Pumped up profits: Breast-pump venture milks Obamacare rule

Bojan Fatur | E+ | Getty Images

An Obamacare rule that entitles moms to free breast pumps and breast-feeding services from their insurers is opening new business opportunities for two breast-feeding supporters—and encouraging healthier babies and mothers at the same time.

The venture's pitch to insurance companies and big firms who self-insure: Use their service to obtain electric breast pumps for new moms, and then to provide those moms with lactation consulting services that will support them in the goal of continuing to feed milk to their babies the old-fashioned way.

"We're talking about serious savings" to insurance plans, said Joy Kosak, who with her sister Debra Abbaszadeh recently co-founded breast-pump provider Pumping Essentials, based in California.

"We can save them money," said Kosak about the insurers being offered the services of her new partnership with Isis Parenting.

Isis Parenting, which offers a range of parenting education, is offering breast-feeding consulting as their side of the partnership, either through "Pump Talk" classes at one of their bricks-and-mortar locations in three states, or via online instruction to new moms.

"We plan to expand our physical footprint nationally," said Heather Coughlin, CEO of Boston-based Isis Parenting, a decade-old company whose venture with Pumping Essentials launches the first week of August during World Breastfeeding Week. She said that Isis intends to build on its model of partnering with hospital and health systems to achieve that goal.

Studies show billions of dollars could be saved from reduced medical expenses for infants and moms if breast-feeding became more prevalent in the U.S., Kosak said. However, she added, of the 75 percent of moms who start out trying to breast feed when their babies are born, only 13 percent of moms are doing so by the time their babies reach six months of age.

"We need to get those numbers up," said Kosak, a 37-year-old mom of two.

(Read More: Big health bills drive bankruptcies)

Boosting the number of breast-feeding moms is a key reason that the new Affordable Care Act last year began mandating that insurers provide breast pumps and services to help them give their milk to their babies.

Since then, Pumping Essentials has contracted with six insurers in western states act as as go-between for them with insured women, fulfilling their orders for breast pumps.

"We then handle all the billing, so the mom doesn't have to handle anything," said Kosak.

Included with the pump is a free Simple Wishes Hands Free Bra that facilitates multitasking while pumping with a machine. Simple Wishes, which also sells those bras on Amazon.com and elsewhere, is a company Kosak runs with Abbaszadeh and two of her other sisters. (Altogether she has six sisters and two brothers, "and my mother breast fed all of us," she said with a smile.)

Kosak also has a pending deal with Aetna to be one of their breast-pump suppliers in all 50 states, as well as pending deals with Cigna for 10 western states, and Blue Cross and Blue Shield of Texas, Hawaii and Alaska.

Kosak said that her company helps insurers make sure policyholders are getting a high-quality double electric breast pump made by either leading manufacturer Medela or one made by Ameda, instead of directing moms to a durable medical equipment manufacturer for whom breast pumps are a low priority of concern in terms of sale, and an even lower priority in terms of giving the kind of advice to women Pumping Essentials offers as part of the deal.

The new healthcare law, popularly known as Obamacare, does not spell out what kind of breast pump should be available free of charge to moms, nor does it specify the value of the pump. That vagueness that has lead some companies to offer cut-rate pumps, while others offer pumps worth $2,500, Kosak said.

Kaiser Permanente sparked an online backlash among moms last year when it was revealed that it was offering manual breast pumps to its policyholders, arguing that manual pumps met the needs of most moms, and that the insurer would offer electric models if they were deemed medically necessary.

"You can imagine how upset working mothers were," said Kosak, noting the labor required to manually pump, compared to electrically.

She said that during a recent insurance trade event, a Kaiser executive approached her and "was interested in exploring something with Pumping Essentials."

(Read more: We Americans are healthy, really!)

Deborah Abbaszadeh, left, and her sister Joy Kosak
Source: Pumping Essentials
Deborah Abbaszadeh, left, and her sister Joy Kosak

On Friday, in response to a query from CNBC about its policy of offering primarily manual pumps, a Kaiser Permanente spokeswoman revealed, "Kaiser Permanente is currently working toward providing coverage of double electric pumps for our members."

(Read More: Healthcare inflation slows)

In addition to the question of the value of breast pumps, Kosak and her new partner Isis Parenting are also facing the lack of guidance under Obamacare about how much breast-feeding consulting must be covered by insurers.

Some insurers are only offering free breast pumps, while others will also reimburse for breast-feeding consulting only if it is provided for by recognized payees under their plans—such as doctors. That means lactation consultants might not be eligible for payment. Kosak said that's a challenge, given the importance of making sure moms are comfortable breast feeding so that they continue doing so.

"It's not something that's intuitive," she said about breast feeding. "Many moms need support."

"We're trying to figure out the financials of offering that [consulting] at no cost, while insurance plans are figuring out how to reimburse for lactation services versus lactation supplies," Kosak said. "My goal is to make this as zero-cost to the moms as I can, but it all depends on the reimbursement that the insurance plans give me."

"With plans that only reimburse $130, we can't possibly bundle in everything at no cost to the mom," she said, suggesting mothers could pay $20 to $30 to access the 'Pump Talk' consulting offered Isis Parenting.

Coughlin, the Isis Parenting CEO, said the breast-feeding class offered by her company "is reimbursable" if receipts are submitted to insurers.

Coughlin is bullish about the potential revenue from her company's partnership with Pumping Essentials, saying the bundling of the pump, bra and classes offers a unique solution to insurers now compelled by law to provide breast-feeding equipment and services to moms.

"Our goal is to be jointly connected with all the major commercial insurance companies, and, frankly, all the state Medicaid agencies as quickly as possible," Coughlin said. "We would like to be known as 'the' resource for fulfilling this mandate."

By CNBC's Dan Mangan. Follow him on Twitter @_DanMangan