A sleep study, medically known as a polysomnography, is a non-invasive test that records body functions during sleep, such as brain activity, oxygen levels, heart rate, breathing, and leg movements, to help diagnose sleep disorders. Medicare generally covers a sleep study if the test is considered medically necessary by a physician and specific regulatory criteria are met.
Understanding Medicare Coverage Components
Coverage for a sleep study falls primarily under Medicare Part B, the medical insurance component of Original Medicare. Part B covers outpatient services, including physician services, diagnostic tests, and medical supplies. Since a sleep study is classified as an outpatient diagnostic test, Part B is the responsible payer once coverage requirements are satisfied.
If enrolled in a Medicare Advantage Plan (Part C), coverage is handled through the private insurance carrier. These plans must legally cover the same services as Original Medicare, including medically necessary sleep studies. However, Part C plans may have different rules regarding referrals, prior authorizations, and the use of in-network facilities.
Qualifying for a Covered Sleep Study
For Medicare coverage, “medical necessity” is the overriding factor for approval. The test must be ordered by a treating physician who believes the patient has clinical signs and symptoms of a covered sleep disorder. The physician must document a comprehensive evaluation of the medical history, physical exam results, and specific signs justifying the need for testing.
Coverage is most commonly approved for diagnosing Obstructive Sleep Apnea (OSA), characterized by repeated episodes of upper airway collapse during sleep. Medicare may also cover studies for other conditions, such as narcolepsy or parasomnia, though these often require a comprehensive in-facility test. The physician’s documentation must clearly support the need for the study, as testing for conditions like chronic insomnia is generally not covered.
The test must be ordered by the provider treating the suspected condition, and the claim must include the ordering provider’s name and identification number. A sleep study used to evaluate the effectiveness of existing treatment, such as assessing Continuous Positive Airway Pressure (CPAP) needs after a weight change, can also qualify for coverage. If the study is ordered by a physician who has a financial relationship with the testing facility, coverage may be denied due to self-referral statutes.
In-Facility vs. Home Sleep Apnea Testing Coverage
Medicare has distinct rules regarding the setting of the sleep study, depending on the suspected condition and the patient’s overall health. Home Sleep Apnea Testing (HSAT), using a portable device at home, is often the preferred initial approach for diagnosing uncomplicated OSA. Medicare covers Type II, Type III, and Type IV HSAT devices for patients who show clinical signs of OSA and lack other complex medical conditions.
HSAT devices are simpler, measuring fewer channels than a full in-lab study, but they effectively record respiratory effort, heart rate, oxygen saturation, and airflow. This unattended testing is covered only for diagnosing OSA and is not approved for other sleep disorders. If the patient has moderate to severe co-morbidities, such as significant pulmonary disease or congestive heart failure, HSAT may be medically inappropriate, requiring an in-facility test.
In-Facility Polysomnography (PSG), designated as a Type I study, requires the patient to spend a night in a certified sleep lab or hospital setting. This comprehensive test monitors a minimum of 16 channels, including brain waves (EEG) and eye movements (EOG), providing a detailed look at sleep architecture. Medicare covers Type I PSG when necessary for diagnosing narcolepsy or parasomnia, or when the initial home test for OSA was inconclusive or failed. The in-lab setting is reserved for more complex cases or when continuous monitoring by a trained technician is necessary.
Patient Financial Responsibility and Costs
Even when a sleep study is covered by Medicare Part B, the patient remains responsible for certain out-of-pocket costs. Part B coverage requires the beneficiary to meet an annual deductible before payments begin. Once the deductible is satisfied, Medicare pays 80% of the Medicare-approved amount for the diagnostic service.
The patient is responsible for the remaining 20% coinsurance of the approved amount. A copayment may also be required if the study is performed in a hospital outpatient setting. Patients with supplemental insurance, such as a Medigap policy or Medicare Advantage Plan coverage, may have these out-of-pocket costs reduced or fully covered. Confirming that the sleep facility accepts Medicare assignment ensures the lowest possible patient cost.