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Questionable Billing for Polysomnography Services


Increased Medicare spending on polysomnography (a type of sleep study), along with growing concerns about fraud and abuse, prompted 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.


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.


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.


To strengthen safeguards for polysomnography services, we recommend that 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.