Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

QUESTIONABLE BILLING FOR 

POLYSOMNOGRAPHY 

SERVICES 

Daniel R. Levinson 

Inspector General 

October 2013 

OEI-05-12-00340 
EXECUTIVE SUMMARY: Questionable Billing for Polysomnography Services, 

OEI-05-12-00340 

WHY WE DID THIS STUDY 

Increased Medicare spending on polysomnography (a type of sleep study), along with growing 

concerns about fraud and abuse, prompted the Office of the Inspector General (OIG) to conduct 

this study. From 2005 to 2011, Medicare spending for polysomnography services rose from 

$407 million to $565 million, an increase of 39 percent. In addition, fraud investigators and 

sleep medicine professionals have identified specific vulnerabilities regarding polysomnography 

services. In January 2013, a provider agreed to pay $15.3 million to settle allegations of false 

polysomnography claims billed to Medicare and other Federal payers. 

HOW WE DID THIS STUDY 

We analyzed Medicare payments for polysomnography claims for 2011. The claims were from 

hospital outpatient departments and nonhospital providers, such as physician-owned sleep 

laboratories and independent diagnostic testing facilities. We identified polysomnography 

claims that did not meet one or more of three Medicare requirements. We also identified 

providers with patterns of questionable billing using 11 measures of questionable billing, which 

included the 3 Medicare requirements and 8 additional measures developed in consultation with 

fraud investigators and sleep medicine professionals within and outside of OIG. 

WHAT WE FOUND 

Medicare paid nearly $17 million for polysomnography services that did not meet one or more of 

three Medicare requirements. Payments for services with inappropriate diagnosis codes 

composed a majority of these payments. Eighty-five percent of claims with inappropriate 

diagnosis codes came from hospital outpatient departments. Inappropriate payments might have 

been averted with effective electronic edits that automatically deny claims or suspend them for 

manual review. 

Further, 180 providers exhibited patterns of questionable billing for polysomnography services. 

Most of these providers submitted an unusually high percentage of claims for beneficiaries with 

another polysomnography claim on the same day, which is questionable because beneficiaries 

can undergo only one polysomnography service in a day, as the process requires an overnight 

stay. 

WHAT WE RECOMMEND 

To strengthen safeguards for polysomnography services, we recommend that the Centers for 

Medicare & Medicaid Services (CMS) implement or improve claims processing edits and 

consider using measures of questionable billing from this study to identify providers for further 

investigation. We also recommend that CMS take appropriate action regarding inappropriate 

payments and providers that exhibited patterns of questionable billing. CMS concurred with all 

four of our recommendations. 
TABLE OF CONTENTS 

Objectives ....................................................................................................1 

Background..................................................................................................1 

Methodology................................................................................................6 

Findings......................................................................................................12 

Medicare inappropriately paid nearly $17 million for 

polysomnography claims that did not meet certain Medicare 

requirements ...................................................................................12 

One hundred and eighty providers exhibited patterns of 

questionable billing for polysomnography services ......................14 

Conclusion and Recommendations ............................................................17 

 Agency Comments and Office of Inspector General Response .....19 

Appendix A: Agency Comments ..............................................................20 

Acknowledgments......................................................................................23 
 

 

OBJECTIVES 

1.	 To identify inappropriate payments for polysomnography claims that 

did not meet certain Medicare requirements. 

2.	 To identify providers with patterns of questionable billing for 

polysomnography services. 

BACKGROUND 

Polysomnography Services 

In 2011, Medicare paid over 1 million claims for polysomnography 

services, totaling almost $565 million.1 Medicare spending on 

polysomnography increased from $407 million to $565 million 

(39 percent) from 2005 to 2011. 

Additionally, fraud investigators and sleep medicine professionals have 

identified specific vulnerabilities regarding inappropriate and fraudulent 

billing for polysomnography services. Most recently, in January 2013, a 

provider agreed to pay $15.3 million to settle allegations of false 

polysomnography claims billed to Medicare and other Federal payers.2 

Polysomnography is a type of sleep study conducted to diagnose medical 

conditions that affect sleep (e.g., sleep apnea) and to evaluate the 

effectiveness of positive airway pressure (PAP) devices (a type of 

treatment device for sleep apnea). During a polysomnography service, a 

beneficiary sleeps overnight while connected to sensors that measure and 

record parameters of sleep, such as brain wave activity, eye movement, 

and airflow.3 If polysomnography shows that a beneficiary has sleep 

apnea, a provider may prescribe a PAP device for treatment. Providers fit 

and titrate PAP devices (i.e., set them to the appropriate pressure for a 

beneficiary’s condition), after which beneficiaries may get a PAP device 

for home use.4 Providers also may prescribe a different type of treatment 

device, called an oral appliance, instead of a PAP device. 

1 Office of Inspector General (OIG) analysis of polysomnography claims from National 

Claims History data. Throughout this report, references to Medicare payment represent 

the total amount allowed by Medicare, which consists of payments made by Medicare 

plus beneficiary cost-sharing payments. 

2

 U.S. Department of Justice, Florida-Based American Sleep Medicine to Pay 

$15.3 Million for Improperly Billing Medicare and Other Federal Healthcare Programs 

(press release). Accessed at www.justice.gov on March 29, 2013. 3

 The Centers for Medicare & Medicaid Services (CMS) considers the overnight stay to
 

be an integral part of this service. CMS, Medicare Benefit Policy Manual, 

Pub. No. 100-02, ch. 15, § 70(B). 

