The High Cost of a Good Night's Sleep
Business + Economy

The High Cost of a Good Night's Sleep

On a Monday night in December, Lauretta Martin, 47, visited the sleep lab at the National Rehabilitation Hospital in Washington, D.C., for the second time. On her first visit, Martin, a heavyset woman whose husband reports she is a loud snorer, was diagnosed with sleep apnea. This time, she was being fitted for a CPAP machine, which helps keep a snorer's airway open throughout the night.

The sleep lab has six testing rooms, each of which looksjust like a room at a Holiday Inn, with striped wallpaper, a floral bedspread,framed prints of the seaside and free wifi.

“They have a brochure that says it’s just like being in ahotel room, and it is,” says Martin, sitting on the edge of her bed wearing apair of soft grey pajamas and watching a football game on her flat-screen TV.Aside from the two-dozen colorful electrodes taped to her body to monitor herevery motion and the scuba-style mask on her face to enhance her breathing, shelooked ready for a cozy night of slumber.

In the tech room a few doors down, a professional sleeptechnician observed her over a video monitor, testing the electrodes andpreparing to listen in to the sounds of her sleep.

Snoring was once considered a simple annoyance for bedpartners, but there is a growing awareness in the medical community that thegrunts and snorts of noisy sleepers can also be a sign of sleep apnea, acondition shown to increase the risk of numerous serious illnesses, includingheart disease, stroke and dementia. Critics, however, worry that overnight tests to diagnose apnea,particularly those done in sleep labs, may be overprescribed at great cost tothe health care system.

Testing can be a lucrative business, and labs have popped upin free-standing clinics and hospitals across the country. Over the pastdecade, the number of accredited sleep labs that test for the disorder hasquadrupled, according to the American Academy of Sleep Medicine (AASM). At thesame time, insurer spending on the procedure has skyrocketed. Medicare paymentsfor sleep testing, for example, increased from $62 million in 2001 to $235million in 2009, according to the Office of the Inspector General.

Sleep apnea occurs when the muscles in the back of thethroat relax, causing an airway obstruction that can stop a person’s breathingfor several seconds or even minutes. It causes restless sleep and sometimes dangerously-low blood oxygenlevels. The disorder can be diagnosed by monitoring a snorer’s sleep patterns,either in an overnight visit to a sleep lab or at home using a portable testingdevice. It is then often treated with a CPAP machine, which helps keep asnorer’s airway open during sleep.

Sleep apnea has likely gotten more common as the populationhas grown older and more obese, two major risk factors for apnea, and theNational Institutes of Health estimates that more than 12 million Americanssuffer from the disorder. Many arenever diagnosed.

“I think the medical community is sort of dropping the ball”on apnea, explains Dr. David Gross, medical director of the sleep lab at theNational Rehabilitation Hospital. “It’s just sad when you walk through thehospital and you see these patients with heart failure — the person might be 35years old, he’s 350 lbs — but no one’s thinking that he has sleep apnea, whichhe statistically does.” He saysmore than three-quarters of the patients who come to the lab are diagnosed withapnea.

But the testing isn’t cheap: each night at a hospital sleeplab can cost $1,900 and is usually mostly covered by a patient’s healthinsurance. Some patients, including Martin, end up spending two nights at thelab – one to test for apnea, and the second to try the CPAP machine.

Dr. Fred Holt, an expert on fraud and abuse and the medicaldirector of Blue Cross Blue Shield in North Carolina, says some patients aren’thaving basic exams done first and are therefore being prescribed expensivetests they don’t need. Not everyone who snores has a chronic disorder, henotes.

In other cases, Holt says the labs prescribe CPAP machinesright away without first suggesting other strategies like losing weight orsleeping on your side, which can also reduce apnea.

“We are spending more and more money on sleep testing andtreatment, and like anything else in health care, there are unscrupulous peopleout there who are more than happy to do testing and treatment that might be ofquestionable value,” says Holt. “This might be because of naiveté on the partof the physician, or unfortunately, it could be done for the sake of improvingthe cash flow of one’s business.”

It’s no secret that the sleep business can be lucrative forphysicians. A website for Aviisha, a sleep testing company, has a section forphysicians showing a picture of a doctor with a stack of money in his lab coatpocket. And in February, the AASMis offering a seminar on the “business of sleep medicine for physicians” at agolf resort in Arizona.

Dr. Nancy Collop, president of the AASM, says that whilemany sleep centers offer comprehensive care for sleep disorders, others arelargely focused on overnight sleep testing. “A lot of people have gotten intothe sleep business specifically to do that procedure,” she explains. The goalof the AASM’s accreditation process, she says, is to make sure sleep labs areoffering more because “many patients may not even need a sleep study.”

Helen Darling, president of the National Business Group onHealth, which represents large employers offering health insurance to theirworkers, says the tests are driving up the cost of premiums. “This is a good example of somethingwhere we have technology, we have financial incentives to use more of it thenwe have historically done, you have enough problems including a growing obesityepidemic, and you sort of put together the so-called perfect storm for drivingup overuse and health care cost." She says doctors should focus instead on common-senseapproaches to sleep apnea, like losing weight, before turning to expensivetesting and medical devices.

Another option are home sleep tests, which costs less than afifth of the cost of a lab test, and are considered effective for mostpatients. Medicare began paying for home sleep tests in 2008, but the testshave had only modest growth.

“I believe lab tests, as opposed to the home tests, arebeing wildly overprescribed,” says Mike Backus, senior vice president ofAmerican Imaging Management, a subsidiary of Wellpoint. Right now, he says, 99percent of the sleep tests given to Wellpoint patients are done in the lab, but“it should be 70 percent at home and 30 percent in the lab.” Backus adds that the majority of patients who are diagnosedwith apnea and then given CPAP machines stop using them within the first year.

Some insurers, including Wellpoint, are changing the waythey pay for sleep testing to curb the costs. Many now require a specialpre-authorization. They also ask the doctor whether a patient qualifies for ahome sleep test instead of one at the lab. Those changes are now widespread among Massachusettsinsurers and are having an effect on the sleep industry in the state.

Dr. Lawrence Epstein, the chief medical officer of SleepHealthcenters in Massachusetts, says the labs have already experienced a 20percent drop in the number of patients coming in for testing. While the pastdecade was focused on industry growth, he says it’s “now going to be aboutconsolidation and provision of better quality, more efficient care.”

Sleep Healthcenters has shut down three of its 15 sleeplabs, and more closures may be on the way. Epstein says the company is focusingmore on “sleep wellness,” including treating and managing sleep disorders, andless on testing. The key, he explains, is to become more efficient withoutdecreasing access to care for patients who need it.