With the first quarter of 2010 already in the rearview mirror, manufacturers and providers agree that government policy continues to shape the CPAP market more than any other force. In late 2008, the rules for Medicare patients shifted dramatically when CMS required a follow-up physician visit for patients.
Despite efforts to educate physicians about the 30- to 90-day face-to-face requirement, countless providers had to do a lot of reminding. Some docs did not take kindly to the new direction, which inevitably lead to some friction.
"It can be really frustrating and difficult for patients and physicians," acknowledges Patrick Clevidence, RRT, vice president, respiratory service, for Cleveland-based Medical Service Co. "Physicians say, 'I usually see patients in two weeks, and now you are saying you want me to request them between 30 and 90 days. Why do I have to do this?'"
While only 20 percent of Clevidence's CPAP patients are Medicare beneficiaries, the Cleveland-based provider must allocate one full-time employee who does little else but follow up on those patients. "We call the patient, get the compliance download, and call the doctor's office," confirms Clevidence. "We make sure patients went to their appointment, make sure physicians actually document notes in their charts — so it is a lot of education."
It takes a lot of time and effort to cultivate compliant patients, and Clevidence laments that much of that effort goes unpaid and, therefore, must be done as efficiently as possible. Fortunately, the company's educational push with its referral sources seems to be working, Clevidence says.
Helen Kent, RRT, CEO of Carlsbad, Calif.-based Progressive Medical, contends that working with patients is often easier than working with doctors. After all, providers see patients much more than they see physicians, so educating patients about the 30- to 90-day window gets patients on board and advocating on their own behalf.
Using her considerable powers of persuasion, Kent gets patients on her side while also conveying the impact of CPAP therapy on overall health. Once patients share her enthusiasm, she puts the onus on them to make appointments with physicians. Physicians can conceivably ignore home care providers, but patients typically receive proper attention.
If a Medicare patient appears unwilling to be an ally in the compliance fight, Kent does not hesitate to decline the business. "If you get a patient who is not going to work with you from the get go, then I am not playing that game," says Kent with characteristic candor. "When it comes time for the face-to-face, we have a stop-hold report generated by our Web-based business software system (from Brightree). You print it out every day and see who you must contact, and it lets you know it is time to get the doctor's notes, and time for the face-to-face."
Even as a firm believer in the potential of the non-Medicare CPAP market, Kent's Progressive Medical still counts up to 50 percent of her CPAP patients as Medicare beneficiaries. Kent's increasing Medicare numbers are largely due to the high amount of neuromuscular patients found in the San Diego area. "These patients have hypoventilation syndrome," explains Kent. "It is completely different than sleep apnea, and treated differently with an E0471, but you still must follow the same rules set down by Medicare. They must also have a face-to-face with their doctor, and we need the doctor's notes."
Among non-Medicare patients, Kent encounters some managed care contracts that are not willing to pay for an auto- titrating machine. "In those cases, patients get what we call a blower," explains Kent. "A lot of times with those you can check compliance, but you can't really check efficacy. If they aren't going to pay us for it, we can't do it."
Competitive Bidding: Still There
Ask Kent about the CPAP market and one threat stands above all: "Competitive bidding is really going to shape our market," says the so-called grandmother of sleep. "I don't understand how we can do all these things that Medicare requires — checking for compliance and efficacy — when they set the rates so low. I can't imagine them being any lower. And with this competitive bidding round, you know rates are going to go lower. I probably won't be able to give the patient the service that they really require to be compliant if they cut our rates anymore."
After years of pulling miracles out of the hat, can providers overcome competitive bidding and maintain service? "There is only so much you can give," laments Kent. "I'm not a non-profit. I am a for-profit business … I really worry that companies like us aren't going to be able to keep their doors open."
CPAP and other DMEPOS providers took a 9.5 percent cut just to get a reprieve from competitive bidding, but with the sleeping giant awakened, consequences may indeed prove severe.
Todd Cressler, owner of CressCare Medical, managed to maintain revenue of about $4 million last year despite the 9.5 percent cut. However, like many providers, Cressler felt the effects of the economy from 2008 to 2009, with new CPAP set-ups down 3.5 percent.
