The respiratory market is steadily increasing in tune with advancements in the sleep industry. With increased awareness about sleep disorders, more patients are being diagnosed with sleep-related problems. As expected, the DME industry is racing to keep pace with the demand for CPAP and other respiratory devices. Therefore, providers must firmly understand key reimbursement concepts to ensure continued profitability.

CPAP equipment is often the front line of products used to treat the most common diagnosis of obstructive sleep apnea (OSA), and Medicare is most often the primary payor for these products. First off, Medicare requires a sleep study that is documented by an attended, facility-based polysomnogram. CMS recently finalized a national coverage decision that stated there is insufficient evidence to conclude that unattended sleep study testing is reasonable and necessary. Therefore, home and mobile studies cannot be used to satisfy the documentation requirements for the CPAP policy.

The facility-based study must show that the patient has a diagnosis of OSA based on an apnea hypopnea index (AHI). The AHI is the average number of apneas and hypopneas per hour of sleep. For Medicare purposes, an apnea is defined as the cessation of airflow for at least 10 seconds. A hypopnea is an abnormal respiratory event lasting at least 10 seconds associated with at least a 30% reduction in thoracoabdominal movement of airflow as compared to baseline—and with at least a 4% decrease in oxygen saturation.

The AHI cannot be extrapolated or projected. The study must take place over a minimum of two continuous hours of sleep without the use of a positive airway pressure device, and can be either a whole night study for diagnostic purposes or a split-night study for diagnosis and initial treatment.

To qualify for CPAP therapy, the AHI must be 15 or more events per hour. If an AHI is between five and 14 events per hour, patients may still qualify if they show one or more of the following symptoms: excessive daytime sleepiness, impaired cognition, mood disorders, insomnia, hypertension, ischemic heart disease, or history of a stroke.

Once the study has been completed, you will need to obtain a prescription (written or faxed) or a verbal order from the physician. This initial communication with the physician is typically basic and fundamental. The initial prescription will usually be generic and state only “CPAP.” On a rare occasion, it may even go further to state “accessories.”

If the order is verbal, be sure you have appropriately documented the date and source of the call. This information will allow you to deliver the equipment and accessories to the patient. However, you cannot bill Medicare off of this information.

Prior to billing your claim, you will need to obtain a detailed written order. This detailed version must include other aspects such as length of need (required for all rented items), start date of the order (based on the doctor’s initial assessment), detailed descriptions of all CPAP accessories to be provided (humidifier, mask, tubing, headgear, filter, chinstrap), and finally a signature and date from the physician. While signature stamps are acceptable on detailed orders, I do not recommend using them as a general rule due to the potential for misuse.

On the patient side, you should have a delivery ticket that is signed by the patient. Most delivery tickets will include an assignment of benefits and medical records release statement. The patient should be provided with training materials, warranty information on the machine, and any accessories. They should also be advised of your privacy practices/privacy notice and provided a copy of the NSC 21 standards if they are new customers.

Billing Your CPAP Claims
Once all this documentation is in your files, you may begin to bill your CPAP claims. You must attach the capped rental modifiers along with a KX modifier if the medical policy criteria are met. However, before billing your fourth month’s claim, you will need to obtain a one-time, written or verbal statement from the physician or patient indicating compliance with the product. This can be accomplished by telephone interview with either the patient or the physician to determine that the equipment is being used and the patient is benefiting from its use.

If you have a large volume of patients on CPAP therapy or other products that require this type of follow-up, you may be able to save money by outsourcing the patient calls to a third-party automated calling system. These services can often use your recorded voice to call patients anytime of the day or any day of the week when they are more likely to be home. If the system is unable to reach a person, it can often make multiple calls without additional charge. To decide if this type of service would be useful, weigh the hourly cost of your personnel and the amount of time they spend trying to reach patients on the phone against focusing energies on sales, service, and collections. Many of these services cost around $.50 or less per patient (depending on volume).

Keep in mind that even if you are only providing accessories to customers that obtained their CPAP through another supplier, you must have on file all patient documents in addition to a detailed order, information that corroborates the OSA diagnosis, and a compliance statement so you can add the KX modifier to your accessory claims.

In the 10th month of use, you must provide customers with the option to have the equipment purchased or continue with rental as long as the equipment is needed. Because the CPAP machine falls under the capped rental category, this option must be extended to the patient. Examples of these letters are often provided with your electronic software billing package, but can also be found in your Medicare provider manual. Communicate to Medicare which option has been selected by using the “BR”—beneficiary chose rental, “BP”—beneficiary chose purchase, or “BU” modifier—beneficiary was unresponsive or undecided.

