PwC Report Executive Summary

Background

Since 1947, the Australian government has provided hearing services to some of those most vulnerable in our community. Since then hearing services have expanded to cover a wider range of eligible clients under the Hearing Services Program (HSP), established through the Hearing Services Administration Act 1997 and administered by the Commonwealth Department of Health (the Department). The HSP allows its clients to receive hearing services through two program components, the Voucher Scheme (VS)[1] and the Community Service Obligations (CSO).[2]

The HSP plays a critical role in society and the Australian economy. At a cost of $475.9million in the 2015-16 financial year (0.9% of the total administrative expenditure of the Department), the Voucher and CSO components ensure that clients have access to hearing support from qualified practitioners and are able to access world class hearing technology. The HSP makes a meaningful contribution to mitigating the reported $33.3 billion cost of hearing loss to the Australian economy.[3] The HSP represents a majority share of the Australian hearing services market, estimated to be approximately 68% of the measurable market in the 2015-16 financial year.[4]

By 2019-20, a proportion of HSP clients will transition across to the National Disability Insurance Scheme (NDIS). With eligibility requirements differing between the HSP and the NDIS, a whole of government view is needed on the provision of hearing services and assistive hearing technology (AHT). This is to ensure that no unjustifiable differences in pricing of hearing services and range of available devices between the NDIS and the HSP are able to distort or disrupt the hearing sector or reduce client outcomes. 

The current focus on the Australian hearing sector indicates an increasing appetite for change. This has been driven by recent parliamentary inquiries in the hearing sector, consumer protection issues highlighted by the Australian Competition and Consumer Commission (ACCC) report on the sale of hearing aids, and the Professional Practitioner Bodies (PPBs) implementing a joint Code of Conduct and Scope of Practice.

Australia’s ageing population will increase the demand for hearing services and AHT, potentially leading to funding pressures. Current trends evident within the VS may also add to these pressures. Specifically, total administrative expenditure between FY2012-13 and FY2015-16 has grown at an average rate of 7.1% per annum, 2.5 times the growth in client numbers (2.8% per annum over the same period). This growth has outstripped growth in broader health spending.

Certain industry practices are putting upward financial pressure on the HSP and are not necessarily leading to improved client outcomes. These practices include

• a growing trend in the take-up of partially subsidised AHT, driven by changing consumer preferences and anecdotally-supported cases of industry ‘upselling pressure’, and
• a shift towards a greater number of higher-priced partially subsidised AHT being provided through the HSP, with the average cost to client (in real terms) increasing.

Against this backdrop, it is timely for government to undertake a review of the VS. Subsequently, PwC was contracted by the Department to conduct a review of services and technology supply in the HSP, particularly as it relates to the VS.[5]

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Major findings

The findings of this report are informed through extensive consultations, which included 72 stakeholder interviews (involving over 40 hours of direct contact), two online surveys with a total of 381 responses, and 37 responses to a public discussion paper. The public discussion paper, released in April 2017, outlined a range of options for alternative models of services items and fees and supply arrangements under the HSP. Stakeholders representing government, industry, consumer groups, and PPBs participated in this consultation process. This has been complemented with research and analysis conducted during the information gathering phase of the review. Generally, the level of constructive sector engagement was high. The majority of major stakeholders recognised the strength of the current service delivery model and acknowledged the challenges facing the sector. However, opinions differed on what changes need to be made to the current service delivery model to best overcome these challenges. Figure 1 outlines the stages of the review, which began in June 2016 and concluded in August 2017 (see Appendix A for a detailed overview).

Figure 1 Approach summary, by phase and stage

The review identified 12 major findings associated with the current service delivery model. On the whole, the findings recognised there is room to improve fundamental components that contribute to the way the VS provides services and AHT. However, there was a lack of consensus around the alternative model that would be best to address the challenges identified.

The majority of stakeholders were in favour of a gradual approach to reform of the current model. There were concerns that any major reform would disrupt the hearing sector and that the challenges highlighted in the sector by the recent ACCC report and parliamentary inquiries could be better addressed through changes to the current service delivery model as opposed to moving towards a completely revamped service delivery model. 

In part this stemmed from the belief that certain alternative models were too risky to implement in the Australian context. Valid questions were raised on the impact major reform could have on a relatively small health program, and how such reform would deliver substantial improvements in client outcomes or government objectives.

