1 

HHS OIG Data Brief • September 2016 • OEI-12-15-00370 

Escalating Medicare Billing for Ventilators Raises Concerns

Medicare paid 85 times more 

claims for noninvasive pressure 

support ventilators in 2015 than 

it did in 2009, leading to a rapid 

increase in expenditures. 

Growth in claims for these 

types of ventilators was driven 

primarily by three suppliers. 

Diagnoses on these claims have 

shifted dramatically from 

neuromuscular to respiratory 

conditions. 

Medicare paid $25 million for 

noninvasive pressure support 

ventilator claims with indicators 

of inappropriate billing.

AT A GLANCE 

The Centers for Medicare & Medicaid Services (CMS) and 

its contractors have expressed concerns about the recent 

substantial increase in Medicare billing for noninvasive 

pressure support ventilators.1, 2 In addition to describing 

the current payment trends, this data brief explores 

factors possibly contributing to the billing surge. This 

information provides useful context for CMS as it 

develops further policy and refines its program integrity 

efforts in this area. 

In recent years, ventilator technology has evolved so that 

it is possible for a single device to treat numerous 

conditions by operating in several different modes—i.e., 

basic continuous positive airway pressure (CPAP) mode, 

respiratory assist device (RAD) mode, and traditional 

ventilator mode.3 This creates an opportunity for abuse, 

whereby suppliers could bill Medicare for the device as if 

it were being used as a ventilator, when use of a lower 

cost CPAP device or RAD is indicated based on the 

patient’s medical condition.

4, 5 Because of concerns 

about possible abuse related to ventilator claims, two 

Durable Medical Equipment (DME) Medicare 

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 nonbinding 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 
2 

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 patient’s condition and which device—a ventilator or a RAD—would 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 beneficiary’s 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 CMS’s 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 interface—such as a mask or chest shell—that 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 features—the noninvasive interface and the 

multimodal capability—could make the noninvasive pressure support ventilator susceptible to 

inappropriate billing. 

Table 1: Comparison of Medicare Coverage for Home Respiratory Devices 

Device Type Condition(s) Treated

Circumstances Under Which Device Is 

Considered Reasonable and 

Necessary 

Ventilator

Neuromuscular diseases, thoracic restrictive 

diseases, and chronic respiratory failure 

consequent to chronic obstructive pulmonary 

disease18

Beneficiary has a severe condition in 

which the interruption of respiratory 

support could lead to serious harm

RAD

Restrictive thoracic disorders, severe chronic 

obstructive pulmonary disease, central sleep 

apnea, complex sleep apnea, or 

hypoventilation syndrome19

Beneficiary has a less severe,

non-life-threatening condition that 

requires only intermittent and 

relatively short durations of 

respiratory support20

CPAP device

Obstructive sleep apnea21 Beneficiary has been diagnosed with 

obstructive sleep apnea on the basis of 

a sleep test
3 

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 patient’s 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. 
4 

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., 

tracheostomy tube)

$900.55 $1,059.47**

 E0460 Negative pressure ventilator, portable or stationary $692.09 $814.22**

 E0461 Volume control ventilator used with noninvasive interface 

(i.e., mask)

$900.55 $1,059.47**

 E0463 Pressure support ventilator with volume control mode used 

with invasive interface (i.e., tracheostomy tube)

$1,326.87 $1,561.02**

 E0464 Pressure support ventilator with volume control mode used 

with noninvasive interface (i.e., mask)

$1,326.87 $1,561.02**

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, Medicare’s 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 

claims in 2015—85 times more than the 

2,528 claims it had paid just 6 years earlier. 

As depicted in Figure 1, Medicare billing for 

other types of ventilators either increased at 

much slower rates or decreased during the 

same period. Medicare billing for E0464 

ventilators also far outpaced the growth in 

In 2015, Medicare paid 85 times 

more claims for E0464 ventilatiors 

than it did in 2009, leading to 

rapidly escalating expenditures for 

this device
5 

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 

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 

0

50,000

100,000

150,000

200,000

250,000

2009 2010 2011 2012 2013 2014 2015

E0450 E0460 E0461 E0463 E0464
6 

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 beneficiary’s 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 

that had billing far exceeding the national 

average. The increased billing from three 

suppliers accounted for 54 percent of the 

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. 

Growth in billing for E0464 

ventilators was driven primarily by 

three suppliers
7 

Figure 3: Top Three E0464 Suppliers Had a Spike in Number of Beneficiaries Served 

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

 -

 1,000

 2,000

 3,000

 4,000

 5,000

 6,000

 7,000

 8,000

 9,000

E0464 Beneficiaries

Source: OIG analysis of data from the CMS NCH File, 2016. 

The distribution of primary diagnoses on 

E0464 ventilator claims has changed 

dramatically since 2009. 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.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 beneficiary’s 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 

Diagnoses on E0464 ventilator 

claims have shifted from 

neuromuscular to respiratory 

conditions 
8 

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 

Chronic 

Respiratory 

Failure

85%

Neuromuscular 

Disease

7%

Thoracic 

Restrictive 

Diseases

0.6%

Other Diseases of 

the Respiratory 

System or Lung

7%

Obstructive 

Sleep Apnea

1%

2015

Neuromuscular 

Disease

56%

Chronic 

Respiratory 

Failure

28%

Other Diseases of 

the Respiratory 

System or Lung

11%

Obstructive 

Sleep Apnea

2% Other

3%

2009

Chronic 

Respiratory 

Failure

85%

Neuromuscular 

Disease

7%

Thoracic 

Restrictive 

Diseases

1%

Other Diseases of the 

Respiratory System or 

Lung

7%

Obstructive 

Sleep Apnea

1%

2015*

Neuromuscular 

Disease

56%

Chronic 

Respiratory 

Failure

29%

Other Diseases of 

the Respiratory 

System or Lung

11%

Other

3%

Obstructive Sleep 

Apnea

2%

2009

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 

inappropriate billing. Among the 32,848 

beneficiaries who used E0464 ventilators in 

2015, 932 also had 1 or more months with 

concurrent claims for CPAP devices or RADs.38

 

CMS staff stated that it is unlikely that 

beneficiaries would need to use both a 

ventilator and a CPAP device or RAD during 

the same period. Therefore, this pattern 

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 

Medicare paid $25 million for 

E0464 ventilator claims with 

indicators of inappropriate billing, 

such as billing for multiple devices, 

billing for separate accessories, or 

billing to treat obstructive sleep 

apnea
9 

(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. 
10

CONCLUSION 

The evolution in ventilator technology has resulted in products that are capable of operating in multiple 

modes—as 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 might—but ultimately do not—explain 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 CMS’s 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 CMS’s 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. 
11

METHODOLOGY

We used CMS’s 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 beneficiary’s most recent claim for a CPAP device, RAD, or accessory and 

the beneficiary’s 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 Contractor’s 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. 
12

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. 
13

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. 
14

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/certreview/mr/complex-notifications-results/ventilators-hcpcs-e0464-quarterly-results-of-service-specificprepayment-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 beneficiary’s 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. 
15

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 categories—ventilators 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 categories—i.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. 20—Durable 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-ScheduleItems/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. 
16

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/certreview/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.