Humana Plans to Cut Its Hearing-Aid Prices
Wall Street Journal 9/3/97
In response to evidence that Humana Medical Plan has been
touting illusory discounts on hearing aids in South Florida, the
health-maintenance organization has cut its prices on several
models and may issue refunds to some elderly members.
Humana announced the moves two days after an Aug. 27 article in
The Wall Street Journal reported that the HMO's $700 discount on
hearing aids offered little or no savings to its Medicare
members. Price comparisons showed that the retail prices on most
of the models Humana offered were several hundred dollars above
prevailing retail prices, meaning that Humana members often were
deprived of the promised discount.
Humana officials say they have taken steps to ensure that the
HMO's members are receiving the lowest possible retail price from
Affiliated Hearing Professionals, the Hallandale-based network of
80 independent hearing centers through which Humana sells hearing
aids in South Florida.
The officials say they have told AHP providers to apply the $700
discount to their lowest price whether that be the price Humana
and AHP agreed to in their contract or the providers' in-store
price for non-Humana customers. Many of the hearing-aid centers
have kept two separate price lists for the same products one for
regular customers and a higher-priced version for Humana members.
"We have advised our provider and they agreed that the $700
allowance will always be applied to the lower" of the two prices,
says Pam Gadinsky, spokeswoman for Humana in Miramar. "We think
it's a minor alteration that needs to be made."
Still, Humana's changes won't help members who buy a hearing aid
from an AHP dealer who doesn't offer Humana's models to non-
Humana customers and thus doesn't carry a separate price list for
comparison. Those seniors could be still paying the higher
prices. Humana officials say they are looking into the matter.
As for the more than 4,000 Humana members who have bought
hearing aids since June 1996, when Humana's prices through AHP
took effect, the HMO, a unit of Humana Inc., Louisville, Ky., may
refund some portion of their purchase.
"There is no timetable on it," says Ms. Gadinsky, "but that is
an issue we are looking into."
Some of Humana's AHP providers had earlier criticized the HMO
for not thoroughly monitoring its hearing-aid dealers' network.
Richard Skelly, founder and chairman of AHP, wouldn't comment on
Humana's pricing changes. He says he has been told not to discuss
the matter publicly by officials at Humana and Professional
Hearing Care Inc., the Fort Lauderdale firm that acts as a third-
party administrator, receiving payments from Humana and then
disbursing them to AHP.
Officials at Professional Hearing Care didn't return calls.
One of Humana's hearing-aid providers says the AHP price list
represents the average of prices from 20 counties across South
Florida. He says Humana's prices in Broward, Dade and Palm Beach
counties are substantially higher than prevailing retail prices
in the same market because of increased competition among dealers
there. Other areas of South Florida don't have such a high
concentration of elderly people and hearing-aid centers.
The problem is that the bulk of Humana's Medicare members and
hearing-aid customers live in those three counties and are thus
paying the higher prices.
Humana dominates the state's Medicare HMO market, with 235,352
members. About 40% of those members live in Broward, Dade and
Palm Beach counties.
Hearing-aid discounts are among several benefits HMOs promote
heavily to attract Medicare recipients; the federal program
doesn't cover such items. Officials with the federal Health Care
Financing Administration, which monitors how HMOs market their
benefits, have asked Humana to check for any possible complaints
about their hearing-aid prices.
"They're going through their grievances and appeals to see if
they find anything," says Norm Dodds, HCFA's lead investigator
for Humana in Florida.
Ms. Gadinsky says the HMO has received five written complaints
about its hearing-aid benefit; specifics were unavailable late
And the Florida attorney general's office could take an interest
in the case since it devotes significant resources to prosecuting
deceptive business tactics targeted at seniors. Attorneys in its
Fort Lauderdale office wouldn't comment on the possibility of an
investigation of Humana.