HHS OIG Data Brief  September 2016  OEI-12-15-00370 
 
Escalating Medicare Billing for Ventilators Raises Concerns 
 
The Centers for Medicare & Medicaid Services (CMS) and 
its contractors have expressed concerns about the recent 
AT A GLANCE  substantial increase in Medicare billing for noninvasive 
pressure support ventilators.1, 2  In addition to describing 
the current payment trends, this data brief explores 
Medicare paid 85 times more 
factors possibly contributing to the billing surge.  This 
claims for noninvasive pressure 
information provides useful context for CMS as it 
support ventilators in 2015 than 
develops further policy and refines its program integrity 
it did in 2009, leading to a rapid 
efforts in this area. 
increase in expenditures. 
 
In recent years, ventilator technology has evolved so that 
Growth in claims for these 
it is possible for a single device to treat numerous 
types of ventilators was driven 
conditions by operating in several different modesi.e., 
primarily by three suppliers. 
basic continuous positive airway pressure (CPAP) mode, 
respiratory assist device (RAD) mode, and traditional 
Diagnoses on these claims have 
ventilator mode.3  This creates an opportunity for abuse, 
shifted dramatically from 
whereby suppliers could bill Medicare for the device as if 
neuromuscular to respiratory 
it were being used as a ventilator, when use of a lower 
conditions. 
cost CPAP device or RAD is indicated based on the 
Medicare paid $25 million for   patients medical condition.4, 5  Because of concerns 
noninvasive pressure support  about possible abuse related to ventilator claims, two 
ventilator claims with indicators  Durable Medical Equipment (DME) Medicare 
of inappropriate billing.  Administrative Contractors conducted prepayment 
reviews that resulted in the denial of more than 
90 percent of claims for noninvasive pressure support 
ventilators, primarily for deficient clinical 
documentation.6, 7   
 
Medicare Coverage of Home Respiratory Devices 
The CMS Medicare National Coverage Determinations Manual stipulates that ventilators are covered for 
the treatment of conditions associated with neuromuscular diseases, thoracic restrictive diseases, and 
chronic respiratory failure consequent to chronic obstructive pulmonary disease.8  In 2014, the 
Medicare Pricing, Data Analysis, and Coding contractor provided further clarification to a CMS non-
binding decion memo from 2001, stating that ventilators are considered reasonable and necessary 
only when the beneficiary has a severe condition in which the interruption of respiratory support would 
1  be life-threatening or lead to serious harm.9, 10  This guidance was in effect through May 2016 and 
therefore covers the time period that is the subject of our review.  In May 2016, CMS and its contractors 
updated the guidance, making it less proscriptive about the use of ventilators for non-life-threatening 
conditions.11  In this new guidance, CMS and its contractors deferred to providers clinical judgment 
about the severity of the patients condition and which devicea ventilator or a RADwould be the 
appropriate treatment plan.  
Even though a ventilator may be capable of operating in CPAP or RAD mode, the device would not be 
eligible for reimbursement for treatment of any of the less severe conditions that the local coverage 
determinations (LCDs) for RADs describe, or for the treatment of obstructive sleep apnea as described in 
the Medicare National Coverage Determinations Manual (see Table 1).12  Medicare covers ventilators 
and RADs for similar respiratory diagnoses (e.g., chronic obstructive pulmonary disease), but the 
selection of the appropriate device is based on the severity of the beneficiarys condition.13  RADs are 
covered for beneficiaries with less severe conditions that require only relatively short durations of 
respiratory support, whereas ventilators are covered for more severe conditions.14  CPAP devices are 
covered for the treatment of obstructive sleep apnea.15  CMSs guidance specifically states that program 
abuse is occurring when ventilators are billed for the treatment of obstructive sleep apnea.16, 17   
We have focused this data brief on one specific type of ventilator that may be particularly vulnerable to 
inappropriate billing:  the noninvasive pressure support ventilator.  Certain marketed products in this 
category are multimodal devices that can function as a ventilator, RAD, or CPAP device.  Additionally, 
this device utilizes a noninvasive interfacesuch as a mask or chest shellthat is similar to the 
interfaces used with CPAP devices or RADs.  In contrast, an invasive ventilator requires the beneficiary to 
have a tracheostomy tube, which would likely discourage the inappropriate use of such a ventilator in 
place of other devices.  The combination of these featuresthe noninvasive interface and the 
multimodal capabilitycould make the noninvasive pressure support ventilator susceptible to 
inappropriate billing. 
Table 1: Comparison of Medicare Coverage for Home Respiratory Devices 
Circumstances Under Which Device Is 
Device Type  Condition(s) Treated  Considered Reasonable and 
Necessary  
Neuromuscular diseases, thoracic restrictive  Beneficiary has a severe condition in 
diseases, and chronic respiratory failure  which the interruption of respiratory 
Ventilator 
consequent to chronic obstructive pulmonary  support could lead to serious harm 
disease18 
Restrictive thoracic disorders, severe chronic  Beneficiary has a less severe, 
obstructive pulmonary disease, central sleep  non-life-threatening condition that 
RAD  apnea, complex sleep apnea, or  requires only intermittent and 
hypoventilation syndrome19  relatively short durations of 
respiratory support20 
Obstructive sleep apnea21   Beneficiary has been diagnosed with 
CPAP device  obstructive sleep apnea on the basis of 
a sleep test 
 
