Upgrades and Replacements

Upgrades and Replacements

Cochlear™ provides the following information as guidance about patient's sound processor replacement insurance coverage questions. Medicare, Medicaid, Medicare Advantage, and commercial health plans all have guidelines for when they might cover a replacement or upgrade for sound processor (or other parts and accessories).

Commercial Health Insurance and Upgrade Coverage

Each commercial health insurance plan is different and has its own criteria. Therefore, it is important to check each plan regarding coverage criteria on replacement parts and upgrades. Health insurance carriers, however, may cover replacement sound processors based upon the following two criteria:
  1. The pre- /post- audiologic test results for a specific patient or information and data that clearly predict improved performance with use of the new technology (i.e., Medical Necessity).
  2. The age or "useful life" of a sound processor. As a general rule, if the current processor has been continuously used for 5 years, replacement with improved technology may be possible.

While it may be useful to include data obtained from the Nucleus 5 validation trial in a Letter of Medical Necessity, it must be determined for a specific patient whether he or she will benefit from these advancements. Among the ways to provide support for this are the following:

  • Test the recipient's performance with his/her current processor in the conditions above and compare it to the performance results with the upgraded sound processor.
  • Predict improved performance for a specific recipient based on the group average clinical data available.
  • The basic tenet of medical necessity is the individual benefit received with the proposed treatment or service.

Medical Necessity and Commercial Health Plans

To request coverage and payment for medically necessary services, a letter of medical necessity (LMN) must be written by a currently treating medical professional familiar with the patient's medical condition and situation. Cochlear Americas cannot establish medical necessity. The following topics are usually included in an LMN:

  • A description of the condition.
  • A description of treatment.
  • The relationship of treatment to the condition.
  • The lack of alternatives available to meet the treatment needs of the patient.
  • The anticipated benefit from the treatment or service.

Things to Consider

Would the upgraded sound processor and associated products allow this recipient to:

  • Better use the telephone.
  • Improve work performance due to better communication.
  • Be more independent at school.
  • Improve performance in school.
  • Improve their sense of well-being.
  • Spend less off-air time due to repairs.
  • Manipulate the batteries more easily.
  • Require fewer clinic visits due to enhanced troubleshooting features of the system.
  • Improve personal safety by better hearing cars, emergency alarms and signals.

Medicare and Upgrade Coverage

Medicare classifies Cochlear™'s sound processors and associated parts and accessories as prosthetics. As such, all of cochlear's parts and accessories are subject to the durable medical equipment, prosthetics, orthotics, and supplies ("DMEPOS") requirements under Medicare. Medicare's claim Processing manual, chapter 20, section 50 (applicable to DMEPOS) provides that Medicare will cover replacement of DME equipment under the following circumstances:

  • Loss
  • Irreparable damage
  • Irreparable wear
  • Where required because of a change in the patient's condition

a. Loss and irreparable damage. Medicare may cover replacement based upon its fee schedule for replacement in these two circumstances without a physician's order if, in the Medicare contractor's judgment, the replacement equipment will still meet the patient's needs.

Loss In circumstances of loss, Cochlear seeks supporting documentation to provide support and evidence of the loss to retain in its files. The clinic may want to obtain this information as well for its files.

Irreparable Damage 
In circumstances of irreparable damage, if the clinic can make that determination, it would want to document it for its files. If the irreparable damage is not obvious, and the product is sent to Cochlear for repair, Cochlear will advise if the product is irreparably damaged.

b. Irreparable Wear, useful life, and Change in Patient's Condition. Medicare requires a current physician's order for claims involving replacement of equipment due to wear or a change in the patient's condition.

Irreparable Wear and Useful Life
Irreparable wear refers to deterioration sustained from day-to-day usage over time and a specific event cannot be identified. Replacement of equipment due to irreparable wear takes into consideration the reasonable useful lifetime of the equipment. if the item of equipment has been in continuous use by the patient for the equipment's useful lifetime, the beneficiary may elect to obtain a new piece of equipment. Replacement may be reimbursed with a new physician order to reaffirm the medical necessity of the item (i.e., that the patient has an ongoing need for the item).

Medicare's regulations provide that, the reasonable useful lifetime of Cochlear's product as a prosthetic device is determined through program instructions. There are no program instructions, and Cochlear™ has confirmed with CMS that the useful life of five years will apply. Computation is based on when the equipment is delivered to the beneficiary, not the age of the equipment. 42 CFR 414.210(f).

Keep in mind that replacement due to wear is not covered during the reasonable useful lifetime of the equipment; however, during the reasonable useful lifetime, Medicare does cover repair up to the cost of replacement (but not actual replacement) for medically necessary equipment owned by the beneficiary.

Change in the patient's condition. This is not the same standard as a "Medically Necessary" standard. To qualify for a replacement under this standard, the patient's current treating physician must issue an order that justifies the replacement of the product with another product due to an identifiable change in the patient's condition that would warrant the replacement.

Does State Medicaid Cover Upgrade Sound Processors?

Coverage for upgrade sound processors is subject to each state's Medicaid Plan guidelines, although Medicare's guidelines generally provide a good starting point for Medicaid. Check with each state's Medicaid program for their requirements, but a good practice generally would be to seek a preauthorization request, utilizing Medicare's guidelines and include a letter of medical necessity or current physician's order documenting the basis for recommending the upgrade processor to determine coverage.