In this post I’m going to tell you about perhaps the greatest medical cost savings opportunity available today. Dubious? I don’t blame you. But give me 5 minutes to help open your eyes to one of our biggest health problems, hidden in plain sight.
In 2020, when I stepped away from a health technology business I’d helped build and grow for 7 years, I moved into a consulting role to serve companies poised to drive meaningful and necessary improvements in how we “do” healthcare. We must strike a balance between reducing medical costs and delivering truly meaningful health outcomes, despite many misaligned incentives.
One of my earliest projects took me on a journey to understand sleep health, and obstructive sleep apnea (OSA) in particular. Over the past 4 years, I’ve developed a clear vision of 1) the problem, 2) why the problem continues today, and 3) how to fix it (as well as why we must). Further, it’s become obvious that innovative health payors and at-risk providers will be the ones to solve this (more on that later).
There are decades of well-documented studies showing the negative health and cost consequences of untreated OSA, as well as the incredible (and rapid) health improvements and medical spend reductions when properly treated (email me for a list of top peer-reviewed publications).
I read through hundreds of studies, and thought about this a lot. I called my colleagues at plans like UnitedHealth Group, Aetna, Humana, BlueCross BlueShield, Cigna, and more. Sleep health wasn’t on the radar for a SINGLE PAYOR contact with whom I spoke. One medical director at Cigna was so shocked when I told him that 72% of his Type 2 Diabetics have OSA (most of them undiagnosed) he looked it up on the spot because he couldn’t believe such a staggering number was real and he’d been unaware.
Why was everyone missing this? I asked a lot of questions, researched, and considered the problem from the lens of many stakeholders. Once I put the pieces together it was plain as day, and I realized the story, in all its complexity, must be understood in order, but solved in reverse.
At a high level, I see this as a 3-part problem, which must be worked backwards to clarify and align incentives, and unlock significant population health improvements:
- The chronic condition with perhaps the highest rate of undiagnosed patients today.
Providers are only identifying and referring 20% of patients with OSA today. Those tend to be patients who have been suffering with the disease for up to ten years before it occurs to anyone to test them (during which time they are 3 – 4x more expensive). These patients are typically in the highest end of the cost spectrum (88% of patients with 4+ comorbidities have OSA). These are well-documented facts. Yet almost no one at the health plans I spoke with seemed to be aware of them, much less concerned. I had to understand why.How could it be that this costly, highly prevalent condition that exacerbates a lot of other conditions doesn’t show up on the payor’s priority list? For that matter, after reviewing all the data, I have to ask: Why hasn’t CMS mapped an HCC code to an OSA diagnostic code to account for the increase in care costs for people with sleep apnea (they surely have access to the same data as me)? Why hasn’t NCQA acted on the available research and developed quality measures related to OSA treatment adherence, even for the small percentage of patients we manage to diagnose today? - The care pathway with perhaps the highest failure rate in healthcare today.
I found one big answer to my questions related to the traditional OSA care pathway. First, we have a shortage of sleep specialists, so wait times post-referral are long (and that’s with only 20% of OSA patients going into the funnel today). Getting to diagnosis takes nearly 6 months (or more) and can cost as much as $8,000, involving many visits to a specialist office, a lab for sleep testing (almost always unnecessary), and a strip mall DME somewhere to pick up treatment equipment. Fully 50% of patients who get referred never make it to diagnosis or start therapy, due to the long and fragmented pathway.
With this rate of failure alone, I realized payors probably (and rightfully) view this as one big cost center, with little to no payoff. And let’s be honest. The best option for OSA treatment today, Continuous Positive Airway Pressure (CPAP), is not sexy. It’s an easy thing for patients to put down and stop using. Without personalized, ongoing care monitoring, coaching, and support, people simply quit. This brings us to part 3. - Treatment failures, obfuscated results, and woefully inadequate reporting.
