You Snooze, You Lose: Insurers Make The Old Adage
Literally True
Millions of sleep apnea patients rely on CPAP breathing
machines to get a good night’s rest. Health insurers use a variety of
tactics, including surveillance, to make patients bear the costs.
Experts say it’s part of the insurance industry playbook.
Last March, Tony Schmidt discovered something unsettling about the
machine that helps him breathe at night. Without his knowledge, it was
spying on him.
From his bedside, the device was tracking when he was using it and
sending the information not just to his doctor, but to the maker of
the machine, to the medical supply company that provided it and to his
health insurer.
Schmidt, an information technology specialist from Carrollton, Texas,
was shocked. “I had no idea they were sending my information across
the wire.”
Schmidt, 59, has sleep apnea, a disorder that causes worrisome breaks
in his breathing at night. Like millions of people, he relies on a
continuous positive airway pressure, or CPAP, machine that streams
warm air into his nose while he sleeps, keeping his airway open.
Without it, Schmidt would wake up hundreds of times a night; then,
during the day, he’d nod off at work, sometimes while driving and even
as he sat on the toilet.
“I couldn’t keep a job,” he said. “I couldn’t stay awake.” The CPAP,
he said, saved his career, maybe even his life.
As many CPAP users discover, the life-altering device comes with
caveats: Health insurance companies are often tracking whether
patients use them. If they aren’t, the insurers might not cover the
machines or the supplies that go with them.
In fact, faced with the popularity of CPAPs, which can cost $400 to
$800, and their need for replacement filters, face masks and hoses,
health insurers have deployed a host of tactics that can make the
therapy more expensive or even price it out of reach.
Patients have been required to rent CPAPs at rates that total much
more than the retail price of the devices, or they’ve discovered that
the supplies would be substantially cheaper if they didn’t have
insurance at all.
Experts who study health care costs say insurers’ CPAP strategies are
part of the industry’s playbook of shifting the costs of widely used
therapies, devices and tests to unsuspecting patients.
“The doctors and providers are not in control of medicine anymore,”
said Harry Lawrence, owner of Advanced Oxy-Med Services, a New York
company that provides CPAP supplies. “It’s strictly the insurance
companies. They call the shots.”
Insurers say their concerns are legitimate. The masks and hoses can be
cumbersome and noisy, and studies show that about third of patients
don’t use their CPAPs as directed.
But the companies’ practices have spawned lawsuits and concerns by some
doctors who say that policies that restrict access to the machines could
have serious, or even deadly, consequences for patients with severe
conditions. And privacy experts worry that data collected by insurers
could be used to discriminate against patients or raise their costs.
Schmidt’s privacy concerns began the day after he registered his new
CPAP unit with ResMed, its manufacturer. He opted out of receiving any
further information. But he had barely wiped the sleep out of his eyes
the next morning when a peppy email arrived in his inbox. It was ResMed,
praising him for completing his first night of therapy.
“Congratulations! You’ve earned yourself a badge!” the email said.
Then came this exchange with his supply company, Medigy: Schmidt had
emailed the company to praise the “professional, kind, efficient and
competent” technician who set up the device. A Medigy representative
wrote back, thanking him, then adding that Schmidt’s machine “is doing a
great job keeping your airway open.” A report detailing Schmidt’s usage
was attached.
Alarmed, Schmidt complained to Medigy and learned his data was also
being shared with his insurer, Blue Cross Blue Shield. He’d known his
old machine had tracked his sleep because he’d taken its removable data
card to his doctor. But this new invasion of privacy felt different. Was
the data encrypted to protect his privacy as it was transmitted? What
else were they doing with his personal information?
He filed complaints with the Better Business Bureau and the federal
government to no avail. “My doctor is the ONLY one that has permission
to have my data,” he wrote in one complaint.
In an email, a Blue Cross Blue Shield spokesperson said that it’s
standard practice for insurers to monitor sleep apnea patients and deny
payment if they aren’t using the machine. And privacy experts said that
sharing the data with insurance companies is allowed under federal
privacy laws. A ResMed representative said once patients have given
consent, it may share the data it gathers, which is encrypted, with the
patients’ doctors, insurers and supply companies.
Schmidt returned the new CPAP machine and went back to a model that
allowed him to use a removable data card. His doctor can verify his
compliance, he said.
Luke Petty, the operations manager for Medigy, said a lot of CPAP users
direct their ire at companies like his. The complaints online number in
the thousands. But insurance companies set the prices and make the
rules, he said, and suppliers follow them, so they can get paid.
“Every year it’s a new hurdle, a new trick, a new game for the
patients,” Petty said.