In addition to the Medicare cut, Harrisburg, Pa.-based CressCare Medical experienced an identical cut from two managed care companies, along with a hefty 37 percent cut from yet another major payer.
Like Kent, Cressler maintained some revenue through astute use of technology such as the medSage patient management application. Six months into 2009, his average revenue per employee stood at $130K, but he managed to end the year at $163K.
"We were able to really boost our supply reorder business to generate revenues which did not exist by our own efforts," says Cressler, who has three locations in the Harrisburg area. "We were getting good results, but with the volume of patients we have now — around 6,800 active patients getting supplies — we could not handle it ourselves. The software system contacts patients and makes sure they do not fall through the cracks."
The real key for Cressler is building the long-term market for CPAP. "If the patient is 40 years old in the case of the non-Medicare population, I am going to have that patient until he is 80. That is 40 years," he says, "and every six months he is getting a new mask."
Despite the best efforts of diligent providers, not everyone is CPAP-compliant. For Cressler, 12 percent of all of new set-ups result in pick-ups due to a lack of compliance. Of that 12 percent, a quarter are attributable to the insurance carrier and its medical policy, while the remaining percentage are people who just do not like it.
For these patients, dental devices could be the next step, and providers could eventually be a referral source for dentists who provide these services. "Dental devices coming out in the future could take some market share, but I don't know that for sure," says Cressler. "The future will present opportunities, but … competitive bidding and the scheduled changes that are going to occur over the next five years will determine if we stay in business or not."
That's a threat Kelly Riley, CRT, RCP, director of the National Respiratory Network for The MED Group, Lubbock, Texas, deals with every day in her discussions with the service group's members. Riley predicts major changes to the CPAP market if the CMS program remains on the fast track.
"If competitive bidding is allowed to go through, it will be the final straw for HME providers supplying PAP therapy to Medicare beneficiaries, because there are many that are already exiting the market now," she says. "There are many who are saying, 'I'm done. I cannot bear the financial burden of jumping through hoops that CMS has deliberately created.' For many providers, it is not possible to get between a physician and his patient, and it is not possible to control whether or not that patient goes back to the physician."
Using an analogy with diabetes, Riley points out that payers do not disallow payments for future diabetes treatments because of non-compliant patients. "And that is basically what CMS has done with PAP patients," she contends. "If you speak to sleep physicians they will tell you for many patients, it is not some arbitrary number of hours per night. Many patients report improvement in their activities of daily living with as little as two to three hours a night of therapy. Physicians want to retain that judgment call."
Along with the face-to-face requirement, CMS also required compliance data reporting from providers, and some observers believe it's only a matter of when other payers will follow. Both requirements are reshaping the way sleep therapy providers do business.
In a recent HomeCare survey, 60 percent said they had increased their use of data management/monitoring products and increased patient support and contact in response to the new compliance rules. Fifty-eight percent said they expected to bump their use of auto-setting devices among patients over the course of 2010.
"The U.S. market is being shaped by CMS, which is requiring compliance downloads to obtain full payment for OSA therapy," says Mark D'Angelo, vice president and general manager for sleep therapy, Philips Home Healthcare Solutions. "Another trend getting a lot of press is portable in-home diagnostics in place of an in-lab study for certain insurance providers. Various new models have emerged as a result of this trend."
Like many of his customers, D'Angelo believes the reemergence of competitive bidding "may shape how therapy is administered and monitored in the Medicare patient population."
New Goodies for Patients, Providers
With all these challenges, the overall CPAP market soldiers on with patient demand and media attention growing. Countless articles have spread awareness of obstructive sleep apnea, and a Wall Street Journal article in early 2010 signaled that the media push is far from over.
Publicity is usually a positive thing, but the article painted a relatively gloomy picture of the CPAP mask and its perceived discomfort. Comparing the masks to bulky scuba gear, reporter Kris Maher wrote that "as few as 50 percent of people who are prescribed a CPAP device actually use it regularly."
