From - G2 Compliance Advisor If your lab performs sleep studies on Medicare patients, beware. It is now a high-priority target for federal fraud and… . . . read more

If your lab performs sleep studies on Medicare patients, beware. It is now a high-priority target for federal fraud and abuse enforcement. Here is a look at the risk you face and what you can do to manage it.

Who Is At Risk?

Target providers include independent and hospital labs that perform polysomnography, a sleep study in which patients sleep overnight while connected to sensors measuring brain waves, blood oxygen flow and other parameters. The study is commonly used to diagnose obstructive sleep apnea (OSA) and evaluate the effectiveness of using positive airway pressure (PAP) devices to manage the condition.

When the polysomnography indicates that a patient has a sleep disorder, the lab will often conduct a PAP titration study as well. Patients may also receive a PAP device for home use after the titration study. In so-called split-night cases, both studies are performed on the same patient on the same night—the polysomnography followed a few hours later by the PAP titration.

Medicare Coverage & Billing Rules

The most common code for billing sleep order tests is HCPCS 95810. As with most diagnostic services, polysomnography consists of two components:

  • The technical component covering administration of the test, signified by HCPCS modifier code -TC; and
  • The professional component covering the provider’s interpretation of the test results, signified by code -26.

Failure to list either modifier is an indication that the lab is billing globally for both the technical and professional components. HCPCS 95811 is the code for both PAP titration and split-night services.

OIG Lowers the Boom on Sleep Clinics

Incomplete and missing documentation of sleep testing procedures has become a recurring problem for sleep testing labs, one that has gathered increasing attention from the Office of Inspector General (OIG). The seal was broken in a January 2013 case in which Florida-based American Sleep Medicine LLC agreed to pay $15.3 million to settle claims for falsely billing Medicare and TRICARE for sleep diagnostic services. Since then, the OIG has zeroed in on billing for sleep testing, even listing it as an item in its 2017 Work Plan.

The most recent target was another Florida clinic called Sleep Health. The OIG audited 100 random Medicare patients who had received polysomnography services over two years. The findings, listed in the OIG’s September report: The Fort Myers-based clinic received $48,934 in overpayments—$141,339 in total when extrapolated over the 3-year recovery period.

In addition to paying back that money, the OIG called on Sleep Health to work with the Medicare administrative contractor (MAC) to return the estimated $345,593 in overpayments it allegedly received outside the 3-year recovery period.

Ensure Proper Billing and Documentation of Sleep Tests

According to Local Coverage Determination (L29949), before sleep testing is performed, two sets of documentation are required:

The treating physician must perform a face-to-face clinical evaluation documenting the need for testing that includes a minimum of three things:

  • The patient’s symptoms and sleep history;
  • An Epworth sleepiness scale; and
  • A focused cardiopulmonary and upper airway evaluation.

The treating physician must then write an order for the study.

The lab that performs the study must keep a record of the attending physician’s face-to-face evaluation and written order.

Thus, in the Sleep Health case, the OIG identified a pattern of what it believed to be documentation breakdowns affecting 63 patients with 143 corresponding lines of service. For 116 lines of service, the problem was that the treating physician’s clinical evaluation was incomplete because at least one of the three required elements was missing. For 27 lines of service, the OIG contended that there was no documentation of the clinical evaluation, order or technician’s report.


It should be stressed that Sleep Health has vigorously refuted the OIG’s findings. But more often than not, providers accused of improper billing end up settling these cases rather than risk slugging it out in court. And even if Sleep Health ultimately is vindicated, simply having to defend against these charges is likely to take a toll. Bottom Line: If you bill Medicare, Medicaid or another federal health care program for polysomnography services, make sure you implement controls to ensure those tests are adequately documented.

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