Cochlear Implant Equipment – Why Does It Cost So Much To Replace?

By Eric Sherman

When your cochlear implant equipment is no longer under warranty, the cost of replacement parts such as sound cords, headpieces or the processor can seem quite pricey.  Sometimes our health insurance will cover part of the cost, but generally reimbursement for parts can be minuscule to the actual purchase price we pay.  For example, our insurance valued the cost of a $125 sound cord at $11 with our plan and then stated they were only going to reimburse us at 50% of the $11, because our CI manufacturer was not in-network.

   

To most of us, the replacement costs can seem outrageous even with insurance.  But… are the CI manufactures taking advantage of us just because there is no competition for their unique parts or are there other reasons such as their warranties on equipment; R & D, etc., to justify these higher prices. Depending upon the CI Manufacturer, warranties may be 1-5 years with free replacement on parts or processors and may include shipping.

Additionally, most people accept the idea that a lot of the cost comes from R & D.  CI devices continue to evolve offering better sound quality and new features that enhance the user’s listening experience.  Cochlear implants are medical devices that fall under government regulations. Compliance to these regulations can also add to the expense.  Then you have to look at the total size of the cochlear implant market which adds to costs.  According to the National institute of Deafness and Communication Disorders (NIDCD) as of 2012 there were 324,200 registered cochlear implant recipients worldwide,  and over 58,000 in the US.

 

I’m sure the numbers have gone up over the last 4 years, but in general terms this would be considered a niche market.  Furthermore, the 3 cochlear implant manufacturers divide up the total CI market making their market share even smaller.  Due to constant changes in technology and new product offerings, existing brand models become a subset of an already small market and thus become a limiting factor to mass produce proprietary items.  With no real aftermarket for replacement parts to sell generic options, people are left to pay the higher price from the manufacturers or search online to purchase parts from another person.  All of these factors seem to play into the higher cost of replacing parts for cochlear implants, but consider the replacement cost when the item is not under warranty. 

Like many families we’ve replaced our son’s processor, sound cords and headpieces numerous times while under warranty.  Most often our daily activities might cause these sensitive devices to fail.  For example, a child is sucking or chewing on their headpiece or sound cord, a processor getting damaged during an activity because of too much moisture from sweat or being knocked off the body.  These sensitive devices will fail and need to be replaced.

Think about this, your smartphone stops working within the manufacturer’s warranty period because you caused physical damage to it, like dropping it in water or cracking the screen. The manufacturer is not going to replace it, unless you’ve paid extra for an extended warranty. Yet cochlear implant manufactures know how important it is for you to hear and they usually, without question, provide you a replacement while under warranty regardless of how many times you request a replacement.

Given the advantageous warranties and the responsiveness of the CI manufacturers, the cost of replacement parts may not be that outrageous. Unfortunately, it is an unexpected expense and admittedly I complain about this as well. However; the cost may not seem as bad if you think about it in terms of what it would be without a warranty. Let’s hope cochlear implant manufacturers continue to support their CI recipients by maintaining or providing longer term warranties on their products. 

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Do Insurance Companies Determine Unreasonable Rates For Cochlear Implant Equipment?

By Eric Sherman

When your cochlear implant equipment is out of manufacturer’s warranty period and you need a new sound cable, headpiece (coil) or processor, often people will go through their health insurance to help cover part of the cost.  Not all health insurance is the same, so be aware as your insurance company might reimburse you for less than you expect. This was the case with us when we purchased a CI sound cable for $125.00 and the insurance reimbursed us $5.81, less than 10% of the cost.

 

Cochlear Implant Sound Cord

After receiving our reimbursement check and Explanation of Benefits (EOB), we noticed the “Allowable Amount” (the amount the insurance company will pay for service or medical equipment) was substantially less than the cost of the equipment ($125.00 compared to their allowable amount of $11.62).

When inquiring about the allowable amount and how it was derived, the insurance company’s own definitions, terminologies and explanation were as confusing, ambiguous and misleading as credit card offers you receive in the mail.  Under “medical supplies, equipment and footwear benefits” in our plan it stated our responsibility is “all charges in excess of 50% of the Negotiated Fee Rates,” for non-participating providers.  The negotiated fee rate is the rate negotiated for in-network providers and is synonymous with “allowable amounts.”   Our implant manufacturer is not a participating provider, but we received an in-network provider waiver, meaning we would receive the in-network rate (60% coverage based on our plan).

Here is the problem with cochlear implant equipment; it is proprietary to each manufacturer’s device.  Parts cannot be mixed and matched between manufacturers.  Finding a compatible sound cable at the cost of $11.62 is not possible.  In our grievance filed with state regulators, we argued this point and requested the insurance company explain their methodology in how they derived at $11.36, in this instance, to determine their allowable amount.

Based on the definition outlined in our policy, we reasonably believed that the insurance company would cover 60% of the cost of the sound cord.  The insurance company responded to our inquiry and grievance describing five different methods of determining allowable amounts and none of it made sense in relationship to our claim. In some instances, their explanation directly contradicted what was outlined in our policy.  Eventually, the insurance company claimed the amount was determined by a “customary and reasonable rate of reimbursement and not at billed charges.”

A "customary and reasonable" is a term used by insurance companies to cap their exposure on certain medical equipment and procedures. Paying less than 10% of the billed amount didn’t seem to be reasonable.   The insurance company refused to divulge the methodology used to determine what was customary and reasonable and thus settled on the rate of $11.62.  Under this terminology, insurance companies decide the rate they will pay. 

In the end, state regulators didn’t have the legal authority to compel the insurance company to reveal how they came up with their rates. An adjustment was made to our claim and the rationale behind the adjustment was equally confusing.  We were reimbursed more on our claim, but the amount was substantially less than what was billed.  

Clearly, the power in the health care industry lies with the insurance companies and not the consumer. Right now is open enrollment for health care insurance (it’s the law, you must have health insurance).  If you are looking for a new health care plan, you may want to contact the insurance provider you’re considering to find out their coverage on your cochlear implant equipment.  (Here are links to billing codes for different cochlear implant manufacturers Advanced Bionics, Cochlear, Med El).

Final thought, be an informed voter when it comes to your health care.  Avoid the temptation of negative ads and political bias.  Unfortunately, in our state, the voters missed an opportunity to gain more control over their health care.  The insurance companies ran a huge negative ad campaign with no opposition which helped defeat a health care proposition.  The bill would have helped make health care costs more transparent.

More about Ci Wear
Ci Wear is a patent pending shirt designed for cochlear implant processors and other listening device.  Use as an exercise shirt, rash guard or swim shirt during sports activities. The shirts have pockets that add a layer of security to your device. Made in the USA and sells direct to consumers via online store.  Shop at www.Ciwear.com. 

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