Still Betting on Sleep Therapy

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 2010.

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 compliance.

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 pages.

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 locations.

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 higher-end masks.

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 (25%).

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% lower (16%).

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.

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 the loop”

“Education at the time of setup explains CMS requirements, and failure to qualify and return unit will result in an out-of-pocket purchase arrangement.”

“Explain to them that if they do not bring data card into store to retrieve data for compliance, they will be responsible financially”

“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.”

“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 patient.”

How do you monitor your sleep-disordered breathing patients to ensure compliance?

“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 compliance.”

“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.”

“Replenishment program”

“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 do you expect the Round 1 rebid to affect your sleep-disordered breathing business?

“Another readjustment just as the oxygen cutbacks”

“Badly”

“Could lose 12% of our CPAP business or gain probably 20% more”

“Destroy it”

“Eliminate Medicare patients”

“Hopefully get us more patients that can afford their upfront copays”

“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 implications.”

“If we change products dispensed, positively; if we don’t, negatively”

“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 work.”

“It will significantly impact our Medicare SDB business, but because our Medicare share is low, it shouldn’t be devastating.”

“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 competition.”

“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 suffer.”

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.