4

 Medicare covers prescriptions for PAP devices when an appropriate diagnosis results 

from a polysomnography service. 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 1 
 

 

Providers can perform diagnostic and titration services in two visits or 

together in a single visit, known as a split-night service. Providers can 

perform a split-night service when a diagnosis of sleep apnea can be made 

within the first few hours of the polysomnography service and the 

provider is able to fit and titrate the PAP device in the same night. If the 

provider cannot make a diagnosis early in the polysomnography service, 

the beneficiary may need to return at a later date for an additional 

polysomnography service to fit and titrate the PAP device.5 

Polysomnography services are performed in hospital outpatient 

departments and nonhospital locations, such as independent diagnostic 

testing facilities and provider-owned sleep laboratories. (In this report, we 

refer to these nonhospital facilities as “nonhospital providers.”) 

Medicare Requirements for Polysomnography Services 

Medicare pays for polysomnography services under different payment 

systems, depending on where the services are performed. For 

polysomnography services performed in most hospital outpatient 

departments, Medicare pays under the Outpatient Prospective Payment 

System.6 For polysomnography services performed by nonhospital 

providers, Medicare pays under the Physician Fee Schedule. In 2011, the 

Medicare payment rate for a polysomnography service was $780.77 for 

hospital outpatient departments and $618.03 for nonhospital providers.7, 8 

CMS contracts with Medicare Administrative Contractors (MAC) to 

process claims. Fifteen MACs with a total of 128 distinct contracts 

processed polysomnography claims in 2011.9 Each MAC may have 

multiple contracts to process claims. 

Medicare Coverage Requirements. The Social Security Act governs 

Medicare payments for all services, including polysomnography. 

5

 OIG analysis of local coverage determinations (LCD) for polysomnography services 

from 2011.
 6

 Some hospitals are exempt from the Outpatient Prospective Payment System, and 

instead receive cost-based reimbursement.
 7

 American Medical Association, Current Procedural Terminology reference for code 

95811. Accessed at hsrl.mediregs.com on April 9, 2013. Reimbursement amounts
 

reflect unadjusted 2011 Outpatient Prospective Payment System and Physician Fee 

Schedule base payment rates for the technical component of the service.
 8 The five character codes and descriptions included in this document are obtained 

from Current Procedural Terminology (CPT®, copyright [2011] by the American 

Medical Association (AMA). CPT is developed by the AMA as a listing of 

descriptive terms and five character identifying codes and modifiers for reporting 

medical services and procedures. Any use of CPT outside of this document should 

refer to the most current version of the Current Procedural Terminology available 

from AMA. Applicable FARS/DFARS apply. 9

 OIG analysis of polysomnography claims from National Claims History data and MAC 

contract information from the Services Tracking, Analysis, and Reporting System. 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 2 
 

 

 

 

 

 

Medicare covers services that it considers “reasonable and necessary,” 

including services used to diagnose or treat a disorder.10 Also, Medicare 

does not pay duplicate claims (i.e., multiple claims submitted for a single 

service performed).11 

For all diagnostic tests, including polysomnography, CMS requires an 

order from the provider who evaluates or treats the beneficiary.12, 13 

Polysomnography providers must enter the name and National Provider 

Identifier (NPI) of this ordering provider on the polysomnography claim.14 

Statutory prohibitions on self-referral specify that beneficiaries receiving 

polysomnography services at hospital outpatient departments must be 

ordered by a provider who does not have a financial relationship with the 

hospital.15 

MACs may specify additional coverage requirements through LCDs.16 

LCDs include information such as utilization guidelines, permissible CPT 

codes, and diagnosis codes that support medical necessity.17 For example, 

all LCDs for polysomnography services list sleep apnea diagnosis codes as 

supporting the medical necessity of diagnostic polysomnography.18 

Nine of the fifteen MACs had LCDs that applied to some or all of the 

polysomnography claims processed in 2011.19 Of these nine MACs, eight 

had both LCDs that applied to hospital outpatient departments and LCDs 

that applied to nonhospital providers, whereas one had only LCDs that 

applied to nonhospital providers. The remaining six MACs had no LCDs 

for polysomnography in 2011.20 

Several LCDs for polysomnography specify that one service is usually 

sufficient for diagnosis and titration. These LCDs note that there are some 

instances in which beneficiaries may need to return for repeat 

polysomnography services (e.g., in the case of equipment failure, 

inconclusive results, or titration adjustments). However, the LCDs specify 

10 Social Security Act § 1862(a)(1)(A); 42 U.S.C. § 1395y(a)(1)(A). 

11 CMS, Reminder to Stop Duplicate Billings, Medicare Learning Network Matters 

No. SE0415. Accessed at www.cms.gov on March 26, 2013. 12 42 CFR § 410.32(a). 

13 CMS, Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 15, § 70(A).
 14 CMS, Claims Processing Manual, Pub. No. 100-04, ch. 26, § 10.4. 15 Social Security Act § 1877. Polysomnography services performed by nonhospital 

providers are not subject to the self-referral prohibition. 

16 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 13, § 13.1.3. 17 42 CFR § 400.202.
 18 OIG analysis of LCDs for polysomnography services from 2011.
 19 Because LCDs are established at the contract level, a MAC with multiple contracts 

may process some claims under contracts with applicable LCDs and other claims under 

contracts without applicable LCDs. 

20 OIG analysis of LCDs for polysomnography services from 2011.
 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 3 
 

 

that routinely performing repeat services is not medically necessary, and 

that providers must have persuasive documentation to justify the necessity 

of repeat tests.21 

Medicare Billing Requirements. Providers bill for polysomnography 

services using three CPT codes. Providers bill for diagnostic services 

using either CPT code 95808 or 95810, depending on how many 

parameters of sleep are measured. Providers bill for both full-night 

titration services and split-night services using CPT code 95811. See 

Table 1 for a description of each type of polysomnography service and 

associated CPT codes. 

