Report on the regulatory framework for hearing services

Focusing on specific areas of concern

Review of the efficiency and effectiveness of the regulatory framework for hearing services July 2012. The Report was prepared for the Office of Hearing Services by MP Consulting

Page last updated: 28 November 2012

Given the limitations of this review and the complexity of the legislative and contractual environment it is not possible to identify all instances where the scheme does or does not meet good regulatory practice.

This chapter examines four elements of the scheme of particular note:

  • the regulation of top-ups – this was the single biggest issue raised by stakeholders
  • the accreditation scheme – this provides a good example of some of the problems with the regulatory scheme.
  • the relationship between the OHS and device suppliers
  • the schedule of items and fees.

Case study 1 – Top-ups

The service provider contract (effective from 1 July 2012) provides that:
  • a service provider must not encourage a client to select a top-up device where an approved hearing device is available to the client free of charge and would reasonably meet the client’s rehabilitation needs
  • if the service provider is to supply a top-up the provider must have first provided the client with a quote, the quote must be signed and a copy of the signed quote kept by the service provider. The service provider may then charge the client the quoted price
  • if a service provider fails to comply with the requirements detailed above and as a result the client chooses a top-up device as a consequence of the failure, the Minister may require the service provider to refund to the client all charges in connection with the top-up

In addition the Deed provides that:
  • the device supplier and the service provider may agree a price for a top-up (this is unlike free-to-client devices where the Commonwealth sets the price)
  • hearing devices on the top-up schedule of approved devices must have additional features, with demonstrable client benefit. These features:
      • must be over and above those required to achieve an acceptable standard of rehabilitation specified under the terms of the contract between the service provider and the OHS
      • are in addition to those specified for free-to-client devices. They must be identified and the potential client benefit supported by appropriate evidence. The evidence for additional client benefit could, for example, take the form of field trial data, test results or validated research
  • the Schedule to the Deed details the minimum specifications for top-up devices. For example, the device must meet the specification for free-to-client devices plus include at least one feature from the list of top-up features listed in the Deed.
    Top of Page

Stakeholder feedback

The issue of top-ups was discussed with all stakeholders. Concerns expressed by stakeholders included:
  • that there was anecdotal evidence that clients were being inappropriately provided with top-up devices where free-to-client devices were available and would meet the client’s need
  • that practitioners were subject to pressure from their companies to sell top-up devices
  • that some practitioners were being paid performance bonuses that were linked to the number of top-ups sold (with the concern being that top-ups were not always being suggested on the basis of client need)
  • that there was inadequate recompense from the government for free-to-client devices and as a result practitioners were relying on top-ups to enable their practice to be profitable
  • that the clients of the scheme were a vulnerable community who relied on the advice of practitioners and were less likely than some other groups in the community to question the advice or seek a second opinion. It was therefore suggested that the clients were more susceptible to being influenced by the provider in terms of the need for, or desirability of, a top-up.


Top-ups are a perfect example of where the risk that the regulation is trying to mitigate is unclear, the role of government is unclear and as a result an unusual hybrid of regulation has emerged.

On the one hand it could be argued that:
  • there is no role for government in the regulation of top-ups because top-ups are a consumer item offered by a service provider
  • it is entirely up to the client whether or not they wish to purchase the top-up
  • there are consumer protections available through the Competition and Consumer Act 2010 which protect consumers from misleading and deceptive conduct or false claims.

If this argument is supported, then there is theoretically no need for the hearing services regulation to specifically address top-ups. Rather, the focus could be on educating clients so they can make informed decisions about whether or not to choose a top-up.

On the other hand it could be argued that the fact that the Australian Government is directing clients to certain providers with whom the Government has a contract to provide free-to-client services, means that stronger protections are needed for clients to minimise the risk that they will incur unnecessary expenses as the result of inappropriately being offered top-ups.

If this argument is supported then it would be logical for the hearing services regulation to include additional consumer protections. The extent of these additional protections (taking into account the risk and the regulatory burden) would require consideration. But it should not be necessary to:
  • regulate the relationship between the device supplier and the service provider in relation to top-ups (as the regulation currently does)
  • describe minimum specifications for top-ups (as the regulation currently does).
A third argument is that government has a role in the regulation of top-ups that goes beyond consumer protection. This role would need to be defined and the regulation matched to the risks identified.

Case study 2 – The accreditation system

All service providers must be accredited by the OHS before being offered a service provider contract. The process of accreditation involves the following stages:
  • submission of application
  • assessment of application by the OHS
  • submission of additional information prior to offer of a contract
  • notification of accreditation and accreditation conditions. An offer of a contract occurs at the same time as the notification of accreditation.

