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The rules say that plans must pay for a medical service or item if regular Medicare would pay for it in this case. 
You can find this rule at 42 Code of Federal Regulations (CFR) Section 422.101. 
 
The rules say that Covered Indications  
 
Please refer to Centers for Medicare & Medicaid Services (CMS) Internet-Only Manuals (IOMs) Publication 
100-02, Medicare Benefit Policy Manual, Chapter 15, Section 70 for sleep disorder clinics definitions and 
criteria for coverage of diagnostic tests, and medical conditions for which testing is covered.  
 
1. Sleep Apnea:  
 
Please refer to CMS IOM Publication 100-02, Medicare Benefit Policy Manual, Chapter 15, Section 70 B. 
Medical Conditions for Which Testing is Covered.  
 
Please refer to CMS IOM Publication 100-03, Medicare National Coverage Determinations (NCD) Manual, 
Chapter 1, Part 4, Section 240.4 Continuous Positive Airway Pressure (CPAP) Therapy For Obstructive Sleep 
Apnea (OSA) and Section 240.4.1 Sleep Testing for Obstructive Sleep Apnea (OSA) for indications and 
limitations.  
 
Abnormal breathing events in sleep apnea syndromes include apnea, hypopnea and respiratory effort related 
arousals (RERA). Apnea is a cessation of airflow for at least 10 seconds. Hypopnea is an abnormal respiratory 
event lasting at least 10 seconds with at least a 30 percent reduction in thoracoabdominal movement or airflow 
as compared to baseline, and with at least a 4 percent decrease in oxyhemoglobin saturation. RERA is defined 
as a period during sleep lasting at least 10 seconds during which severe narrowing of the upper airways with 
increasing respiratory efforts leads to electroencephalographic arousal from sleep without an appreciable 
reduction in airflow and oxygen saturation.  
 
Apneas can be classified as central, obstructive or mixed based on the presence of respiratory effort during the 
event. In obstructive apnea events, respiratory effort continues in the absence of airflow while in central apnea 
events, both airflow and respiratory effort are simultaneously absent. Mixed apnea events contain respiratory 
effort only during a portion of the apnea event.  
 For a diagnosis of OSA to be made, the following criteria must be met:  
 
A. Prior to sleep testing, the patient has a face-to-face clinical evaluation by the treating physician to assess the 
patient for OSA which must include, at a minimum, the following: 
 
Sleep history and symptoms including, but not limited to, snoring, daytime sleepiness, observed apneas, 
choking or gasping during sleep, morning headaches; and, 
Epworth Sleepiness Scale; and, 
Physical examination that documents body mass index, neck circumference and a focused cardiopulmonary 
and upper airway system evaluation. 
B. The patient has a covered sleep test that meets either of the following criteria:  
 
The apnea-hypopnea index (AHI) or Respiratory Disturbance Index (RDI) is greater than or equal to 15 events 
per hour with a minimum of 30 events; or, 
The AHI or RDI is greater than or equal to 5 and less than or equal to 14 events per hour with a minimum of 10 
events and documentation of:  
Excessive daytime sleepiness, impaired cognition, mood disorders, or insomnia; or, 
Hypertension, ischemic heart disease, or history of stroke  
OSA occurs when the muscles relax during sleep, causing soft tissue in the back of the throat to collapse and 
block the upper airway. This leads to partial reductions (hypopneas) and complete pauses (apneas) in breathing 
during sleep. Most pauses last between 10 and 30 seconds, but some may persist for one minute or longer. This 
can lead to abrupt reductions in blood oxygen saturation. OSA characterized by RERA events has been called 
upper airway resistance syndrome. In central sleep apnea, the airway is not blocked but respiratory 
coordination is impaired such that the brain does not signal the muscles of respiration to contract. All sleep 
apnea syndromes disrupt sleep, leading to excessive daytime sleepiness, fatigue and cognitive disturbances. 
OSA has also been associated with elevated risk for arterial hypertension, cardiac ischemic events, cerebral 
vascular accidents, insulin resistance and obesity.  
 
The diagnosis and severity of sleep apnea syndromes is established by the clinical evaluation and a positive 
PSG or HST. Staging of the severity of sleep apnea can be accomplished by utilization of the apnea-hypopnea 
index (AHI) which is defined as the average number of apneas and hypopneas per hour of sleep. The 
respiratory disturbance index (RDI) is another term used to establish the diagnosis of sleep apnea and stage its 
severity, which in sleep tests that measure sleep with EEG is defined as the average number of apneas and 
hypopneas, and RERA per hour of sleep. In Type III, Type IV HST, and in HST devices measuring three or 
more channels that include actigraphy, oximetry, and peripheral arterial tone where sleep is not measured, the 
RDI is defined as the average number of apneas and hypopneas per hour of recording.  
 