Findings include the following set of high level themes.

Finding 1 - More can be done to focus on client outcomes.

• The need to focus on client outcomes has been noted by research as being a key component in assessing the benefit or value associated with the provision of health services.[6]
• Focusing on client outcomes would entail a process that begins with the definition of an outcome, followed by data collection, compilation, analysis, and comparison of outcomes across peers on a national level. This has been noted through research as providing the means to identify areas for improvement in the delivery of health services.[7]
• While the measurement of outcomes has become more commonplace in certain health settings, such as in hospitals (e.g. in-hospital mortality indicators),[8] the hearing services market exhibits a relatively low degree of maturity in this area.
• Responses to the public discussion paper indicate that a majority of stakeholders (including most Contracted Service Providers (CSPs), some Device Manufacturers (DMs), and all consumer groups and research institutions) agreed to the assertion that client outcomes have an important part to play in determining what support should be delivered under the HSP. 
• However, there was no consensus on how to measure client outcomes. CSPs, DMs, PPBs, and industry associations indicated that four different types of measurement instruments are commonly used. A further 16 instruments were identified through research.
• While responses to the public discussion paper indicate that outcome measures are common in some form at the CSP level, the challenge facing the VS is how to address the inconsistent approach to the recording of data in order to capture broader trends in client outcomes at a program level.

Finding 2 - The current Minimum Hearing Loss Threshold (MHLT), and practices for measuring it, do not align to international definitions.

• A MHLT sets criteria around the minimum level of hearing loss required in order for an individual to be eligible to receive a fitting of an AHT to the ear being tested. Currently, the VS sets the MHLT at 23 decibels (dB) as measured on a 3 Frequency Average Hearing Loss (FAHL) method consisting of measurements at 0.5, 1, and 2 kilohertz (kHz).[9]
• Comparison of this MHLT definition to best practice international definitions indicates misalignment on two fronts. The MHLT does not
• align with the World Health Organisation’s (WHO’s) definition of disabling hearing loss (measured on 4 FAHL), or
• adopt the most common form of Frequency Average Hearing Loss measurement used by practitioners (4 FAHL consisting of measurements at 0.5, 1, 2, and 4 kHz).
• In addition, there is empirical evidence to indicate that the lower the severity of hearing loss, the less likely the individual is to desire using AHT. This raises questions regarding the efficacy of the current MHLT.
• These questions of efficacy are compounded by the possibility that the current MHLT definition may also guide the eligibility criteria to be adopted by the NDIS, particularly as the National Disability Insurance Agency (NDIA) is yet to publish its Access Guidance to define hearing as a disability in a manner measurable through conventional hearing tests.
• State based workers’ compensation schemes, also adopt different stances on measuring eligibility due to hearing loss. The State Insurance Regulatory Authority (SIRA) New South Wales (NSW) evaluates impairment through binaural hearing impairment evaluations as defined by the National Acoustic Laboratories (NAL).

Finding 3 - The current level of funding for services is contributing to a higher prevalence of cross-subsidisation.

• Cross-subsidisation refers to the situation where the sale of AHT covers the losses accrued, or lack of profits derived, in the provision of hearing services.
• The way the current service delivery model funds services has drawn criticism from certain stakeholders who believe it dilutes the value of providing hearing services, increases the emphasis on AHT as the primary - and sometimes sole - solution to mitigating hearing loss, and incentivises a dependency on the provision of AHT. This view was expressed by CSPs, industry associations, and community groups. 
• Combined, these factors have contributed to a reliance on cross-subsidisation, with its prevalence primarily supported by anecdotal evidence from hearing practitioners and industry associations. 
• Cases of CSPs providing hearing services at cost, or at a loss, support the need to review the way services are funded in the VS.
• This is supported by benchmarking of the FY2016-17 schedule prices for services in the VS against the private market and other government programs, which indicates that the current fees are low for a range of key services. It is important to note that the benchmarking was conducted for a subset of services that could be compared on a like-for-like basis (e.g. assessment, follow-up, maintenance, rehabilitation, and client review). The complexity of the current schedule makes comparison for all items impractical. This was particularly the case with fitting services, where the bundling (e.g. fitting, in addition to rehabilitation and maintenance) makes any comparison difficult.
• The use of cross-subsidisation raises questions about whether additional services should be included in the VS. These could include
• interpretation and translating services – currently provided by the NDIS and Worksafe Victoria (VIC). The Department of Veterans’ Affairs (DVA) is currently investigating the extent to which it will support these services.
• reimbursement for travel time – price loading for services provided to rural and remote Australia are to be applicable in the NDIS, aligned to those adopted by the Independent Hospital Pricing Authority (IHPA). Some State based workers’ compensation schemes also reimburse the cost of travel.
• The delivery of services through digital mediums – telehealth is already funded by government, including the Department through the Medicare Benefits Schedule (MBS) and DVA through its Rebates and Financial Incentives. However, this relates to telehealth service delivery, as opposed to teleaudiology specifically. The NDIS has also indicated that it supports the use of telehealth, video conferencing, or off‑site supervision in its strategy for rural and remote areas.

