If, on September 12, CMS decides to allow in-home apnea testing as a criterion for CPAP, a range of opportunities (and some extra costs) could open up for CPAP providers.

For years, HME providers have had to stand in line behind sleep laboratories to beg for CPAP referrals. That time may be coming to an end. On September 12, 2007, CMS officials will likely make their final decision on implementing home-based CPAP qualification criteria.

I would not hold my breath thinking that sleep labs will automatically give up this lucrative business in favor of home-based qualification. The sleep lab community is lobbying heavily to ensure that at least some part of this proposed new ruling allows them to continue to prosper. CMS has provided little insight into its thinking so far.

A few months ago, CMS actually presented fee schedules associated with what has been classified as unattended sleep studies. These codes and associated fee schedules are believed to be the basis of the reimbursement going forward—should CMS approve in-home qualification for CPAP patients. Currently, two codes have been published for unattended sleep studies, but they are not reimbursed by CMS at this time.

The first basic part of reimbursement is for the technical component—the actual conducting of the tests, or delivering and setting up the testing equipment, then processing the reports and delivering them to a qualified physician. The second part is the professional component, which is for the actual reading and interpretation of the results. Expect this to be the portion that the sleep labs try to hang their hats on.

If they can convince CMS that only a qualified physician, such as a pulmonologist, can be allowed to interpret the results, they will have remained in control of the CPAP referral business. By mandating that most primary care physicians are not qualified to read and interpret the results, they will continue to control the CPAP business.

CMS also has mandated that the biller of the technical component must be the owner of the equipment used in the testing process. This will likely limit the HME provider's ability to bill for the conducting of the test. Since it has long been a CMS policy to not allow HME providers any part in qualifying their own patients, look for CMS to follow some similar philosophy that has been successful in the past.

In the absence of a sleep lab as the qualifying entity, CMS could possibly follow the same steps as it does for oxygen qualification. In that procedure, CMS allows HME providers to deliver the equipment and download the results from that equipment to a qualifying entity.

In the case of oxygen, the qualifying entity is the independent diagnostic testing facility (IDTF). This is a proven process that has been used successfully over a long period of time with few problems. If CMS chooses this procedure, it could be a win-win for both HME providers and sleep labs.

For oxygen qualification using an oximetry testing system, HME providers are still in control of the referral process. And in more than 98% of cases, if a patient qualifies, the referral goes to the HME provider that delivered the testing equipment. In this scenario, HME providers would remain in control of the referral process and sleep labs would still provide the reading and interpretation of the test.

Mickey Letson

TITRATION AND COMPLEX APNEA

Several questions remain. The first is related to titration of patients if they qualify. How would this be done? Several companies suggest that a patient would receive an auto-titrating CPAP and download the results to the physician for determination of pressure settings. The second question deals with complex or central sleep apnea. Most of the in-home qualification systems would have a difficult time diagnosing these types of sleep apnea. The third question is what happens when a patient records a high apnea-hypopnea index (AHI). Once again, many believe that if patients record high AHIs, they would likely be referred to a sleep lab for more in-depth analysis. This could actually increase the number of referrals to the sleep lab.

In reconsidering the ability to qualify a CPAP patient in-home rather than in a sleep lab, CMS has decided to reevaluate, or better qualify, exactly how AHI is calculated. The AHI is the qualifying determination for CPAP just as the oxygen saturation level is for the oxygen qualification process.

It appears that CMS believes there are many or multiple definitions of the AHI and/or methods of AHI calculations currently being used in the marketplace. This might be a clue to the thinking of CMS relating to its approval of in-home qualification for CPAP patients. It could be that if CMS believes that a universal definition of AHI were to be developed, the ability to accurately diagnose a CPAP patient in-home would lead to quicker and less expensive treatment. This could be the key to CMS' approval for in-home qualification.

Ultimately, CMS is looking to reduce its upcoming liability to sleep labs and/or the cost to qualify and treat a CPAP patient. Each time that the media releases another report related to sleep apnea, or the possible number of sleep apnea patients, the number seems to have risen at a staggering rate.

The latest figures indicate that the potential number of sleep apnea patients in the United States is at or above 70 million. It is estimated that less than 10% have been tested and diagnosed so far, which leaves approximately 63 million patients left to be studied.

Approximately 40% of the patients entering sleep labs exit without a diagnosis of sleep apnea. Thus, to identify the remaining 63 million potential sleep apnea patients, it is estimated that approximately 88 million people will have to be tested.

Following today's current CPAP qualification procedure of going to a sleep lab, the cost to study, diagnose, titrate, and treat these patients is staggering. It would cost the federal government billions to complete the testing and qualification process. CMS will be looking for a way to ensure that all patients are diagnosed and treated safely and effectively—and as fast as possible. CMS also will be concerned with reducing all associated costs relating to the diagnosis and treatment.

BE PREPARED

This is CMS, so be prepared for anything! We know that when CMS evaluates a program or product, the intent is to lower reimbursement costs. HME providers must begin to evaluate how they can provide these services at a lower cost.

If the apnea program becomes more like the oxygen programs, HME providers will be required to spend additional money to test patients without associated reimbursement for expenses related to the qualification of those patients. This will mean a greater cost for administering the HME CPAP program, but also should dramatically increase the number of referrals from primary care physicians.

The increase in patients should more than offset the costs associated with getting these patients qualified. One key element will be the HME provider's ability to capture the recurring revenue from supplies associated with the CPAP patient. The dispensing of CPAP alone will do nothing to offset additional expenses for qualification that the HME providers may likely be responsible for. If providers do not have an ongoing program to secure this recurring revenue, then they will lose out.

As we explore the idea of in-home CPAP qualification, HME providers should consider the possibility of widely broadening their payor base. Since the average age of the largest population of CPAP patients is in the 35- to 50-year-old range, this would mean a broader diversity in payor sources. The largest number of these patients would fall outside the Medicare population.

What does this mean for the provider? Imagine this as a major league baseball program. No player starts in the major leagues. They usually come through what is called a farm league system. The players are rated by their capabilities and then placed in a farm system labeled Minor A through AAA prior to joining the major leagues. Minor A would include the newest players with the least amount of experience, and they would progress upward through AA and then on to AAA prior to joining the big club.

It is important to think of a CPAP patient as being in a AA or AAA franchise. This means that the HME provider will have a chance to keep these patients for a much longer period of time—much more than those patients who are Medicare age.

Imagine the possibility of beginning to care for your patients while they are still in their 50s. With an average life expectancy of more than 80 years now, this could provide your HME company with 30+ years of patient revenue. That is a program that HME providers can build a long-lasting company around. This would provide true long-term growth potential for treating these younger patients, creating relationships that last for much longer than the typical 3 years of the average Medicare patient.

As HME providers continue to seek ways to remain profitable in the long term, they will have to look closely at the opportunities that this new ruling could bring. With oxygen patients capping at 36 months (or even 18), competitive bidding looming, and other insecurities in the marketplace, one could look at the possibility of in-home CPAP qualification as a bright light at the end of a long tunnel. It could be an opportunity to decrease the importance of the Medicare system as well as provide long-term relationships with patients beginning at a much earlier age.

It has been said many times that the opportunity for success passes by each one of us at least once. The difference between those who are successful and those who are not is the ability to recognize that opportunity. Keep a close watch to see if in-home testing proves to be just that opportunity.

Mickey Letson is president and founder of Letco Inc, Decatur, Ala. He can be reached at .