No Americans are likely to be hit harder by change than HME suppliers and sleep labs involved in the provision of home sleep testing and treatments for obstructive sleep apnea.
by Clay Stribling

In recent months, Americans have been exposed to the concept of
change in a number of different ways.

Change was the central theme for the presidential campaign of
2008, and most Americans got a healthy dose of political news and
campaign advertising highlighting this theme. Given the recent
performance of the financial markets, many Americans are collecting
their change to help stretch their budgets and dollars further.

However, no Americans are likely to be hit harder by change than
HME suppliers and sleep labs involved in the provision of home
sleep testing and treatments for obstructive sleep apnea.

However, no Americans are likely to be hit harder by change than
HME suppliers and sleep labs involved in the provision of home
sleep testing and treatments for obstructive sleep apnea.

The HME industry is one that endures and absorbs a significant
amount of change on a routine basis. However, 2008 has been a
landmark year for sleep providers for several reasons. Not only has
home testing caused a significant ripple in the market, but the
implementation of home testing guidelines has also made fundamental
changes to the reimbursement rules for CPAP and traditional

In order to understand these changes, it is important that each
supplier know what sources of new information exist and spend time
reading the guidelines to understand what the impact on its
operation will be.

Local Coverage Determination

The Local Coverage Determination for PAP therapy provides that a
CPAP device is covered for the treatment of obstructive sleep apnea
if three criteria are met, including:

  • The patient has a face-to-face clinical evaluation by the
    treating physician prior to the sleep test to assess the patient
    for obstructive sleep apnea;

  • The patient has a Medicare-covered sleep test that meets the
    clinical criteria set forth in the policy; and

  • The patient and/or their caregiver have received instructions
    from the supplier of the CPAP device and accessories and the proper
    care and use of the equipment.

The clinical evaluation by the treating physician must be
documented in a detailed narrative in the patient's chart and
contain, at a minimum, the following elements:

  • Signs and symptoms of sleep disordered breathing, including
    snoring, daytime sleepiness, observed apnea, such as choking or
    gasping during sleep and morning headaches;

  • The duration of such symptoms; and

  • Validated sleep hygiene inventory such as the Epworth Sleepiness

In addition, a physical exam must be performed, which includes a
focused cardiopulmonary and upper airway system evaluation, the
patient's neck circumference and the patient's body mass index

All of this information is required before the supplier can
submit a claim for a CPAP or bilevel unit. In addition, it is
interesting to note that the patient's face-to-face clinical
evaluation must be conducted by the treating physician prior to the
sleep test. It is vital that suppliers carefully review the
clinical documentation they receive to be certain that all clinical
notes that they rely on to document the physician face-to-face
examination are notes that existed prior to the sleep test.

In addition to new requirements related to the physical exam,
the LCD contains elements requiring the HME provider to verify that
the interpretations provided by physicians meet minimum criteria.
For dates of service after Nov. 1, 2008, all suppliers are required
to verify that any home sleep tests used to qualify the patient are
interpreted by a board-certified sleep physician, a board-eligible
sleep physician or a physician with active staff membership at an
accredited sleep facility.

By placing the burden on the HME supplier to verify that these
requirements are met, CMS is opening the door for denials for CPAP
devices if an improperly qualified physician interprets the sleep

For patients with dates of service after Jan. 1, 2010,
physicians interpreting facility-based polysomnograms must meet all
of the criteria listed above as well.

For continued coverage of a PAP device beyond the first three
months, the patient must have a clinical reevaluation by the
physician no sooner than the 31st day but no later than the 91st
day after initiation of therapy. This clinical reevaluation should
contain, at a minimum, a face-to-face examination by the physician
with documentation that symptoms are improved and objective
evidence of adherence to use of the PAP device. Adherence is
defined as use of the PAP for greater than or equal to four hours
per night on 70 percent of nights during a consecutive 30-day

Home Sleep Testing

According to the LCD for PAP devices, several types of home
sleep test units are approved for qualification of Medicare
patients. A Type II device measuring a minimum of seven channels, a
Type III device measuring a minimum of four channels and a Type IV
device measuring a minimum of three channels are all approved for
qualifying Medicare patients for PAP therapy.

However, the LCD strictly prohibits involvement by the HME
company in the provision of a home sleep test. No aspect of a home
sleep test, including delivery and pickup of the unit, may be
performed by a DME supplier. For this reason, DME suppliers need to
be particularly careful structuring their relationships with sleep
labs or independent companies engaged in the provision of home
sleep testing.

Joint Ventures

The physician fee schedule for 2009, which was released in early
November, contained a provision that prohibited reimbursement for
CPAP devices if the HME company was affiliated with the provider of
the diagnostic test used to qualify the patient. This provision
applied only to patients qualified using home sleep tests, and an
exception was made for patients who were qualified in a
facility-based attended study.

Under this provision, "affiliate" is defined broadly to include
both ownership and compensation relationships. For that reason, an
HME company should have no financial ties to the entity qualifying
the patients for CPAP if the qualification is being performed using
a home sleep test.

Although the definition of affiliate is much broader than was
anticipated, the fact that this prohibition was limited to home
sleep testing has softened the blow for many suppliers.

Some continue to struggle with the volume and nature of change
in the sleep market. However, given the turbulent nature of 2008,
hopefully, sleep providers can face 2009 with an opportunity to
implement these changes and avoid having to deal with significant
and fundamental changes to the market moving forward.

Clay Stribling, Esq., is an attorney with the Health Care
Group at Brown
& Fortunato, PC
, a law firm based in Amarillo, Texas. He
represents pharmacies, infusion companies, home medical equipment
companies and other health care providers throughout the United
States, and is Board Certified in Health Law by the Texas Board of
Legal Specialization. You can contact him at