No one truly owns responsibility for patient follow-up and treatment adherence (this is where a quality metric would be useful). For patients who actually DO start therapy (CMS data shows 65% of those diagnosed don’t), fewer than 20% will still be adherent in 12 months. For the patients who get and stay on treatment, there is no accountability for the DME to monitor and/or report back to providers and payors.So the organizations footing the bill (i.e.: you, dear reader) have no clarity on whether your patients are even using their therapy. You also lack visibility and reporting on your covered population’s adherence data. After the initial 90-day CMS-required compliance documentation to “lock in” and bill for resupply, DMEs lack accountability to demonstrate results. Which means no one is following the patient, or monitoring and supporting them through treatment, yet payors are covering treatment supplies without knowing if they’re even used by patients. How is this okay? It’s clear to me the care pathway has to work better for patients in order to drive results (ROI via medical cost and acute utilization reductions) for payors and at-risk providers, creating the kind of return that helps prioritize the issue. And really, how can we spend this much money on a diagnostic and treatment process without accountability? We have the knowledge, the technology, and the ability to do so much better!
A Payor’s Perspective. Thinking as a payor, I had to ask myself why would payors care about a problem that (today) is essentially a cost center with little to no ROI? The process is expensive. In the traditional OSA care pathway, patients are not properly supported and fail out at an unacceptably high rate. If I were a payor in this case, I suppose I, too, would throw prior authorization in the way to try to keep people out of the funnel.
This is when it dawned on me that we have to start at the end. I realized that, while we’re missing 80% of people with OSA who are sick and costly, we have to: 1) address the broken care pathway (make it faster, more accessible, and improve graduation rates), 2) create a scalable model (that can sustain an influx of referrals without lengthy wait times), while 3) delivering effective and personalized treatment protocols, with accountability for measuring and reporting on treatment usage so patients get better and payors can track and measure ROI to demonstrate the proven medical spend reductions and related health benefits post-treatment.
In fact, all of this has been done. ALL of these problems have been solved. The success story is where I had actually begun my journey.
Population Health-Level Solutions That Serve All Stakeholders.
I’m fortunate to have worked with several innovative sleep health solution providers in the last 4 years who have been doing incredible work to advance sleep medicine. These organizations are driving the changes we need to be implementing at the payor level to unlock the documented cost savings of $200 – $400 PMPM for these patients, once treated. (Those numbers may seem impossible, but are documented in an actuarial study I co-authored in 2022 and based on actual CMS data.)
One of these clients is consists of a team of talented engineers and scientists developing AI tools and ML algorithms with which we need to equip clinicians to unlock scalability and ongoing efficiencies in sleep medicine. In fact, they help power the tools another client, BetterNight, uses to implement a completely virtual end-to-end solution for OSA, from consult to sleep testing, diagnosis, and treatment, all available for patients while comfortably at home, and at a mere 25% of the cost of the current model.
BetterNight delivers targeted and personalized care management, coaching, and support, as well as treatment adherence rates 4 – 5x the industry standard. On top of that, they deliver population health reporting to payors and referring providers, including treatment utilization and adherence rates. In fact, they’ve been providing this level of follow through for patients longer than there have been payment models to support it. Talk about mission-driven healthcare!
You can switch to BetterNight, or any of the emerging models that offer virtual support, lowering cost and increasing accessibility. But always, always, demand reporting and accountability on patient adherence.
No matter what you save by virtualizing the care pathway, the only path to real health improvement and ROI is to ensure your patients are on their treatment for the long run.
If you’re a payor or at-risk provider and you’d like to discuss how to focus your outreach on your highest risk (most costly) members with the most to gain from health improvements and medical cost reductions, drop me a note and let’s discuss your specific population and how we can tailor the right solution for you. Reach out to me anytime. I love sharing what I’ve learned and helping plans put the pieces together to save money and improve the health of their membership.
Virtual, scalable, accessible, affordable, and personalized care that works has already been done and proven. We all deserve better sleep and better health, and we can save money enabling it. Ask me how!
P.S. And by the way, where exactly are the industry experts and regulators (who also need to be accountable)?
CMS. Again I ask, why isn’t OSA risk-adjusted? If you spend 5 minutes looking at the costs, you’d know enough to know OSA deserves an HCC code. My outreach here has yielded no follow-up, but sleep health, with all its costly consequences, deserves a seat at this table. When health plans truly understand the costs, I expect they’ll be pushing CMS directly for a risk-adjusted allowance for this very high-cost condition.
NCQA. If you spend another 5 minutes looking at the benefits of properly treating patients with OSA, you’d see that treatment adherence should be among our critical quality measures. Again, I’ve received little interest from the folks at NCQA when broaching this topic, but would urge Peggy and team to reconsider.
