Hooked on CMS?

Break the Habit with These Sleep Market Hot Spots

Fact: More than 75 percent of equipment for obstructive sleep apnea (OSA) is not reimbursed by the Centers for Medicare & Medicaid Services (CMS). So, if you’re a provider fretting about the 9.5-percent cuts to CPAPs and the uncertainty with the new local coverage determinations (LCDs), fear not. The sleep market, which continues to grow as more people are diagnosed with OSA, has ample opportunities that do not rely on CMS for reimbursement.

Home Sleep Testing
If you think home sleep testing opportunities are dead in the water thanks to the LCDs that prohibited provider involvement, think again. Helen Kent, BS, RRT, respiratory care practitioner and owner of Progressive Medical in Carlsbad, Calif., says that home sleep testing (HST) has helped her business thrive in the San Diego area for several years.

With approximately 80 million people undiagnosed and most of those people below the Medicare age, Kent is reaching out to end-users with private insurance that currently pays for home sleep testing.

To accomplish this, Kent works closely with independent physician associations, such as Scripps Mercy in San Diego, which are groups of physicians that work under one umbrella and get a fee per patient from large health insurance companies, such as Aetna or Cigna. “Their goal is to go out and negotiate with companies like us, so that we can be there for their sleep,” she explains.

In fact, Kent won’t touch Medicare patients. “If they have Medicare, we do not treat them in the home (with home sleep testing),” she says. “We facilitate them. In other words, we give them to our favorite sleep labs.” Kent explains that the Medicare population often has co-morbidities and takes many medications that would make them candidates for attended sleep studies vs. home sleep testing.

In addition, Kent says large employer groups have shown a keen interest in screening for sleep apnea. Progressive Medical, in turn, targets employers with more than 100 employees and provides a simple questionnaire to screen patients for sleep apnea. Those at risk undergo a home sleep test and are then treated for sleep apnea, if necessary. She says this is especially successful with companies such as limousine services. “You do drug testing; why wouldn’t you do sleep testing (or) a sleep questionnaire?” Kent asks. “After all, they do hold liability if that employee has an accident. I don’t care what it’s caused by. So, in those situations, employer groups are paying us to test them once they screen positive.”

The Trucking Industry
If large employer groups sound like a good way to go, then you can’t overlook the largest employer groups of all: fleet operators in the trucking industry. Some important factors — including a sedentary lifestyle and economic incentives for working long hours — put this group at a higher than normal risk for OSA, says Vince Jenness, clinical coordinator, the VGM Group’s Nationwide Respiratory.

The trucking industry has started to take notice of the potential dangers of untreated sleep apnea in this population. Many fleet operators are implementing sleep screening as a measure to reduce the costs of their health care plans, explains Jenness.

“From a business development standpoint, it’s an area of the marketplace that the typical HME provider can diversify into and provide additional business away from the Medicare model,” Jenness says.

In response, Nationwide Respiratory, in partnership with Philips Respironics, has launched a program to assist providers in marketing to local trucking companies. An important component of the Commercial Transportation OSA Program is home sleep testing. Encouraging home sleep testing for qualified patients prevents drivers from being pulled off the road, sometimes for days, to go to a sleep lab.

In addition to private insurances, cash pay is a potential source because many truckers are independent business owners that subcontract with trucking companies and often have no insurance, Jenness says. “A lot of these guys don’t have insurance or they carry a very high deductible policy to obviously lower costs,” he says. “In a lot of cases, their deductibles won’t even help with getting screened, going to a sleep study and having to be treated with a CPAP device.”

HST can help reduce some of those costs for owner/operators.

Before providers enter the trucking industry, however, Jenness says providers need to research the trucking companies they plan to target. “You have to know what their model is. There are a lot of large companies out there that utilize strictly owner/operators. They subcontract with them. So, that group of the industry, they’re not technically employees.” In that scenario, companies would be unlikely to pay for sleep screening.

Jenness says providers also must look at the company’s turnover rate. In many cases, larger companies may have as high as 100-percent turnover per year. “A company that has an excessively high turnover probably is not going to be real receptive to spending money on treating drivers that are going to be gone in three months,” he says.

OSA patients, who tend to be younger than the average Medicare beneficiary, are more willing to pay out of pocket. That’s good news when it comes to retail opportunities. In fact, providers might be able to sell additional masks or CPAPs for travel that might not otherwise be included under insurance plans, says Bob Messenger, BS, RRT, product manager of sleep products and clinical manager of respiratory products, Invacare.

“Even if it’s not a large percentage of (providers’) populations, they have kind of a captive audience,” Messenger says. “So, there’s nothing to prevent a provider from either sending something to the patient — or even when they’re doing the initial setup — to let their patients know that new products are coming out from time to time, and if they find that they have the need for additional units that they would be willing to work with them on that.”

Messenger says typically he sees providers promote small CPAPs for travel when they are introduced. This works especially well for patients that might have older, larger and heavier versions of CPAPs.

In fact, CPAP patients may be willing to pay cash for equipment upgrades. Kent says this is especially true of her high-income patients. “A lot of times people know that their insurance will pay for, let’s say, a Chevy, but (the patient has) gotten used to a Cadillac,” she says. “When we say a Chevy, we mean a CPAP blower, but they’ve gotten used to an auto-titrating CPAP. They’ll pay the difference. It’s not a problem for them.”

