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F I S C A L I M P A C T R E P O R T
SPONSOR Wallace
ORIGINAL DATE
LAST UPDATED
01/23/07
03/03/07 HB 85/aHHGAC/aSCORC
SHORT TITLE Insurance Coverage for Child Hearing Aids
SB
ANALYST Hanika Ortiz
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)
FY07
FY08
FY09 3 Year
Total Cost
Recurring
or Non-Rec
Fund
Affected
Total
($.01)
(Parenthesis ( ) Indicate Expenditure Decreases)
SOURCES OF INFORMATION
LFC Files
Responses Received From
Health Policy Commission (HPC)
Department of Health (DOH)
Public Regulation Commission (PRC)
SUMMARY
Synopsis of SCORC
The Senate Corporations and Transportation Committee Amendment strikes language requiring
an insurer to make available additional hearing aid coverage that exceeds the proposed coverage
as defined in the bill.
Synopsis of HHGAC Amendment
The House Health and Government Affairs Committee Amendment adds language to clarify that
a health insurer has the discretion to determine the provider of hearings aids and related services
with which it contracts; and, may conduct medical necessity or provide for utilization review.
SIGNIFICANT ISSUES
Insurers use “utilization review" to examine medical records to see if a patient was given an
economical level of care consistent with their needs and the past needs of similarly-afflicted
patients with regard to care received in a particular facility or from a particular provider. An
insurer uses medical necessity as the standard in providing patient care that is reasonable,
necessary, and/or appropriate based on evidence-based clinical standards of care.
pg_0002
House Bill 85/aHHGAC/aSCORC – Page
2
Synopsis of Original Bill
House Bill 85 enacts several new sections to the Insurance Code requiring hearing aid and
related services are provided for children covered by any individual or group health care
coverage issued or renewed in New Mexico.
FISCAL IMPLICATIONS
The PRC believes the estimated cost of this benefit for insurers vary from less than $1 per year to
as much as $1 per month per child.
HPC reports that requirements vary state by state for hearing aid coverage for children and range
from $400 coverage per hearing aid per ear every 3 years in Rhode Island, to once every 48
months without a dollar limit in Oklahoma. DOH reports that costs for a hearing aid, accessories
and related professional services are estimated at $3000 per hearing aid. Infants and young
children require more frequent professional services because of the variation of their hearing loss
over time.
DOH reports that in 2000, the annual average per student special education expenditure for a
child who was deaf or hard of hearing was more than twice the expenditure for their hearing
peer, $15,992 vs. $6,556. Costs to state agencies for children without early hearing loss related
services may be significant in terms of direct medical costs, family discord, lost work
productivity and increased dependence on welfare systems.
SIGNIFICANT ISSUES
Insurers in New Mexico, except for Medicaid, typically exclude the purchase of hearing aids
from their health care plans. The DOH reports less than forty percent of New Mexico’s children
are insured through employer-sponsored health insurance plans. The coverage mandated under
HB 85 provides coverage for one hearing aid and related services per hearing-impaired ear up to
$2,200 for insured children under 18 years of age or under 21 years of age if still attending high
school. Insurers must make available to policyholders the option of purchasing additional
hearing aid coverage that exceeds the services provided.
ADMINISTRATIVE IMPLICATIONS
The PRC reports the additional workload to re-file insurers policy forms with the Insurance
Division can be accomplished with existing staff and resources.
OTHER SUBSTANTIVE ISSUES
HM 16 in 2006 requested a study on the feasibility of mandating insurance coverage for
children’s hearing aids and cochlear implant processor replacement as durable medical
equipment.
According to DOH, 80 infants are born each year in New Mexico with congenital hearing loss,
one of the most common birth defects. Other children are born with normal hearing but
experience late onset or progressive hearing loss. Children as young as one month of age can be
fitted with hearing aids. There is considerable evidence that early intervention services can
pg_0003
House Bill 85/aHHGAC/aSCORC – Page
3
mitigate the effects of hearing loss and language delays, and provide the child and family the
opportunity to develop age appropriate communication. The HPC further notes that recent
research indicates children identified with hearing loss who begin services before 6 months of
age develop language (signed or spoken) on a par with their hearing peers.
DOH further reports that in 2000, the Joint Committee on Infant Hearing stated that without
auditory input and the opportunity to learn language, children with hearing loss almost always
fall behind their peer in language, cognition, social-emotional development. They also have
difficulties attaining the same level of academic achievement as their hearing peers. Several
studies show that deaf children by age 8 are already 1.5 years behind their hearing peers in
reading comprehension scores, and half of deaf children graduate from high school with a 4
th
grade reading level or less. Children with unilateral hearing loss also lag behind their peers in
math, language and social functioning as well.
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL
Insurers may continue to exclude the costs of hearing aids and related services for children from
their health care plans.
AHO/mt:csd