Table 1: Types of Polysomnography Services 

Type of 

Polysomnography 

Service 

CPT Code Description 

Diagnostic 

95808 Polysomnography; sleep staging with 1-3 additional parameters of 

sleep, attended by a technologist. 

95810 Polysomnography; sleep staging with 4 or more additional 

parameters of sleep, attended by a technologist. 

Titration 95811 Polysomnography; initiation of continuous positive airway pressure 

therapy or bilevel ventilation, attended by a technologist. 

Split-night 95811 

Initial diagnostic polysomnogram confirming the diagnosis of 

obstructive sleep apnea followed by titration during 

polysomnography on the same night. 

Sources: AMA, CPT reference for codes 95808, 95810, and 95811; 2011 LCDs for polysomnography services. 

All polysomnography services consist of two components: the 

administration of the test (the technical component) and the provider’s 

interpretation of the test (the professional component). Providers 

generally bill separately for the technical and professional components 

when each is performed by a different provider; some providers may 

perform only one component of the service.22 If a provider bills for the 

two components together, it is referred to as a “global service.” There is 

no financial advantage to billing separately for each component as 

opposed to billing for a global service—for a given provider, the sum of 

the Medicare payments for the technical and professional components is 

equal to the payment for the global service.23 

21 OIG analysis of LCDs for polysomnography services from 2011. 

22 Most hospital outpatient departments can receive payment only for the technical 

component. 

23 AMA, CPT reference for codes 95808, 95810, and 95811. Accessed at 

hsrl.mediregs.com on August 15, 2012. 

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CMS requires providers to obtain an NPI and to use it when submitting 

Medicare claims, including claims for polysomnography services.24, 25 

NPIs should be deactivated if they are no longer in use (i.e., if the provider 

organization dissolves or the provider dies).26 

CMS also requires an appropriate diagnosis code for payment for 

polysomnography services.27 CMS instructs providers to list the condition 

that justifies the service as the primary diagnosis code.28, 29 The primary 

diagnosis should be the one most relevant to the service. 

Medicare Safeguards for Polysomnography Services 

Medicare uses claims processing edits to prevent inappropriate payments. 

These electronic edits automatically pay all or part of a claim, deny all or 

part of a claim, or suspend all or part of the claim for manual review. 

CMS has edits for certain services, including polysomnography, that deny 

payment when the unit of service billed is not likely for normal medical 

practice.30 These edits, referred to as Medically Unlikely Edits, apply to 

all claims submitted nationally. Medically Unlikely Edits for 

polysomnography services are intended to deny payment for claims with a 

unit of service greater than one.31 

MACs may choose to implement local edits to enforce their LCDs and 

reduce payment error.32 For example, MACs could implement an edit to 

deny payment for claims without a diagnosis code supporting the medical 

necessity of a service. These are considered local edits because they apply 

only to geographic areas covered by the MAC. MACs have the discretion 

to implement local edits denying payment when overutilization is 

identified and an LCD serves as the basis for the denial.33 

CMS also conducts data mining to identify high-risk and potentially 

fraudulent providers. One way CMS does this is by running algorithms on 

claims data using its Fraud Prevention System.34 According to CMS staff, 

24 CMS, Transmittal No. 1349. Accessed at www.cms.gov on March 26, 2013. 25 45 CFR § 162.410(a). 

26 45 CFR § 162.408(c). 

27 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 3, § 3.4.1.3(A). 28 CMS, Medicare Claims Processing Manual, Pub. No. 100-04, ch. 25, § 75.5. 

29 Ibid., ch. 26, § 10.4.
 30 CMS, Medically Unlikely Edits. Accessed at www.cms.gov on March 26, 2013.
 31 Practitioner Services and Outpatient Hospital Services Medically Unlikely Edit Tables. 

Accessed at www.cms.gov on March 26, 2013. 32 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 3, § 3.4.1.5(A). 33 Ibid., ch.3, § 3.4.1.4(B).
 34 CMS, Center for Program Integrity: New Strategic Direction and Key Antifraud 

Activities. Accessed at www.cms.gov on April 19, 2013. 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 5 
 

 

the Fraud Prevention System includes algorithms to detect potentially 

fraudulent polysomnography providers. 

Related Office of Inspector General Work 

In addition to this evaluation, OIG is conducting audits of 

polysomnography claims for selected regions to determine whether the 

claims complied with Medicare requirements and were paid accurately. 

As part of these audits, OIG will review MAC safeguards for the selected 

regions. OIG is also evaluating MACs’ use and evaluation of local edits. 

METHODOLOGY 

Scope 

The findings in this report are based on analysis of Medicare claims data. 

We did not review medical documentation to determine the medical 

necessity of polysomnography services. We also did not review MAC 

safeguards for polysomnography services. Finally, because of data 

limitations, we did not analyze ownership information or other indications 

of self-referral, which may affect questionable billing for 

polysomnography services. 

Data Collection 

This study is based on our analysis of 100-percent Medicare claims data 

from CMS’s National Claims History Standard Analytic File and other 

selected data sources. We collected Physician Fee Schedule and hospital 

outpatient claims from 2009 to 2011 and Durable Medical Equipment 

(DME) claims from 2009 to 2012. We also collected current NPI 

information from CMS’s National Plan and Provider Enumeration System 

(NPPES) and LCDs for polysomnography services from CMS’s Medicare 

Coverage Database. 

To create our data set, we identified all paid claims for the technical 

component of polysomnography and global polysomnography services 

(CPT codes 95808, 95810, and 95811) from January 1, 2011, to 

November 30, 2011.35, 36 The data set contained 626,212 claims for a total 

of $470 million, representing 7,232 unique providers and 461,363 unique 

beneficiaries.37 

35 We excluded zero-dollar claims. 

36 We excluded claims from December 2011 because certain associated claims were not 

available at the time of our analysis. 