 
2  Medicare Payment Policies for Home Respiratory Devices 
Medicare pays for home ventilators under the category of durable medical equipment (DME) items that 
require frequent and substantial servicing to avoid risk to the patients health.22  Medicare makes 
monthly rental payments for this category of DME as long as medical necessity and Part B coverage 
remain.23  The monthly rental payment covers the base device (i.e., the ventilator); frequent and 
substantial servicing of the device; and replacement of essential accessories (e.g., tubing, masks, and 
filters).   
Medicare covers CPAP devices and RADs under its category for capped rental for DME items.  This 
category limits the rental period to 13 months of continuous use, after which the Medicare monthly 
payment for the base equipment ceases and the beneficiary takes ownership of the device.24, 25  The 
monthly rental payment covers only the base device and any necessary maintenance and servicing of 
the rented device; suppliers bill separately for related accessories (e.g., masks, filters, humidifiers).  
After the capped rental period ends, Medicare continues to pay for replacement of the accessories.   
To obtain payment for DME provided to beneficiaries, suppliers submit claims to their Medicare 
contractors using Healthcare Common Procedure Coding System (HCPCS) codes.  HCPCS codes provide a 
standardized coding system for describing specific items and services provided in the delivery of health 
care.  At the time of our review, there were five HCPCS codes for ventilators.  Table 2 lists the specific 
characteristics for each ventilator type.   
As Table 2 shows, the rental rates for noninvasive pressure support ventilators (HCPCS code E0464) 
were as much as $660, $1,470, and $1,352 more per month, respectively, than the rates for volume 
ventilators, CPAP devices, and RADs during the period of our review.26, 27, 28  Additionally, the monthly 
rental payments for ventilators continue indefinitely, whereas those for CPAP devices and RADs are 
capped at 13 months.  The reimbursement rates shown in Table 2 include the 20-percent copayment 
paid by the beneficiary.  Because E0464 ventilators have both higher reimbursement rates and 
uncapped rental periods, beneficiaries not only pay higher monthly copayments for these devices but 
also pay over a longer rental period. 
   
3  Table 2: Medicare Reimbursement for Home Respiratory Devices 
Device Type  Description of Device  Medicare Reimbursement 
Floor and Ceiling Monthly 
Rates as of July 2015* 
Ventilators       
   E0450  Volume control ventilator used with invasive interface (i.e.,  $900.55  $1,059.47** 
tracheostomy tube) 
   E0460  Negative pressure ventilator, portable or stationary  $692.09  $814.22** 
   E0461  Volume control ventilator used with noninvasive interface  $900.55  $1,059.47** 
(i.e., mask) 
   E0463  Pressure support ventilator with volume control mode used  $1,326.87  $1,561.02** 
with invasive interface (i.e., tracheostomy tube) 
   E0464  Pressure support ventilator with volume control mode used  $1,326.87  $1,561.02** 
with noninvasive interface (i.e., mask) 
RAD  Respiratory assist device  $208.66  $614.34** 
CPAP device  Continuous positive airway pressure device  $90.84  106.87** 
Source: CMS, DMEPOS Fee Schedule, revised for July 2015.  
* The monthly rental rates in this table do not include additional Medicare payments for accessories (e.g., masks, humidifiers) associated with 
using CPAP devices and RADs. In contrast, the monthly rental rates for ventilators are all-inclusive; they cover both the device and 
relatedaccessories. 
** The monthly rental rates for CPAP devices and RADs in this table do not reflect the payment amounts under the Competitive Bidding 
Program, which are lower than the DMEPOS Fee Schedule amounts listed above. 
 
Since January 2011, Medicares DME Competitive Bidding Program has included CPAP devices and 
RADs.29, 30, 31   In the 109 Competitive Bidding Areas, payment amounts for CPAP devices and RADs are 
even lower than the regular Medicare fee schedule amounts listed in Table 2.32   Through the 
Competitive Bidding Program, contract suppliers are paid based on a single payment amount derived 
from the median of all winning bids for an item.33  In Round 2 of the Competitive Bidding Program, the 
2013 single payment amounts for CPAP devices ranged from $41 to $56 per month, depending on the 
location.  For RADs, the single payment amounts ranged from $107 to $464 per month.34  With the 
reduced reimbursement for CPAP devices and RADs in Competitive Bidding Areas, the difference 
between Medicare payment for those devices and ventilators is even greater.  For example, if 
a Medicare beneficiary diagnosed with obstructive sleep apnea were inappropriately provided with an 
E0464 ventilator, rather than a traditional CPAP device, the increased costs to Medicare over just 
12 months could be as much $18,000 per beneficiary.    
 
 
RESULTS 
 
 
Medicare paid for 215,379 E0464 ventilator 
In 2015, Medicare paid 85 times  claims in 201585 times more than the 
2,528 claims it had paid just 6 years earlier.  
more claims for E0464 ventilatiors 
As depicted in Figure 1, Medicare billing for 
than it did in 2009, leading to  other types of ventilators either increased at 
much slower rates or decreased during the 
rapidly escalating expenditures for 
same period.  Medicare billing for E0464 
this device 
ventilators also far outpaced the growth in 
4  billing for CPAP devices, RADs, and accessories, which increased 1.4 times since 2009. 
 
Figure 1: Claims for E0464 Ventilators Grew Faster Than Those for Other Ventilators 
250,000
200,000
150,000
100,000
50,000
0
2009 2010 2011 2012 2013 2014 2015
E0450 E0460 E0461 E0463 E0464
Source:  Office of Inspector General (OIG) analysis of data from the CMS National Claims History (NCH) File, 2016. 
 
