According to an Irish proverb, a good laugh and a long sleep are
the best cures in the doctor's book. It seems modern-day physicians
agree, at least about the sleep part.
Physicians' ever-increasing awareness of obstructive sleep apnea
and associated comorbities, paired with consumer interest,
continues to be a primary driver in the sleep-disordered breathing
market. After a decade of solid growth, sleep therapy remains one
of the most consistent performers in home care, with brisk sales
and numbers of new patient referrals. Although the dragging economy
has contributed to a slowdown in patient volume growth in recent
quarters, home medical equipment providers taking part in a survey
said they are optimistic that growth will accelerate again in
The survey, conducted by HomeCare and William Blair
& Co., also shows HME providers expect home sleep testing to
boost patient volumes in the coming years, although it's not a
major factor yet. The thought is that home testing will be
considerably more appealing to the estimated 30 percent of patients
that never go to a sleep lab to receive a diagnosis.
Among the most prominent trends the survey confirms, however, is
the movement toward improving patient compliance.
No one argues with the fact that SDB patients are a resistant
population; getting patients to breathe for the first time on a
CPAP can be challenging — and costly. Patients either don't
follow the physician's prescribed regimen or find the devices
uncomfortable and stop using them. So providers must move quickly
and aggressively early on to keep patients compliant.
CMS compounded the challenge last year with a coverage change
that mandates a patient return to the physician for a face-to-face
evaluation between 31 and 90 days of starting the therapy. But
patients who balk at another visit to the doctor and physicians not
in tune with the rules often make it difficult to get the
documentation providers must have to show patient benefit.
In response, those in the survey said they have ramped up
efforts to keep patients compliant with their therapy and ensure
payment from Medicare. They're using a combination of tactics to do
that, including increased contact and support coupled with more use
of data management/monitoring equipment. Some said they are
recommending higher-end devices and masks to help promote
If none of that works, almost half of the providers surveyed
said they're now using financial incentives to hold their patients
responsible for compliance, using ABNs for Medicare patients and
credit card information taken from others at setup. Wrote in one
provider, "If they are on Medicare and either do not meet the new
coverage criteria at the 90-day window or do not want to see their
physician for the face-to-face meeting, then we send them an ABN at
that time and hold them responsible if they do not return the
machine or comply."
View the 2010 Sleep Survey results on the next few
Survey Fast Stats
SDB patients are a mixture of private insurance (52%), Medicare
(44%) and cash pay (4%) for the survey group.
Respondents service a median 155 new SDB patients each year.
Providers with one location service a median 53 new patients each
year, compared to 245 for respondents with two to four locations
and 475 for respondents with five or more locations.
Respondents service a median 360 existing SDB patients each
year. Those with one location service a median 113 existing
patients each year, compared to 576 for respondents with two to
four locations and 1,000 for respondents with five or more
These providers indicate their SDB patient volume has increased
by a median 2.5% in the past six months, and they expect it to
increase an additional 2.5% in the next year.
The average SDB patient uses 2.4 masks per year. This number is
likely to have increased during the past year, either slightly
(34%), moderately (20%) or significantly (5%). Thirty-one percent
of respondents have seen no change in the number of masks used per
patient in the past year, while 6% have seen a decrease.
Providers in the survey group have increased their use of data
management or data monitoring products (60%) in response to CMS'
new compliance requirements. Fifty-nine percent have increased
patient support and contact, 34% have increased the use of
permanent autosetting devices and 28% have increased the use of
temporary autosetting devices. Twenty-four percent use bi-level
generators in non-compliant patients, and 17% recommend the use of
Going forward, providers expect further increases in their use
of data management and monitoring products (66%), autosetting
devices (58%), bi-level generators (31%) and higher-end masks
Respondents are divided on whether they do (48%) or do not (46%)
make their SDB patients responsible for compliance.
Respondents are divided on expectations for successful bids in
the Round 1 rebid. Twenty-six percent said winning bids would need
to be 20% or more below current rates. The remainder said bids
would be successful at: 15% lower (23%); 10% lower (24%); and 5%
The majority of providers in the survey expect to get partial
(52%), or full (6%) concessions from their vendors to offset
reimbursement reductions that may result from competitive bidding.
Another 36% do not expect concessions.
The majority of respondents expect SDB patient volumes from home
testing to increase slightly (36%), moderately (21%) or
significantly (12%) over the next three years. Twenty-six percent
expect no change.
|What is the payer mix for your sleep-disordered
|How many new sleep-disordered breathing patients do
you service each year?
|1 to 49||19.0%|
|50 to 99||12.4%|
|100 to 499||33.6%|
|500 to 999||12.8%|
|1,000 or more||13.3%|
|How many existing sleep-disordered breathing
patients do you service each year?
|1 to 49||10.6%|
|50 to 99||9.3%|
|100 to 499||27.0%|
|500 to 999||13.3%|
|1,000 to 4,999||21.7%|
|5,000 or more||9.3%|
|How has your sleep-disordered breathing patient
volume changed in the past six months?
|Down 8% or more||12.4%|
|Down 5% - 7%||8.4%|
|Down 1% - 4%||5.3%|
|Up 1% - 4%||17.7%|
|Up 5% - 7%||17.3%|
|Up 8% or more||13.7%|
|How do you see your sleep-disordered breathing
patient volume in 2010 compared to 2009?
|Down 8% or more||3.5%|
|Down 5% - 7%||6.2%|
|Down 1% - 4%||6.6%|
|Up 1% - 4%||26.5%|
|Up 5% - 7%||18.6%|
|Up 8% or more||17.3%|
|Do you make your sleep-disordered breathing
patients responsible for compliance (i.e. on the hook
|Up 1% - 4%||17.7%|
|Up 5% - 7%||17.3%|
|Up 8% or more||13.7%|
How do you make your sleep-disordered breathing patients
financially responsible for compliance?
