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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 Nationally Covered Indications 
 
Effective for claims with dates of service on and after March 3, 2009, the Centers for Medicare & Medicaid 
Services finds that the evidence is sufficient to determine that the results of the sleep tests identified below can 
be used by a beneficiarys treating physician to diagnose OSA, that the use of such sleep testing technologies 
demonstrates improved health outcomes in Medicare beneficiaries who have OSA and receive the appropriate 
treatment, and that these tests are thus reasonable and necessary under section 1862(a)(1)(A) of the Social 
Security Act. 
 
1. Type I PSG is covered when used to aid the diagnosis of OSA in beneficiaries who have clinical signs and 
symptoms indicative of OSA if performed attended in a sleep lab facility. 
 
2. Type II or Type III sleep testing devices are covered when used to aid the diagnosis of OSA in beneficiaries 
who have clinical signs and symptoms indicative of OSA if performed unattended in or out of a sleep lab 
facility or attended in a sleep lab facility. 
 
3. Type IV sleep testing devices measuring three or more channels, one of which is airflow, are covered when 
used to aid the diagnosis of OSA in beneficiaries who have signs and symptoms indicative of OSA if 
performed unattended in or out of a sleep lab facility or attended in a sleep lab facility. 
 
4. Sleep testing devices measuring three or more channels that include actigraphy, oximetry, and peripheral 
arterial tone, are covered when used to aid the diagnosis of OSA in beneficiaries who have signs and symptoms 
indicative of OSA if performed unattended in or out of a sleep lab facility or attended in a sleep lab facility. 
 
C. Nationally Non-Covered Indications 
 
Effective for claims with dates of services on and after March 3, 2009, other diagnostic sleep tests for the 
diagnosis of OSA, other than those noted above for prescribing CPAP, are not sufficient for the coverage of 
CPAP and are not covered. 
 
You can find this information in Medicare's National Coverage Determination (NCD): Sleep Testing for 
Obstructive Sleep Apnea (OSA) (240.4.1). 
 The rules say Criteria for Coverage of Diagnostic Tests: 
All reasonable and necessary diagnostic tests given for the medical conditions listed in subsection B are 
covered when the following criteria are met: 
 
        The clinic is either affiliated with a hospital or is under the direction and control of physicians. Diagnostic 
testing routinely performed in sleep disorder clinics may be covered even in the absence of direct supervision 
by a physician; 
        Patients are referred to the sleep disorder clinic by their attending physicians, and the clinic maintains a 
record of the attending physicians orders; and 
        The need for diagnostic testing is confirmed by medical evidence, e.g., physician examinations and 
laboratory tests. 
 
Diagnostic testing that is duplicative of previous testing done by the attending physician to the extent the 
results are still pertinent is not covered because it is not reasonable and necessary under 1862(a)(1)(A) of the 
Act. 
 
B. Medical Conditions for Which Testing is Covered 
Diagnostic testing is covered only if the patient has the symptoms or complaints of one of the conditions listed 
below. Most of the patients who undergo the diagnostic testing are not considered inpatients, although they 
may come to the facility in the evening for testing and then leave after testing is over. The overnight stay is 
considered an integral part of these tests. 
 
Home Sleep Testing 
 
    The physician services related to home sleep testing are covered for the purpose of testing a patient for the 
diagnosis of obstructive sleep apnea if the home sleep testing is reasonable and necessary for the diagnosis of 
the patients condition, meets all other Medicare requirements, and the physician who performs the service has 
sufficient training and experience to reliably perform the service. 
    (See Physician requirements below) 
    A home sleep test is covered only when it is performed in conjunction with a comprehensive sleep 
evaluation and in patients with a high pretest probability of moderate to severe obstructive sleep apnea. 
    Home sleep testing is not covered for persons with comorbidities (moderate to severe pulmonary disease, 
neuromuscular disease or congestive heart failure 
    Home Sleep studies are only covered for the diagnosis of Obstructive Sleep Apnea. They are not covered for 
any other sleep disorders (central sleep apnea, periodic limb movement disorder, insomnia, parasomnias, 
circadian rhythm disorders or narcolepsy) or for screening asymptomatic persons. 
 
You can find this information in Medicare's Local Coverage Determination (LCD): Polysomnography and 
Other Sleep Studies (L36861). 
 
If you want to read these Medicare rules, you can go to this website www.medicareappeal.com.