Because of increased billing for E0464 ventilators, combined expenditures for Medicare and its 
beneficiaries surged from 2009 to 2015, increasing 89-fold (from $3.8 million to $340 million).  
Medicare and beneficiary expenditures for this device have continued to grow rapidly each year.  
Expenditure increases from 2014 to 2015 alone accounted for 47 percent of the entire $337 million 
increase from 2009 to 2015.  Consistent with the increase in expenditures, the number of beneficiaries 
associated with claims for E0464 ventilators also escalated, increasing 79-fold (from 415 to 32,848) 
between 2009 and 2015.  (See Figure 2.)   
 
Figure 2: Escalating Number of Beneficiaries Receiving E0464 Ventilators 
Year  Beneficiaries (Each circle represents 1,000) 
2009   
2010   
2011   
2012   
2013   
2014   
2015   
Source:  OIG analysis of data from the CMS NCH File, 2016. 
 
Increased billing for E0464 ventilators was less prevalent in areas subject to the Competitive Bidding 
Program.  Round 2 of the Competitive Bidding Program started on July 1, 2013, and included CPAP 
devices, RADs, and related accessories, but not ventilators.  Through competitive pricing, Medicare 
reimbursement for CPAP devices and RADs has decreased in areas covered by the Competitive Bidding 
Program.  Reduced payment for CPAP devices and RADs in these localities might induce suppliers to bill 
inappropriately for E0464 ventilators instead.  To examine this, we compared whether billing for E0464 
ventilators increased more sharply in areas where the reimbursement rates for CPAP devices and RADs 
fell because of competitively bid prices.  In areas subject to Round 2 of the Competitive Bidding 
Program, claims for E0464 ventilators increased by 51 percent after the implementation of competitive 
bidding for CPAP devices and RADs.  However, claims for E0464 ventilators increased by 62 percent in 
5  areas not subject to competitive bidding during the same period.  Therefore, the reduced prices for 
CPAP devices and RADs under the Competitive Bidding Program do not appear to be driving increased 
billing for E0464 ventilators. 
 
Seven percent of E0464 ventilator beneficiaries had also used lower cost respiratory devices in the 
preceding year.  Increased billing for ventilators could be driven, in part, by suppliers switching 
beneficiaries from less expensive devices to more expensive devices that would also function in CPAP or 
RAD mode.  However, it does not appear that such switching is a primary driver of the increased billing 
for E0464 ventilators.  Of the 32,644 beneficiaries who had claims in 2015 for E0464 ventilators, only 
2,125, or 7 percent, had prior or concurrent claims for CPAP devices or RADs within a year of their first 
ventilator claim.35     
 
Of these 2,125 beneficiaries, 49 percent had a claim for a CPAP device in the preceding year.  Switching 
from a CPAP device to a ventilator may be appropriate if the beneficiarys diagnosis changed.  However, 
CPAP devices are primarily intended to treat obstructive sleep apnea, a condition that is explicitly 
excluded from the Medicare coverage policy for ventilators.  Therefore, when beneficiaries switch from 
CPAP devices to ventilators, it could signal program abuse if the ventilator is being used to treat 
obstructive sleep apnea.   
 
 
The massive growth in E0464 ventilator 
claims was largely driven by three suppliers 
Growth in billing for E0464 
that had billing far exceeding the national 
ventilators was driven primarily by 
average.  The increased billing from three 
suppliers accounted for 54 percent of the  three suppliers 
nationwide growth in beneficiaries with E0464 
claims from 2012 to 2015.  These 3 suppliers 
went from serving a combined total of 196 beneficiaries in 2012 (i.e., 5 percent of beneficiaries with 
E0464 claims) to serving 16,073 beneficiaries in 2015 (i.e., 48 percent of beneficiaries with E0464 
claims).  This growth far exceeded the growth in the average number of E0464 beneficiaries among 
other suppliers, which rose from 13 beneficiaries per supplier to 28 during the same period (see Figure 
3).  OIG is further reviewing information on the 3 suppliers that accounted for 54 percent of the 
nationwide growth to determine whether to initiate audits or investigations and/or to refer them to 
CMS for followup, as appropriate. 
 
6  Figure 3: Top Three E0464 Suppliers Had a Spike in Number of Beneficiaries Served 
 9,000
 8,000
s
rie  7,000
a
ci  6,000
efi  5,000
n
e  4,000
B
4   3,000
6
4  2,000
0
E  1,000
 -
2009 2010 2011 2012 2013 2014 2015
Other Suppliers' Average 6 7 9 13 18 26 28
Supplier A 3 5 8 8 23 3,098 8,192
Supplier B 13 14 32 29 25 1,009 5,532
Supplier C - - - 159 732 1,621 2,349
 
Source:  OIG analysis of data from the CMS NCH File, 2016.  
 
