Home Sleep Testing: A Q&A with The MED Group and Jeff Baird, Esq., Brown & Fortunato

May 15, 2008

On March 20, members of The MED Group convened with Jeff Baird, Esq., Brown & Fortunato, to discuss the legal implications of the final rule on home sleep testing devices. Below are some of the questions posed by MED members and the answers collected.

What are the requirements to become a home sleep testing (HST) entity and what are the fees expected to be?

Although the CPAP decision memo expresses CMS' intent to extend CPAP coverage to a diagnosis of obstructive sleep apnea (OSA) based on HST, it does not address coverage or requirements for the HST itself. There is no CMS national coverage determination (NCD) for polysomnography and sleep testing. So, Medicare coverage is based on the local coverage determination (LCD) of the local Part B carrier. Historically, coverage has not been provided for unattended sleep tests. We will have to wait until the LCDs are revised to determine the requirements for HST and if the carrier will pay for HST. According to the 2008 fee schedule amounts for CPT 95806 (sleep study, unattended), before geographic adjustments, the reimbursement is stated to be $76.31 for the professional component and $116.85 for the technical component. However, just because a CPT code is listed on the fee schedule does not mean it is, or will be, covered by Medicare.

There have been discussions that Regions A and C will opt out of HST. Do the MACs have the authority to do this?
Assuming that the CPAP NCD is revised in accordance with the CPAP decision memo, each of the DME MACs will have to allow CPAP coverage based on a diagnosis of OSA resulting from HST. However, as stated above, coverage of the HST itself is left to the various Part B carriers and not the DME MACs.

There are some state legislatures that are attempting to pass laws to require all sleep testing (in the lab and in the home) to be conducted by a licensed sleep technician. If these states are successful in passing these laws, do you think Medicare may rescind or revise HST?
It is unlikely that the CPAP NCD and LCDs will change as a result of new state laws. The entity performing the HST will need to satisfy both federal and state requirements.

When will the LCDs be published?
They are expected to be published prior to July 1, 2008.

There are sleep labs that have partnered with HME companies in anticipation of HST. How is this possible in light of the prohibition against financial arrangements?
Assuming that the partnership or financial arrangements between the sleep lab and HME company do not violate anti-kickback laws, the rules are currently different for an HME company/sleep lab arrangement vs. an HME company/oxygen qualifying lab arrangement. If the sleep lab is a separate legal entity from the HME company, then the HME company can provide CPAP equipment to the OSA patients qualified at the sleep lab. On the other hand, the HME company cannot provide oxygen equipment to patients qualified by a lab that is financially associated with or related to the HME supplier.

How can an HME company show that a patient has improved by using a CPAP?
The CPAP decision memo states that CPAP is covered beyond 12 weeks only for those beneficiaries who benefit from CPAP during the 12-week period. Each of the DME MACs will have to address what documentation is needed to demonstrate compliance with this requirement.

Will the HST need to be performed by an independent diagnostic testing facility (IDTF) or can it be performed by a certified PSG lab?
We believe that Part B carrier LCDs allowing HST will allow it to be performed by either.

Can the HME company rent HST equipment to the physician at fair market value?
If the physician is referring Medicare or Medicaid patients to the HME company, then the rental agreement must comply with the Stark exception for rental of equipment and must comply with the equipment rental safe harbor to the Medicare/Medicaid anti-kickback statute. Among other requirements, the rent must be fair market value and must be a flat annual fee fixed in advance.

Does the HST decision memo allow for bi-level devices or must CPAP units be initially provided?
The rules for coverage of bi-level devices remain the same.

Who may interpret and score the HST study?
See the answer to the first question. Currently, there is nothing published that prohibits a physician from interpreting the results of a diagnostic study he orders for a patient. Nevertheless, it is always recommended to have proof of competency of the physician performing the interpretation.

If an HME company has a CPAP patient whose CPAP services have been covered by a commercial insurer and then the patient goes on Medicare, is the original sleep study valid?
Yes. Unlike the oxygen LCD, the current CPAP LCD does not require that the sleep study be performed within a specified time frame prior to Medicare coverage.