Understanding Third-party Referral Networks

By Nicole Klutz, Au.D.

In this installment of our blog series about Managed Care, we take a look at Third-party Referral Networks (TPRNs), what they mean to you as the hearing care provider (HCP) and what they mean for your patients.

Balancing patient care and business success

At the end of the day, you are in the hearing healthcare business to help those who can’t connect and communicate with their loved ones, colleagues and communities. From young to old, you have committed to making a difference in your patients’ lives. At the same time, you have also committed and aspired to operate a successful business, which means providing best-in-class hearing healthcare while running a profitable business.

No matter how successful they are, independent providers must still focus on how to stay competitive in their market, retain patients while acquiring new ones, and increase their bottom line.

Profitability is a daily concern for independent providers. No matter how successful they are, independent providers must still focus on how to stay competitive in their market, retain patients while acquiring new ones, and increase their bottom line. Other the past several years, TPRN involvement in hearing benefits and hearing aid reimbursement has continued to grow, with programs being offered by traditional commercial payers and their subsidiaries, Medicare and Medicaid contractors, and government entities. This growth has provided HCPs with various opportunities to be involved as providers of care in these programs. However, with opportunity comes risk, and many HCPs are uncertain of the questions and qualities they should be evaluating when considering joining a TPRN.

Why are third-party companies involved?

The rise in the trend of health plans offering hearing benefits has increased hearing aid accessibility. Many plans contract directly with individual providers, group practices, hospitals or other healthcare organizations to procure hearing solutions and deliver them to members along with hearing healthcare services. These relationships are generally referred to as “in-network” providers. In this model, the plans bear the cost of administering member benefits and managing their provider relationships. Product and service costs in this arrangement can vary greatly by region and even by provider within the same region.

Some plans operated by large healthcare organizations employ their own network of HCPs to supplement independent in-network providers, and they have even tested alternate models that centralize the product selection, service and delivery where members have little access to independent HCPs.

An increasingly popular approach for health plans is to partner with third-party companies, providing controlled costs, outsourcing the management of a provider network, administration of the hearing benefit, hearing aid price negotiations with hearing aid manufacturers, and industry-specific expertise. Ultimately, each plan seeks to offer the best value proposition to their members, while carefully working to standardize the services and experiences members receive so they know what to expect.

Why do my patients go through third-parties instead of coming directly to me?

I want you to think of those patients coming through your door today. Most likely they are more educated about hearing loss and hearing aids than the patients walking through your door 5 years ago. They have access to an internet full of information readily available at the click of a mouse, including websites promoted by hearing aid manufacturers, healthcare plans, consumer advocacy groups – you name it. The patients of today are more aware of hearing aid pricing and how to exercise their buying power, and shopping around for the best “bang for their buck” – being more demanding about the products or services they receive.

The patients of today are more aware of hearing aid pricing and how to exercise their buying power, and shopping around for the best “bang for their buck” – being more demanding about the products or services they receive.

Consumer pressure for benefits and plans competing for members are a couple of the reasons healthcare plans are adopting hearing aid benefits, which are seen as a valuable differentiator. Consumers in the market for both hearing aids and health plans are more likely to choose a plan that offers an attractive benefit compared to one that does not.

The consumer of hearing healthcare today views hearing loss as a healthcare issue, regards hearing aids as medical devices, expects insurance to help cover the costs, and seeks their health plan’s guidance in purchasing hearing aids where there is benefit. Consumers now often start by reaching out to their health plan for their hearing care needs before seeking advice of an audiologist or hearing aid specialist.

Some existing hearing aid users are likely to explore cost-saving options being offered through their health plan if they previously paid out-of-pocket for their hearing aids. In that respect, managed care does represent a threat — turning a former retail customer into a third-party referral.

On the other hand, it’s also an opportunity for providers who opt to participate in the customer’s health plan network, either directly or through a third-party company. In-network providers will have an opportunity to retain their relationship with existing patients who elect to take the health plan route as well as receive first-time user referrals. These first-time user referrals can be a substantial amount of volume for an individual clinic and may not be accessible through the traditional pathways to a clinic.

Choosing the right TPRN for your practice

To be successful with TPRNs, you may need to adapt many areas of your practice to not only be consistent with the service delivery model of the TPRN, but also ensure profitability. A multitude of factors can influence profitability and being knowledgeable about your clinic’s specific data will only further support your decision to accept (or not) third-party referrals.

Factors that may influence your decision to participate may include:

  • Time & fees. What amount of time are providers expected to spend with each referral and how you will be reimbursed for that time (e.g., provider fitting fee)?
  • Service & warranty. How does the TPRN handle the service and maintenance of their patients’ hearing aids and follow up services over time? Is the arrangement sustainable for you and your practice, and when can you start charging fees for service outside of the contracted time?
  • Demographics in your area (i.e., if a major employer has contracted with any of the TPRNs in hearing healthcare, then that may be the only way to see those patients).
  • Member on-boarding by TPRN. Some TPRN’s refer patients that are further along in their hearing aid purchasing journey and more informed about hearing healthcare, while others do not spend as much time educating their members and bringing them closer to a purchasing decision.
  • The mix of private pay vs insurance patients. Can your practice and staff adapt to working with a higher volume of patients and managing the different requirements each TPRN has?
  • Marketing costs to acquire patients. Even if your fitting fee is reduced, if you don’t have to spend money on marketing to attract these patients, does that “even out?”
  • Freedom to choose the “right” product. Some TPRNs may require providers to recommend product from a limited selection by a single manufacturer as specified in a plan contract. While many TPRNs contract with all of the top hearing aid manufacturers, others may not, meaning you could have less choice and/or flexibility to recommend the product you believe best addresses the patient’s hearing healthcare needs within their allowed benefit.

The bottom line is that making an informed decision and using as many resources available to you and your practice to answer your questions in regard to TPRNs is extremely important. When you know your clinic’s bottom line, you will be able to utilize that data to make an informed decision, allowing you to maintain a successful practice.

What does the future hold for TPRNs?

If anything, we know that TPRNs are not going anyway any time soon. As the membership of each health plan grows, the better the benefits they are able to offer to their members. With the health plan landscape becoming ever more competitive, consumers have a voice to drive change in plan offerings and health plans have the opportunity to provide what makes their members happy, while controlling costs for both themselves and their members.

…exploring whether TPRNs are right for your practice and, if so, finding the right balance of private vs TPRN payers will ensure your practice the opportunity to thrive in the future.

Being proactive with an emerging channel is important and keeps you ahead of the curve compared to a reactive strategy. There will always be private pay patients, as not everyone will have access to the plans and networks that offer these hearing benefits. However, the hearing healthcare field is evolving and constantly changing, so exploring whether TPRNs are right for your practice and, if so, finding the right balance of private vs TPRN payers will ensure your practice the opportunity to thrive in the future.

Don’t forget who we’re serving

While often confusing or overwhelming, managed care presents the hearing healthcare landscape a promising opportunity to effectively reach many of the adults in the U.S. with untreated hearing loss. These potential patients may not be attracted or reachable through traditional marketing, making them more difficult for you to get into your office. Managed Care and TPRNs provide you with a solution that maintains the quality of the care and service provided while reducing out of pocket costs, allowing you to successfully evolve and grow your practice with access to a patient subset that you may not have had before.

Have a question?

At Phonak, we strive to be your valued partner, and the resource you trust when you have questions about Managed Care and TPRNs. Send us your questions at managedcare@phonak.com, and we’ll do our best to earn your trust!