 
The distribution of primary diagnoses on 
E0464 ventilator claims has changed 
Diagnoses on E0464 ventilator 
dramatically since 2009.  Ventilators are 
claims have shifted from 
covered for the treatment of conditions 
neuromuscular to respiratory  associated with neuromuscular diseases, 
thoracic restrictive diseases, and chronic 
conditions  
respiratory failure consequent to chronic 
obstructive pulmonary disease.36  To describe 
the change in the distribution of diagnoses for 
E0464 ventilators from 2009 to 2015, we summarized the number of claims associated by primary 
diagnosis codes and then identified the top 10 most common diaganoses for each year.  Of the E0464 
ventilator claims with the most common diagnosis codes in 2009, more than half (56 percent) 
represented neuromuscular diseases.  (See Figure 4.)  By 2015, the proportion of these claims listing a 
neuromuscular disease diagnosis decreased to 7 percent.  During the same time period, there was a 
substantial increase in diagnoses of chronic respiratory failure; the proportion of these ventilator claims 
with such a diagnosis rose from 29 percent to 85 percent.   
 
The shift in the diagnosis mix on E0464 ventilator claims is notable because diagnoses of chronic 
respiratory failure are similar to diagnoses for conditions that are treated by using RADs.  Medicare 
covers ventilators and RADs for similar diagnoses, but the selection of the appropriate device is based 
on the severity of the beneficiarys condition.37  We cannot determine solely on the basis of the 
diagnosis listed on the claim whether the claim is for a beneficiary with a severe respiratory condition or 
whether the supplier might have upgraded the beneficiary to a ventilator when the beneficiary could 
have been appropriately treated with a RAD instead.  Further review of medical records would be 
necessary to determine whether these claims met Medicare coverage requirements. 
 
The top three suppliers cited above were more likely than all other suppliers to cite chronic respiratory 
failure as the primary diagnoses on their E0464 claims.  Ninety-seven percent of these suppliers E0464 
claims listed diagnoses of chronic respiratory failure, and only 2 percent of their E0464 claims listed 
diagnoses of neuromuscular disease.  In contrast, other suppliers E0464 claims listed diagnoses of 
7  chronic respiratory failure in 75 percent of cases and diagnoses of neuromuscular diseases in 
12 percent.  
 
Figure 4: Distribution of Top Diagnoses for E0464  All Suppliers 
Other Diseases of  ObstructiveO bstructive Sleep  TThhooraracicci c  OOtthheerr  DDiisseeaasseess  ooff  the 
Othteh eRre Dspisieraatsoersy o f  Sleep Apnea Apnea RReestsrtircitcitvivee  Rethspei rRaetsopriyr aStyosrtye m Oobr strOucbtsitvreu ctive 
StSyhysest teRem1em1s o% porir rL aLutunongrgy  O3th%er2% 2%O3th%er DDi0sie.s61ea%%asesess System7L %7ou%rn gLung Sleep1S %Alepenp1e %Aapnea
11%
Neuromuscular 
Neuromuscular 
Disease
Disease
7%
7%
ChroCnhicr onic 
CChhrroonnicic  
RespRireastpoirrya tory 
RReessppiriraattoorryy   NeuNroemuruosmcuulasrc ular  FailuFraeilure
FFaailiulurree DiseDasiseease 85%85%
2289%% 56%56%
22001155*
22000099
Source:  OIG analysis of data from the CMS NCH File, 2016. 
* The total equals 101 percent due to rounding. 
 
 
Some beneficiaries had claims for multiple 
devices concurrently, which suggests 
Medicare paid $25 million for 
inappropriate billing.  Among the 32,848 
E0464 ventilator claims with 
beneficiaries who used E0464 ventilators in 
indicators of inappropriate billing,  2015, 932 also had 1 or more months with 
concurrent claims for CPAP devices or RADs.38  
such as billing for multiple devices, 
CMS staff stated that it is unlikely that 
billing for separate accessories, or 
beneficiaries would need to use both a 
billing to treat obstructive sleep  ventilator and a CPAP device or RAD during 
the same period.  Therefore, this pattern 
apnea 
might suggest inappropriate billing for 
multiple devices for the same beneficiary.  
Medicare and its beneficiaries paid more than 
$21.7 million for these claims (close to $19.9 million for E0464 ventilators and close to $1.9 million for 
CPAP devices, RADs, and accessories).  We will refer these claims to CMS for appropriate followup. 
 
Some beneficiaries had claims for accessories that were paid for separately (rather than bundled 
with claims for the ventilator), which violates Medicare payment policies for ventilators.  Seven 
hundred and four beneficiaries who used E0464 ventilators in 2015 had one or more claims for 
accessories during the year without a history of claims for base CPAP devices or base RADs.  Ventilators 
are covered under the DME frequent and substantial servicing category, which covers the base device 
8  (i.e., the ventilator); frequent and substantial servicing of the device; and accessories (e.g., tubing, 
masks, and filters) through a single monthly rental payment.  Therefore, suppliers should not bill 
Medicare separately for accessories used with ventilators.  Medicare and its beneficiaries paid a total of 
$262,050 for these claims for accessories.  We will refer these claims to the CMS for appropriate 
followup.  
 
In 2015, 1 percent of paid E0464 claims listed a primary diagnosis of obstructive sleep apnea, which is 
not an eligible diagnosis for Medicare coverage for this device.  CMS and its contractors have stipulated 
that ventilators are not eligible for reimbursement for the treatment of obstructive sleep apnea.39  
However as indicated in Figure 4 above, Medicare and its beneficiaries inappropriately paid close to 
$2.9 million in 2015 for 1,892 E0464 claims with a primary diagnosis of obstructive sleep apnea.  We will 
refer these claims to CMS for appropriate followup. 
   
