Growing awareness of disorders related to obstructive sleep apnea (OSA) and the availability of treatments, such as continuous positive airway pressure (CPAP) therapy, have created a sharp increase in the demand for sleep disorder treatment devices—and this market has the potential to get even bigger.

The American Sleep Apnea Association estimates that at least 10 million Americans currently exhibit symptoms of undiagnosed sleep apnea, and, as these people are identified, the demand for sleep disorder treatment devices and services will only continue to increase.

As the medical industry struggles to keep up with this emerging market, HME suppliers are asking what role they can play in assisting potential OSA patients in obtaining the sleep tests they need to qualify for treatment. However, Medicare, as well as national and regional private insurance companies, regulate relationships between sleep therapy device providers and sleep disorder diagnostic facilities to avoid any financial motive for diagnosing people with OSA.

Therefore, it has become increasingly important for HME providers to understand the applicable Medicare and private insurer regulations regarding qualification and testing. Only through an understanding of these provisions will HME providers know to what extent they can interact with local sleep testing facilities in an effort to ensure that patients with OSA receive the diagnosis and treatment that they need.

Medicare Guidelines
In addressing issues surrounding OSA, the initial question for most HME suppliers is how patients are appropriately qualified for CPAP devices under existing Medicare guidelines. In order for a CPAP device to be approved for initial coverage, the medical review policies of the four DME Regional Carriers (DMERCs) require that the patient must be diagnosed with OSA by an attended facility-based polysomnogram. In addition, the patient must meet one of two clinical criteria.

1. The apnea-hypopnea index (AHI) for the patient is greater than or equal to 15 events per hour.
2. The AHI is between five to 14 events per hour with documented symptoms of either daytime sleepiness, impaired cognition, mood disorders, insomnia, hypertension, ischemic heart disease, or a history of stroke.

Remember, the DMERCs also require that the AHI is calculated using a minimum of 2 hours of recorded sleep. It may not be extrapolated or projected from a shorter recording. If these conditions are not met, the CPAP device will be denied as medically unnecessary.

Testing Locality
Many HME providers—particularly those in small, rural areas—are experiencing difficulty in obtaining qualifying tests prior to supplying CPAP devices. In many communities, physicians have expressed a willingness to work with HME providers to facilitate the testing of patients who may have OSA.

Initially, many providers considered developing a home or clinic-based polysomnographic testing protocol. However, the DMERC medical policies clearly state that polysomnographic studies must be performed in a facility-based sleep study laboratory. It is, therefore, impossible for a DME provider to coordinate with physicians to establish a protocol for polysomnographic studies in a home or mobile facility.

The policies are also clear in that to be recognized as valid, the polysomnographic studies must be documented by an attended test and not a remotely monitored, patient-administered test.

For these reasons, polysomnographic testing may be performed only in a hospital facility qualified to provide sleep study services or in a freestanding sleep study laboratory meeting all applicable state and federal regulations.

Investing in Sleep Labs
The next question most HME providers encounter is whether there can be any involvement by an HME provider in a sleep testing facility. Many providers have explored the possibility of forming joint ventures with local physicians or investing in newly formed sleep testing facilities in areas where capital or resources may be scarce. However, HME providers should exercise caution regarding any potential investment in a sleep testing facility to ensure that they do not run afoul of DMERC policy.

Under the terms of a revised medical policy concerning CPAP devices issued by the DMERCs last June, HME suppliers are prohibited from performing sleep studies in a sleep testing facility and cannot invest in any way in such a facility. Likewise, the investors and employees of a DME provider are restricted from investing in a sleep testing facility.

However, soon after the issuance of this policy, the DMERCs replaced a portion of the text with the following:

For the purposes of this policy, polysomnographic studies must not be performed by a DME supplier. This prohibition does not extend to the results of studies conducted by hospitals certified to do such tests.

This change appeared to permit investors or employees of an HME provider to become investors or employees of a sleep testing facility without jeopardizing the HME provider’s ability to provide CPAP devices for patients qualified by the newly formed sleep testing facility. Such a change could open the door for sleep testing facilities in many rural areas and allow more patients to be diagnosed and begin receiving treatment.

Despite this change in Medicare policy, it is important to note that any investment by owners or employees of an HME company in a sleep testing facility could potentially lead to concerns regarding the federal Anti-kickback Statute as well as state laws regarding limitations on provider referrals. An HME provider’s legal counsel should review any potential investments in a sleep laboratory by the HME provider or the provider’s employees prior to the formation of the sleep laboratory entity.

Private Insurers
Given the DMERCs’ restrictive position regarding the location for sleep studies, many providers wonder whether the recent advances in portable recording technology can be used at all. A review of most state regulatory guidelines and private insurer policies indicates that the private insurance community is also reluctant to allow portable sleep testing. For example, Blue Cross/Blue Shield of Tennessee’s medical policy considers portable polysomnography (in-home sleep studies) investigational and requires testing to be performed in an accredited facility.

Similarly, the ConnectiCare medical coverage policy requires testing to take place at facilities that are accredited by the American Academy of Sleep Medicine.

However, not all private insurers are as restrictive when it comes to in-home sleep studies. Aetna’s medical coverage policy indicates that it covers portable standard diagnostic full-channel nocturnal polysomnography performed in the patient’s home when a trained technologist is in attendance and the test is for one of the following circumstances.

• As follow-up for patients to reassess therapy when a diagnosis was established by standard polysomnography.
• As testing for patients who are unable to be studied in a sleep laboratory (eg, nonambulatory patients who cannot be safely moved).
• As testing for patients with severe clinical symptoms indicative of OSA, when initial treatment is urgent and standard testing is unavailable.

Clearly, private insurers are not rushing to allow polysomnographic studies to be conducted in a patient’s home. However, as technology improves and techniques for monitoring self-administered polysomnographic studies are advanced, the use of at-home testing may increase over time.

Given the interest by health care providers in identifying and treating the approximately 40 million Americans with sleep disorders, it is certain that the guidelines governing federal program reimbursement as well as private insurance reimbursement for polysomnographic studies will continue to evolve. As guidance becomes available from the federal government, state governments, and private insurers, HME providers will need to remain aware of any changes to ensure that their current practices are acceptable. Qualification of patients for CPAP devices and the rules and regulations governing sleep testing facilities will be an issue to watch.

Clay Stribling, JD, is an attorney with the Health Care Group of Brown & Fortunato, PC, Amarillo, Tex. He can be reached at (806) 345-6318 or cstribling@bf-law.com