Insurance Contracts, Read and Understand Before You Sign

Insurance Contracts… no one who hasn’t passed the bar exam ever really reads an insurance contract from start to finish.  Unfortunately too often we realize that it might not have been bad idea to do just that.  Never is this more true than when it comes to contracts with insurance companies.

Insurance Companies

Insurance companies are notorious for producing purposefully vague contracts by using terminology that is terribly unclear, terms like “usual and customary”.  Here’s one definition of “usual and customary” from,

“Denotes the base amount that is treated as the most typical charge for a medical service when provided in a specific geographic region. Third-party payers such as insurance carriers and employers implement these fees to conclude the amount to be paid on behalf of the enrollee, for services that are recompensed by a health insurance policy or plan.”

In other words an arbitrary amount than can and will change based on undisclosed criteria.  If you sign a contract where the reimbursement is based on “usual and customary” odds are you will be paid far less than you’re anticipating.

What to Do?

Before signing an insurance contract request a fee schedule for 15 – 20 of your most commonly used CPT codes including hearing aid codes.  This should eliminate the “surprise” of a significantly lower than expected rate of reimbursement.

It is also possible to negotiate the terms of your contract with an insurance company.  Contact the insurance company representative (yes, you have one) and explain that you would like to participate with their XYZ Plan but would like the following reimbursement…for the following codes.

More importantly, if you either don’t understand what you’ll be paid for your services or feel their reimbursement will significantly impact your bottom line, don’t sign the contract.  Often times the fear of being excluded creates the compulsion to join against your better judgment.  Just remember, it’s ok to ask for better terms or to simply decide not to participate.





HIPAA Update

The US Department of Health and Human Services (HHS) recently announced new changes to the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The new rules take effect on March 26, 2013 and providers and business associates are required to comply with the applicable requirements by September 23, 2013.  The highlights of the new rule are as follows:

The Business Associate Agreement

If you are in healthcare and do business with anyone (excluding patients) you must have revised, signed business associate agreements (BAA) ‘s.  Here’s a link to a sample BAA

Forget trying to figure out if you’ll disclose information to them or they might have access to information.  The guy who fixes your copier?  He signs it.  The window washer?  He signs it.

These business associate contracts must be updated to reflect the new rule. Revised business associate contracts must be dated after January 25, 2013 and must be completed and signed by September 23, 2013.

Notice of Privacy Practices

Update your Notice of Privacy Practices to reflect the provisions of the new rule. Revised Notices of Privacy Practices must be dated after January 25, 2013 and must be completed and signed by September 23, 2013.

HIPAA Security Policy

You must have a HIPAA security policy in place, including a HITECH breach notification policy and process.

You must have a HIPAA process for their practice and a training program for their employees.  And you must document the training that takes place.


Yup, here’s the biggie….marketing authorization forms

Audiology practices must have a patient sign a marketing authorization prior to sending any third-party marketing materials to their patients; the most conservative guidance would be that all audiology practices have all of their patients complete a marketing authorization and that, without this authorization, the patient is removed from any marketing communication until this authorization is obtained.

And as with all HIPAA updates we provide, please remember we are not the ones setting the policy…just explaining it, no matter how insanely ridiculous, costly and next to impossible to implement it may be.


What to do About Online Competition?

The latest, greatest fear for many of you is the threat from websites selling directly to the end consumer.  Will it be the end of your business at least as you know it?  I don’t think so.  Brick and mortar stores have been battling online competition for much, much longer than you.  They are still in existence.  They may have had to change the way they do business in order to compete, but they’re still there. 

Interestingly, there’s been a swing in the other direction.  From the NY Times

“After years of criticizing physical stores as relics, even e-commerce zealots are acknowledging there is something to a bricks-and-mortar location. EBay and Etsy are testing temporary stores, while Piperlime, the Gap Inc. unit that was online-only for six years, opened a SoHo store this fall. Bonobos plans to keep opening stores, and Warby Parker, the eyeglass brand, will soon open a physical location.

The companies say they are catering to customers who want to see what they are buying in person, and who see shopping as a social event. As they build the locations, though, the retailers are reimagining some long-established rules — carrying less inventory, having fewer staff members and embracing small and out-of-the-way locations. In the process, they are creating what could be a model for efficient in-store operations: the store as a showroom.”

Price, Quality, Quantity

Will every company that began in cyberspace add a brick and mortar presence?  Who knows?  But one thing that all successful businesses understand is who their customer is.  Zappos is a great example.  They cater to people who value quantity and quality.  The old adage,  “Price, quality, quantity, pick two” should always be considered.  Zappos chose the latter two.

Bargains are not to be found at Zappos, but if you need a boys football cleat in a wide width and you aren’t sure of the size, you can order a 3W, 3.5W, 4W in 6 different styles.  I’m a VIP customer so they ship overnight.  I have 365 days to return all of them or none of them and I don’t pay the shipping.  I don’t have the time or the inclination to drag my son all over town looking for shoes that fit or a price I can live with.  I’m busy and I’m willing to pay the price for quantity and quality.

Who is your customer and what do they want?

The hearing aid experience is very much a show and tell experience.  Patient’s want to “see” what it’s going to be like.  They want to “test-drive” what they’re about to buy.  If you don’t want to be viewed by the consumer as no different than an online store, then act differently right from the start.  The patient doesn’t understand the service side of the hearing aid industry.

They don’t realize they may need adjustments for fit or modifications to improve the listening experience…but they do understand “try it before you buy it”.  And that is a distinct advantage that you have over the online companies.  You already do it; you already provide a quality experience, enhance it and then promote it.