9  CONCLUSION 
The evolution in ventilator technology has resulted in products that are capable of operating in multiple 
modesas CPAP devices, as RADs, or as ventilators.  The emergence of this multimodal device, when 
combined with Medicare coverage and payment policies that favor reimbursement for ventilators, may 
create incentives for suppliers to provide and bill for a ventilator when the device is actually being used 
as a RAD or CPAP device.  At the same time, the number of Medicare claims for E0464 ventilators has 
grown 85-fold since 2009, raising serious concerns about inappropriate billing and abuse.  Inappropriate 
use of ventilators in place of CPAP devices or RADs drives up costs for Medicare as well as for 
beneficiaries, who pay increased copayments for ventilators.   
 
In this data brief, we examined factors that mightbut ultimately do notexplain the substantial 
increase in E0464 ventilator billing in relation to billing for other respiratory devices.  For example, the 
reduced prices for CPAP devices and RADs in Competitive Bidding Areas do not appear to be driving 
increased billing for E0464 ventilators.  Additionally, it did not appear that a large proportion of the 
beneficiaries with E0464 ventilators had recently switched to these devices from using a CPAP device or 
RAD.   
 
Instead, the E0464 ventilator billing trend is being driven primarily by 3 national suppliers that have 
rapidly expanded their market share and who accounted for 54 percent of the nationwide growth in 
beneficiaries with E0464 ventilator claims from 2012 to 2015.  Additionally, there was a dramatic shift in 
the use of ventilators to treat respiratory conditions (i.e., the same category of conditions treated by 
CPAP devices and RADs) rather than neuromuscular conditions.  This pattern of having a majority of 
claims with respiratory diagnoses was even more pronounced for the top three suppliers.   
 
CMS has taken recent actions to address concerns with E0464 ventilator billing.  In January 2016, CMS 
consolidated billing codes for ventilators and reduced the reimbursement amount for noninvasive 
pressure support ventilators.  This action may somewhat reduce the incentive to bill for such ventilators, 
but even with the decreased payments, ventilators will continue to be reimbursed at significantly higher 
rates than CPAP devices and RADs.  Further, suppliers will continue to receive the higher monthly rental 
payments for as long as the beneficiary needs the device, rather than having their payments end after 
13 months as is the case with the less expensive devices.  Therefore, the growth trends highlighted in 
this data brief could continue despite CMSs changes to billing codes and reimbursement amounts. 
 
The information presented in this data brief provides useful contextual information for CMS as it 
develops further policy and refines its program integrity efforts in this area.  For example, CMS could 
consider focusing its efforts on monitoring the providers with the largest market shares of ventilator 
beneficiaries or exploring the causes and implications of the shift in diagnoses on ventilator claims.  This 
data brief also reinforces the importance of CMSs and its contractors reviews (both prepayment and 
postpayment) of ventilator claims; these reviews have found high rates of improper payments.40, 41 
 
Finally, we also identified some E0464 claims with indicators of inappropriate billing, including claims 
with diagnoses of obstructive sleep apnea, claims for multiple devices for the same beneficiary, and 
claims for accessories that were paid for separately.  We will refer these potentially inappropriately paid 
claims to CMS for further review.  In addition, OIG is further reviewing information on the three 
suppliers driving the increase in ventilator claims to determine whether to initiate audits or 
investigations of any of them and/or to refer them to CMS for followup, as appropriate. 
10  METHODOLOGY
 
We used CMSs National Claims History (NCH) file to identify all DME claims for ventilators (HCPCS codes 
E0450, E0460, E0461, E0463, and E0464), RADs (HCPCS codes E0470, E0471, and E0472), CPAP devices 
(HCPCS code E0601), and related supplies with dates of service from 2006 through 2015.   
 
Billing Trends for Ventilators, RADs, and CPAP devices 
To describe billing trends for ventilators, RADs, and CPAP devices, we identified the total number of 
claims for each year.  We also calculated the allowed charges for E0464 ventilators and the number of 
unique beneficiaries associated with claims for ventilators, RADs, and CPAP devices.   
 
Ventilator Beneficiaries with a History of Claims for CPAP Devices or RADs 
To examine whether beneficiaries had switched from a CPAP device or RAD to a ventilator, we first used 
the NCH DME file to identify all beneficiaries with E0464 ventilator claims in 2015.  For this group of 
beneficiaries, we then reviewed NCH DME files from 2014 through 2015 to identify whether they had 
any claims for CPAP devices, RADs, or related accessories in the previous 365 days.  We calculated the 
number of days between each beneficiarys most recent claim for a CPAP device, RAD, or accessory and 
the beneficiarys first E0464 ventilator claim to determine how many had switched devices within a year 
or had multiple devices concurrently.  For beneficiaries with simultaneous claims for multiple devices, 
we also calculated the allowed dollars that Medicare and its beneficiaries paid for ventilators, CPAP 
devices, RADs, and accessories during the overlap period.  
 
Effect of the Competitive Bidding Program on Ventilator Claims 
To assess the effect of the Competitive Bidding Program on ventilator billing trends, we examined 
whether billing for ventilators increased in areas where the reimbursement rates for CPAP devices and 
RADS decreased due to competitively bid prices.  We used the 2013 NCH DME file along with the 
Competitive Bidding Implementation Contractors ZIP Code files for Competitive Bidding Areas in the 
Round 1 Rebid and Round 2.  For the periods before and after the July 2013 implementation of Round 2 
of the Competitive Bidding Program, we identified the total number of claims and allowed charges for 
ventilators in areas that were Round 2 Competitive Bidding Areas versus areas that were not.  We 
excluded all claims in Round 1 Competitive Bidding Areas to target the change in claims after the 
implementation of Round 2.  Starting in January 2011, CPAP devices and RADs were subject to 
competitive bidding prices in the nine areas included in the Round 1 Rebid.  In July 2013, competitively 
bid prices for CPAP devices and RADs were expanded to 100 new areas under Round 2 of the 
Competitive Bidding Program. 
 
