AllStar challenges CPAP remarks

Sunday, July 31, 2005

CONCORD, Calif. -- When Michael Kuller, president of Allstar Oxygen Services, heard that U.S. Health and Human Services Secretary Michael Leavitt questioned the pricing on one of Allstar's bread and butter products, the straight talking provider did not sit idly by. Kuller wrote Leavitt a letter carefully outlining his gripe.
"[Leavitt's comments] were so misinformed and off-base that I felt a need to respond," said Kuller. "Here's the guy who is in charge of health and human services and he sounds like he is clueless about how managed care and the DME industry work."
The source of Kuller's frustration was a personal anecdote that Leavitt told during speech on healthcare technology at Stanford University that was reported by the San Francisco Chronicle.
According to the article, Leavitt, who has had sleep apnea for years, talked about his experience buying two replacement CPAP devices, one for home and one for travel. His insurance company agreed to buy one unit, which cost $985, leaving his share at about $180. Leavitt then said he found the same device on the Internet for $390, but when he told the insurance company about it they said they had a contract to buy its CPAP devices from one particular vendor.
Leavitt explained that he finally paid the $180 co-payment for the first CPAP and bought the second from the Internet vendor.
"There are many reasons your insurance company would not purchase a CPAP machine from the Internet company with your health care dollars," said Kuller in his letter. "While they may have saved a few bucks in the short run, it would have ended up costing them and the health care system much more in the long run.
Many of Kuller's reasons for the price discrepancy centered on the services his small company provides, including home visits and consultations by certified respiratory therapists, third party billing and accreditation and business association memberships.
"There is no reason for the Internet company to get accredited because they are selling this stuff at rock bottom prices on the Internet," he said. "Some of these companies are getting these products through legitimate sources. Others, who knows where the stuff is coming from, it could have fallen off the back of the truck."
Kuller explained that there is room for Internet suppliers in the CPAP business. He often refers patients paying out of pocket to the Internet if they do not require services, like mask fittings.
"For me, mask fitting is the key to making CPAP work for the patient," he added. "Nationally, patient compliance for CPAP therapy runs around 50%. With our services, out compliance rate is over 90%."
In his speech, Leavitt also questioned the legitimacy of his insurance company's required two-month rental period for CPAP units. Leavitt said he argued the retail period for seven months and eventually left that company.
"This rule saves money," argued Kuller. "I have not come across an insurance company that doesn't do it that way."