In many markets, diagnostic testing for obstructive sleep apnea (OSA) is moving from in-center polysomnography to out of center sleep testing (OCST). This trend is primarily driven by the health care payors’ desire to reduce their expenses since the cost of out of center sleep testing can be much lower than that of attended polysomnography. For this reason, the number of diagnostic tests for OSA performed outside of a sleep lab will continue to increase over the coming years. Existing sleep centers must address this shift in testing methods to meet the requirements of the various insurers and utilization management companies by integrating OCST into their business model. Integrating OCST allows centers to remain relevant in a shifting market and to potentially develop new revenue streams to replace declining ones.
Out of Center Sleep Testing Models
There are three different models to review when considering adding OCST to an existing sleep center.
• In-Center Management: In the in-center management model, all of the activities related to OCST are managed and performed by the sleep center.
• Partial Outsourcing: In the partial outsourcing model, the sleep center engages a service provider that will be responsible for all aspects of providing the portable monitoring (PM) equipment to the patient and retrieving the equipment after use. The center will perform the data scoring and interpretation services.
• Complete Outsourcing: In the complete outsourcing model, the sleep center engages a service provider to perform all aspects of the OCST. The center is responsible for getting the patient scheduled with the service provider and then following up with the patient based on the interpretation delivered to the center by the service provider.
In this model, the sleep center remains an active participant and manager throughout the spectrum of care. When OCST is prescribed, the sleep team will train the patient, issue the PM equipment to the patient, clean the equipment when it is returned, score and interpret the study, and discuss treatment options with the patient. In this model, purchasing and tracking the equipment is important.
With approximately 24 different OCST devices available, a set of parameters needs to be established by the sleep center that will assist in choosing the device or devices that will be best for the center. It is possible that a center will have a number of different devices based on device features, center preference, relationship with device manufacturers, payor requirements, and patient preference. The key criteria for OCST equipment selection can be found in Figure 1.
Assumptions about the equipment need to be made to determine how many devices should be procured. The assumptions also will help determine the total cost of the OCST equipment to conduct a sleep study. To monitor cost and ensure that sleep centers have an adequate number of devices to cover the anticipated out of center sleep tests, the centers should ask the following:
• What is the cost of the equipment for each sleep study?
• What is the cost of consumables for each device for each sleep study?
• What is the number of patients who will need a retest?
• What is the number of sleep studies that one piece of equipment will be able to perform per month?
• What is the attrition rate of the equipment?
• What is the expected life of the OCST equipment before it will need to be retired and replaced?
In the partial outsourcing model for OCST, an outside service provider will deliver the OCST equipment and train the patient. The patient will ship the equipment back to the outside service provider after completion of the sleep study. The sleep center receives the raw sleep study data for its staff to score, interpret, and follow up with the patient. The benefit of using this model is that the center gives up the expense and risk of managing the OCST equipment while focusing on the diagnosis and treatment of sleep illnesses.
In the complete outsourcing model for OCST, an outside service provider will deliver the OCST device and train the patient. The patient will ship the device back to the service provider after completion of the sleep study. The service provider will perform the scoring and interpretation of the sleep study and deliver the interpretation to the sleep center for follow-up with the patient.
The criteria for selecting a service provider involve more than just the equipment the service provider uses. The service provider is a delegate of the sleep center and will need to follow all of the accreditation standards associated with OCST.
In the outsourcing models, the OCST equipment used is still important. Accreditation standards pertaining to OCST equipment still need to be followed regardless of who supplies the equipment. It is particularly important for the partial outsourcing model because the data collected will be scored and interpreted by the center’s staff. In both models, the center wants the patient to be able to easily administer the test and get good data.
The service provider’s responsiveness and performance will ultimately be the factor with the greatest influence when determining the service provider to be used. The service provider must be able to professionally interact with the patient as well as the sleep center staff. Below are some of the criteria that a sleep center should consider when they are reviewing service providers. This is not an exhaustive list.
• How is the patient trained on using the device?
• Does the service provider have adequate on-call coverage?
• Does the service provider effectively communicate to the patient how to get after-hours assistance?
• How quickly will the center receive the data/interpretation once the service provider receives the device?
• Is the system used to transmit the data HIPAA compliant?
• Does the service have established cleaning procedures?
• Can the service provide quality assurance reporting?
• What is the price of the service?
• Is the center charged for failed tests?
• How are retests communicated to the patient and center?
Assumptions about the service need to be made to help determine the total cost of the service to conduct a sleep study. It is straightforward to calculate the cost per study with service providers that charge by the study. The exception to this is if the service provider charges for failed studies. In this case, it is important to understand the number of patients who will require retesting. Since retesting is not reimbursable, this cost should be spread out across all of the sleep studies performed.
