Why and how the year 2025 could mark the start to an era of innovation for unattended sleep testing.
By Sree Roy
When the WatchPAT home sleep test (HST) entered the US market, the idea that a home-based device could supply a reliable apnea-hypopnea index (AHI)—without a sensor in the nose, at that—was inconceivable.
During a time when sleep testing was almost exclusively done in the lab and always involved direct airflow sensing, “Itamar, in many ways, was swimming against the stream,” says Etai Amitai, vice president of strategic planning and health economics at WatchPAT-marketer ZOLL Itamar.
In a halting sequence of events that took about a decade—including a Centers for Medicare and Medicaid Services (CMS) national coverage determination in favor of HST, new Current Procedural Terminology (CPT) codes that described equipment beyond airflow-based type III HSTs, and an American Academy of Sleep Medicine (AASM) clinical practice guideline update that found peripheral arterial tonometry (PAT) technology to be technically adequate—WatchPAT arrived at its current position of broad acceptance among sleep specialists and payors.
But now Amitai and other stakeholders say HST innovation is again being choked by similar means. Outdated codes, practice guidelines that don’t recognize the capabilities of new hardware and software, and reimbursement dollars that don’t sync with modern business realities have resulted in a bevy of novel sleep study technologies not being utilized in the United States, despite their having already cleared the Food and Drug Administration (FDA) and their potential clinical advantages. “It’s very hard to innovate because you complete very promising technology, but because it does not measure ‘x,’ nobody will use it because then they will not get paid,” Amitai says.
Momentum is building for change. In fits and starts, a new HST code set is being developed by the AASM, a clinical guideline patch is being drafted, and reimbursement fee changes will follow. 2025 could be the year that the American Medical Association (AMA) approves new CPT codes. And this time, according to a representative of the AASM, the code structure will stand the test of time.
CPT Code Concerns
Today’s CPT codes for HST are mostly defined by channels (such as oxygen saturation and respiratory effort), while 95800 also requires the parameter of sleep time. These codes are:
- 95800: heart rate, oxygen saturation, respiratory analysis (such as by airflow or PAT), sleep time;
- 95801: heart rate, oxygen saturation, respiratory analysis; and
- 95806: heart rate, oxygen saturation, respiratory airflow, respiratory effort.
But new technologies—which may monitor novel channels (such as jaw movements) and/or supply parameters beyond sleep time (such as sleep stages)—don’t always check these boxes.
For example, sleep specialists might find huge clinical value in HSTs that provide rich insights to facilitate phenotyping and optimize relief of patient-centered concerns. However, these devices tend to cost more than the ones that simply report an AHI. Within the current system, the extra cost and analysis time are not reimbursed accordingly, some stakeholders say.
As Skip Ashmore, chief commercial officer at patch-based home polysomnography (PSG) marketer Onera, sees it, “The lack of appropriate coding and reimbursement for type II devices creates an artificial market dynamic where providers are incentivized to use either expensive in-lab testing or limited home testing, with no middle ground….A dedicated CPT code for type II devices would help align reimbursement with clinical value and enable broader access to advanced home sleep diagnostics.”
Newer HSTs designed for mass-scale accessibility are unfairly ignored by the coding structure, other stakeholders posit.
“I believe certain populations should have access to HSTs, supported by a new reimbursement code that economically incentivizes healthcare professionals while expanding diagnostic access….This new code would allow other healthcare providers, beyond traditional sleep clinics, to perform tests and receive reimbursement for diagnosing [obstructive sleep apnea],” says Esther Rodriguez-Villegas, PhD, founder and CEO of HST marketer Acurable. “This approach could also ensure that patients who test positive and above a certain severity are referred to a sleep clinic for further evaluation, where more complex tests could be performed if necessary and still reimbursed.”
Still others express concern that signals of sleep health remain unrecognized. “Validated assessment of sleep quality and architecture is very important,” says Bogi Palsson, CEO of software as a service marketer SleepImage. “Research continues to indicate that addressing AHI and oxygen levels alone is not capturing the totality of sleep health.”
Add to this numerous concerns about so-called “black-box” HSTs—devices that use proprietary artificial intelligence to create their reports—and current CPT codes feel woefully inadequate.
AASM Develops New HST Code Set
Many of these concerns are shared by the AASM. That’s why, for the past several years, it has been developing a new HST code set to submit to the AMA, the organization responsible for creating, maintaining, and updating the CPT codes, an effort that has ramped up in the past nine months.
“There have been some steps forward and steps back,” says Fariha Abbasi-Feinberg, MD, FAASM, FAAN, a sleep physician on the AASM board of directors.
The challenges are numerous.