Kent says these patients, especially women who feel safer at home, also may pay out of pocket for a home sleep test to avoid going to the sleep lab. Many patients also have a limit, such as $2,000, on how much they can spend per year on HME equipment, forcing many to pay cash for sleep products, she says.

Replacement Parts
One of the most overlooked areas of sleep revenue is replacement parts — something Medicare does pay for. Though patients typically need to continually replace headgear, masks and cushions, many providers have not yet developed a program to handle this need.

“I think people are clearly missing a fantastic revenue opportunity if they don’t pursue this right up front,” Messenger says. “What (providers) really need to do is to get their patients to expect it and to understand the replacement of these masks and cushions, it is all part of the program.”

Messenger, who likens masks and accessories to razor blades in terms of the need for frequent replacement, says that with Invacare’s Twilight full-face mask, providers could make approximately $1,000 annually per patient by simply following the replacement schedule.

Providers might be rightfully overwhelmed with starting a replacement parts program if they didn’t do so before their patient population grew. The process of contacting patients and shipping the product could consume the margin that providers would generate, Messenger says. Higher-cost replacement components, inefficiencies in contacting patients and shipping costs can collectively consume a significant portion of the margin that providers would generate, Messenger says.

The first step is to examine costs. “(Providers) have to look at all of their costs,” Messenger says. “It’s not just the cost of the product; it’s also the cost of contacting the patient and getting the product into the patient’s hand.”

Creativity can play a major part in establishing a program, Messenger says. Some providers establish a replacement schedule at the initial setup by including a postcard that the patient can fill out. Then the provider has something on file and can set the patient on an ongoing shipping program.

Outsourcing shipping and customer calls are options, especially if providers have a small staff. In fact, many manufacturers have established online drop-ship programs that take the hassle out of managing replacement parts shipments.

Overlap Syndrome
Providers with a lot of COPD patients might find themselves naturally expanding into sleep, thanks to overlap syndrome. A number of medical conditions overlap with sleep apnea, such as type II diabetes, but there’s also a connection between OSA and COPD. Ron Richard, CEO of SeQual Technologies, says current research indicates that approximately 10-12 percent of COPD patients also have OSA.

With overlap syndrome, patients often are only treated for half of their disorder. For example, COPD patients will get only oxygen. What starts to happen, however, is these patients begin to desaturate during sleep, even with the oxygen, and sometimes have associated hypoventilation, Richard says. In many cases, these patients require adaptive servo-ventilation or bi-level devices for non-invasive ventilation.

To get involved in this new niche, providers need to know the signs and symptoms of sleep apnea. Richard says the respiratory therapist should be doing more than checking out the machine during follow-up. “They should be asking the patient: How are you sleeping? How’s your diet? How are you feeling? What’s your blood pressure doing?” he says. “You do your spot check maybe with a pulse oximeter. You do an overnight oximetry.”

Richard says there’s also an opportunity for providers to offer sleep screenings for these patients as an added benefit for referral sources. “It’s very low cost,” he says. “It’s an added benefit to do this, and it’s easy to do with some of the technology that’s out there today.”

Setting up the equipment might be a little tricky because the oxygen cannula needs to be teed into the CPAP mask at night. Richard says the FDA has established safeguards for using oxygen and positive airway pressure. Manufacturers typically have these diagrams on their Web sites and in product manuals.

Referral Sources
A good way to expand your sleep business by way of private insurance or Medicare is to take a look at the referral sources you target. Simply put, providers who only target primary care physicians need to expand their list.

Co-morbidities associated with sleep apnea, such as obesity, diabetes and cardiovascular disease, offer up a host of other specialists that could help providers grow their businesses in 2009. Also, many providers are contacting anesthesiologists because of the connection between anesthesia, OSA and morbidity during surgery.

Kent says her favorite referral sources are ear, nose and throat doctors (ENTs) as well as neurologists — both of which are educated about sleep. “Most neurologists understand sleep better than any other doctor,” she says.

If the physician you’re targeting doesn’t understand sleep, then you must start the education process, Kent advises. “If the doctor doesn’t understand sleep apnea and doesn’t understand the consequences of it, it’s going to be pretty hard to find a patient,” she says.

Trend to Watch: Auto CPAPs
Inevitably, CMS still will play a role in your sleep business, especially as home sleep testing is implemented. Though it’s still unclear if reimbursement for Auto CPAPs will increase, the devices are positioned to play an important role in home titration for home sleep-tested patients. “There is certainly a market for Auto PAP devices outside of a home sleep testing environment, but HST could dramatically impact utilization,” says Christian Kiely, marketing manager at Fisher & Paykel Healthcare. “If a model develops whereby patients bypass traditional polysomnography and PAP titration, the logical alternative would be the use of HST and Auto PAP.” Kiely says providers interested in this area should start by understanding their local market because not all clinicians believe in the wide-scale adoption of Auto CPAP. Next, Kiely recommends that providers become familiar with the different Auto CPAP devices because while operation is similar, each device may respond differently to events.

This article originally appeared in the Respiratory Management November 2008 issue of HME Business.

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