Finding 4 - A greater focus on rehabilitation and support.

• There was clear support in the responses to the public discussion paper for increased client access to rehabilitation services, with 75% of respondents being of the view that the current rehabilitation services did not provide clients with appropriate support.
• Most stakeholders agreed that the practitioner should have the discretion to decide the appropriate time for a client to receive rehabilitation and support services.
• While the current schedule of services in the VS includes three items specifically for rehabilitation services, uptake of these items has been low and claiming rules have prevented clients accessing them until after being fitted with a fully subsidised AHT.
• This raises questions about the effectiveness of rehabilitation services as they are currently delivered in the HSP. A review commissioned by the Department in 2011, which looked at the ‘Rehabilitation Plus program’ identified that more of a focus was needed on psycho-social and functional aspects of aural rehabilitation.[10]
• There is debate about the role of rehabilitation and support services in achieving optimal client outcomes when applied in isolation, although this may also stem from the inability to consistently measure client outcomes.
• Research shows that individuals with hearing loss receive improvements to both their mental and physical state when rehabilitation is combined with the supply of AHT.[11] It is likely that this reflects the finding that the success of a hearing intervention, such as an AHT, is dependent on the motivation and skill of the individual. Motivation and skill can be improved through access to rehabilitation and support.
• Rehabilitation and support has also been shown to positively contribute to addressing the stigma attached to hearing loss by addressing feelings such as anxiety and social exclusion.

Finding 5 - Improving the flexibility of the service pathway.

• Stakeholders suggested that the current schedule has complex and rigid claiming rules that limit the extent to which professional clinical judgement can be applied in the treatment of a client.
• CSPs stated that after providing a service to a client they often spend additional time and resources referring to service claims history and voucher claiming rules. There are also concerns that the rules limit adaptability to technological advances in the delivery of hearing services.
• A number of stakeholders also believed that a client should not have to reapply for a voucher where the client has retained their eligibility to the HSP. Instead, there should be automatic renewals every three years.
• However, with the average age of a VS client being 79 years, automatic eligibility checks every three years may be an inappropriate undertaking. Particularly if automatic eligibility checks allow CSPs to claim a benefit for services not actually provided to the client, whether it be because the client is unable to genuinely verify the provision of the hearing service or AHT, or because the client was deceased.

Finding 6 - There is a need to improve the quality of information made available to clients.

• Client knowledge of their own entitlements and rights was recognised as an area of the HSP that needs to be addressed. The majority of stakeholders indicated that more could be done to educate clients and facilitate more informed decision making on their part. This is an indication that client literacy needs to improve.
• It has been reported that with the variety of AHT on the market, decisions around identifying which type of AHT and service is most appropriate for the individual’s needs, preferences, and budget have become increasingly difficult for clients.
• This reality is exacerbated by the lack of standardised terminology, which makes it hard for clients to differentiate marketing jargon from comparable features and capabilities.
• Stakeholders asserted that clients should be provided with mechanisms to manage their expectations, including measuring and reporting outcomes to practitioners and understanding that while AHT may advertise certain benefits, these benefits are not necessarily achievable by all clients.

Finding 7 - Minimum specifications are fundamental to ensuring access to high quality AHT.