If you want them to come and see you, then make it a wonderful experience worth their time and money. If you don’t in their minds provide quality, then they are left with quantity and price.  Quantity is pretty much a fixed variable that leaves them with price.  And battling a larger online company in a price war is a recipe for disaster.



Medical Device Tax Went Into Effect

A 2.3 percent medical device tax went into effect on Jan. 1 as part of the Affordable Care Act.

Good news…bad news…

The tax applies to medical device products intended for human use, but exempts eyeglasses, contact lenses and hearing aids, as well as devices that are purchased by the general public for retail or individual use.  Hearing aids are exempt from the tax, that’s the good news.

Bad news…

The 2010 health care law has several new taxes designed to offset its costs. There are taxes on prescription drugs, taxes on health insurance, extra taxes on high-benefit health insurance, and reduced tax deductions for people with high medical costs.

More bad news…

Hearing aids are exempt but not much else that our demographic needs is exempt including pacemakers, implanted defibrillators, hip and knee joint replacements, dental implants, and just about every tool you might see in a hospital, or the office of a physician or a dentist. Medical equipment is also included – everything from MRI and X-ray machines to dental implements.

While the tax is formally payable by the manufacturers and importers of taxable devices, the effects will be felt by patients and workers as well. The tax will be passed along to hospital, health care providers, and patients in the form of higher prices leading to higher health insurance premiums.

I’m not sure what the goal of healthcare form is supposed to be, but I’m fairly certain this isn’t it.

Is it Time for a Change?

Out with the old in with the new.  Time for a change.  Sounds like a great idea, but is it?

Typically we are loath to change until we’re forced to admit that a change is needed.  Why do we loathe change? There are any number of reasons.

Reasons why we hate change


1.  It requires admitting that we might be wrong.

2.  It usually requires extra work, effort and/or time.

3.  It usually requires modification.

4.  There may be costs associated with the changes.

And the number one reason you probably don’t want to initiate a change?

Your staff is going to hate it, complain about it and find every conceivable reason why it won’t work and it is a bad idea that shouldn’t be attempted or frankly even discussed.

If that sounds like your office, then I have your first resolution of the New Year.  Start the New Year on the right foot.  It’s time for your staff to get on board.   You need to make changes.  Change is part of running a business.  Call it an adjustment if that makes everyone feel better, but he sooner they understand that you will make “adjustments” as often as necessary to ensure the success of your practice, the better off you’ll all be.

Make sure they understand they have a choice. There’s no easy way to put it, but either they embrace the changes you will be making or they will need to embrace a career change.

Change is never easy but it’s an inevitable part of success.  Make sure you remove whatever obstacles are in the way of your ability to change, starting today (or at least tomorrow…that’ll give you at least a day to get used to the idea).

Happy New Year!


Why You Need Liability Insurance

Insurance of any kind isn’t cheap.  But the one insurance policy you shouldn’t be without is liability insurance.  Odds are that one of these or a similar circumstance will happen to you at least one time while you own your business.

  • Someone falls and suffers an injury while visiting your place of business and files a lawsuit for reimbursement of medical expenses.
  • A customer is injured while using a product you sold and files a claim for indemnity.
  • A customer suffers an allergic reaction after wearing a product you sold them and files a lawsuit.
  • Someone in your company makes a negative comment about one of your competitors to the press and your competitor files a lawsuit against your company for slander.
  • Due to an overload on an electrical socket, a fire results that causes damage in the building where you are renting space, and the owner of the building demands payment from your business for the cost of the repairs.
  • You have a contract to deliver an order within a specified period of time. Due to a hurricane, you lose electrical power for an extended period and cannot deliver the products on time. The customer files a lawsuit for breach of contract.

These risks could be covered by different types of insurance policies. A third party liability insurance contract provides coverage for various types of risks your business faces in its activities and dealings with customers and clients, and the public in general.

What is Typically Covered by Third Party Liability Insurance?

A third party liability insurance policy against all risks, or a general commercial liability policy covers four categories of events for which your business could be held liable: bodily injury, third party property damage, personal damages including libel and slander, and false or misleading advertising.

According to these categories of events, the damages for which third parties could hold your business liable, and which are normally covered by a general commercial liability insurance policy include:

  • Compensatory damages – compensatory damages are economic losses suffered by the affected party and the future losses that could result from the damages claimed in a lawsuit.
  • General damages – general damages are non-monetary losses suffered by the affected party, such as “pain and suffering”, or “psychological anguish”.
  • Punitive damages – punitive damages are the penalties and additional charges that your business could be ordered to pay.

What is Generally Not Covered by a Third Party Liability Insurance Policy

Normally, a general third party liability insurance policy does not cover labor claims, such as wrongful dismissal, or lawsuits for sexual harassment or discrimination. These are covered under employment practices liability insurance.

Claims related to vehicles are covered under a motor vehicle policy. You should have motor vehicle coverage for the vehicles that are registered in the name of your company. If you use a personal vehicle in the business, you need separate commercial coverage to protect you and your workers when you are using that vehicle for business purposes.

Professional liability insurance is coverage for the risk of a potential professional malpractice suit. Doctors and other health care providers, attorneys, accountants, architects, engineers, consultants, and other professionals contract this type of insurance separately.

Third party liability insurance does not cover the risk of business debt. In order to protect yourself from being personally liable for the debts of your business, you could set up your company as a limited liability company (LLC), or a corporation.

Keeping Policies Up-To-Date

On a final note, it’s important to review all insurance policies at least once a year, noting any changes that could affect the costs of coverage. For example, premiums could be affected by an increase or reduction in the number of company employees, the products sold to patients and changes in state regulations that affect your business.