Keeping Up with Changes in the Sleep Market

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 polysomnography.

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 Scale.

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 (BMI).

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 study.

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 period.

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 [email protected].