• Stakeholders indicated that minimum specifications for AHT are one of the most important aspects of the current supply arrangements.
• Suggestions in the public discussion paper to remove the minimum specifications were opposed by almost all stakeholders.
• Arguments in favour of maintaining minimum specifications cited a possible decline in the overall quality of AHT available through the VS, and clients not benefitting from improvements in technology if the minimum specifications were removed.
• However, while AHT continues to improve with the release of newer technology and a larger range of features, the minimum specifications have not been updated since 2012.
• The Department commenced work to review the minimum specifications in 2013, but feedback from industry resulted in no amendments being made.
• Whether the Department should continue to maintain responsibility for setting minimum specifications was questioned by a few stakeholders. Alternatives to the Department included establishing an independent expert panel or using the existing government funded bodies such NAL, the Hearing Cooperative Research Centre (CRC), or the newly formed Health Technology (HTA) branch. 

Finding 8 - Effectiveness of AHT schedules could be improved.

• Schedules are adopted in the HSP as a mechanism to differentiate whether AHT are available to clients at no cost (i.e. fully subsidised AHT) or available through payment of a client contribution (known as a ‘top-up’ – for partially subsidised AHT).
• A number of DMs noted the ease of adding AHT to the schedule as one of the strengths of the VS. However, incentives could be adopted to encourage DMs to retire AHT that are in very low demand or superseded by new models with improved technology.
• Stakeholders offered a range of suggestions which may reduce the proliferation of older technology in the schedules. The most common was for the Department to automatically remove AHT after a specified period, for example five years.

Finding 9 - Access and types of Alternate Listening Devices (ALDs) available under the VS should be broadened.

• The ability of a client to acquire an AHT is different depending on whether the AHT is a hearing aid, ALD, or implantable technology (e.g. a cochlear implant).
• While non-standard AHT, which includes ALDs, make up less than 2% of all AHT sold in the VS, cumbersome processes flagged by stakeholders pose a challenge to the effectiveness of the current supply arrangements. This is pertinent because ALDs can provide improved accessibility, convenience, and functionality relative to conventional hearing aids f0r certain individuals.
• While the Department has a process for acquiring non-standard AHT that are not listed on the schedules, some stakeholders suggest that the range of listed non‑standard AHT could be expanded.

Finding 10 – Validity of the partially subsidised schedule, and its role in the perceived upselling of AHT.

• Despite the existence of clinical guidelines and norms, analysis showed a significant divergence in the proportion of partially subsided AHT sold in the VS on an individual provider basis. This raises questions as to the validity of the partially subsidised schedule.
• This has led to some stakeholders, such as consumer groups and research institutions, indicating that there is some merit in decommissioning the partially subsidised schedule, which would aim to address some of the cross‑subsidisation issues highlighted in the ACCC inquiry into the sales practices of the hearing aid industry.
• It was also suggested that if the partially subsidised schedule were decommissioned, the minimum specifications of fully subsidised AHT could be raised. In practice, this would mean that the features of the fully subsidised AHT would increase to encompass some of the features currently found in partially subsidised AHT.
• At the same time, concerns were raised that removing the partially subsidised schedule may limit the capacity for some clients to obtain an AHT which meets their specific requirements.
• However, it should be noted that while client and clinical needs are central to some stakeholders, removal of the subsidy to the partially subsidised schedule would likely result in revenue loss to the DMs, and possibly, to a lesser extent, CSPs.

Finding 11 - Most government subsidised hearing services are limited to clients who acquire AHT through the VS.