Suppliers of E0464 Ventilators  
We identified the number of E0464 ventilator beneficiaries each supplier served annually between 2009 
and 2015.  To identify suppliers, we used Tax Identification Numbers (TINs) so that DME supply 
companies with multiple locations and participating providers were included as single entities.  We 
calculated the annual average number of E0464 ventilator beneficiaries served per supplier and 
compared the suppliers with the highest number of E0464 beneficiaries to the national average. 
 
Distribution of Diagnoses 
To describe the change in the distribution of diagnoses for E0464 ventilators, we summarized the 
number of claims associated by primary diagnosis codes in 2009 and 2015.  We then selected the 
10 diagnosis codes in 2015 that had over 1,000 associated claims.  We subsequently selected the top 
10 primary diagnosis codes in 2009.  
11   
In consultation with our Chief Medical Officer, we classified the top 10 diagnosis codes in 2009 into the 
following 5 categories: neuromuscular diseases, chronic respiratory failure, obstructive sleep apnea, 
other diseases of the respiratory system or lung, and other diseases (nonrespiratory).  Similarly, we 
grouped the top 10 diagnoses in 2015 into the categories of neuromuscular diseases, chronic respiratory 
failure, thoracic restrictive diseases, obstructive sleep apnea, and other diseases of the respiratory 
system or lung.  We compared the top diagnosis groups in 2015 to the top diagnosis groups in 2009.  We 
also compared the top diagnosis groups in 2015 between the top three suppliers and the rest of the 
supplier population. 
 
A ventilator is not eligible for reimbursement for the treatment of obstructive sleep apnea.  To 
determine the amount that Medicare and its beneficiaries inappropriately paid for noninvasive pressure 
support ventilators to treat obstructive sleep apnea, we calculated the allowed dollars and the number 
of DME claims in 2015. 
 
Limitations  
Our review relied on Medicare claims and administrative data.  We did not conduct a medical record 
review to determine if devices billed were medically necessary or coded correctly. 
 
Standards  
This study was conducted in accordance with the Quality Standards for Inspection and Evaluation issued 
by the Council of the Inspectors General on Integrity and Efficiency. 
   
12  ACKNOWLEDGMENTS 
 
This report was prepared under the direction of David Tawes, Regional Inspector General for Evaluation 
and Inspections in the Baltimore regional office, and Louise Schoggen, Assistant Regional Inspector 
General.  
 
Heather Barton served as the team leader and Berivan Demir Neubert was the lead analyst for this 
study.  Office of Evaluation and Inspections staff who provided support include Joe Chiarenzelli, 
Lucia Fort, David Graf, Althea Hosein, and Christine Moritz.  OIG Immediate Office staff who provided 
support include Julie Taitsman.  
   
13  ENDNOTES 
 
 
 