Positive airway pressure (PAP) therapy is a non-invasive technique for providing continuous (CPAP) or 
variable levels of air pressure from a flow generator, via a nose mask, through the nares. The purpose is to 
prevent the collapse of the oropharyngeal walls and the obstruction of airflow during sleep, which occurs in 
OSA. CPAP is the most commonly used treatment for OSA. The appropriate level for CPAP is best determined 
during a CPAP titration PSG. A titration PSG provides useful information on the appropriate level of CPAP 
during one single night in a dedicated environment. Other factors, such as body and neck or mandibular 
position, weight changes, and nasal obstruction may affect the appropriate CPAP level. Since these effects may 
change over time, automatically-adjusting positive airway pressure devices (APAP) were developed. APAP 
devices are designed to automatically match the treatment pressure to the patient's needs. APAP devices react 
to perceived treatment pressure needs by manufacturer specific processes such that the information derived 
from APAP may differ by device and manufacturer. Certain APAP devices may be used in an unattended way 
to determine a fixed CPAP treatment pressure for patients with moderate to severe OSA without significant co-
morbidities such as congestive heart failure, chronic obstructive pulmonary disease, central sleep apnea 
syndromes and hypoventilation syndromes. Similarly, certain APAP devices may be initiated and used in the 
self-adjusting mode for unattended treatment of patients previously diagnosed with moderate to severe OSA without the significant co-morbidities earlier described. A clear patient preference for APAP over manual 
CPAP has not been demonstrated by studies addressing the issue.  
 
Bilevel positive airway pressure (BPAP) is a positive pressure treatment alternative to CPAP that delivers 
different pressures during exhalation and inhalation. The inhalation pressure does not adapt to the patient's 
changing needs, as in the APAP, but the exhalation pressure can be adjusted lower. The ability to set different 
inhalation and exhalation pressures results in lower average airway pressures than those delivered by CPAP. 
Using lower pressures may reduce the incidence of side effects, such as the sensation of suffocation, difficulty 
exhaling, nasal congestion, etc. which contribute to patient noncompliance. A clear patient preference for 
BPAP over CPAP has not been demonstrated by studies addressing the issue.  
 
Split-Night Studies 
 
Split-night studies involve polysomnography in the first half of the night followed, if there is an abnormal 
frequency of apneas and hypopneas, by PAP titration for the remainder of the night. Polysomnography with 
PAP titration is indicated in patients with sleep apnea previously diagnosed by a clinical evaluation and either a 
positive PSG or a positive HST. Typically split-night studies are performed for two major reasons:  
 
When a positive diagnosis (described below) of sleep apnea (obstructive, central or mixed) can be made within 
the first 4 hours of polysomnography. This could include emergency protocols where patients apnea is not safe 
to continue testing without PAP treatment  
In patients with a prior history of OSA who need an updated polysomnography and PAP titration. 
For Positive Airway Pressure (PAP) titration, a split-night study (initial diagnostic polysomnogram followed by 
PAP titration during polysomnography on the same night) is an alternative to one full night of diagnostic 
polysomnography, followed by a second night of titration for the treatment of obstructive sleep apnea (OSA) if 
the following criteria are met:  
 
A positive test for OSA is established if either of the following criteria using the Apnea-Hypopnea Index (AHI) 
or Respiratory Disturbance Index (RDI) is met:  
 
AHI or RDI greater than or equal to 15 events per hour, or 
AHI or RDI greater than or equal to 5 and less than or equal to 14 events per hour with documented symptoms 
of excessive daytime sleepiness, impaired cognition, mood disorders or insomnia, or documented hypertension, 
ischemic heart disease, or history of 
There are at least three hours for PAP titration prior to the end of the test. 
2. Narcolepsy:  
 
Please refer to CMS IOM Publication 100-02, Medicare Benefit Policy Manual, Chapter 15, Section 70 B. 
Medical Conditions for Which Testing is Covered.  
 
Narcolepsy can occur with and without cataplexy (sudden, brief loss of muscle tone with retained 
consciousness precipitated by strong emotion).  
 