• The growing demand for partially subsidised AHT is connected to the growth in the variety of AHT easily available to clients outside the VS.
• In initial consultations, a broad range of stakeholders noted the ability of clients to purchase good quality, lower cost AHT online and through other retailers (e.g. Costco). In some cases, the cost of the AHT was less than if the client had obtained the same AHT through the partially subsided schedule.
• Stakeholders had diverging views around the issue of access to AHT purchased outside of the VS. Specifically, whether clients should retain eligibility to hearing services offered through the VS where AHT are purchased from alternative providers who are not CSPs. 
• DMs, CSPs, and industry associations expressed concern that people accessing AHT outside the VS would not be able to receive the expert support needed to correctly identify an appropriate AHT, or have it fitted in the correct manner.
• Stakeholders pointed out that many of these issues stem from consumer literacy and information asymmetry. Clients are not necessarily aware of the drawbacks of purchasing their own AHT, as opposed to going through the VS. Conversely, the opaque nature of AHT pricing and availability of similar, or seemingly identical products, from other retailers at a substantially discounted price encourages consumers away from the VS and the advice CSPs provide.
• The applicability of Bring Your Own (BYO) AHT has been recently addressed in the US, by the passing of a bill that mandates the US Food and Drug Administration (FDA) to create an ‘over-the-counter’ hearing device category for those individuals who have mild-to-moderate hearing loss.
• With DMs being part of global supply chains and operating in multiple jurisdictions, sourcing AHT through private channels (i.e. allowing a BYO approach) would facilitate competition among CSPs in the HSP.
• However, any approach to embed BYO principles into the VS needs to analyse the interplay between warranty and the place of purchase, given that international warranties may place a burden on the client being able to service or repair their AHT. The role of minimum specifications and AHT schedules should also be considered in light of allowing BYO principles to be embedded in the VS.

Finding 12 - Uncertainty around the implementation and impact of the NDIS.

• A consistent theme evident through all stakeholder discussions and responses to the public discussion paper was the uncertainty around the NDIS and how its implementation would impact stakeholders. This was especially evident among providers of hearing services.
• While key aspects of the NDIS Access Guidance for hearing is still being finalised, existing information around potential pricing, accreditation, and operations was not consistently understood by stakeholders.
• While it is outside the scope of this review to directly address communications surrounding the NDIS and its hearing program, it should be recognised that this uncertainty is likely to have an influence on stakeholder views and their appetite for major reform or changes in the VS over the short term.
  

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Recommendations

A range of options for changes to the VS were canvassed in the public discussion paper.  These ranged from retaining the status quo through to large scale reform that would involve fundamentally shifting the way in which hearing services and AHT are provided to clients.

The findings of this review indicate that the major opportunities for the VS can be achieved through altering the current schedules of services, prices, and clauses in the Deed of Standing Offer (the ‘Deed’) and contract, rather than through adoption of an entirely different model.

The risks and transition costs associated with moving towards a new model are high and potentially not justified given the current performance of the VS, service coverage to clients, and sentiment expressed by stakeholders.

The principles and characteristics of the current VS and the opportunities for the scheme to move towards the recommended future state are shown below in Figure 2. The subsequent recommendations outline the changes needed to move towards this future state.  The implementation plan contained within this report provides a road map of how to achieve this (see Section 5.5).

Recommendations are broken down into those relating to the VS, those relating to service items and fees, and those relating to supply arrangements.

Figure 2 Current vs Future state

Scheme level recommendations

Recommendation 1 - Accelerate the transition towards an outcomes focused model.

• It is recommended that the Department, where possible, accelerate the transition towards an outcomes focused future state.
• Recognising there is no agreed approach to measuring client outcomes and that industry needs to play a leading role in determining industry wide standards, the Department should accelerate efforts and consultation with industry participants to
• define optimal clinical outcomes for clients
• set a standardised approach to measuring outcomes, and
• determine principles to facilitate comparison of outcomes across client cohorts and CSPs.
• This acceleration is especially pertinent given that industry is currently unable to comparably evaluate whether an optimal client outcome has been achieved. This is indicated by the range of different measurement instruments currently used by practitioners, their lack of comparability, and the lack of consensus around what measurement instrument is best-suited to identifying whether clinical outcomes are being met.
• Accelerating the transition towards an outcomes focused model would increase the maturity level surrounding how to evaluate the effectiveness of hearing interventions.

Recommendation 2 - Review the MHLT

• The MHLT should be formally reviewed with the intention to investigate
• aligning the MHLT with international practice definitions of hearing loss
• mandating the measurement and reporting of hearing loss via international and industry practice (4 FAHL), and
• applying the outcomes of such a review to prospective clients.
• The review would allow the scheme to incorporate a more salient approach to measuring and reporting hearing loss levels. It also targets the fitting of AHT to clients who have a level of hearing loss that would benefit from a hearing aid. This would minimise the propensity for inefficient spending associated with clients receiving fitting services that are undesired and AHT that they do not use.