37 For Physician Fee Schedule claims, we identified providers by the performing NPI 

listed on the claim. For hospital outpatient claims, we identified the provider by the 

organization NPI listed on the claim, but we also obtained the NPI of the attending 

physician listed on the claim for certain analyses. 

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Identification of Claims That Did Not Meet Medicare 

Requirements 

We analyzed our data set to identify polysomnography claims that did not 

meet one or more of three Medicare requirements. Specifically, we 

identified claims that were: (1) submitted with inappropriate diagnosis 

codes, (2) for the same service date as other polysomnography claims for 

the same beneficiary, or (3) submitted with invalid NPIs. This analysis 

included all claims from the 7,232 providers in our population. 

To identify polysomnography claims submitted with inappropriate 

diagnosis codes, we determined whether the primary diagnosis code on 

each claim was acceptable per the applicable LCD. We did not perform 

this analysis for claims without applicable LCDs. We classified an LCD 

as applicable if the contractor number listed on the LCD matched the 

contractor number listed on the claim and if the LCD was in effect on the 

service date for the claim. The 15 MACs that processed polysomnography 

claims in 2011 accounted for 128 distinct contracts, 79 of which had LCDs 

for polysomnography. Of the 626,204 claims in our data set, 

456,096 (72.8 percent) had applicable LCDs. 

After identifying polysomnography claims submitted with inappropriate 

diagnosis codes, we determined what percentage of those claims came 

from hospital outpatient departments as opposed to nonhospital providers. 

For comparison, we also determined what percentage of all claims came 

from hospital outpatient departments as opposed to nonhospital providers. 

To identify polysomnography claims with the same service date as one or 

more other polysomnography claims for the same beneficiary, we grouped 

claims by beneficiary number and service date and identified groups with 

more than one claim. We classified one claim from each of these groups 

as allowable but classified the remaining claims as inappropriate. 

To identify polysomnography claims that were submitted with invalid 

NPIs, we compared the provider NPI listed on each claim to NPI 

information from NPPES. We classified an NPI as invalid if it did not 

exist in NPPES or if its NPPES status was “inactive” on the service date. 

Identification of Providers That Exhibited Patterns of 

Questionable Billing 

We identified providers that exhibited patterns of questionable billing in 

three steps. First, we developed 11 measures of questionable billing and 

determined providers’ percentages for each measure. For this analysis, we 

excluded the 893 providers in our data set that had fewer than three 

claims, leaving a total of 6,339 providers. Next, for each measure, we 

identified providers that had unusually high percentages of questionable 

billing relative to other providers. To establish an objective benchmark, 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 7 
 

 

 

 

 

we considered a provider’s percentage to be unusually high if it was 

greater than the 75th percentile plus 1.5 times the interquartile range for the 

measure.38 Finally, we identified providers that had unusually high 

percentages for three or more of the 11 measures. We defined a pattern of 

questionable billing as having an unusually high percentage for three or 

more measures. 

The 11 measures of questionable billing are composed of 3 measures that 

identify claims that did not meet Medicare requirements (as discussed in 

the previous section), and 8 additional measures of questionable billing. 

All of these measures can represent services that were not medically 

necessary, not rendered, or otherwise inappropriate. The three measures 

that identify claims that did not meet Medicare requirements are as 

follows: 

	 Inappropriate diagnosis code. This measure represents the 

percentage of a provider’s polysomnography claims that did not 

meet Medicare criteria because they had inappropriate diagnosis 

codes per the applicable LCD. Providers with unusually high 

percentages for this measure may be routinely performing and 

billing Medicare for polysomnography services that are not 

medically necessary. 

	 Same-day duplicate claims. This measure represents the 

percentage of a provider’s polysomnography claims that did not 

meet Medicare criteria because they were for the same service date 

as one or more other polysomnography claims for the same 

beneficiary. Providers with unusually high percentages for this 

measure may be routinely submitting duplicate claims. 

	 Invalid NPI. This measure represents the percentage of a 

provider’s polysomnography claims that did not meet Medicare 

criteria because they were submitted with invalid NPIs.39 

Providers with unusually high percentages for this measure may be 

billing Medicare inappropriately. 

The eight additional measures of questionable billing are based on 

Medicare coverage and billing requirements for polysomnography 

services, measures used in OIG questionable-billing studies for other 

38 This is a standard exploratory method for identifying members of a population with 

unusually high values on a given statistic compared to the rest of the population when no 

established benchmarks exist. See J.W. Tukey, Exploratory Data Analysis, 

Addison-Wesley, 1977. 

39 A portion of a provider’s claims may have been submitted with an invalid NPI if the 

provider’s NPI changed from active to inactive during 2011, the timeframe of our 

analysis. 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 8 
 

 

Medicare services, and consultations with fraud investigators and sleep 

medicine professionals within and outside of OIG. We consulted sleep 

medicine professionals to identify clinical standards and best practices for 

the provision of polysomnography services. These professionals included 

MAC clinical medical directors; a practicing physician specialist and 

researcher; and representatives from a professional association, an 

accreditation organization, and an advocacy group. We also consulted 

health care fraud investigators to identify data patterns that could indicate 

inappropriate or fraudulent billing. These individuals included OIG 

auditors and agents, CMS policy and technical staff, and a private-sector 

fraud examiner knowledgeable about polysomnography compliance 

issues. 

The eight additional measures of questionable billing are as follows: 

	 Shared beneficiaries. This measure represents the percentage of a 

provider’s beneficiaries who also had polysomnography claims 

submitted by one or more other providers. Providers with 

unusually high percentages for this measure may be using 

compromised beneficiary numbers for fraudulent billing. 

