In March 2008, Medicare issued regulations that would allow payments for unattended, home-based sleep studies used to diagnose sleep apnea. In response to those regulations, CMS expressed concern that many physicians who are involved in the supply of CPAP equipment would have an incentive to increase home sleep study referrals, in an effort to profit from the provision of CPAP equipment. To this end, CMS recently published new regulations addressing these concerns.

As of January 1, 2009, Medicare prohibits payment to the supplier of a CPAP device if the supplier or its affiliate (i.e., a person or organization that is related to another through ownership or compensation arrangement) is directly or indirectly the provider of the sleep test used to diagnosis the sleep apnea. This prohibition, however, does not apply when the sleep test used to diagnosis the sleep apnea is an “Attended, Facility-Based Polysomnogram.” An Attended, Facility-Based Polysomnogram includes: 

         [A] comprehensive diagnostic sleep test including at least electroencephalography,   electro-oculography, electromyography, heart rate or electrocardiography, airflow, breathing effort, and arterial oxygen saturation furnished in a sleep laboratory facility in which a technologist supervises the recording during sleep time and has the ability to intervene if needed.

In practice, the prohibition on payments to CPAP suppliers will not apply as long as the sleep test was conducted outside the patient’s home and in the presence of a technologist or provider monitoring the testing.