But new goodies from prominent manufacturers should help to boost those numbers, they say, and make monitoring and reporting easier.
San Diego-based ResMed markets its new Swift FX nasal pillows system as "less mask, more you" with a minimalist design and headgear made of a pliable silicone material.
ResMed also recently released its new S9 Series CPAP platform, which introduces a new humidification system and a sleek design that company officials say looks more natural on a bedside table. The unit also offers detailed data reporting for clinicians and a wireless compliance management package.
"In essence, the S9 represents a new approach to achieving patient compliance: making it as easy as possible for users to accept CPAP on their own terms," says ResMed's Drew Terry, senior director of product management, adding that the unit puts patients "in control of the details that make the difference in their personal comfort." The Climate Control humidification feature, for example, intelligently adapts to the user's real-time environmental conditions.
"The S9 platform carries over the exceptional quietness that we delivered in the S8 Series II products, and also introduces a whole new kind of quiet by reducing conducted noise by 75 percent," adds Michael Farrell, senior vice president of the Global Sleep Business Unit at ResMed. "Customers want the new technology that helps to drive compliance and the systems to be able to measure and demonstrate that compliance."
Philips Respironics' new System One therapy platform, launched in October, couples technologies for patient care — like advanced event detection and Flex pressure relief — with patient management. A line of accessories includes the company's Encore Anywhere Internet-based patient management system and wireless modems for automatic patient monitoring.
The System One Humidity Control feature adjusts automatically for changes in room temperature and humidity, and Resistance Control adjusts pressure delivery for comfort with the company's masks.
Its newest, the EasyLife nasal mask, takes up less space on the face and, with only four parts, can be quickly sized and set up for patient convenience.
With these new introductions comes the inevitable need to replace used equipment, a burgeoning market for astute providers. "One of the biggest opportunities in the short term is to engage in a resupply business," says D'Angelo. "There are many patients who go for extended periods of time with old subpar masks and accessories who are in need of replacements."
Add it all up and you have the contradictory mix of uncertainty and optimism that has marked so much of the home care industry in recent years. Ultimately, the manufacturers and providers who have put so much time, energy and money into the CPAP market are hopeful that patient demand — and perhaps some common sense in Washington, D.C. — will mean a bright future.
"The market for treating sleep-disordered breathing continues to be a very vibrant and growing market," enthuses Farrell. "This is great news because it means that awareness about obstructive sleep apnea, central sleep apnea and nocturnal hypoventilation is increasing, and more patients who need treatment are receiving it."
What's more, says provider Don White, CEO of Associated Healthcare Systems, Amherst, N.Y., as sleep technology continues to evolve, it gives you "plenty to talk about to referral sources."
Updates and Changes
On March 5, the DME MACs issued a revised PAP LCD with a super-tight April 1 implementation date. According to HME consultant Andrea Stark of Columbia, S.C.-based Mira Vista, the PAP LCD:
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Calls for providers to have physician documentation in four areas before patients can be upgraded from a CPAP (E0601) to a bi-level (E0470);
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Changes PAP replacement guidelines; and
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Updates OSA testing devices/categories accepted by Medicare.
Those revisions, Stark notes, are on top of updates made to the PAP LCD on Jan. 22, 2010 (retroactive to Jan. 1) that established a requirement for a credentialed physician to interpret OSA results; noted coverage requirements for patients on PAP devices prior to Nov. 1, 2008; stated time limits/date requirements for documentation proving medical necessity; and defined documentation of supply utilization and shipment/deliver limitations.
"It's getting very strict," Stark acknowledges, adding that providers see the latest change "as a very substantial shift that will require education within the physician community. It doesn't exactly meld with the way things are actually done."
The new regulation could be a tripping point for sleep therapy providers, especially since they had less than a month to try to get their physicians on board.
At press time, several trade associations and organizations were talking with the DME MACs to see if they would allow an extension of the implementation deadline. But providers shouldn't bank on a grace period, Stark says.
"Right now, this is what is written down. This is what people need to be doing," she says.
