Observation Deck

Dealing with the CPAP and Chip Shortage

HME providers and their patients continue to face a shortage of sleep therapy devices. What can and should be done to address the situation?

• By Eric Mongeau
• May 12, 2022

Almost one year ago, Philips issued a recall on millions of its PAP therapy devices, yet as we approach the anniversary of that event, a major shortage of PAPs remains and providers are struggling to supply these machines to their patients. 

Currently, more than 6 million people are diagnosed with sleep apnea each year, and only 25 percent of those people can access the CPAPs needed for their health. Additionally, while shortages are prevalent across numerous industries, the semiconductor chips needed to produce medical devices are extremely difficult for the industry to get their hands on as they are often overlooked for more money-making fields, including consumer electronics and electric vehicles. 

However, if the DME industry wishes to get back on its feet following the aftermath of the recall, the manufacturers of sleep therapy equipment must be at the top of the list for chip distribution to ensure devices are being created to keep up with the demand.

How is the chip shortage impacting the medical industry?

Shortages of semiconductor chips across all industries began at the beginning of 2020 due to the pandemic’s significant impact on the supply chain. Chip manufacturers shifted their focus to more demanding industries, such as computer equipment and mobile devices, which spiked as more people began working remotely.

And while semiconductor chips are known to be used for various high-tech consumer devices, almost all diagnostics, therapeutics, and capital equipment companies that produce essential medical technologies utilize chips and are dealing with the impact of this shortage as well. This includes providers who supply PAPs, ventilators, defibrillators, imaging machines, pacemakers and more.

Unfortunately, since the start of this shortage, DME providers are coming in behind consumer electronics distributors when it comes to priority, as electronics companies tend to lead to much larger profitability for chip manufacturers. This lack of prioritization, coupled with an already low shortage of chips, has caused PAPs to remain unavailable to 75 percent of those who need them.

Medical device makers are desirable customers for chip suppliers due to the stability of the medical industry, and the constant demand for chips in order to develop essential and life-saving devices. Even if there are disrupting events occurring across the world, there will still always be a need for medical devices like CPAPs, ventilators, imaging machines, etc. Additionally, products in this industry are regulated and are not as frequently updated as consumer electronics, meaning the medical industry is a reliable client to chip suppliers. Lastly, it is known that medical device makers pay a premium cost for chips compared to other industries because of the quality they demand for their life-changing and saving devices.

What can payers do to mitigate the CPAP recall and chip shortage?

With supplies running low, patients are required to manually download an SD card to prove they are in compliance and using the PAP as required. The patient must use the CPAP device at least 70 percent of the time for 30 days to be considered compliant. If compliance is not achieved, the payer will not cover the device or supplies, preventing patients from receiving necessary medical care. Payers should consider temporarily suspending the compliance period for PAP devices until after Philips has satisfied the recall. Taking a step further, providers can also negotiate with payers to increase CPAP reimbursement. Providers are currently experiencing historically high costs as device materials continue to experience surcharges and labor and shipping delays.

Rather than spending time and money on monitoring how much a patient uses a device, payers should instead prioritize educating stakeholders on the impact the CPAP recall and chip shortage are having on people’s access to necessary medical devices, and what they can do on their end to help combat the situation. This could be as simple as writing a letter to an automotive and technology company requesting that they reallocate a small portion of chips to PAP manufacturers or reaching out to a local congressman requesting they coordinate with the Department of Commerce to help with parity for chips in the healthcare sector, specifically addressing this issue.

What does the future hold for the DME industry? 

While this is a great start for individual providers to take, the DME industry must all come together to spread awareness of the shortage and how it is impacting the medical device industry. The more people are aware of this issue, the more likely change can begin to take shape as attention will be placed on chip manufacturers. 

Payers, patients, advocates and anyone who knows of the issues surrounding the supply chain and medical device industry must take a stand and help spread awareness. People are suffering because the medical industry ranks as a low priority to chip manufacturers. Therefore, we must take action and reach out to lawmakers and others in power to start paying attention to chip allocations.