The application for accreditation requires the applicant to submit, among other things:
  • applicant details including relevant certificates of registration
  • a detailed statement of experience in the provision of hearing services from a business management and clinical expertise approach (with claims supported by attaching a current resume complete with references)
  • information about the staffing profile, including information regarding all qualified practitioners and support staff arrangements
  • information about the site(s) including site suitability: how the safety and general wellbeing of voucher clients will be ensured and details of all equipment that has been acquired or is intended to be acquired for hearing assessments (including details of the type of earphone/cushion or earphone/enclosure combination)
  • information about the financial viability of the applicant. The Accreditation Kit Manual provides detailed guidance about the information to be provided to support an application. For example, the Manual encourages applicants to engage a qualified accountant to assist in the preparation of financial information and provide independent verification that the figures used are accurate and financial projections (including assumptions) are sound. It also requires that the applicant provide detailed information such as: a diagram of business structure; audited financial statements including for parent companies; projected profit and loss forecast; and, for newly established entities, a business plan and various accountant and bank declarations
  • a declaration re convictions, receivership or liquidation.

The OHS assessment of the application involves: requests for additional information; independent financial analysis by a contractor to the OHS; and an average of 65 OHS staff hours per application.

In order to accredit an organisation, the OHS must be satisfied that it is in the best interests of persons received hearing services under the Act having regard to:
  • the provider’s experience in providing hearing services
  • the proposed staffing profile and qualifications of the staff
  • the accessibility of the premises and whether the premises are of a satisfactory standard
  • capacity to meet the rules of conduct
  • financial viability
  • any other matters that might affect the standard of the service.

The accreditation process highlights a number of issues: Top of Page
  • first and foremost the purpose of accreditation is not clear. There is no obvious reason why, for example, the OHS would need to assess the business plans or financial viability of a provider especially when:
      • no significant pre-payments or grants are made to service providers
      • the contract requires the provider to attest to, and also make warranties as to, a number of the matters that are considered as part of the accreditation process (overlapping requirements)
      • there is no follow-up for a number of the matters considered. Having received accreditation, the provider could change its business plan, its loan arrangements, its liquidity and its financial position and this is never again checked by the OHS. Rather than suggesting that such checking needs to occur, the more reasonable conclusion is that the initial assessment is unnecessary

    Similarly, it is unclear what purpose it serves to undertake an assessment of all support staff particularly given that support staff can change over time and no notification of such change needs to be made to the OHS.
  • the word ‘accreditation’ suggests a process in which certification of competency, authority, or credibility has occurred. It suggests that a third party has assessed the performance of the organisation against standards. But this is not the case for accreditation of hearing services providers. Rather the process is more akin to a pre-contract vetting process.

    The use of the term also risks organisations holding themselves out as having a preferred status when the only practical or legal consequence of accreditation is that it is a pre-condition to being able to contract with the Commonwealth
  • the process requires providers to expend money and prepare documents that would not otherwise be needed for the establishment or maintenance of their business yet with no clear benefit or purpose to the OHS
  • the requested information includes significant amounts of personal information. Once held by the OHS, appropriate mechanisms need to be in place for the protection of such information (this was not explored in detail with the OHS)
  • on the advice of the OHS, no organisation has ever been refused accreditation.

As the accreditation requirement is specified in legislation, there is limited capacity for the OHS to streamline or eliminate this process, should it be deemed unnecessary. This highlights the need for structural reform of the hearing services regulation. This is discussed further in Chapter 7.

Case study 3 – Device suppliers

Under the scheme, device suppliers must
  • be registered by the OHS in order to provide devices to service providers for the purposes of the hearing services scheme
  • enter into a Deed with the Commonwealth
  • enter into a contract with the service provider for the provision of devices. The contract must be in accordance with the conditions detailed in the Deed.

These arrangements are unusual in a number of respects.
  • The Deed requires that device suppliers be registered with the OHS. The process of registration is described in the Deed as involving consideration by the OHS of the ‘financial viability and ethical standards’ of the device supplier. As for accreditation of service providers, it is unclear what purpose registration of device suppliers serves.
  • The overall need for the Deed (and the wide range of matters it ‘regulates’) is not clear. If the main purpose of the Deed is to describe the approved devices, their specifications and the price the Commonwealth will pay for such devices, this could be done without a Deed. The Commonwealth could specify this information in a Schedule to the service provider contract, or in delegated legislation6 It is noted that the Schedule of fees (which is published on the OHS website and is referenced in the service provider contract but is no longer a schedule to that contract) already includes a list of hearing device prices. . The effect of this would be that the Commonwealth ‘sets the bar’ in relation to devices that it will fund, without regulating the relationship between the device supplier and the service provider. It would then be a matter for the service provider and the device supplier as to how they negotiate for supply of the device.
  • The Deed provides that devices may be approved under the Act (in which case they are deemed to be added to the device Schedule) yet there is no power under the Act for the Minister to approve devices. Devices are entered on the Device Schedule monthly by the OHS. As has been identified by the OHS, it is important that the device schedule be reviewed as part of a broader procurement plan to ensure that the specified devices are efficacious and represent value for money for the Commonwealth.
  • The service provider contract requires that the service provider must comply with the terms and conditions of the Deed. While the Deed is accessible to service providers through a secure part of the OHS website, it is not clear whether all providers would be familiar with the contents of the Deed, not having been a party to that agreement.
  • Based on discussions with OHS it is understood that the Deed has been in place for 10 years, without substantial review or amendment. Possibly as a result of this, the Deed is outdated in a number of respects. For example the definitions of client and device in the Deed are different to the definitions in the service provider contract.