A Sleep Saving Machine Gets Popular
The American Sleep Apnea Association estimates about 22 million
Americans have sleep apnea, although it’s often not diagnosed. The
number of people seeking treatment has grown along with awareness of the
disorder. It’s a potentially serious disorder that left untreated can
lead to risks for heart disease, diabetes, cancer and cognitive
disorders. CPAP is one of the only treatments that works for many
patients.
Exact numbers are hard to come by, but ResMed, the leading device
maker, said it’s monitoring the CPAP use of millions of patients.
Sleep apnea specialists and health care cost experts say insurers have
countered the deluge by forcing patients to prove they’re using the
treatment.
Medicare, the government insurance program for seniors and the
disabled, began requiring CPAP “compliance” after a boom in demand.
Because of the discomfort of wearing a mask, hooked up to a noisy
machine, many patients struggle to adapt to nightly use. Between 2001
and 2009, Medicare payments for individual sleep studies almost
quadrupled to $235 million. Many of those studies led to a CPAP
prescription. Under Medicare rules, patients must use the CPAP for four
hours a night for at least 70 percent of the nights in any 30-day period
within three months of getting the device. Medicare requires doctors to
document the adherence and effectiveness of the therapy.
Sleep apnea experts deemed Medicare’s requirements arbitrary. But
private insurers soon adopted similar rules, verifying usage with data
from patients’ machines — with or without their knowledge.
Kristine Grow, spokeswoman for the trade association America’s Health
Insurance Plans, said monitoring CPAP use is important because if
patients aren’t using the machines, a less expensive therapy might be a
smarter option. Monitoring patients also helps insurance companies
advise doctors about the best treatment for patients, she said. When
asked why insurers don’t just rely on doctors to verify compliance, Grow
said she didn’t know.
Many insurers also require patients to rack up monthly rental fees
rather than simply pay for a CPAP.
Dr. Ofer Jacobowitz, a sleep apnea expert at ENT and Allergy Associates
and assistant professor at The Mount Sinai Hospital in New York, said
his patients often pay rental fees for a year or longer before meeting
the prices insurers set for their CPAPs. But since patients’ deductibles
— the amount they must pay before insurance kicks in — reset at the
beginning of each year, they may end up covering the entire cost of the
rental for much of that time, he said.
The rental fees can surpass the retail cost of the machine, patients
and doctors say. Alan Levy, an attorney who lives in Rahway, New Jersey,
bought an individual insurance plan through the now-defunct Health
Republic Insurance of New Jersey in 2015. When his doctor prescribed a
CPAP, the company that supplied his device, At Home Medical, told him he
needed to rent the device for $104 a month for 15 months. The company
told him the cost of the CPAP was $2,400.
Levy said he wouldn’t have worried about the cost if his insurance had
paid it. But Levy’s plan required him to reach a $5,000 deductible
before his insurance plan paid a dime. So Levy looked online and
discovered the machine actually cost about $500.
Levy said he called At Home Medical to ask if he could avoid the rental
fee and pay $500 up front for the machine, and a company representative
said no. “I’m being overcharged simply because I have insurance,” Levy
recalled protesting.
Levy refused to pay the rental fees. “At no point did I ever agree to
enter into a monthly rental subscription,” he wrote in a letter
disputing the charges. He asked for documentation supporting the cost.
The company responded that he was being billed under the provisions of
his insurance carrier.
Levy’s law practice focuses, ironically, on defending insurance
companies in personal injury cases. So he sued At Home Medical, accusing
the company of violating the New Jersey Consumer Fraud Act. Levy didn’t
expect the case to go to trial. “I knew they were going to have to spend
thousands of dollars on attorney’s fees to defend a claim worth hundreds
of dollars,” he said.
Sure enough, At Home Medical, agreed to allow Levy to pay $600 — still
more than the retail cost — for the machine.
The company declined to comment on the case. Suppliers said that Levy’s
case is extreme, but acknowledged that patients’ rental fees often add
up to more than the device is worth.
Levy said that he was happy to abide by the terms of his plan, but that
didn’t mean the insurance company could charge him an unfair price. “If
the machine’s worth $500, no matter what the plan says, or the medical
device company says, they shouldn’t be charging many times that price,”
he said.
Dr. Douglas Kirsch, president of the American Academy of Sleep
Medicine, said high rental fees aren’t the only problem. Patients can
also get better deals on CPAP filters, hoses, masks and other supplies
when they don’t use insurance, he said.
Cigna, one of the largest health insurers in the country, currently
faces a class-action suit in U.S. District Court in Connecticut over its
billing practices, including for CPAP supplies. One of the plaintiffs,
Jeffrey Neufeld, who lives in Connecticut, contends that Cigna directed
him to order his supplies through a middleman who jacked up the prices.
