March 13, 2008, must have seemed like the “day of infamy” for sleep laboratories. On that day, CMS determined that PSG was no longer the gold standard for diagnosing OSA and that unattended portable monitoring was an acceptable option for qualifying select patients for CPAP. As expected, private payors soon followed CMS’ lead, and sleep professionals feared that the expanding in-laboratory PSG model would be decimated.

A year later, little has changed. In-laboratory PSG is still growing, according to Sleep Review‘s latest industry survey, and few laboratories are using portable monitoring in lieu of PSG.1 Despite these facts, the portable monitoring bell has been rung. The AASM is funding a study comparing home sleep testing (HST) to in-lab PSG, while industry watchers expect that CMS will continue to encourage home testing or find other ways to significantly lower in-laboratory polysomnography costs.


In the jungle of health care reimbursement, CMS is a lion. Its national coverage decisions have far-reaching effects on not only the reimbursement of Medicare-approved physicians, but also the coverage decisions of private payors.

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However, a year after CMS published its National Coverage Determination (NCD) on home sleep testing, little has changed. Sleep Review‘s Wachovia national survey of sleep professionals reveals that sleep laboratories continue to expand or build new facilities; at the same time, few laboratories are offering or performing portable monitoring studies.1

Sleep laboratories can thank the American Academy of Sleep Medicine (AASM) and other groups for convincing the local Medicare carriers to further define the NCD with more stringent guidelines written into the Local Coverage Determinations (LCDs).

Terry Murphy, director of sales, North and South America, for Denver-based PSG and portable monitoring manufacturer Embla, remarked how radical the original NCD was—at first.

Murphy says, “CMS took a very hard line regarding traditional laboratories, even going so far as saying that laboratories were not the gold standard and that portable monitoring was every bit as reasonable and viable an option as traditional bricks and mortar labs. I think that position caused the AASM to rally its forces and go on a counteroffensive, which worked the local administrative offices of CMS and created LCDs that gutted much of the original intent of the national determination.”

Among the refinements that weakened CMS’ hope for more portable monitoring:

  • Portable monitoring was left as an option for clinicians in all OSA suspected cases, even in the most highly probable cases outlined in AASM guidelines. Given a choice, it was easier, clinically justifiable, and more profitable for physicians to remain with the standard PSG.
  • Home medical equipment providers were prevented from providing and educating patients on the use of portable monitoring devices. Instead, device distribution is in the hands of sleep laboratories. No compensation was made for the time and cost of patient training, further dis-incentivizing laboratories from considering portable monitoring as an option.
  • A viable model for home titration using autoPAP devices was not addressed, which meant that patients testing positive for OSA and using home testing need to return to the laboratory for an overnight titration study. In addition, CMS has yet to approve a higher reimbursement for the more expensive autoPAP devices, which once again discouraged laboratories from using them.
  • HST interpretations can be conducted only by sleep medicine professionals who meet the qualifications documented in the LCDs.
Susan Esther, MD
Robert D. Hoover, Jr, MD, MPH, FACP
Peter C. Gay, MD

Susan Esther, MD, president of the AASM and medical director at The Sleep Center at SouthPark, Charlotte, NC, views the refinements as part of the process and does not believe they limit opportunities for portable monitoring. If anything, she says the opposite is true.

Speaking as a clinician, Esther says, “The NCD did not change or limit what we were already doing. It just expanded the available avenues that patients could use to get treatment and CPAP.”

Esther also points out that even before the March final decision, the AASM issued a retrospective review of the evidence for portable monitoring and subsequently published guidelines for Type II and Type III home testing as an option for select patients.2 In addition, the AASM is funding a large multicenter clinical trial through the American Sleep Medicine Foundation, which will compare economic and clinical protocols for portable monitoring in comparison to the traditional PSG model.3

Asked if the sleep industry would be moving at all toward portable monitoring if it weren’t for CMS’ influence, Esther says, “Absolutely. I don’t know how much [it moves] for CMS influence, but I hope that it’s the evidence of what makes good medical practice that will influence what gradually evolves, and that we’ll have the research to back that up.”


A year after the NCD, a representative from one of the Durable Medical Equipment Medicare Administrative Carriers (DME MACs) says it is still too early to speculate on the effect of CMS’ portable monitoring policy.

Robert D. Hoover, Jr, MD, MPH, FACP, senior medical director for CIGNA Government Services, commented in a statement, “At this time, the DME MACs and CMS are waiting to determine the impact of the sleep testing policy change. Home sleep testing, while a technology that has been available for several years, is still relatively underutilized compared to facility-based polysomnography, and [it] has only recently gained favor in the medical literature for a narrow population of patients. The DME MAC … [LCD] was developed with provisions that reflect the current medical literature to ensure proper patient selection while fostering judicious use of home testing technology.”

Peter C. Gay, MD, professor of medicine, Mayo Graduate School, Rochester, Minn, and a physician who works directly with DME MACs, says that the CMS NCD or subsequent LCDs have not moved his practice toward portable monitoring at all.

“We have not initiated a single portable monitoring study in our population as an outpatient,” Gay says.