Overall, as has been acknowledged by the OHS, the Deed is in need of review. However, it may also be timely to re-evaluate the purpose of the Deed as part of the broader consideration of scheme reforms.


It is noted that the Schedule of fees (which is published on the OHS website and is referenced in the service provider contract but is no longer a schedule to that contract) already includes a list of hearing device prices.

Top of Page

Case study 4 – Schedule of items and fees

The Hearing Services Administration Act 1997 provides that the contract between the Commonwealth and the service provider may provide for amounts to be paid by the Commonwealth to a service provider. Such a payment may not be paid unless a claim has been made to Medicare Australia (the claims acceptance body for the Commonwealth).

Schedule 1 of the service provider contract describes the Schedule of Service Items. The fees payable for each of the services is detailed on the OHS website.

In summary, the Schedule of Service Items:
  • contains 34 service items
  • for each service item, the Schedule contains a description of the service item and the conditions for claiming. The descriptions of many of the service items are complex and include a blend of conditions, claiming information, and record keeping requirements.
    For example, in order to claim a fee of $72.30 for aid adjustment, the service provider must meet the following criteria:

      930 Aid Adjustment – Monaural

      Description of Service Item

      This item covers device adjustment where the Client is experiencing less than optimal benefit or satisfaction with the device and it is more than 12 months from the date of fitting and more than 24 months from the last aid adjustment claim. It can be claimed where the Client has had a monaural fitting without the need for the Client to apply for a new Voucher.

      The aims of this item are to give the practitioner greater flexibility in providing appropriate services in a timely and efficient manner and to extend the life of the current fitting. Activities performed as part of this item are separate to those performed as part of a Reassessment. This item is not intended to be used to rectify a poor fitting by the practitioner.

      Conditions for Claiming

      This item can only be claimed where the service was performed on or after 1 December 2000 and a monaural fitting or refitting has previously been claimed for the Client.

      A claim for these services would be indicated where the usual checks to exclude aid malfunctions or external auditory meatus cerumen blockage has been completed and the client is still reporting difficulties.

      In order to claim this item three or more of the following activities should be performed with supporting evidence on file:
      i) Hearing screening including an indication of middle ear status
      ii) Repetition of real ear insertion or aided threshold measurement
      iii) Resetting of hearing aid parameters to accommodate slight changes in hearing thresholds
      iv) Checking of real ear insertion or aided thresholds measurements with new settings
      v) Fitting of new earmoulds or modification of the current earmould/shell (eg. retubing, replacement of earhook)
      vi) Assessment of Loudness Discomfort Levels in relation to MPO settings
      vii) A review of negotiated client goals with modification where necessary and/or a review of client's expectations and appropriate use of communication strategies and tactics
      viii) A review of the client's aid management with re-instruction.

      This item is only available where it is more than 12 months since the date of fitting or in the period between a subsequent monaural Fitting Date and the subsequent monaural fitting Date of Service (i.e. Follow-up date) inclusive, where the readjustment is to the initially fitted aid. It can be claimed once every 24 months where it is clinically necessary. A new Voucher is not required for subsequent claims against this item.

      The range of outcomes covered by this item are described in the Hearing Rehabilitation Outcomes; Outcome 7, Aftercare.

By contrast, the MBS is significantly clearer. The schedule of items is available online and is searchable by item number or service description. For each service item:
  • the service item is succinctly described with the fee described alongside the service item (in the case of the OHS the service fee is in a separate document to the service item)
  • associated notes provide further explanation including information about, for example: eligible patients; related service items; the number of services of that type that may be provided to eligible people; where to obtain further information. This means that it is much easier to distinguish the various requirements.
As an aside, and as discussed in Chapter 7, the MBS includes a number of items relating to audiology. It is unclear how the OHS ensures that parity is maintained between the fees associated with service items under the hearing services scheme and like service items under the MBS.