Cracking The Code: Reducing Medical Spend While Creating Lasting Health Improvements

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 lead for 7 years, I moved into a consulting role with an aim to serve other companies poised to drive meaningful and necessary improvements in how we “do” healthcare. We must strike a balance between reducing the dollars we spend on medical costs and delivering truly meaningful health outcomes (in spite of our myriad misaligned incentives).

One of my earliest projects took me deep into a journey to understand sleep health, and obstructive sleep apnea (OSA) in particular. During the past 4 years, I have gained a VERY clear vision of 1) the problem, 2) why the problem continues today, and 3) how to fix it (as well as why we must). Furthermore, it’s clear to me 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) upside to both health and medical spend reductions when properly treated (email me for a list of top peer-reviewed publications).

I read dozens of these, and then thought about this a lot. I called many 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 72% of his Type 2 Diabetics have OSA (most of them undiagnosed) he looked it up on the spot because he couldn’t believe it when I first told him.

Why was everyone missing this? I asked a lot of questions and researched and considered the problem from many angles. Once I had put the pieces together it was plain as day, and I realized the story, in all its complexity, must be told in order, but solved in reverse.

At a high level, I see this as a 3-part problem, which I’ve come to believe must be worked backwards to align incentives and achieve significant population health improvements:

  1. The chronic condition with perhaps the highest rate of undiagnosed patients today.
    Providers are only flagging/referring 20% of patients with OSA today. And those patients 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 often at 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 seems to be concerned about it. I needed to understand why? How can it be that this devastating, costly, highly prevalent condition doesn’t show up on the payor’s priority list? For that matter, after reviewing all the data, I have to ask: Why doesn’t CMS have an HCC code to account for the incredible increase in care costs for people with sleep apnea? Further, why hasn’t the 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?
  2. The care pathway with perhaps the highest failure rate in healthcare today.
    I discovered that one big answer these questions related to the traditional OSA care pathway. It’s fragmented, and has too many touchpoints (referring provider, rendering provider, DME), too many in-person visits requiring travel, time, and cost to patients, with insufficient access (we have a shortage of sleep specialists), and no one truly responsible for patient follow up and treatment adherence.Fewer than half the patients referred and diagnosed even start treatment. 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, a strip mall DME somewhere to pick up treatment equipment, and of those who DO start therapy, fewer than 20% will still be using it in 12 months. With this rate of failure, I realized the payors must view this as one big cost center, with little to no payoff. No wonder it hasn’t been a priority!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. It became clear to me that the care pathway has to work better for patients, which can then drive results for payors and at-risk providers, creating the kind of return that helps prioritize the issue.
  3. Obfuscated adherence rates and treatment failures.
    Finally, for the patients who actually start and remain on treatment, there is no accountability for the DME to monitor and/or report back to providers and payors. So the entities paying the bills have no visibility whether the patients are even using their treatment, let alone how many nights and for how many hours.After the initial 90 day CMS-required compliance documentation, DMEs simply don’t have any accountability requirements to “lock in” and bill for resupply. No one is monitoring the patients, no one is holding DMEs accountable for outcomes, and payors are covering treatment supplies but never knowing if patients are actually using them, because DMEs aren’t tracking or reporting on their treatment utilization rates.How can we spend this much money on a diagnostic and treatment process and not require accountability? We have the knowledge, the technology, and the ability to do so much better.

EUREKA! The light went off. Why would payors care about a problem that (today) is essentially a cost center with little to no ROI? Patients go into a lengthy, expensive funnel with very low success rates that yield little by way of improved outcomes or cost savings. 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. We have to start at the end. I realized that, while the 80% of people with OSA we don’t even know about are both very costly and very important (and getting sicker every day), we have to: 1) address the broken care pathway, 2) create a scalable model, while 3) delivering meaningful treatment adherence protocols, with accountability to measure actual treatment usage rates so patients get better and payors can track and measure ROI. In fact, this has all been done. ALL of these problems have been solved.

The Solution(s)

I’m fortunate to have worked with several innovative sleep health solution providers in the last 4 years who have been doing the right things, the right way, sometimes without available payment models to even compensate their efforts. These folks 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 rife with talented engineers and scientists developing AI tools and ML algorithms that power the kinds of improvements we need to equip clinicians and payors with.

Another built a completely virtual end-to-end solution for OSA, from initial consult to home sleep testing, diagnosis, and treatment setup and training, all conducted with patients who never have to leave home, and at a mere 25% the cost of the current model. Further, they have been delivering targeted and personalized care management, coaching, and support, as well as treatment adherence rates 4 – 5x the industry standard. On top of that, they provide regular reporting to payors and referring providers on their patient populations, including 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 this provider, 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. The only way to unlock real health improvements and ROI is to maintain accountability for keeping patients 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.

P.S. And by the way, where exactly are the industry experts and regulators (who also need to be accountable)?

CMS. 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 the table here, and health plans that understood the costs should really push on CMS to provide an 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.

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!