New Rules: Disappearing Rules and Regulations: Part 3 of 4—Clinics as Merchandise

The first two parts of this series have dealt with some of the past issues that might have been managed in a way that provided for a more efficient and future-looking field.  A few more related discussions may provide more awareness of potential directions that might make the future easier.

Federal Regulations

Four important federal regulations hold an ever-decreasing sway over our clinical practices. They are:

  • The Anti-Kickback Statute
  • The Stark Self-Referral Prohibitions
  • The False Claims Act
  • The Health Insurance Portability and Accountability Act

Most clinicians, being compliant and lucky, will never be visited with anyone tasked with assuring adherence to these regulations. Lack of inspection notwithstanding, violations of these regulations take place on a rather regular basis.  (I have nothing more than anecdotal observations in saying this.  You should investigate for yourselves.)

If asked why these regulations were enacted, the best answer would likely be:  because the public asked for some form of protection. The regulating bodies stepped in to “help out”.  A follow-up question might be: “How did that all work out?”

The essence of the Big Three (first three above) is an attempt to minimize the effect of money in healthcare.  A clinician cannot make false claims of treatments or procedures (I would assume in order to acquire or keep patients). Clinicians can neither refer to themselves, directly or indirectly, nor can they pay for referrals (same reason).

These Big Three try to require clinicians to practice openly, honestly, and transparently.  But, like many government plans, results may be lost in the evolving details or clever bypasses of the regulations. For example, a kickback does not have to take the form of direct payment of money.  And some false claims may have in them a kernel of truth but they may still be in violation of the spirit of the regulation. How does the government deal with “violations of spirit”?  Most of the time, they probably don’t.

Many times, violations of the Big Three are not all that obvious to consumers. Perhaps the people attracting business with borderline deceptive methods are not aware of the lack of transparency, although it is their responsibility to know such things.  Increasingly, astute consumers uncover those methods that function to their detriment. When that happens, rules, regulations, and laws can be made or changed.

In a nutshell, the Big Three regulations were put in place in part to prevent professionals from treating healthcare as if it were merchandise, similar to soap, automobiles, or dietary supplements. Hearing healthcare has become a commodity.  Attempts to regulate are halfway measures at best and appear to be failing for the most part.


In addition to the Big Three, there is the HIPAA regulation that mandates the personal health information of patients under the care of a clinician to be both private and portable.  Some audiologists outside of universities and hospitals have trouble understanding the confidentiality and ownership of patient information. Money is also at the heart of this problem.

For example, consider the definition of covered entities at the HHS website—to wit, the scope of business associates who have responsibilities under the regulation.  In general, business associates are non-clinical people working for or on the behalf of clinics or clinicians (covered entities). 

 Business Associate Defined. …Business associate services to a covered entity are limited to legal, actuarial, accounting, consulting, data aggregation, management, administrative, accreditation, or financial services. However, persons or organizations are not considered business associates if their functions or services do not involve the use or disclosure of protected health information, and where any access to protected health information by such persons would be incidental, if at all. A covered entity can be the business associate of another covered entity.[1] 

There has always been some confusion about hearing aid manufacturers being covered entities in the hearing health business. Can a hearing aid manufacturer collect data from its files and mail to all those patients (customers) for whom they constructed or sold hearing aids?  Can sales offices use mailings?  Can an office, affiliated with a manufacturer (covered entity?) or a sales group (non-covered entity?) refuse to provide a customer with a copy of their audiogram?  What is patient data and who is entitled access under HIPAA?  And, consider false claims in advertising…Wow!

Of course, all of this just becomes more complicated with the advent of DIY, over-the-counter, and PSAPs.  Will these new manufacturers be covered entities if their products are the same as hearing aids, i.e. prosthetic in nature? 

I suspect that an important lesson from these regulations is that, when the government gets involved—usually for good reasons—the effects of that involvement sometimes cause more trouble than the precipitating situations. 


[1] Accessed on the web on 1/19/18 at:


About Mike Metz

Mike Metz, PhD, has been a practicing audiologist for over 45 years, having taught in several university settings and, in partnership with Bob Sandlin, provided continuing education for audiology and dispensing in California. Mike owned and operated a private practice in Southern California for over 30 years. He has been professionally active in such areas as electric response testing, hearing conservation, hearing aid dispensing, and legal/ethical issues. He continues to practice in a limited manner in Irvine, California.

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