1 NHIC, Corp. Results of Widespread Prepayment Probe Review of Claims for E0464 (Pressure support ventilator 
with volume control mode, may include pressure control mode, used with non-invasive interface (e.g. mask)), 
April 30, 2015.  Accessed on June 10, 2015, at a URL that no longer works; see archived version at 
http://web.archive.org/web/20150731020947/http://www.medicarenhic.com/viewdoc.aspx?id=3020. 
2 CMS, Internal Healthcare Common Procedure Coding System (HCPCS) Decision Regarding Codes for Ventilators. 
Accessed on June 5, 2015, at a URL whose content has subsequently changed; see archived version at 
https://web.archive.org/web/20150610042556/http://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/Downl
oads/Internal-Coding-Decisions.pdf.   
3 Ibid.  
4 Noridian Healthcare Solutions, Medicare PDAC (Pricing, Data Analysis, and Coding) contractor.  Correct Coding 
and Coverage of Ventilators, Joint DME MAC Publication, April 28, 2014.  Accessed on June 10, 2015, at 
https://www.dmepdac.com/resources/articles/2014/04_10_14.html. 
5 CMS, Internal Healthcare Common Procedure Coding System (HCPCS) Decision Regarding Codes for Ventilators.  
See Endnote 2 for URL information.  
6 Noridian Healthcare Solutions, Ventilators (HCPCS E0464) Quarterly Results of Service Specific Prepayment 
Review, January 27, 2016.  Accessed on May 17, 2016, at https://med.noridianmedicare.com/web/jddme/cert-
review/mr/complex-notifications-results/ventilators-hcpcs-e0464-quarterly-results-of-service-specific-
prepayment-review. 
7 NHIC, Corp.  Results of Widespread Prepayment Probe Review of Claims for E0464 (Pressure support ventilator 
with volume control mode, may include pressure control mode, use with non-invasive interface (e.g., mask)), 
April 30, 2015.  See Endnote 1 for URL information. 
8 CMS, Medicare National Coverage Determinations Manual, Pub. No. 100-03, ch. 1, pt. 4,  280.1, p. 129. 
9 Noridian Healthcare Solutions, Medicare PDAC contractor.  Correct Coding and Coverage of Ventilators, Joint DME 
MAC Publication, April 28, 2014.  See Endnote 4 for URL information. 
10 CMS, Decision Memo for Noninvasive Positive Pressure RADS for COPD (CAG-00052N).  Accessed on 
November 16, 2015, at https://www.cms.gov/medicare-coverage-database/details/nca-decision-memo.aspx? 
NCAId=56&ver=&viewAMA=Y&bc=AAAAAAAAIAAA&.   
11 In May 2016, the Medicare PDAC contractor issued a Joint DME MAC publication with updated guidance on the 
correct coding and coverage of ventilators.  This new guidance removed language stipulating that (1) ventilators 
and RADs are covered for different disease groups and (2) ventilators are not eligible for reimbursement for any of 
the non-life-threatening conditions described in the LCDs for RADs.  The guidance clarified that although the 
disease categories described in the respective Medicare coverage determinations for ventilators and RADs may 
overlap, the choice of an appropriate treatment plan, including the determination to use a ventilator vs. a [RAD], 
is made based upon the specifics of each individual beneficiarys medical condition. The guidance also stated that 
in the event of a claim review, there must be sufficient detailed information in the medical record to justify the 
treatment selected.  Noridian Healthcare Solutions, Medicare PDAC contractor.  Correct Coding and Coverage of 
Ventilators, Joint DME MAC Publication, May 24, 2016.  Accessed on August 30, 2016, at 
https://www.dmepdac.com/resources/articles/2016/05_24_16b.html. 
12 Noridian Healthcare Solutions, Medicare PDAC contractor.  Correct Coding and Coverage of Ventilators, Joint 
DME MAC Publication, April 28, 2014.  See Endnote 4 for URL information. 
13 Ibid. 
14 Ibid. 
15 CMS, Medicare National Coverage Determinations Manual, Pub. No. 100-03, ch. 1, pt. 4,  240.4, p. 92. 
16 CMS, Internal Healthcare Common Procedure Coding System (HCPCS) Decision Regarding Codes for Ventilators.  
See Endnote 2 for URL information. 
 
14   
17 CMS and its contractors have clarified that the use of a ventilator to treat any of the conditions contained in the 
LCDs for RADs is considered more than is medically necessary.  Ventilators and CPAP devices/RADs are covered 
under different DME payment categoriesventilators are covered under the Frequent and Substantial Servicing 
category, and CPAP devices and RADs are covered under the Capped Rental category.  Medicare prohibits 
upgrade billing across different payment categoriesi.e., when a device covered under one payment category 
(e.g., a ventilator covered under the Frequent and Substantial Servicing category) is provided to treat conditions 
covered in LCDs for devices in other payment categories (e.g., conditions described in the LCDs for CPAP devices 
and RADs covered under the Capped Rental category).  Noridian Healthcare Solutions, Medicare PDAC contractor.  
Correct Coding and Coverage of Ventilators, Joint DME MAC Publication, April 28, 2014, p. 2.  See Endnote 4 for 
URL information. 
18 CMS, Medicare National Coverage Determinations Manual, Pub. No. 100-03, ch. 1, pt. 4,  280.1, p. 129. 
19 Local Coverage Determination (LCD): Respiratory Assist Devices (L33800) for DME MAC Jurisdictions A, B, C, and 
D, available at https://www.cms.gov/medicare-coverage-database/.  Prior to October 1, 2015, the DME MACs had 
separate but identical LCDs for RADs (i.e., LCDs L11504, L27228, L5023, and L11493 for DME MAC Jurisdictions A, 
B, C, and D, respectively), available at http://localcoverage.cms.gov/mcd_archive/.   
20 Noridian Healthcare Solutions, Medicare PDAC contractor.  Correct Coding and Coverage of Ventilators, Joint 
DME MAC Publication, April 28, 2014.  See Endnote 4 for URL information. 
21 CMS, Medicare National Coverage Determinations Manual, Pub. No. 100-03, ch. 1, pt. 4,  240.4, p. 92. 
22 42 CFR  414.222; 71 Fed. Reg. 4518, 4525 (Jan. 27, 2006).  
23 Ibid.  
24 42 CFR  414.229; 71 Fed. Reg. 4518 (Jan. 27, 2006); CMS, Medicare Claims Processing Manual, Pub. No. 100-4, 
ch. 20Durable Medical Equipment, Prosthetics, Orthotics, and Supplies,  30.5.  Accessed on June 15, 2015, at 
http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c20.pdf. 
25 Since January 2011, CPAP devices, RADs, and related accessories have been included in the Medicare DME 
Competitive Bidding Program.  Under the Competitive Bidding Program, payment amounts for CPAP devices and 
RADs in Competitive Bidding Areas are lower than the regular Medicare fee schedule amounts for these devices. 
(See CMS Competitive Bidding Implementation Contractor, DMEPOS Competitive Bidding Program Product 
Categories.  Accessed on November 16, 2015, at http://dmecompetitivebid.com/palmetto/cbicrd1rebid.nsf/ 
DocsCat/Product%20Categories.  CMS Competitive Bidding Implementation Contractor, DMEPOS Competitive 
Bidding Program Round 1 Rebid.  Accessed on August 8, 2016, at http://dmecompetitivebid.com/palmetto/ 
cbicrd1rebid.nsf/DocsCat/Home.  CMS, Durable Medical Equipment, Prosthetics, Orthotics, and Supplies 
Competitive Bidding Program Round 2: Weighted Average Savings.  Accessed on June 23, 2015, at 
http://www.dmecompetitivebid.com/Palmetto/Cbicrd2.Nsf/files/R2_Weighted_Average_Savings.pdf/$File/R2_We
ighted_Average_Savings.pdf.)  
26 CMS, DMEPOS Fee Schedule, Revised for July 2015.  Accessed on March 21, 2016, at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/DMEPOSFeeSched/DMEPOS-Fee-Schedule-
Items/DME15-C.html?DLPage=1&DLEntries=10&DLSort=2&DLSortDir=descending.  
27 When pressure support ventilators were added to Medicare coverage in 2005, the fee schedule amounts were 
established using manufacturer suggested retail prices for specific products, rather than basing these amounts on 
average reasonable charges for the monthly rental of the items (which was the method used to establish payment 
for many other DME items).  Consequently, the monthly rental fees for pressure support ventilators were higher 
than for volume ventilators.  (See CMS, Internal Healthcare Common Procedure Coding System (HCPCS) Decision 
Regarding Codes for Ventilators. Accessed on June 5, 2015.  See Endnote 2 for URL information. 
28 CMS had planned to add noninvasive pressure support ventilators to the DME Competitive Bidding Program 
beginning in 2017, but reversed this decision and instead discontinued the existing codes and created two new 
codes for ventilators.  CMS established payment amounts for the new codes that restored payment to the levels 
mandated by the statute for ventilators.  These coding and payment changes took effect beginning on January 1, 
2016.  (See CMS, Internal Healthcare Common Procedure Coding System (HCPCS) Decision Regarding Codes for 
Ventilators.  Accessed on June 5, 2015.  See Endnote 2 for URL information.) 
29 Ibid. 
30 CMS Competitive Bidding Implementation Contractor, DMEPOS Competitive Bidding Program Round 1 Rebid.  
Accessed on August 8, 2016, at http://dmecompetitivebid.com/palmetto/cbicrd1rebid.nsf/DocsCat/Home.   
 
