Private Payers 2017-12-14T20:14:07+00:00

Private Payers

Private Payer Policy Background

Over the past ten years, there has been a significant growth in the number of people tested for obstructive sleep apnea (OSA). This can be attributed to a number of different factors. There is a now a greater awareness of sleep disorders, including OSA, in the general population. Additionally, there is an expanding population of elderly and obese populations. These populations are shown to have a higher risk of OSA. These factors have resulted in increased testing and treatment for OSA, which payers have experienced as an increase in spending for sleep disorders.

To compensate for this overall increase in spending for sleep disorders, private payers, both nationally and locally, are implementing new policies intended to cut costs of diagnosis and treatment of sleep disorders. Private payers have identified the following cost cutting techniques:

  • Use of a home sleep apnea test (HSAT) to diagnose OSA in place of in-center polysomnography;
  • Use of Auto-PAP to titrate the patient in place of an in-center PAP titration;
  • Use of primary care and national independent diagnostic testing facility (IDTF) providers of HSATs in place of local board-certified sleep medicine physician providers; and
  • Use of national durable medical equipment (DME) chains in place of local DME providers.

Providers can expect that insurance companies will continue to look at maximizing these cost cutting techniques.

The American Academy of Sleep Medicine (AASM) agrees that HSATs may be an acceptable alternative to overnight polysomnography when used properly. However, the AASM firmly believes that cutting the board-certified sleep medicine physician (BCSMP) out of the diagnosis and treatment algorithm decreases quality and leads to poor PAP adherence. This is because the BCSMP is uniquely trained and qualified to manage sleep illness.

The AASM will continue to argue for the appropriate use of HSATs as well as the continued role of the BCSMP in diagnosis and management of sleep illness.

Key Definitions


A home sleep apnea test (HSAT) is an unattended diagnostic study which assesses obstructive sleep apnea without the determination of sleep stage. The term specifies the condition being assessed (i.e., sleep apnea) by current technology without implying that “sleep” quality, staging or time are determined. The AASM recognizes that not all such studies are performed at home; however, “home” is included in the term because that is where the vast majority of patients undergo these tests. HSATs have also been referred to as home sleep tests, out of center sleep tests, and portable monitors. HSAT technology has been found to be comparable to polysomnography in the diagnosis of OSA in patients with high pre-test probability and no co-morbid conditions. In 2011, the AASM published an evaluation of technology for HSAT and began offering HSAT accreditation. In 2017, the AASM published an updated clinical guideline paper on diagnostic testing (both in-lab and HSAT) for adult OSA.

Utilization Management

Recently, insurance companies have started implementing utilization management programs for sleep testing. Utilization management is a tool/technique used to determine if a procedure or test is medically necessary. Usually, this technique is used for high-cost procedures and is intended to reduce unnecessary testing or procedures. In the case of sleep medicine, utilization management is used to determine when in-center testing is necessary and when a patient can be tested using HSAT.

Insurers often contract with outside companies to administer their utilization management program. These companies advertise reduced testing and procedure costs that result from implementing their utilization management programs. The utilization management company will work with the insurer to establish an authorization process for testing. These processes vary from insurer to insurer. Depending on the insurance policy and the utilization management company, sleep utilization management can be labor intensive for the provider. It can also limit the physician’s ability to make clinical decisions for his/her patients.


Recently, more and more private insurers have started requiring preauthorization prior to sleep testing. Preauthorization is the process of confirming with an insurer not only whether or not a test or treatment is a covered service but also whether or not it is considered medically necessary for a specific patient. As described above, insurance companies frequently use utilization management companies to review preauthorization documentation. For sleep, this documentation can include signs and symptoms of OSA as well as a list of co-morbid conditions which might result in the patient requiring in-center sleep testing.

AASM Communication with Private Payers

The AASM understands our members’ concerns regarding private payer policies not aligning with the AASM practice standards. In light of the paradigm shift from in-center polysomnography and titration to HSAT and APAP, the AASM has been reaching out to private payers to ensure that the board-certified sleep medicine physician (BCSMP) is involved in the testing and management of patients. The AASM firmly believes that patients managed by the BCSMP receive high-quality care.

The AASM is in touch with payers on a regular basis commenting on and requesting changes to policies so that these policies align with our recommended standards for patient-centered care. The following letters are some examples of how the AASM has worked with various payers to provide guidance on policy making.