	 Unbundling a split-night service. This measure represents the 

percentage of a provider’s diagnostic claims for which the provider 

also submitted a titration claim for the same beneficiary the next 

day. CMS allows providers to perform diagnostic and titration 

services on separate nights, which should be billed on two separate 

claims. Although there are some situations in which it may be 

necessary for a provider to perform these two services on 

consecutive nights, fraud investigators and sleep medicine 

professionals say it is unusual for a provider to do so routinely. 

Providers should not submit two separate claims if they perform a 

split-night service on a single night.40 Because a split-night service 

involves only one overnight stay, submitting two polysomnography 

claims for a split-night service constitutes inappropriate 

unbundling. Providers with unusually high percentages for this 

measure may be routinely performing split-night services but 

submitting separate diagnostic and titration claims to increase 

reimbursement. 

	 Double-billing for the professional component. This measure 

represents the percentage of a provider’s claims for global services 

that had a corresponding claim for the professional component. 

Providers with unusually high percentages for this measure may be 

40 OIG analysis of LCDs for polysomnography services from 2011. 

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routinely double-billing Medicare for the professional component 

of the polysomnography service.41 

	 Repeated titrations. This measure represents the percentage of a 

provider’s beneficiaries who had three or more titration claims 

within a 90-day period.42 According to fraud investigators and 

sleep medicine professionals, it is rarely medically necessary for a 

beneficiary to undergo more than two titration services in such a 

short time. Furthermore, most LCDs explicitly require that 

providers justify the medical necessity of polysomnography 

services beyond two nights of testing. Given this, providers with 

unusually high percentages for this measure may be routinely 

performing and billing Medicare for titration services that are not 

medically necessary or not rendered. 

	 Missing professional component. This measure represents the 

percentage of a provider’s claims for the technical component that 

had no corresponding claim for the professional component 

submitted by any provider. Providers with unusually high 

percentages for this measure may be routinely billing for 

polysomnography services not rendered. 

	 Titration with no corresponding treatment device. This measure 

represents the percentage of a provider’s titration claims for which 

the beneficiary has no corresponding DME claims for PAP devices 

or oral appliances. According to fraud investigators and sleep 

medicine professionals, in almost all cases beneficiaries who 

require a titration service are prescribed a PAP device or oral 

appliance. Providers with unusually high percentages for this 

measure may be routinely billing for services that are not 

medically necessary or not rendered. 

	 Missing visit with ordering provider. This measure represents the 

percentage of a provider’s polysomnography claims for which the 

beneficiary had no claims with the ordering provider in the 

preceding year.43 Providers with unusually high percentages for 

this measure may be routinely performing and billing Medicare for 

41 Double-billing is never permissible. However, the polysomnography service and the 

interpretation of that service may take place on different days. Accordingly, we had to 

approximate corresponding claims. Because of this approximation, our study 

characterizes instances of double-billing as only “questionable” rather than as definitively 

inappropriate. 

42 We excluded from our analysis all claims for incomplete titration services. 43 Because information on referring providers was available only on Physician Fee 

Schedule claims, we did not perform this analysis for hospital outpatient claims. 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 10 
 

polysomnography services for which they do not have valid orders, 

and therefore are not medically necessary. 

	 Repeated polysomnography services. This measure represents the 

percentage of a provider’s beneficiaries who had two or more 

polysomnography claims in each of 3 consecutive years. Although 

it may be necessary in some cases for a beneficiary to undergo 

repeat tests, it is rarely medically necessary for beneficiaries to 

receive multiple polysomnography services in consecutive years, 

according to fraud investigators and sleep medicine professionals. 

As such, providers with unusually high percentages for this 

measure may be routinely performing and billing Medicare for 

polysomnography services that are not medically necessary or not 

rendered. 

Limitations 

The 11 measures of questionable billing used in this study do not provide 

conclusive evidence of fraudulent billing. Rather, the measures are 

intended to identify questionable scenarios on the basis of claims data. In 

this study, we highlight providers that, relative to their peers, have 

unusually high percentages of questionable scenarios for several measures. 

Further investigation would be required to determine whether these 

providers have, in fact, submitted inappropriate or fraudulent Medicare 

claims for polysomnography services. 

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. 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 11 
 

FINDINGS 

Medicare inappropriately paid nearly $17 million for 

polysomnography claims that did not meet certain 

Medicare requirements 

Medicare inappropriately paid $16.8 million for polysomnography claims 

that did not meet one or more of three Medicare requirements. These 

claims had inappropriate diagnosis codes, were same-day duplicate claims, 

or were submitted with an invalid NPI. Of the providers with paid 

polysomnography claims in 2011, 35 percent (2,534 providers) submitted 

at least 1 claim that did not meet 1 or more of the 3 requirements. Table 

2 shows the number, percentage, and amount of claims that did not meet 

one or more Medicare requirements. 

Table 2. Polysomnography Claims That Did Not Meet One or More 

Medicare Requirements 

Reason Claim Did Not Meet 

Medicare Requirements Number of Claims Percentage of All Claims Amount 

Inappropriate diagnosis code 20,110 3.21% $16,050,155 

Same-day duplicate claim 1,178 0.19% $669,540 

Invalid NPI 109 0.02% $86,594 

(Overlap) (49) (0.01%) ($28,846)

 Total 21,348 3.41% $16,777,443 

Source: OIG analysis of National Claims History data, 2013. 

A majority of the claims did not meet Medicare requirements because they 

had inappropriate diagnosis codes. Medicare should not pay claims with 

diagnosis codes that are not allowed by LCDs.44, 45 Medicare may have 

paid claims with inappropriate diagnosis codes because claims processing 

edits to prevent inappropriate payments did not exist or were ineffective. 