Neufeld declined to comment for this story. But his attorney, Robert
Izard, said Cigna contracted with a company called CareCentrix, which
coordinates a network of suppliers for the insurer. Neufeld decided to
contact his supplier directly to find out what it had been paid for his
supplies and compare that to what he was being charged. He discovered
that he was paying substantially more than the supplier said the
products were worth. For instance, Neufeld owed $25.68 for a disposable
filter under his Cigna plan, while the supplier was paid $7.50. He owed
$147.78 for a face mask through his Cigna plan while the supplier was
paid $95.
ProPublica found all the CPAP supplies billed to Neufeld online at even
lower prices than those the supplier had been paid. Longtime CPAP users
say it’s well known that supplies are cheaper when they are purchased
without insurance.
Neufeld’s cost “should have been based on the lower amount charged by
the actual provider, not the marked-up bill from the middleman,” Izard
said. Patients covered by other insurance companies may have fallen
victim to similar markups, he said.
Cigna would not comment on the case. But in documents filed in the
suit, it denied misrepresenting costs or overcharging Neufeld. The
supply company did not return calls for comment.
In a statement, Stephen Wogen, CareCentrix’s chief growth officer, said
insurers may agree to pay higher prices for some services, while
negotiating lower prices for others, to achieve better overall value.
For this reason, he said, isolating select prices doesn’t reflect the
overall value of the company’s services. CareCentrix declined to comment
on Neufeld’s allegations.
Izard said Cigna and CareCentrix benefit from such behind-the-scenes
deals by shifting the extra costs to patients, who often end up covering
the marked-up prices out of their deductibles. And even once their
insurance kicks in, the amount the patients must pay will be much
higher.
The ubiquity of CPAP insurance concerns struck home during the
reporting of this story, when a ProPublica colleague discovered how his
insurer was using his data against him.
Sleep Aid or Surveillance Device?
Without his CPAP, Eric Umansky, a deputy managing editor at ProPublica,
wakes up repeatedly through the night and snores so insufferably that he
is banished to the living room couch. “My marriage depends on it.”
In September, his doctor prescribed a new mask and airflow setting for
his machine. Advanced Oxy-Med Services, the medical supply company
approved by his insurer, sent him a modem that he plugged into his
machine, giving the company the ability to change the settings remotely
if needed.
But when the mask hadn’t arrived a few days later, Umansky called
Advanced Oxy-Med. That’s when he got a surprise: His insurance company
might not pay for the mask, a customer service representative told him,
because he hadn’t been using his machine enough. “On Tuesday night, you
only used the mask for three-and-a-half hours,” the representative said.
“And on Monday night, you only used it for three hours.”
“Wait — you guys are using this thing to track my sleep?” Umansky
recalled saying. “And you are using it to deny me something my doctor
says I need?”
Umansky’s new modem had been beaming his personal data from his
Brooklyn bedroom to the Newburgh, New York-based supply company, which,
in turn, forwarded the information to his insurance company,
UnitedHealthcare.
Umansky was bewildered. He hadn’t been using the machine all night
because he needed a new mask. But his insurance company wouldn’t pay for
the new mask until he proved he was using the machine all night — even
though, in his case, he, not the insurance company, is the owner of the
device.
“You view it as a device that is yours and is serving you,” Umansky
said. “And suddenly you realize it is a surveillance device being used
by your health insurance company to limit your access to health care.”
Privacy experts said such concerns are likely to grow as a host of
devices now gather data about patients, including insertable heart
monitors and blood glucose meters, as well as Fitbits, Apple Watches and
other lifestyle applications. Privacy laws have lagged behind this new
technology, and patients may be surprised to learn how little control
they have over how the data is used or with whom it is shared, said Pam
Dixon, executive director of the World Privacy Forum.
“What if they find you only sleep a fitful five hours a night?” Dixon
said. “That’s a big deal over time. Does that affect your health care
prices?”
UnitedHealthcare said in a statement that it only uses the data from
CPAPs to verify patients are using the machines.
Lawrence, the owner of Advanced Oxy-Med Services, conceded that his
company should have told Umansky his CPAP use would be monitored for
compliance, but it had to follow the insurers’ rules to get paid.
As for Umansky, it’s now been two months since his doctor prescribed
him a new airflow setting for his CPAP machine. The supply company has
been paying close attention to his usage, Umansky said, but it still
hasn’t updated the setting.
The irony is not lost on Umansky: “I wish they would spend as much time
providing me actual care as they do monitoring whether I’m ‘compliant.’”
This story is part of an ongoing series from ProPublica and NPR
called The
Health Insurance Hustle. Are you an insurance industry insider
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