Recommendation 3 - Improve the information about hearing services and AHT, and dissemination of this information to clients in the VS

• To address consumer hearing literacy concerns and enable clients to be more active in achieving optimal clinical outcomes, the VS should provide client‑friendly information that facilitates the objective comparison of AHT and services available through the VS.
• Providing client-friendly information would empower clients by giving them access to information that contributes to better purchasing decisions. It also acts as a mechanism for CSPs to reconsider the way they are approaching the pricing and provision of AHT. It would embed competitive dynamics through increased information transparency in aspects of the hearing services market that currently exhibit limited publicly available information.
• As a result, the likelihood of sub-optimal selection and allocation of AHT would be reduced.

Recommendation 4 - Investigate the scope and cost of providing a range of additional services through the VS.

• There is a range of hearing services which currently fall outside the scope of the VS. It is recommended that the Department investigate the scope and cost of providing a range of additional services that could positively contribute to achieving optimal client outcomes.
• This includes
• interpreting and translating services for clients from non-English speaking backgrounds
• teleaudiology services for rural, remote locations, or where clients would benefit from access through a digital medium, and
• the application of a ‘home-visit’ loading to cover travel costs.
• In all these cases, the data around the cost associated with introducing these additional services is limited or does not exist, making it difficult to accurately model the actual financial impact of implementation. Some information does exist on the cost to provide translating and interpreting services. However, no conclusive study has looked at demand forecasts for these services in the VS.

Recommendation 5 - Change the name of the VS

• Changing the name of the VS is consistent with the shift towards an outcomes focused future state. It would allow the scheme to move away from the notion that it is the voucher itself that provides the benefit, instead of the appropriate and timely delivery of hearing services and provision of AHT to motivated clients who are willing to address their hearing loss.
• From a behavioural stand point, changing the name of the scheme would minimise the current perception that all benefits of a voucher are to be used, regardless of the impact they have on achieving optimal client outcomes.

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Recommendations specific to service items and fees

Recommendation 6 - Adopt the simplified and unbundled model for the schedule of service items

• It is recommended that a simplified and unbundled schedule of service items be adopted to simplify the service pathway, reduce administrative burden, mitigate the prevalence of wasted expenditure, and highlight the role that hearing services play in achieving optimal client outcomes.
• This would be achieved by ensuring that services are received by those clients who most need them, streamlining the claiming rules, and providing a means to delay the provision of an AHT where it is clinically appropriate.
• This recommendation consists of three broad changes relating to the
• number of service items (reduced from 48 to 4, with fitting and maintenance having variants dependent on whether they relate to monaural or binaural situations)
• service delivery pathway (catered to assessing the readiness or need to delay the provision of an AHT, where appropriate), and
• claiming principles (embedded with an increased degree of flexibility).
• While it is recognised that AHT is the primary intervention to deal with hearing loss, simplifying and unbundling of services could allow rehabilitation and support to have a more prominent role in the VS. This is supported by the findings of the ‘Review of the Rehabilitation Plus program’ and its recommendation to increase the focus on psycho-social and functional aspects of aural rehabilitation.[12]

Recommendation 7 - Adopt a new pricing structure for the simplified and unbundled model of service items

• Incentivising the provision of hearing services, by increasing the benefit claimable by CSPs, would work to limit the number of hearing services that are currently reported as being provided at a loss. The finding that a range of hearing services in the VS were priced at below market values has informed the increase in the new pricing structure.
• For the Department, it helps to limit the sources of wasted spending by identifying those clients who are not ready for an AHT, and providing them with an alternative pathway that can delay acquisition of an AHT, where appropriate. A stronger price signal for rehabilitation reflects this, leading to less fittings for clients who are not ready for an AHT. This is particularly valid, where the client has limited motivation or willingness to use the AHT. In this instance, they are better suited to undergo hearing rehabilitation and support.
• The market driven prices align relatively closely to the currently maxiumum NDIS hourly rate of $175.57. While assumptions have been made (and validated by the Department) about the length of each of these new services, the broad alignment with the NDIS means that there should be limited arbitrage or distortions created in the market by financially incentivising the provision to one group of clients over another.
• Optionality exists within this pricing schedule to specify set units of time for each service item. For example, rehabilitation and support, and maintenance may be specified within 30 minute blocks, rather than one single block.  Depending on the needs of the client, this could be taken as two 30 minute blocks for more complicated maintenance or rehabilitation, or one 30 minute block for simple maintenance or ongoing support.
• For the provision of services to rural and remote areas, it is recommended that targeted polices or practices be adopted that look to leverage current CSO and future NDIS activities in these areas. These should be developed on a case-by-case basis. Analyses of current CSP locations suggest a good level of coverage in most regional and rural areas of Australia (representing close to 50% of all permanent and visiting sites in FY2015-16). Furthermore, current CSO arrangements, and claimable items in the MBS, provide services to the most vulnerable clients in areas where there is insufficient coverage.
• It is recommended that there be no explicit difference in pricing based on the qualification of the practitioner. The Scope of Practice for qualifications within the industry is determined by the respective PPBs. Pricing should be focused on the specific service or outcome received by clients under this Scope of Practice.

