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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 state that for a diagnosis of obstructive sleep apnea (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. 
 
You can find this information in the Local Coverage Determination (LCD) Polysomnography and Sleep 
Testing L33405. 
 
If you want to read these Medicare rules, you can go to this website www.medicareappeal.com.