Past OIG work has found that MACs do not always use edits to enforce 

LCD requirements, including those related to diagnosis codes.46, 47 

Same-day duplicate claims were less common but also contributed to 

inappropriate payments. Fifteen percent of these claims resulted from 

providers’ having indicated that multiple polysomnography services were 

performed, for the same beneficiary and same date of service, on a single 

claim submission. These types of same-day duplicate claims could be 

44 SSA §§1833(e) and 1862(a)(1)(A); 42 CFR § 400.202. 

45 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 3, 3.4.1.3(A). 46 OIG, Inappropriate Medicare Payments for Transforaminal Epidural Injection 

Services, OEI-05-09-00030, April 2010. 47 OIG, Medicare Payments for Facet Joint Injection Services, OEI-05-07-00200, 

September 2008. 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 12 
 

prevented by effective claims processing edits, such as CMS’s Medically 

Unlikely Edits; however, a recent Government Accountability Office 

report found deficiencies in CMS’s Medically Unlikely Edits.48 The 

remaining 85 percent of same-day duplicate claims resulted from separate 

claims submissions, either by the same provider or different providers. 

Preventing payment for such claims through automatic, real-time edits 

may not be feasible, as it would require comparisons across multiple claim 

submissions on different dates. 

A small proportion of claims paid inappropriately were submitted with an 

invalid NPI. Payments to invalid NPIs may occur if CMS does not 

validate NPIs. A previous OIG study found that Medicare paid 

$91 million for DME claims from providers with invalid or inactive 

provider numbers because Medicare claims processing systems verified 

only that the provider numbers listed on a claim met certain format 

requirements.49 

Of claims that did not have an appropriate diagnosis code, 

85 percent were from hospital outpatient departments 

These claims accounted for $14 million of the $16 million paid for claims 

with inappropriate diagnosis codes. This is a disproportionately high 

share; only 53 percent of all polysomnography claims in 2011 came from 

hospital outpatient departments. 

Each of the eight MACs with LCDs that applied to hospital outpatient 

departments processed a portion of these inappropriate claims.50 Despite 

having written policies outlining appropriate diagnosis codes, these MACs 

were unable to prevent inappropriate payments. This may be the result of 

ineffective claims processing edits or not having any edits to verify that 

the diagnosis codes submitted were appropriate. 

Only 15 percent of the claims paid with an inappropriate diagnosis code 

were from nonhospital providers. This is a disproportionately low share; 

47 percent of all polysomnography claims in 2011 came from nonhospital 

providers. 

MACs that processed polysomnography claims from nonhospital 

providers may have approved fewer inappropriate claims because they had 

48 Government Accountability Office, Medicare Program Integrity: Greater Prepayment 

Control Efforts Could Increase Savings and Better Ensure Proper Payment, 

GAO-13-102, November 2012. 

49 OIG, Medical Equipment and Supply Claims with Invalid or Inactive Physician 

Numbers, OEI-03-01-00110, November 2001. 50 The remaining seven MACs that processed polysomnography claims from hospital
 

outpatient departments in 2011 did not have applicable polysomnography LCDs, and are 

therefore excluded from this analysis. 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 13 
 

 

effective claims processing edits. Alternatively, these providers may have 

submitted fewer inappropriate claims. 

One hundred and eighty providers exhibited patterns 

of questionable billing for polysomnography services 

Of the 6,339 providers of polysomnography services in our population, 

180 exhibited patterns of questionable billing for such services for 2011. 

These providers account for 3.7 percent of the $470 million paid for 

polysomnography services in 2011. 

These 180 providers may be submitting inappropriate Medicare claims for 

polysomnography services, and therefore warrant greater scrutiny. We 

identified these providers because they had unusually high percentages, 

relative to other providers, on three or more of our measures of 

questionable billing. Providers that frequently submit claims that do not 

meet Medicare requirements (such as the claims discussed in the previous 

finding) or are associated with other measures of questionable billing may 

be more broadly engaged in inappropriate billing. 

Table 3 summarizes the measures of questionable billing associated with 

the 180 providers with patterns of questionable billing. 

Table 3. Summary of 180 Providers with Patterns of Questionable Billing for 

Polysomnography Services, by Measure of Questionable Billing 

Measure of Questionable Billing 

Number of Providers 

With an Unusually 

High Percentage * 

Measures That Identify Claims That Did Not Meet Medicare Requirements 

Same-day duplicate claims 105 

Inappropriate diagnosis code 50 

Invalid NPI 4 

Additional Measures of Questionable Billing 

Shared beneficiaries 81 

Unbundling a split-night service 79 

Double-billing for the professional component 64 

Repeated titrations 52 

Missing professional component 51 

Titration with no corresponding treatment device 44 

Missing visit with ordering provider 31 

Repeated polysomnography services 10 

Source: OIG analysis of National Claims History data, 2013. 

* Numbers do not sum to 180 because each provider is counted in 3, 4, or 5 rows. 

Same-day duplicate claims. Most providers with patterns of questionable 

billing had an unusually high percentage of same-day duplicate claims. 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 14 
 

 

 

 

Because an overnight stay is required for a polysomnography service, 

beneficiaries can undergo only one such service in a day. Therefore, 

same-day duplicate claims may represent claims for services not rendered. 

Frequent billing of same-day duplicate claims by a provider raises 

questions about the legitimacy of a provider’s services. 

Shared beneficiaries. Nearly half of providers with patterns of 

questionable billing had an unusually high percentage of beneficiaries who 

had polysomnography claims from one or more other providers in 2011. 