Recommendations specific to supply arrangements

Recommendation 8 - Remove the subsidy applicable to partially subsidised AHT

• This recommendation is informed by the VS representing a safety net that ensures the vulnerable and most in need of the Australian community has access to optimal hearing outcomes as determined by the government in line with recommendation 1.
• As a result, it can be argued that it is not the role of the VS to subsidise specific client choice if such clients seek access to features or technology greater than the government deems sufficient to achieve an optimal hearing outcome.
• When implemented alongside recommendations 3 and 9, a situation is created whereby clients are more informed and able to have free access to improved AHT functionality, creating a financial incentive to acquire fully subsidised AHT, which can counterbalances potential efforts to ‘upsell’.
• This recommendation does not limit the range of AHT that clients can choose to purchase under the VS. However, it does limit the AHT that the government will pay for under the VS. This is done by retaining the partially subsidised schedule, albeit under a new name (see recommendation 13), in order to reassure clients of the quality and safety of AHT available through the VS.

Recommendation 9 – Review the minimum specifications

• The Department should engage in a review of the minimum specifications applicable to fully and partially subsidised AHT available through the VS. In doing so, the Department will be responding to observable industry and client trends that have indicated an increasing propensity to consume partially subsidised AHT.
• In determining an appropriate range of minimum specifications, it is advised that a Standing Committee be set up with members representing subject matter experts, government, and industry. This will expedite the process of transitioning towards an implementable set of minimum specifications.
• With Recommendation 8 advising the removal of the subsidy for AHT on the partially subsidised schedule, the broader savings across the VS should be considered to facilitate the expansion of features available under the fully subsidised schedule.

Recommendation 10 - Investigate the viability of including cost recovery levies

• It is recommended that the viability of implementing cost recovery levies be investigated by the Department to improve the effectiveness of the AHT schedules, introduce price signals, and fund greater device information being provided to clients.
• Any investigation should consider the regulatory burden associated with imposing the levies, and compare this burden to the benefits derived from better informing clients and incentivising DMs to keep the AHT schedules up-to-date.
• As part of this process, the Department would need to undertake costings that identify the administrative outlay associated with monitoring the AHT schedules.

Recommendation 11 - Implement additional AHT listing rules

• Implementing additional listing rules would improve the effectiveness of the schedules by setting age, usage, service requirements, and other disclosure requirements for AHT to remain listed.
• This aims to incentivise DMs to keep the schedules up-to-date, while also improving the value clients and other parties draw from sourcing AHT information from the schedules.
• These rules would be included in compliance requirements in the Deed.

Recommendation 12 - Mandate the disclosure of the price and features of AHT

• Improving the ability of clients to make informed decisions is vital to achieving optimal client outcomes. Amending the Deed with DMs to mandate the disclosure of price and features above the minimum specifications will improve the transparency of information around how prices vary across sets of features and brands.
• Disclosure of this information will also cultivate competition by ensuring that clients and CSPs are better able to compare AHT through categories that are aligned with those standardised through the minimum specifications.
• Recommendation 13 - Rename the AHT schedules
• Renaming the AHT schedules would move away from the current focus on the subsidy status of AHT as the predominant characteristic of emphasis.
• It would allow the scheme to shape the way clients conceive of AHT by highlighting alternative characteristics in line with minimum specifications, which would be better aligned with an outcomes focused future state, as described in recommendation 1.

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End notes