Esther says that she has purchased some portable monitors for her practice and reports that she is using them with some patients, though she was still primarily using PSG.

While the NCD has not changed his own practice, Gay suspects that the CMS policy change has helped rural communities that have limited access to sleep laboratories. “If you had a two- to four-bed lab in a rural part of the United States that has much less capacity, then they would really have an opportunity to reach out to a lot more people who have untreated OSA. But for a place like ours that runs 24 beds a night, that has a population who wants to get in and get out, there really isn’t a more efficient way to do this than a split-night study.”

Esther also agrees that at this time, given the open questions about unattended home titration, in-laboratory PSG split night studies remain the most cost-effective and convenient type of OSA testing for her practice.


As to the parade of insurers that were to follow the CMS, they have—but mostly by expanding options for portable monitoring, not mandating it.

Murphy reports that he hears from insurance companies that they would like to go forward with more portable OSA testing, but that little has materialized that would set that goal in motion. However, he notes that there are parts of the country that use portable monitoring, particularly the West Coast because of the Kaiser Permanente Group. He says, “An extremely high percentage of their patients are diagnosed and treated on the basis of that diagnosis using portable monitoring. That has led more of the third-party payors on the West Coast to accept [portable monitoring] as reasonable and customary. But in the rest of the country, that has not been the case.”

As to CMS’ effect on PSG vendors, Murphy says there was an initial flurry of activity to design and provide more portable monitors when CMS was making its initial recommendation in September 2007, before the final decision. As a result, traditional laboratories that were looking at expansions or updating their equipment put their plans on hold, fearing lower volumes of OSA PSG tests. When the LCDs came out, those fears appear to have been alleviated.

“We saw a spike back in the traditional diagnostics market with people saying that now the threat is gone, they’re ready to do their expansion and to do their upgrades and move forward,” Murphy says. In addition, Murphy knows of laboratories purchasing portable monitors on top of their upgraded PSG systems, an indication that sleep laboratories are at least open to offering portable monitoring as an option.


Gay traces CMS’ reconsideration of portable monitoring to a 2005 Office of Inspector General (OIG) report that showed a dramatic rise in OSA diagnostic tests from 2001 to 2005.

“They went from 62 million [PSG tests] in 2001 to 215 million in 2005. That’s the real key to this,” Gay says. “Ultimately, when the OIG saw this kind of expenditure, they said, ‘Okay, [portable monitoring] is back on the radar screen.’ “

As health care costs rise with sleep and other diseases, it is inevitable that CMS will eventually decrease reimbursement costs for OSA testing.

Gay says, “Even if you didn’t have portable monitoring, that huge increase in the use of polysomnography virtually mandates that CMS will go after that. So they will progressively—like they do with anything—eventually reduce the reimbursement for polysomnography until it gets under a more reasonable control.”

Gay notes that CMS’ most convincing argument for pushing portable monitoring is that it should not be paying such high up-front costs for a diagnostic test. Instead, it would rather be using that money for treatment and increased follow-up for compliance.

Despite more laboratories purchasing Type III monitors, Murphy is skeptical that portable monitoring will become a widely used OSA diagnostic technique any time soon.

“It isn’t going to be in the traditional sleep markets,” Murphy says. “It’s going to be in companies that provide services to meet regulatory issues, such as the trucking industry, or for those types of niche concepts that need a quick answer with relatively low cost for people who are highly mobile and don’t have time to be down for several days calling into a sleep laboratory.” Similarly, he says that portable monitoring will continue to grow in organizations that may not abide by AASM standards, such as the military and health maintenance organizations.

Speaking as a clinician, Esther says, “I think gradually, we will, for some uncomplicated patients, do more portable monitoring, and hopefully the portable devices will improve as well. We will have to do more research, with which we can be comfortable working with a number of different models. So, we’ll see how that turns out.”

Gay also sees the in-laboratory PSG model remaining fairly stable for the next several years, but suspects that the niche markets may eventually develop their own protocols to put pressure on physicians to justify a PSG study.

“I wouldn’t be surprised if the pressure to increase portable monitoring comes from Wal-Mart and other major employers in this country that self-insure their own employees,” Gay says. “So, a Wal-Mart patient who comes into my office may one day be carrying a slip of paper that says that during my evaluation, I must clarify why it isn’t very clear that this patient couldn’t be done as a portable monitoring diagnostic study, rather than be put in the lab.”

Whatever the future of in-laboratory PSG, CMS has certainly made its mark in pushing the debate in portable monitoring—and will continue to do so in the coming years.

Tor Valenza is a staff writer for Sleep Review. He can be reached at [email protected].


  1. It’s official: economy affecting sleep centers. Q1 2009, Wachovia/Sleep Review Sleep Center Survey. Sleep Review. 2009;10(2):14-17.
  2. Collop NA, Anderson WM, Boehlecke B, et al. Clinical guidelines for the use of unattended portable monitors in the diagnosis of obstructive sleep apnea in adult patients. J Clin Sleep Med. 2007;3:737-747.
  3. Portable monitoring for diagnosis and management of sleep apnea (HomePAP). Available at Accessed February 11, 2009.