Technology moves a step ahead as providers struggle to catch up with new rules.
by Greg Thompson

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:

Calls for providers to have physician documentation in four
areas before patients can be upgraded from a CPAP (E0601) to a
bi-level (E0470);

  • Changes PAP replacement guidelines; and

  • 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.