Legal-Ease

Like all areas of home medical equipment, sleep therapy programs must be compliant with both state and federal laws. HME providers seeking to diversify into the sleep business should consult a competent health care attorney to ensure they are aware of all applicable rules and regulations, but here are some initial issues to consider:

Make sure you have the right personnel in place.

“State laws are going to vary from state to state regarding what types of personnel you need to have [to provide sleep therapy products],” informs Clay Stribling, an attorney with Brown & Fortunato, Amarillo, Texas.

“There are some states where you must have a respiratory therapist on staff, and there are some where the rules are relatively lax. The state laws are all over the map, so the first step is to find the state law restrictions that apply to you.”

Make sure you understand how to qualify patients for sleep therapy under different payers.

“For example, Medicare requires a facility-based sleep test; for those patients, you cannot use a lot of the new technologies that are home-based diagnostic methodologies,” Stribling notes.

Pay attention to detail.

“CPAP ventures are not a high-profit item — except in volume — and, consequently, when you need volume to make your money, doing things in an efficient manner with carefully constructed protocols is important,” says Neil Caesar, president of the Health Law Center in Greenville, S.C.

“If you have to have that kind of attention to detail to make it worth doing in the first place, then you may as well have the attention also extend to doing it in a manner that is safe, not just profitable.”

If you want to diversify into sleep diagnostics, realize the limitations you might face.

“The entity that does the diagnostic component — the sleep test — can’t be the same entity that provides the CPAP,” Stribling explains. “If an HME company wants to be involved in the diagnostic end, it would need to set up a new legal entity that is separate from the HME entity.

“For example, [the diagnostic component] may be owned by the same people that own the HME entity, but because it is a separate legal entity with a separate tax ID number, it is not the same legal entity as the HME supply company. So in that model, you could test the patient in the sleep lab, then send them over to the HME that is owned by the same people.”

watch what your referral sources are doing.

“You should only really look at diversifying into the diagnostic end in a marketplace that shows a specific need for it because, in a lot of markets, you’ve got already a few too many sleep facilities and you’ve already got many physicians who have invested in those sleep facilities,” Stribling points out.

“The physicians who have invested in those are not going to be particularly interested in sending patients to any other labs in which they do not have an investment.”

If you want to invest with a partner, make sure you are on the same page.

“Do not assume that if somebody is approaching you for a deal, they have already carefully considered the legal issues involved,” says Caesar.

“Not only is that often not the case, but even if it is the case, everybody’s assessment of what is risky and what is not risky and what is worth the effort and what is not worth the effort differs. So, if a potential collaborator is comfortable with something, it doesn’t mean that you are or will be.”

Keep your records in good order.

“We have seen an increase in the past year to 18 months in CPAP audits from the carriers and from the different payers,” Stribling cautions.

“Anyone who gets into the sleep market should expect to see close scrutiny from all payers, specifically Medicare, to make sure that they are following the guidelines regarding what patients are qualified, how they are qualified and if the provider is keeping the right paperwork.”