These providers may be using the same compromised beneficiary numbers 

as other providers to fraudulently bill for services not rendered. Past OIG 

investigations have uncovered schemes in which individuals have used 

stolen beneficiary numbers to submit false claims to Medicare.51 More 

recently, an individual pled guilty to illicitly obtaining and selling 

Medicare beneficiary information for fraudulent billing.52 

Unbundling a split-night service. Many providers with patterns of 

questionable billing had an unusually high percentage of diagnostic 

polysomnography claims with a titration claim for the same beneficiary on 

the following day. These providers may be performing split-night services 

but are submitting separate claims for diagnostic and titration services 

(i.e., unbundling the split-night service). Such unbundling inappropriately 

increases reimbursement by generating payment for two separate services 

instead of a single service. For nonhospital providers, unbundling could 

result in their receiving $1,186.79 instead of $618.03.53 

For example, if a provider begins a diagnostic service at 9 p.m. and can 

make a diagnosis of sleep apnea early on, the provider may then begin the 

titration at midnight or later and complete a split-night service. In this 

scenario, a provider should submit a single split-night claim. Instead, the 

provider might submit two separate claims: one for a full-night diagnostic 

service on the date the split-night service began, and one for a full-night 

titration service on the date the split-night service ended. 

Frequently performing separate diagnostic and titration services on 

consecutive nights is unusual, although there are situations in which it may 

51 Testimony of Gerald T. Roy, OIG Deputy Inspector General for Investigations, before 

the U.S. House of Representatives, Committee on Energy & Commerce, Subcommittee 

on Oversight & Investigations, March 2, 2011. 

52 U.S. Department of Justice, Illegal Marketer of Medicare Information Admits Role in 

Detroit-area Home Health Care Fraud Scheme (press release). Accessed at 

www.justice.gov on February 22, 2013. 53 AMA, CPT reference for codes 95810 and 95811. Accessed at hsrl.mediregs.com on 

April 9, 2013. Reimbursement amounts reflect unadjusted 2011 Physician Fee Schedule 

payment rates for the technical component of the service, which may differ from 

nonhospital providers’ actual reimbursement amounts. 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 15 
 

 

be necessary. According to fraud investigators and sleep medicine 

professionals, scheduling a titration service on the night immediately 

following a diagnostic service is logistically difficult for providers and 

beneficiaries. After performing a diagnostic service, a provider may have 

difficulty fitting a patient into the sleep lab schedule for a titration service 

the next night. However, for beneficiaries travelling long distances, 

providers may opt to pre-schedule two consecutive nights of testing, and 

cancel the second night if it turns out to be unnecessary. Further, although 

beneficiaries may not want to sleep in a lab two nights in a row, a provider 

may deem it medically necessary to perform a titration service as soon as 

possible if the beneficiary is diagnosed with sleep apnea but a split-night 

service cannot be performed. 

Missing visit with ordering provider. Some providers with patterns of 

questionable billing had an unusually high percentage of claims for 

beneficiaries with no evidence of a visit with the ordering provider in the 

preceding year. An in-person evaluation is required to determine whether 

polysomnography services are warranted; according to sleep medicine 

professionals, polysomnography should be performed within a year after 

the in-person evaluation. Given this, these providers may be performing 

polysomnography services for which they do not have valid orders, and 

that therefore are not medically necessary. 

Previous OIG studies have raised the same concern for other types of 

claims. A 2011 OIG study on questionable Medicare billing by suppliers 

of lower-limb prostheses found that Medicare inappropriately paid 

$61 million for beneficiaries with no claims from their referring 

physicians.54 Additionally, a 2009 OIG study on ultrasound services found 

that Medicare paid $49 million in questionable claims for beneficiaries 

with no prior service claims from the ordering physician.55 

54 OIG, Questionable Billing by Suppliers of Lower Limb Prostheses, OEI-02-10-00170, 

August 2011. 

55 OIG, Medicare Part B Billing for Ultrasound, OEI-01-08-00100, July 2009. 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 16 
 

CONCLUSION AND RECOMMENDATIONS 

We found that in 2011, Medicare paid nearly $17 million for 

polysomnography services that did not meet requirements. Although this 

represents a relatively small percentage of payments for polysomnography 

services, CMS and MACs could likely have prevented nearly all of these 

inappropriate payments through more effective claims processing edits, 

particularly prepayment edits to deny claims with inappropriate diagnosis 

codes. By implementing such edits, CMS and MACs could reduce future 

inappropriate payments for polysomnography services. 

We also found that 180 providers exhibited patterns of questionable billing 

for polysomnography services. Although our study did not look for or 

find conclusive evidence of fraud, these providers warrant further scrutiny, 

as they may be likely to submit inappropriate or fraudulent claims for such 

services. Further investigation of these specific providers may also help 

CMS prevent future inappropriate payments. 

We recommend that CMS: 

Implement Claims Processing Edits or Improve Existing Edits 

To Prevent Inappropriate Payments 

CMS should implement claims processing edits or improve existing edits 

for polysomnography services. 

To prevent payments for claims with inappropriate diagnosis codes, CMS 

could encourage MACs to implement claims processing edits or improve 

existing edits to check claims for appropriate diagnosis codes. CMS could 

prioritize working with MACs that process claims from hospital outpatient 

departments, as payments for claims with inappropriate diagnosis codes 

were concentrated among these providers. 

To prevent paying for same-day duplicate services, CMS could investigate 

why its existing Medically Unlikely Edits for polysomnography did not 

stop claims identified in this study. CMS could then correct any identified 

problems. 

To prevent paying for claims with invalid NPIs, CMS could also ensure 

that claims processing edits validate NPIs. 

Recover Payments for Claims That Did Not Meet Medicare 

Requirements 

CMS should investigate, and recover, if appropriate, the payments 

identified in this study for claims that did not meet Medicare requirements. 

In a separate memorandum, we will refer to CMS for appropriate action 

the claims that did not meet Medicare requirements. 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 17 
 

 

Consider Using Measures of Questionable Billing From This 

Study To Identify Providers for Further Investigation 

CMS should consider using one or more of the measures of questionable 

billing in this study to improve safeguards for polysomnography services. 