If the service provider charges a flat monthly fee regardless of the number of studies performed, then the cost per study is based on the number of sleep studies performed that month. The center will want to know how long it takes for the service provider to send out a test and get the data or interpretation to the sleep center. This can vary depending on how quickly the sleep test is distributed, how many nights the sleep study lasts, how quickly the equipment is returned to the center, and how quickly the data can be downloaded and processed.
It is important to integrate the management and monitoring of OCST into the routine of the sleep center. Below are activities that will need to be integrated. Each activity below should be documented and assigned to a staff member who should be trained in how to carry out that activity.
In-Center Management Model
• Who sets the on-call technician schedule for OCST?
• Who schedules patients for training and sleep testing?
• Who trains the patients?
• Who dispenses the equipment and OCST kit?
• Who is responsible for logging equipment returns?
• Who is responsible for uploading the data and determining if the study was successful?
• Who schedules the scoring and interpretation?
• Who follows up on delinquent equipment?
• Who cleans and tests the OCST equipment after each study and puts it back into inventory?
• Who chooses the service provider?
• Who contracts with the service provider?
• Who is the service provider liaison?
• Who contacts the service to schedule the sleep tests?
• Who follows up with the service on delinquent tests?
• Who is responsible for determining if the study was successful (partial only)?
• Who schedules the scoring and interpretation (partial only)?
Staffing will be a great concern in the outsourcing models. This is because of the unknown mix of in-center PSG versus OCST and the change in roles and responsibilities for the center’s staff. The roles and responsibilities shift mainly occurs with the technical and administrative staff. The technical staff may be doing more patient education and patient follow-up than in-lab testing. The administrative staff may be doing more insurance activity and patient scheduling than before.
Typically, when an OCST program is implemented, the amount of daytime activities begins to increase due to patient training, device or vendor management, and data scoring. In-lab tests may not necessarily decrease unless the move to OCST was demanded by payors that want OCST as a first line of testing. Centers with a decreased need for night technicians should consider transitioning them into day technicians to cover the activities stated above.
The challenge lies in determining if the increase in OCST will create enough work to justify the current staff when using the outsourcing models. When utilizing the complete outsourcing model, very little technical work, if any, is generated by OCST.
Most centers have enough infrastructure in place to handle the addition of OCST to their sleep program. The question becomes whether the current infrastructure is optimized to handle the addition of new activities associated with an OCST program. New software may be required with the OCST equipment for displaying the raw sleep study data. The center also may consider new software for tracking the disposition of the devices. It is also important to verify that the current computers can run the new software. There also might be a need for additional computers if more staff will be on duty at the same time. Furthermore, OCST activity places different demands on the physical space located at a sleep center. Some centers may have plenty of space to accommodate the changes in activity while other centers may need to repurpose existing space. The major activities that will need a place within the center are equipment storage, equipment testing, equipment cleaning, and patient training. Also, there might be more staff on duty during the day than in the past. Appropriate work places for each staff member must be considered.
Close attention needs to be paid to the reimbursement codes associated with the different OCST equipment since that is the primary driver of what a sleep center will be reimbursed for each OCST. The reimbursement codes associated with OCST are 95800, 95801, and 95806.
The codes are broken down into physician payment and technical payment. The physician payment covers the pretest physician exam and physician interpretation. The technical payment covers the sleep study, data scoring, and patient training on device setup. While reimbursement amounts vary based on payor and location, their values are fairly consistent relative to each other.
Other Financial Considerations
Labor related to OCST is one of the greatest cost drivers that will need to be monitored to maximize profit. Figure 2 shows a comparison of the tasks required for each model.
For each activity in the model chosen, the center should estimate how long that activity will take and multiply it by the wage rate of the worker performing that activity. This calculation gives the contribution of that activity to the overall cost of performing OCST.
Scoring and interpretation times are typically reduced for OCST data due to the limited output signals of OCST equipment. This change has a direct impact on the volume of sleep studies that can be reviewed by technicians and physicians. Shorter scoring and interpretation times decrease the costs associated with each sleep test and allow for more tests to be reviewed in a given amount of time.
Regardless of the model being considered, the center must remain vigilant in monitoring and reducing labor, equipment, and consumable costs. While this may seem a little overwhelming, it is really no different than what the center currently does with PSG. PSG also has labor, equipment, and consumable costs that should be managed to be profitable.
OCST is not a complete replacement for PSG, but it is a viable option for diagnosing OSA within the Comprehensive Delivery model developed by the AASM. More and more insurers are requiring the use of OCST to diagnose OSA over PSG. Sleep centers that do not want to experience a decrease in business should consider integrating OCST into their practice. Integrating OCST can seem a daunting process, but with the right information and knowledge, the integration can proceed smoothly. SR
John Noel is director of business development at the American Academy of Sleep Medicine. Questions for the author can be sent to [email protected]