Legal Speak

Facing the Inevitable

• By Asela Cuervo
• Sep 01, 2006

Given the challenges facing reimbursement for home oxygen under Medicare, DME companies are considering whether it makes sense to increase their “sleep business.” Sleep disorders and the importance of healthy sleep patterns have been in the spotlight for several years now. Research points to links between sleep deprivation and diabetes and obesity; the public menace of sleepy drivers is well documented; and obstructive sleep apnea (OSA), one of a number of sleep disorders, is tied to increased risks for hypertension and other cardiopulmonary conditions.

These headlines have gained the public’s attention. Web sites dedicated to sleep deprivation and sleep disorders have proliferated in recent years, providing information about the symptoms and consequences of OSA even in children and teens. In April, the New York Times compared the current fascination with sleep deprivation to the fascination with nutrition and physical fitness, fueled in part by its allure to aging baby boomers fixated on “wellness.” Over the last 10 years, for example, accredited sleep centers have tripled to 963 nationwide according to the Times article. There are an estimated 900 additional unaccredited centers.

Given the growing public awareness and the significant new insights now possible as a result of research, the cost-effectiveness of treating sleep disorders like OSA should be straightforward; but as we know, the trends point to an increase in utilization for devices used to treat OSA, which often results in greater scrutiny by payers and attempts to control utilization. Some of these efforts are already underway. In fact, providers will face similar hurdles in servicing their Medicare OSA patients as they do with their oxygen patients, including the challenges posed by competitive bidding and the Deficit Reduction Act (DRA) of 2005.

Although many of these patients are too young to qualify for Medicare and have private insurance, Medicare reimbursement continues to be an important payer for suppliers who service this patient population. In the proposed rule on competitive bidding, the Centers for Medicare and Medicaid Services (CMS) identified CPAPs among the products with high Medicare expenditures. CMS will initiate competitive bidding with products that have a high potential for savings, either because they are high-cost items, or because they are high-volume, high-utilization items. CMS won’t announce the products selected for competitive bidding until it publishes a final rule later this year. In the meantime, providers should be considering their product and payer mix based on the criteria CMS identified in the NPRM.

CPAPs will also be impacted by the new capped rental rules mandated under the DRA.  Generally, Medicare patients will be forced to own their equipment and assume all responsibility for routine maintenance, although CMS will continue to pay for “reasonable and necessary” repairs. Providers are also still struggling to understand how the rules proposed for competitive bidding will dovetail with the rules CMS has proposed to implement the DRA. Patients who began a CPAP rental on Jan. 1, 2006, have only 13 rental months before they own the equipment, so providers should be addressing how they will handle the transition, which will happen early next year.

There are still many unanswered questions about competitive bidding and its impact on this product sector, or how the competitive bidding rules will work under a system of forced patient ownership of equipment. Providers should work to educate themselves on these proposals to understand how they will affect the way they service their patients. No one should wait to begin this analysis. o

This article originally appeared in the Respiratory Management Sept/Oct 2006 issue of HME Business.