Data collected as part of this study at the Injury Prevention and Mobility Laboratory at Simon Fraser University showed that the Livio AI hearing aids had a higher false-positives rate for near-falls — in which the wearer stumbles and then recovers — of 2.5 percent versus only 0.4 percent for the Phillips device. The Starkey-sponsored study, however, found that the Livio’s detection rate of true falls was almost 10 percentage points higher, trumping the Phillips Lifeline AutoAlert’s 82.5 percent sensitivity rate with a 92.1 percent rate. 

An important factor suppressing hearing aid adoption is social stigma. Research by Margaret Wallhagen, professor of physiological nursing at UCSF, and board member of the Hearing Loss Association of America, for example, shows that societal stereotypes about hearing loss fall into three perception categories: not whole, handicapped/disabled, and cognitively impaired. In this case, however, the Livio AI offers a destigmatizing alternative for detecting falls. The hearing aids fit discreetly behind the ear, as opposed to the visible neck pendant, which seems to advertise the wearer’s frailty. 

Fabry advised that currently, the Livio AI does not offer the ability for the wearer to send a composite report to their doctors. The Star Ratings measure on Falls, in contrast, seeks to motivate providers to actively create fall prevention programs. Determining how the hearing aids could upload fall data to patients’ medical record would make the Livio AI doubly useful for MA plans and their providers.

Hearing Healthcare Managed Care
Global hearing aid manufacturers have also responded to the opportunity with MA payers in another way. Three of the five hearing aid companies —Demant, WS Audiology, and Starkey Hearing Technologies — have vertically integrated into managing the hearing benefit for health insurers, including MA payers, as shown below. 

Global Hearing Aid Company Third-Party Administrators Reach
GN Group None NA
Demant Your Hearing Network Almost 5,000 access points
WS Audiology A/S TruHearing More than 5,000 locations
Sonova None* NA
Starkey Hearing Technologies American Hearing Benefits More than 3,000 locations

* Sonova sold its EPIC Hearing Healthcare division to United Health Care in 2018.

Called Third-Party Administrators, these managed care entities develop networks of credentialed audiologists and hearing aid dispensers, who in turn sell and service hearing aids to MA members. The MA member’s copay offers significant discounts off retail prices. 

Oticon, a hearing aid manufacturer owned by Copenhagen-based Demant, has, for example, developed a hearing benefit management capability via internal growth. 

“What Oticon has done is recognize the growth of Medicare Advantage earlier than the other hearing aid manufacturers and has built a network of providers called Your Hearing Network,” said Edward P. Braun, senior vice president of managed care and corporate partnerships at Demant, in an interview earlier this year. “We have just under 5,000 access points that we can provide to a Medicare Advantage plan where we’re providing Oticon [hearing aids] and a network who has been trained on the product.” 

Oticon President Gary B. Rosenbloom, who has a background in consumer-driven medical devices, holds the numbers for Oticon hearing aid unit sales. “When I talk to my sales team, getting as many people into the Your Hearing Network is critical because we want those people, of course, to sell Oticon,” said Rosenblum, in an interview earlier this year. “So it’s a very important channel for me to grow, strictly from a revenue perspective, because of the opportunity there.”

Managing a Third-Party Administrator business requires providing service to both the MA plan as well as the hearing health providers. For the plans, Your Hearing Network counsels on how to market the hearing benefit to its members. “We describe the benefit, we coach them on the communication, what exactly some of the critical buzzwords are,” Braun explained. 

On behalf of the providers, Your Hearing Network runs a call center to direct members to the right provider, helps arrange transportation for members in need, and provides support with claims verification and billing collections. 

In addition, Your Hearing Network serves as access points for other third-party administrators, including Epic Hearing Healthcare, which UnitedHealthcare purchased in 2018. Demant’s dual role, as both a third-party administrator and as a network of access points for other third-party administrators, underscores what can be a byzantine complexity in hearing healthcare. 

Managed care has put pressure on audiologists and hearing aid dispensers to change their business models. “We, as audiologists and hearing aid dispensers, can be our own worst enemy and it is because we did not contain costs,” counseled Kim Cavitt, AuD, in an Audiology Online training course. She explained that insurers are seeking a standard of care for fixed fitting and dispensing fees.

In a joint statement, the three major audiology associations cautioned their professional members to “consider each opportunity carefully” before signing a third-party contract. “It is not uncommon,” the Academy of Doctors of Audiology website instructs, “for third-party payer contracts to include language that requires 24-7 care or limits billing for reimbursement to 60 days post service.”

A key question is how the Third-Party Administrators’ model will weather the future. Given hearing loss’ strong linkage to social isolation and depression, two additional key drivers of social determinants of health, the current model of care with audiologists and hearing aid dispensers largely operating independently may not continue to meet payer needs. In the future, payers may require models integrating hearing care with treatment of social isolation and depression, as well as other comorbid conditions like diabetes, the focus of payer chronic care programs. As in the case of providing data to PCP for Livio, next step in hearing healthcare may be better integration with other providers. 

Photo: PIKSEL, Getty Images

Correction: An earlier version of the story reported incorrect false-positives rates for the Starkey and Philips hearing aids.