A clinical history, sleep diaries, PSG, and MSLT are key items in the evaluation of narcolepsy. PSG followed 
by MSLT is useful in confirming the clinical impression. Narcoleptic patients often report disrupted sleep, and 
PSG often confirms fragmented sleep patterns. Ordinarily, a diagnosis of narcolepsy can be confirmed by 
demonstrating mean sleep latency of 8 minutes or less and two or more sleep onset sleep periods on prior night 
PSG and MSLT.  
 
The diagnosis of narcolepsy is usually confirmed by PSG followed by a MSLT. The following measurements 
are normally required to diagnose narcolepsy: 
 PSG assessment of the quality and quantity of nighttime sleep and to exclude alternate pathology such as 
OSA; 
MSLT derived mean sleep latency; 
The number of REM onset sleep episodes on the PSG and MSLT.  
Initial PSG and MSLT occasionally fail to identify narcolepsy. Repeat PSG may be indicated if:  
 
The first study is technically inadequate due to equipment failure;  
The subject could not sleep or slept for an insufficient amount of time to allow a clinical diagnosis;  
Initiation of therapy or confirmation of the efficacy of prescribed therapy is needed; or  
The results were inconclusive or ambiguous.  
3. Other Respiratory Disorders: 
 
This diagnostic category includes breathing disorders that are not principally defined by obstructive or central 
apnea/hypopnea or the upper airways resistance syndrome.  
 
PSG is indicated for patients with neuromuscular disorder and sleep-related symptoms to evaluate symptoms of 
sleep disorder that are not adequately diagnosed by obtaining a sleep history, assessing sleep hygiene, and 
reviewing sleep diaries.  
 
PSG and HST are not indicated to diagnose chronic lung disease. Nocturnal hypoxemia in patients with chronic 
obstructive, restrictive, or reactive lung disease is usually adequately evaluated by oximetry and does not 
require PSG or HST. However, if the patients symptoms suggest a diagnosis of obstructive sleep apnea or 
periodic limb movement disorder, indications for PSG are the same as for those disorders in patients without 
chronic lung disease.  
 
4. Parasomnia: 
 
Please refer to CMS IOM Publication 100-02, Medicare Benefit Policy Manual, Chapter 15, Section 70 B. 
Medical Conditions for Which Testing is Covered.  
 
In parasomnia, PSG is routinely indicated: 
 
To assist with the diagnosis of paroxysmal arousals or other sleep disruptions that are thought to be seizure 
related when the initial clinical evaluation and results of a standard EEG are inconclusive. 
In evaluating sleep-related behaviors that are violent or otherwise potentially injurious to the patient or 
When evaluating patients with sleep behaviors suggestive of parasomnias that are unusual or atypical because 
of the patient's age at onset; the time, duration, or frequency of occurrence of the behavior; or the specifics of 
the particular motor patterns in question (e.g. stereotypical, repetitive, or focal).  
In parasomnia, PSG may be indicated under the following circumstances:  
 
In situations with forensic considerations (e.g., if onset follows trauma or if the events themselves have been 
associated with personal injury). 
When the presumed parasomnia or sleep-related epilepsy does not respond to conventional therapy. 
PSG is not routinely indicated in cases of typical, uncomplicated, and non-injurious parasomnias when the 
diagnosis is clearly delineated.  
5. Restless Legs Syndrome and Periodic Limb Movement Disorder: 
 
Restless legs syndrome is a neurologic disorder characterized by disagreeable leg sensations that usually occur 
at rest or before sleep and are alleviated by motor activity. Periodic limb movements are involuntary, 
stereotypic, repetitive limb movements that may occur during sleep and usually involve the legs and, 
occasionally, the arms. Periodic limb movements during sleep often accompany restless legs syndrome. 
Periodic limb movement disorder is a sleep disorder characterized by periodic limb movements that cause frequent arousals and lead to insomnia or excessive daytime sleepiness. The results of PSG studies from 
patients with severe restless legs syndrome often show prolonged sleep latencies, decreased sleep efficiency, 
increased number of awakenings, significant reductions in total sleep time, and decreased amounts of slow-
wave sleep. Patients with periodic limb movement disorder often have frequent periodic limb movements that 
are associated with arousals and awakenings, reduced total sleep time, and decreased sleep efficiency.  
 
PSG is indicated when a diagnosis of periodic limb movement disorder is considered because of complaints by 
the patient or an observer of repetitive limb movements during sleep and frequent awakenings, fragmented 
sleep, difficulty maintaining sleep, or excessive daytime sleepiness.  
 
You can find this information in the Local Coverage Determination (LCD) for Polysomnography and Sleep 
Testing (L33405). 
 
If you want to read these Medicare rules, you can go to this website www.medicareappeal.com.