"ABN for Medicare patients, credit cards for non-compliant
managed care [patients]"
"At the outset, we explain compliance and have them sign an ABN
agreeing to comply or assume financial responsibility."
"Coordination with physician upon non-compliance to keep them in
"Education at the time of setup explains CMS requirements, and
failure to qualify and return unit will result in an out-of-pocket
"Explain to them that if they do not bring data card into store
to retrieve data for compliance, they will be responsible
"If they are on Medicare and either do not meet the new coverage
criteria at the 90-day window or do not want to see their physician
for the face-to-face meeting, then we send them an ABN at that time
and hold them responsible if they do not return the machine or
"Recurring credit card information provided at setup"
"They are responsible for compliance. However, at the end of the
day, we won't pick up a machine that is providing therapy for a
How do you monitor your sleep-disordered breathing patients to
"Automated call service"
"Call back protocol"
"Calls, appointments, and monitoring devices"
"Contact calls to both patient and doctor"
"Data management devices"
"Initial education at time of setup. Continued support through
90 days after setup including reinstruct and compliance downloards.
Periodic calls by RTs to generate disposable sales."
"Initial setup, call within 72 hours, monthly phone calls.
Refitting all patients that come in our office … to promote
"Overview of requirements at setup"
"Personal calls and auto-calling"
"Remote monitoring … is the best but adds a lot of cost to
each setup. Smart cards are the next tier, but often get damaged in
the mail or patients do not send in."
"Smart card download, remote real-time telemetry devices and
automated phone follow-up"
"Use [remote monitoring] on all Medicare patients and
downloadable units on all others"
"Visit patient every 90 days"
"We actually require scheduling of follow-up MD appointment at
the time of setup. Also create download time schedule."
"We have a CPAP compliance team."
|How many masks per year, on average, do your
sleep-disordered breathing patients use?
|More than 3||12.4%|
|Up 5% - 7%||17.3%|
|Up 8% or more||13.7%|
|Has the average number of masks your
sleep-disordered breathing patients use done up or down in the past
|It has decreased||6.2%|
|How has your sleep-disordered breathing business
changed in response to CMS' new compliance requirements?
|Increased usage of data management or data
|Increased patient support and contact||59.3%|
|Increased use of autosetting devices
|Increased use of autosetting devices (temporarily
|Use of bi-level generators in non-compliant
|Recommending higher-end masks||17.3%|
How do you expect the Round 1 rebid to affect your
sleep-disordered breathing business?
"Another readjustment just as the oxygen cutbacks"
"Could lose 12% of our CPAP business or gain probably 20%
"Eliminate Medicare patients"
"Hopefully get us more patients that can afford their upfront
"If it drops masks much, we may quit doing Medicare CPAP."
"If recent proposals by [Senate] Finance Committee go through
looking to have all regions affected by Round 1 rebid, it would be
traumatic. If not, then it will have few short-term
"If we change products dispensed, positively; if we don't,
"It's going to impact everyone's business in a very negative
way. Everyone will bid low out of panic and then struggle to make
"It will significantly impact our Medicare SDB business, but
because our Medicare share is low, it shouldn't be
"Not for Round 1, but Round 2 will put us out of business"
"Our mix is well distributed. Medicare is going to have an
impact if we lose the bid, but won't close us."
"Very unclear. If there are large number of idiots bidding or
companies who have never serviced the PAP market before, we will
not win it."
"We have a location in Kansas City, therefore, we will bid in
Round 1. Luckily, our Medicare at this location is only 9%. If we
win the bid, we will have access to many more patients."
"We may need to change to nontraditional manufacturers that
supply low-cost CPAP with download capability since competitive
bidding will drive reimbursement lower, eliminating
"We will likely lose our Medicare SBD revenue. Round 1 will turn
this into an Internet-type business. Winners will provide no
service, compliance will drop drastically."
"We will lose revenue if we win, we will lose business if we do
not win. Either way we lose and ultimately the patient will
|Do you espect to get concessions from your vendors
to offset reimbursement reductions that may result from competitive
|Yes, partial (greater than 50%)||9.3%|
|Yes, partial (less than 50%)||42.9%|
|Do you anticipate increased use of the following
products among your sleep-disordered breathing patients over the
next 12 months?
|Data management and monitoring products||66.4%|
|Do you expect a material change in sleep-disordered
breathing patient volumes from home testing over the next three
|Yes, up significantly||11.5%|
|Yes, up moderately||20.8%|
|Yes, up slightly||36.3%|
About This Survey
Research was conducted for HomeCare and William Blair
& Co. Data were collected Sept.15-29, 2009. Of 226 responses,
71% represent independent home medical equipment providers, while
8% are from national HME operations. The remainder includes
hospital-based HMEs and pharmacies with HME.
The largest segment of respondents (42%) operate one location,
while 14% have 10 locations or more. Thirty-six percent of
respondents report annual revenue of $3.5 million or more, while
31% indicate annual revenue between $1 million and $3.5 million,
and another 22% have revenue under $1 million.
Figures presented are national means and medians across
companies of all sizes. Not all respondents answered every
question, and some totals may add to more than 100 percent due to
multiple responses. Survey methodology conforms to accepted
marketing research methods, practices and procedures.