15   
31 CMS Competitive Bidding Implementation Contractor, DMEPOS Competitive Bidding Program Product 
Categories.  Accessed on November 16, 2015, at http://dmecompetitivebid.com/palmetto/cbicrd1rebid.nsf/ 
DocsCat/Product%20Categories.  
32 CMS, Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive Bidding Program Round 2: 
Weighted Average Savings.  Accessed on June 23, 2015, at http://www.dmecompetitivebid.com/Palmetto/ 
Cbicrd2.Nsf/files/R2_Weighted_Average_Savings.pdf/$File/R2_Weighted_Average_Savings.pdf. 
33 CMS, DMEPOS Competitive Bidding Program Overview.  Accessed on August 4, 2015, at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/DMEPOSCompetitiveBid/index.html? 
redirect=/dmeposcompetitivebid/. 
34 CMS Competitive Bidding Implementation Contractor, Round 2 Single Payment Amounts.  Accessed on 
November 17, 2015, at http://www.dmecompetitivebid.com/palmetto/cbicrd2.nsf/DocsCat/ 
Single%20Payment%20Amounts. 
35 In this analysis, we included 32,644 beneficiaries that either (1) had a claim for an E0464 ventilator without prior 
claims for CPAPs or RADs or (2) switched from a CPAP or RAD to E0464.  We excluded 204 beneficiaries that 
originally switched from a CPAP or RAD to another type of ventilator, but then later in the year switched again to 
the E0464 ventilator.  These 204 beneficiaries were included in the analyses for Finding 1 that 32,848 beneficiaries 
had claims for E0464 ventilators at some point during 2015. 
36 CMS, Medicare National Coverage Determinations Manual, Pub. No. 100-03, ch. 1, pt. 4,  280.1, p. 129. 
37 Noridian Healthcare Solutions, Medicare PDAC contractor.  Correct Coding and Coverage of Ventilators, Joint 
DME MAC Publication, April 28, 2014.  See Endnote 4 for URL information. 
38 In this analysis, we included 32,644 beneficiaries who either (1) had a claim for an E0464 ventilator without prior 
claims for CPAP devices or RADs or (2) switched from a CPAP device or RAD to an E0464 ventilator.  We excluded 
204 beneficiaries who originally switched from a CPAP device or RAD to another type of ventilator, but then later 
in the year switched again to an E0464 ventilator.  These 204 beneficiaries were included in the analyses for 
Finding 1 that 32,848 beneficiaries had claims for E0464 ventilators at some point during 2015.  
39 Noridian Healthcare Solutions, Medicare PDAC contractor.  Correct Coding and Coverage of Ventilators, Joint 
DME MAC Publication, April 28, 2014.   See Endnote 4 for URL information. 
40 Noridian Healthcare Solutions, Ventilators (HCPCS E0464) Quarterly Results of Service Specific Prepayment 
Review, January 27, 2016.  Accessed on May 17, 2016, at https://med.noridianmedicare.com/web/jddme/cert-
review/mr/complex-notifications-results/ventilators-targeted. 
41 NHIC, Corp.  Results of Widespread Prepayment Probe Review of Claims for E0464 (Pressure support ventilator 
with volume control mode, may include pressure control mode, use with non-invasive interface (e.g., mask)), 
April 30, 2015.  See Endnote 1 for URL information. 
16