Because CPAP falls into the capped rental category, reimbursement is limited to rental of the machine itself. All accessories should be billed separately upon delivery. Medicare allows for the replacement of nasal cushions/pillows and disposable filters twice every month. Tubing can be replaced every month. The nasal interface (mask or cannula) can be replaced every 3 months. Headgear, chinstraps, and nondisposable filters can be replaced every 6 months. If something happens prior to the expected replacement date, such as damage to an accessory, Medicare will consider early replacement with a narrative documentation.

Andrea Stark

Beyond Reimbursement
While we have covered the CPAP reimbursement basics, you have to keep other items in mind if you really want a successful CPAP business. Compliance is the key to continued reimbursement, and the keys to compliance are education and selection.

CPAP therapy is an art. It is estimated that almost one out of two patients will stop their CPAP therapy due to discomfort. As an “artist,” it is imperative to ensure the proper fit of the mask and pair it with the right equipment and accessories. Because many patients will experience some discomfort in getting used to the product, it is important to explain common problems they might encounter during initial use.

Explain how specific problems can be corrected with adjustments and/or other types of accessories. If patients can anticipate certain problems and be aware of a solution, they are less likely to reject the therapy.

Residual Income?
A wide selection of products will not only help you maintain higher compliance, it will also provide an opportunity for residual income if you play your cards right. Many respiratory suppliers limit the number of products they carry to those that fall below the Medicare reimbursement rates for fear of losing money. This does not have to be the case. Medicare has provided a tool that allows patients to pay you cash up front for a portion of the cost of the fancier items—the advance beneficiary notice (ABN). The ABN is an approved government form that cannot be altered other than adding your logo to the top or bottom of the form. You can find the form by searching the CMS Web site for CMS 131-R-G. It is available in Spanish and English.

For the ABN to be effective, you must significantly change your mind-set on how items are presented to your customers. Begin by establishing a realistic expectation level. Select a standard “starter package” product line to provide to Medicare customers. Advise them of other products that will be available to aid in correcting certain problems should the patient experience them. In your starter package, you may choose to provide a standard mask. However, explain that if they find the mask is not comfortable, they may want to “upgrade” to a silicone or gel mask. If they choose to do this, they will have to pay the difference between the retail charge on the standard mask and the silicone/gel mask.

Offer to apply the Medicare payment on the standard mask to the mask of their choosing by accepting assignment on the standard item. Thus, there is a reduced amount of out-of-pocket expense to patients and they feel like they are getting a deal by only having to pay the “difference.” In addition, by initiating the choice to have a fancier item, they are more satisfied with the end result.

I always receive a lot of skepticism when I suggest this selling technique. Everyone says their patients do not have the money and always want the best of everything for no cost. Of course, we all want the best for no money, but we do not have that expectation for any other industry other than our own.

Do you think that the doctors do not collect on their co-payments or deductibles? We all know that the patients pay those bills, so why can’t we get payment for our services? You don’t go to the electronics store to get a high-definition flat screen TV for the price of a 13-inch black and white.

It is all about expectations, and as an industry, we have lowered ours. By changing your mind-set, you will be amazed at how much money you can make. Imagine how much your sales would increase if you collected an additional $10 on every patient that walked through your doors. It adds up.

To be successful with collections, you will need to get your money up front. Take credit cards if patients do not have cash, or consider financing options through a lending institution. But get that debt off your books as quickly as you can! The older it gets, the harder it is to collect!

One final note about upgrades; the patient must choose an item that is distinguishably different from a standard product for you to be able to charge a higher price. An item differentiated by a name brand does not qualify as an upgrade. Additionally, if the doctor specifically orders a specialty item, then the upgrade provision does not apply.

Always remember that Medicare requires that you provide patients with what they need, not with what they want. If it is a want—charge for it. By following these tips, you will ensure that you get what you want from your CPAP business.

Andrea Stark specializes in Medicare consulting for medical equipment suppliers and pharmacies. She spent 5 years working for the Region C DMERC as both a claims processor and then later as an ombudsman for the Professional Relations/Supplier Education Department. Stark is the founder of MiraVista LLC, Columbia, SC. She provides consulting and education services throughout the country, and can be reached via e-mail: andrea@miravistallc.com.