“There are so many new and novel options. How do you classify them? You can’t have an individual code for every type of device, but some clearly can’t be lumped together,” Abbasi-Feinberg says. “We’ve been trying to come up with a system that hopefully encompasses devices that are available presently but also allows for new devices in the future.”
There are many parties involved: AASM members, sister societies, HST marketers, AMA panels, and other stakeholders.
For example, Heidi D. Riney, MD, DABPN, chief medical officer at Nox Health (parent company of HST marketer Nox Medical), wants an updated code set to include “clear distinctions between direct and indirect measurements of symptoms of sleep disorders and ensure that coding frameworks are built on evidence-based clinical utility.”
“It is critical to take a patient-centric view and consider the clinical utility of the technologies,” Riney says.
Bad actors, she fears, could manipulate a coding structure that incorporates flexibility. “Without clear guidelines, device manufacturers might exploit the system by inflating channel counts using derived metrics, undermining the intent of the codes,” she says.
Many other HST marketers will also provide their input to the AASM. A spokesperson for ResMed, a marketer of HSTs and other sleep devices, says, “We are aware of the ongoing process led by the AASM to propose updates to the existing CPT codes for home sleep apnea testing. ResMed remains committed to adhering to the established CPT Code Change Editorial Panel Review process and will provide input at the appropriate stages, in accordance with AMA guidelines.”
If you add to the (at times conflicting) stakeholders’ concerns the fact that the AASM wants to simplify the codes—eliminating redundant CPT and G-codes, for example—then the stagnating codes begin to make more sense.
“We’ve submitted code change applications [to the AMA] in the past that have been withdrawn for various reasons,” Abbasi-Feinberg says.
However, she is optimistic that the AASM’s most recent application, submitted at the end of 2024, will earn the AMA’s approval. “I think we are finally at the point, with the most recent code set we’ve been working on, where it will hopefully encompass new technology or new channels as they become available and have that flexibility built in.
“We want to structure it in such a way that it stands the test of time.”
The best-case timing is for the AMA to approve new HST codes at its February 2025 CPT panel meeting, which means the earliest the codes would take effect is January 2027. (Sleep Review will not publish details of the proposed codes before AMA approval. The AASM is available for coding-related concerns at [email protected].)
“This has been close and dear to my heart for numerous years,” Abbasi-Feinberg says. “It’s been more active and then slows down….I am hoping it comes to fruition and a result that everyone can be happy with. I’ve got my hopes up this time, to tell you the truth.”
AASM Drafts Clinical Guideline Patch
New CPT codes would be a huge step, but it’s only the first of many for new HST technologies to reach widespread acceptance.
Because other AASM offerings must be reevaluated in tandem, “that’s been the other challenge in terms of the timeline,” Abbasi-Feinberg says. The AASM may need to update various clinical guidelines and the scoring manual.
A task force is already drafting a focused update to the clinical practice guideline for diagnostic testing for adult obstructive sleep apnea (OSA), essentially a patch that incorporates new technologies and data. The AASM hopes to open the comment period for this focused update in 2025.
Many stakeholders also have their wishlists ready in anticipation of a more complete overhaul of the guidelines, though that is unlikely to occur for several years.
For example, many sleep specialists and industry marketers hope that the AASM will state that HST is appropriate for children. “It should be allowed for pediatrics. There is strong data now that the AASM can use,” says Khem Ballaho, MBA, RPSGT, UCLA sleep lab manager, who laments the challenges of scheduling one-to-one (sleep tech to child) ratio for in-lab studies for children.
Ballaho and others would also like to see guidance on using HST for sleep disorders beyond OSA and potentially for longitudinal monitoring, not just the diagnosis, of myriad sleep disorders.
“Modern home PSG systems can record the complete set of signals required for comprehensive sleep assessment, matching in-lab capabilities. This enables diagnosis beyond just OSA, including evaluation of sleep architecture, limb movements, and other sleep disorders,” Onera’s Ashmore says, who also hopes to see updated clinical pathway recommendations with evidence-based decision trees for selecting between home sleep apnea testing, “home PSG” (with a type II device), and in-lab PSG.
ZOLL Itamar’s Amitai sums it up this way: “In the longer term, the guidelines need to change in a way that [HST] would be allowed to detect more than only obstructive sleep apnea at home. It would be allowed to look at more complicated patients and additional sleep disorders.”
Payments Linked to New CPT Codes
Only after new CPT codes are approved and perhaps while the guidelines continue to be crafted can the million-dollar question (literally) be addressed: How much money exactly will each new code be eligible for?
