How DME's determine cpap machine prices

I've started this as a new thread because it's new information
DME's are not allowed to price new machines lower than what the set insurance reimbursement would be. This is the law in my state (Alabama) -- it may be similar in others. In Alabama the machine insurance reimbursement rate is $806.00 and the humidifier is $197.00. The machine rate includes the head gear. That's a total of $1003.00. However, the DME's can sell used or display models cheaper. In order to determine a price there is a blue book (like used automobiles) --- the newer the machine the greater the price. Only DME's have access to that book (wish we could find it somewhere online). In my case the machine I bought had only been used a couple of times as a display ---- therefore I was allowed a $53.00 discount from the insurance reimbursement rate. I learned this from a local DME other than the one I purchased my machine from. He was willing to call other stores in the state to find an inexpensive machine for me, but I declined the offer because I knew I wasn't going to purchase it. So, if I had done my homework before purchasing I would have saved a lot of money --- even through local DME's.

I would have asked to see the pertinent state statue. Not that I don't trust what some DME tells me..
I once had an RT tell me it was against a Federal law for patients to have the software..this was back when ResScan and Encore was opened sold online by places like cpap.com. Either they are idiots or they think we are or both.

Your prescription from you doctor is all you need to order a machine and supplies online. Your insurance may or may not pay for it, but you can get a better deal since you are going to be charged rent for a period of months or a deductible that will sometimes pay the bill.

Buying your own can actually save money, especially if they try to give you a non data capable machine. You will want to monitor the data at some point to determine your results. Otherwise, you have no way of knowing if you could be doing better in your therapy.

I'd talk to the insurer and see what your out of pocket outlay will be. Take that number and shop for the machine of your choice. Then you will know the best way to continue.

If you buy certain models, you can use open source software, such as Sleepyhead or Onkor for a donation fee, saving you the price of the software from the manufacturer.

jess wrote:I've started this as a new thread because it's new information
DME's are not allowed to price new machines lower than what the set insurance reimbursement would be. This is the law in my state (Alabama) -- it may be similar in others.

Or it may not be true at all. Either way, it's still better than $2500.

In Alabama the machine insurance reimbursement rate is $806.00 and the humidifier is $197.00. The machine rate includes the head gear. That's a total of $1003.00. However, the DME's can sell used or display models cheaper. In order to determine a price there is a blue book (like used automobiles) --- the newer the machine the greater the price.

A new S9 Autoset from CPAP.com would cost $1072. Now, that price is somewhat inflated because ResMed doesn't allow retailers to offer discounts, but it's a nation-wide scam instead of a special deal just for you.

Only DME's have access to that book (wish we could find it somewhere online). In my case the machine I bought had only been used a couple of times as a display ---- therefore I was allowed a $53.00 discount from the insurance reimbursement rate.

I suppose that's state law too. If you can get all this in writing, or on tape, a potential charge of fraud would be a good bargaining chip. Of course, you'd have to choose your words carefully to avoid committing extortion.

Didn't your original purchase include a mask, though? Seems like every time your DME opens his mouth, things get a little stranger.

Bottom line is that it would be worth returning the $53 "discount" to get a brand new machine with full data. Mask plus band new top of the line APAP for a grand is about the going rate. If you can back him into that corner, take the deal. If you get the S9 Autoset and a mask for $1003, you actually are getting a good deal, at least compared to what you can get buying new equipment online. If they are offering that, I think you rattled them in the second round.

DME's are not allowed to price new machines lower than what the set insurance reimbursement would be. This is the law in my state (Alabama) -- it may be similar in others. In Alabama the machine insurance reimbursement rate is $806.00 and the humidifier is $197.00. The machine rate includes the head gear. That's a total of $1003.00.

Like others, I'm skeptical about this so-called regulation or law. I'd want to see it in black and white before I'd believe it. DME's make stuff up all the time, or they think there's a law when there isn't. A lot of "information" on medical reimbursement in the medical community is rumor and innuendo.

And since each insurer negotiates it's own price with a DME, WHICH insurance reimbursement are they basing prices on??? Medicare in your state pays $101 per month X 13 months for the machine ($1313) and purchases the humidifier outright for $72.55. So where exactly did the DME get the rates you were quoted?

Bottom line is that you cannot take a DME's word for ANYTHING, they tend to be less honest than used car salesmen, if that's even possible. Always do your own homework. You need to understand what--if anything--your insurance will pay, what they will pay for, and what your out of pocket share is. Please see "What you need to know BEFORE you meet your DME" in my signature below for more info.

How do they determine prices?

Step 1: Arrange a meeting between the DME and the insurance company.
Step 2: Settle on a price that is high enough that the DME is happy and low enough that the insurance company is happy.
Step 3: Repeat for all insurance companies the DME contracts with.
Step 4: For patients without insurance, set a "retail" price which is significantly higher than the actual cost of the machine and rake in the dough (provided that the patients don't know they can get the machine cheaper online).

jess wrote:... DME's are not allowed to price new machines lower than what the set insurance reimbursement would be. This is the law in my state (Alabama) -- it may be similar in others. ...

It may or may not be state law, however, many, if not most, insurances do insist on a clause such as this when they contract w/a local DME provider.

... In order to determine a price there is a blue book (like used automobiles) --- the newer the machine the greater the price. Only DME's have access to that book (wish we could find it somewhere online). ...

Ooooh, now THIS tickles our interest. Wouldn't it be nice to get our hands on a copy if it is true??