CMS could augment algorithms in its Fraud Prevention System to identify 

polysomnography providers that, on the basis of one or more of the 

measures of questionable billing used in this study, have 

questionable-billing patterns. These measures could be used as screening 

tools to help CMS select targets for audit or investigation. 

Take Appropriate Action Regarding Providers That Exhibited 

Patterns of Questionable Billing 

CMS should refer providers with patterns of questionable billing to 

contractors for further investigation to determine whether the billing 

patterns represent inappropriate or fraudulent billing. In a separate 

memorandum, we will refer to CMS for appropriate action the providers 

we identified as having patterns of questionable billing. 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 18 
 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

CMS concurred with all four of our recommendations. To address our 

recommendations about inappropriate payments, CMS plans to re-review 

the Medically Unlikely Edits for polysomnography services and 

investigate their accuracy and effectiveness. In addition, CMS plans to 

investigate, and recover, if appropriate, the payments that did not meet 

Medicare requirements. To address our recommendations about providers 

with patterns of questionable billing, CMS plans to use the measures OIG 

identified in this report to develop algorithms to detect and analyze 

aberrant billing of polysomnography. CMS also plans to instruct 

contractors to review providers with inappropriate billing and take 

appropriate action. For the full text of CMS’s comments, see Appendix A. 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 19 
APPENDIX A 

Agency Comments 

/,P.VICtf'

( -i_ DEPARTMENT OF HEALTH & HUMAN SERVICES C..nters for Medicare & Medlcaid Services 

~:::-:~ Administrator 

Washington, DC 20201 

AUG 1 5 2013 DATE: 

TO: 	 Daniel R. Levinson 


Inspector General 


FROM: 	 Mantyn Tavenner 


Administrator 


SUBJECT: 	 Office oflnspector General (OIG) Draft Report-"Questionable Billing for 

Polysomnography Services" (OEI-05-12-00340) 

The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 

comment on the above-referenced OIG draft report. The purpose ofthis report is to analyze the 

increased Medicare spending on polysomnography services based on the growing concerns about 

fraud and abuse regarding these services. 

The CMS is committed to preventing improper and fraudulent billing for polysomnography 

services, particularly given the rise in Medicare spending for such services. CMS pays for 

polysomnography services under different payment systems, relying on Medicare Administrative 

Contractors (MACs) to process claims. CMS is committed to working with its MACs to develop 

and implement claims processing edits and improve existing edits in an effort to prevent such 

improper payments. 

We appreciate OIG' s efforts in working with CMS to ensure that appropriate action is taken 

regarding improper payments as well as providers that exhibit patterns of questionable billing for 

polysomnography services. Our response to each ofthe OIG recommendations follows. 

OIG Recommendation 

The OIG recommends that CMS implement claims processing edits or improve existing edits to 

prevent inappropriate payments . 

CMS Response 

The CMS concurs with this recommendation. CMS has developed and implemented medically 

unnecessary edits (MUEs) for the Current Procedural Terminology codes (95808, 95810, and 

95811) for polysomnography services, effective April I, 2007. CMS also has MUEs for the new 

2013 polysomnography codes 95782 and 95783, effective January I, 2013. 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 20 
 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 21 
 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 22 
 

ACKNOWLEDGMENTS 

This report was prepared under the direction of Ann Maxwell, Regional 

Inspector General for Evaluation and Inspections in the Chicago regional 

office; Thomas F. Komaniecki, Deputy Regional Inspector General; and 

Laura Kordish, Deputy Regional Inspector General. 

Kelly Waldhoff served as team leader for this study, and Adam Freeman 

served as lead analyst. Other Office of Evaluation and Inspections staff 

from the Chicago regional office who conducted the study include Hilary 

Slover. Central office staff who provided support include Clarence 

Arnold, Meghan Kearns, Sandy Khoury, Starr Kidda, and 

Christine Moritz. 

Questionable Billing for Polysomnography Services (OEI-05-12-00340) 23 
Office of Inspector General

http://oig.hhs.gov 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health and Human Services 

(HHS) programs, as well as the health and welfare of beneficiaries served by those 

programs. This statutory mission is carried out through a nationwide network of audits, 

investigations, and inspections conducted by the following operating components: 

Office of Audit Services 

The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 

audits with its own audit resources or by overseeing audit work done by others. Audits 

examine the performance of HHS programs and/or its grantees and contractors in carrying 

out their respective responsibilities and are intended to provide independent assessments of 

HHS programs and operations. These assessments help reduce waste, abuse, and 

mismanagement and promote economy and efficiency throughout HHS. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

HHS, Congress, and the public with timely, useful, and reliable information on significant 

issues. These evaluations focus on preventing fraud, waste, or abuse and promoting 

economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI 

reports also present practical recommendations for improving program operations. 

Office of Investigations 

The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 

of fraud and misconduct related to HHS programs, operations, and beneficiaries. With 

investigators working in all 50 States and the District of Columbia, OI utilizes its resources 

by actively coordinating with the Department of Justice and other Federal, State, and local 

law enforcement authorities. The investigative efforts of OI often lead to criminal 

convictions, administrative sanctions, and/or civil monetary penalties. 

Office of Counsel to the Inspector General 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support for OIG’s internal operations. OCIG represents OIG in all civil and 

administrative fraud and abuse cases involving HHS programs, including False Claims Act, 

program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG 

also negotiates and monitors corporate integrity agreements. OCIG renders advisory 

opinions, issues compliance program guidance, publishes fraud alerts, and provides other 

guidance to the health care industry concerning the anti-kickback statute and other OIG 

enforcement authorities.