After the AMA approves new codes, the AASM will survey its members (as well as those of sister societies), and those results will be presented to the Relative Value Update Committee (RUC), which gives the codes a value. The RUC gives its recommendations to the federal government through CMS, and it considers physicians’ work, clinical staff time, medical supplies and equipment, and professional liability insurance associated with performing a service. CMS makes the final decisions about what the payments should be for each service under its programs.
“Your guess is as good as mine about where it’s going to end up landing,” AASM’s Abbasi-Feinberg says. “We’re trying to make sure our members are being reimbursed and compensated for the work that is actually being done….We obviously want to do what’s right for our members, right with our patients, and right with our healthcare system.”
Currently most sleep businesses find the best return on investment when using type III airflow-based HSTs without electroencephalogram (EEG) capabilities. But increased reimbursement for type II home-based devices—those with EEG included—could change the sleep testing landscape. “The business side for type II devices is not there yet,” Ballaho says. “It doesn’t have the win-win value proposition, especially for small to medium players and those whose payor mix does not include much PPO [Preferred Provider Organization insurance].”
Kyle Miko, CRT/CSE, co-founder and vice president of home diagnostics services and device company VirtuOx, says he would like to see payments that reflect the increased popularity of mail-order models. “I think current Medicare Part B, when constructed many years ago, did not take into account many expenses providers actually have—for example, shipping to and from the patient’s home, lost devices, etc,” he says. “The CMS fee schedule was designed for physicians to physically hand a device to the patient where the patient returns a few days later to return it.”
What the Future of HST Could Look Like
Say the CPT code update is approved, the clinical guidelines updated to OK a wider array of technologies, and fee-for-service payments are appropriately compensated. How would the landscape of diagnostic sleep testing change? One glimpse into a potential future lies in Kaiser Permanente. Because of Kaiser’s unique integrated care and coverage model, its sleep diagnostic testing landscape looks very different from today’s fee-for-service model.
According to Dennis Hwang, MD, regional co-chair of sleep medicine at Kaiser Permanente Southern California, Kaiser is realizing cost advantages and more efficient staffing by adopting new HST technologies.
“We’re not upgrading type III HSATs to type II,” Hwang says. “We’re taking patients who we originally would have tested as a type I [in-lab attended study] and moving them to a type II.” The formerly in-lab patients who Hwang regularly now tests at home include children (as young as 5 years old), people with suspected parasomnias, and overnight hypersomnia evaluations (the daytime multiple sleep latency test portion remains in-lab).
“We feel very confident in regards to the clinical appropriateness of our approach,” Hwang says.
In this way, the only patients who still require the expense and staffing for attended in-lab PSGs are those with respiratory failure and “the very, very young,” Hwang says, adding that he thinks “everybody else should be fair game” for home testing.
He also thinks many technologies are fair game, including those that are data-rich and those that are limited in their reporting but easy to access or even wearable. Different technologies can serve their purposes, he says, “which would include airflow-based HSAT devices, non-airflow-based HSAT devices, and even potentially wearables,” Hwang says.
What else could change? Ballaho envisions a future in which AHI isn’t the exclusive metric to assess patient improvement on sleep apnea therapy. HSTs that provide reports with, for example, sleep staging, could ultimately add sleep architecture improvements as part of a CPAP adherence standard. “To me, pushing the type II devices forward will make sense,” he says, not only for the potential of sleep architecture reports but also for underserved markets, such as people with insomnia or narcolepsy.
“It’s not a balanced market. It’s heavy on CPAP-related patients simply because that’s where the money is,” Ballaho says. “Type II devices will be more beneficial once the market also improves. We’ll be able to see more insomnia patients, more daytime sleepiness patients.”
Riney of Nox Health also foresees several potential shifts. “Broader coding could facilitate increased accessibility to home sleep testing for underserved populations and promote adoption of validated at-home sleep technologies,” she says. “Clearer coding and guidelines could enhance the standardization of diagnostic practices, improving overall patient care quality. Device manufacturers might prioritize developing devices that align with clinical relevance rather than simply meeting channel thresholds.”
Adopting Innovation
Ultimately, innovative HST technologies can help ease the socioeconomic burdens of sleep disorders in the United States—but only if they are widely adopted.
Ashmore says, “It is well-documented that millions of patients remain undiagnosed, while healthcare systems struggle with resource constraints that limit access and lead to excessive wait times. The AASM’s initiative to update and revise the HST code structure and guidelines to include recent technological advancements, including home polysomnography, represents a crucial step forward.”
Amitai says it this way: “We like innovation. It’s good for the sleep market, it’s good for the patients, it’s good for the physicians—to look at problems differently, to find new ways of doing things more accurately, more efficiently.”
Ashmore, Amitai, and many other stakeholders hope that 2025 will be the year that HST coding changes usher in this innovation-encouraging paradigm.
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