And by the way, it is my understand that it is the insurance companies, not the local DME providers, who pretty much set the rates they contract at.

It wasn't my DME that told me about the "blue book". This morning I called a local teaching hospital who has a sleep clinic to see who they refer their patients to for machines. They gave me 3 names (my DME was one of them). I called a different DME and got a young guy. He told me about the contract with my insurance company that prohibits selling new machines for less than what the insurance company pays. My own DME had also told me that. However, this guy was really nice. He told me that he doesn't have the used machine that I want, but that he would call Montgomery, B'ham etc to see if he could find me one. When we talked about price he told me about the "blue book". However, he told me that he could probably find me a psr1 machine for around $200.00. I'll go over to his office and try to look at the book (if there really is a book). Since I payed cash for this machine I think that sometime in the next year I'll go ahead and have the sleep study ---- then I'll get the doctor to order me the most expensive machine available and we'll make the bad DME pay for it with my insurance. It will be free for me. I'll let you know when I get the name of the phantom book.

If it's midnight and a local DME tells you it's dark outside, go and check.

jess wrote:He told me that he doesn't have the used machine that I want, but that he would call Montgomery, B'ham etc to see if he could find me one. When we talked about price he told me about the "blue book". However, he told me that he could probably find me a psr1 machine for around $200.00.

That would be a very good price for a full data machine. Remember, to many DMEs, data means compliance data. Also, when buying a used PR1, be aware that the original version is noisy compared to the later revisions. It also doesn't have a backlight for the LED screen.
viewtopic.php?f=1&t=61099&st=0&sk=t&sd=a

If you're looking for a used machine, secondwindcpap.com is worth a visit. Their prices are higher than the best deals on Craigslist, but the machines have less than 500 hours on them and have been professionally cleaned the way they would be in a hospital. Some even come with the same warranty as a new machine. This shop is the polar opposite of the first DME you dealt with. Where many DMEs treat their customers like marks, SecondWind will treat you like a neighbor.

archangle wrote:If it's midnight and a local DME tells you it's dark outside, go and check.

jess wrote:He told me about the contract with my insurance company that prohibits selling new machines for less than what the insurance company pays.

There probably is no law requiring them to not sell for less than what they sell to insurance for. There's probably not even a clause in the insurance contract requiring them to not sell for less money.

That would be illegal restraint of trade, monopoly practices, etc.

However, they're perfectly free to put a clause in the contract saying that the DME has to charge the insurance company or Medicare/Medicaid the lowest price they sell to any customer. That's perfectly legal.

Ain't law in the US great? Aren't you glad they're protecting us.

He told me about the contract with my insurance company that prohibits selling new machines for less than what the insurance company pays.

OK, wait, on rereading this, there's something I missed the first time around. You said "the contract with MY insurance company that prohibits selling new machines for less than what the insurance company pays."

That's absolutely true. If you have insurance, the DME must sell the machine for the price it has agreed upon with YOUR insurer--no more, no less. Your insurer may pay an agreed upon percentage of that price on your behalf, assuming you have met your deductibles and co-pays. If you have not met your deductibles, then you will be responsible for the entire CONTRACTED amount--but no more than that amount, and by contract, the DME can't sell a NEW machine to you for less. Your insurance company has in essence negotiated the price of a new machine for you.

I think we all misunderstood your first post to mean that nobody in Alabama could sell a machine for less than some mystery "insurance price" even if you have no insurance and are paying out of pocket. Now that I reread the above statement, I realize you were saying something else. Sorry for the misunderstanding.

Also, I think your DME IS being helpful, in that he has to offer you a new CPAP for the contracted price, but he is willing to go to bat for you and find you a used machine for a much lower price. That's just fine. Be certain, since you're paying out of pocket anyway, that you get a data capable machine--you will be really glad you did. Not all PR S1's are data capable--avoid the CPAP Plus because it has NO efficacy data.

Janknitz wrote:

He told me about the contract with my insurance company that prohibits selling new machines for less than what the insurance company pays.

OK, wait, on rereading this, there's something I missed the first time around. You said "the contract with MY insurance company that prohibits selling new machines for less than what the insurance company pays.".

I think we all misunderstood your first post to mean that nobody in Alabama could sell a machine for less than some mystery "insurance price" even if you have no insurance and are paying out of pocket. Now that I reread the above statement, I realize you were saying something else. Sorry for the misunderstanding.

Actually, both ideas are in the thread. See what the DME told her back in the first post.

jess wrote:I've started this as a new thread because it's new information DME's are not allowed to price new machines lower than what the set insurance reimbursement would be. This is the law in my state (Alabama)

OK - clarification. I have insurance, but my insurance will not pay for a machine unless I have a sleep study ---- I can not have the study done so the doctor wrote me a prescription without a study. He and I understood that I would have to pay cash for the machine. After owning the machine a couple of weeks I asked the DME to bill Blue Cross so that I could get a denial to appeal. They said that their contract with Blue Cross does not allow billing without the sleep study. It was after that that I began to realize how over charged I was ---- learned that from this board. Then I was told by two different DME's that Blue Cross does not allow them to sell new machines to anyone (not just me) for less than the current insurance reimbursement rate. I posted on another thread that I don't think I can go much further with this. I'm not going to get anywhere with the DME. Therefore, I plan to have a sleep study later in the year and then get the doctor to write a prescription for the most expensive machine available ------ I'll make sure to purchase it from my friendly DME and they'll be stuck with the standard Blue Cross reimbursement. That way my loss will be cut in half. This board has taught me lots!!!