AMARILLO, TX – CMS recently updated its compliance tips for companies that sell Continuous Positive Airway Pressure (CPAP) devices and accessories. See here: [cms.gov]
Revisiting the basics can be a worthwhile reminder that Medicare compliance is more than an administrative task—it is essential to getting claims paid and avoiding costly denials. Recent data from CMS shows that improper payments for CPAP devices remain a significant issue, with many denials tied directly to missing or incomplete documentation.
For CPAP suppliers, understanding Medicare’s coverage rules can help improve cash flow, reduce audit risk, and ensure patients receive the equipment they need without unnecessary delays.
Why CPAP Compliance Matters
According to CMS, the improper payment rate for CPAP devices was 12.5% during the 2024 reporting period, representing approximately $146.1 million in projected improper payments.
The good news is that most of these errors are preventable. More than 71% of improper payments were caused by insufficient documentation. Other causes included medical necessity issues, coding errors, missing documentation, and various administrative mistakes.
This means suppliers that establish strong documentation and verification processes can significantly reduce their risk of denials.
Understanding Medicare Coverage Requirements
Medicare covers CPAP devices and accessories when specific coverage requirements are met. Before a CPAP device is provided, the patient must undergo appropriate evaluation and testing to establish the medical necessity of treatment for obstructive sleep apnea (OSA).
The process begins with an in-person clinical evaluation conducted by the treating practitioner before the sleep test. The purpose of this evaluation is to assess the patient for symptoms and indicators of obstructive sleep apnea.
After the evaluation, the patient must complete an approved sleep test. Medicare recognizes several types of qualifying tests, including:
- Polysomnography (PSG) performed in a sleep laboratory and attended by a qualified practitioner
- Home sleep tests using Type II or Type III monitoring devices
- Type IV home sleep tests that measure at least three channels
Suppliers should verify that documentation of the qualifying sleep test is available before billing Medicare.
Key Sleep Study Thresholds
Not every sleep test result qualifies a patient for Medicare-covered CPAP therapy. Medicare requires that specific clinical thresholds be met.
Coverage generally exists when either:
- The Apnea-Hypopnea Index (AHI) or Respiratory Disturbance Index (RDI) is 15 or more events per hour, with at least 30 events documented; or
- The AHI or RDI is between 5 and 14 events per hour, with at least 10 events documented and additional evidence of certain symptoms or conditions.
When AHI or RDI falls within the lower range, the medical record must also document one or more qualifying conditions, such as:
- Excessive daytime sleepiness
- Impaired cognition
- Mood disorders
- Insomnia
- Hypertension
- Ischemic heart disease
- History of stroke
A supplier should never assume that a sleep study automatically supports coverage. The actual results and supporting clinical records must satisfy Medicare’s requirements.
Documentation Is the Difference Between Payment and Denial
The most important takeaway for CPAP suppliers is simple: documentation matters.
When delivering a CPAP device, suppliers must ensure that records demonstrate the patient qualified for therapy and that all required supporting documentation is available. CMS specifically notes that payment can be denied when key records are missing, even if the patient actually meets clinical criteria.
In addition, suppliers should document that the patient or caregiver received instruction on the proper use and care of the equipment. This education requirement is an important part of the Medicare coverage process.
A strong documentation file typically includes:
- A valid written order
- Sleep study results
- Medical records supporting medical necessity
- Proof of delivery
- Patient education documentation
- Any required follow-up documentation
Maintaining complete records can help suppliers respond successfully to audits and documentation requests.
Continued Coverage After the Initial Trial Period
Medicare does not automatically cover CPAP therapy indefinitely after the device is issued.
According to CMS, continued coverage after the first 12 weeks depends on a practitioner reassessment that documents both patient adherence to therapy and improvement in obstructive sleep apnea symptoms.
For suppliers, this means communication with referring practitioners is critical. If follow-up documentation is not completed, claims associated with ongoing coverage could be vulnerable to denial.
Creating a workflow that tracks approaching follow-up deadlines can help ensure these requirements are satisfied.
Managing Refills Correctly
CPAP suppliers frequently provide replacement masks, tubing, filters, and other accessories on a recurring basis. These supplies should be based on prospective use rather than retrospective use. Suppliers should ensure their refill processes comply with Medicare refill requirements and maintain appropriate documentation supporting recurring shipments.
Well-managed refill programs can improve patient satisfaction while also helping organizations stay compliant.
Conclusion
The majority of Medicare denials for CPAP devices are not caused by a lack of patient need. Instead, they result from incomplete documentation and administrative errors. CMS data shows that insufficient documentation remains the leading cause of improper payments, making compliance a top priority for CPAP suppliers.
Companies that develop strong intake, documentation, and follow-up procedures can reduce claim denials, improve revenue cycle performance, and better support patients with obstructive sleep apnea. By focusing on complete records, proper verification, and ongoing compliance, CPAP suppliers can position themselves for both regulatory success and long-term growth.
Jeffrey S. Baird, Esq., is chairman of the Health Care Group at Brown & Fortunato, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies, manufacturers, and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or [email protected].
Todd Moody, Esq. has spent his entire career assisting healthcare industry clients with state and federal regulatory issues. Todd specializes in home medical equipment suppliers and device manufacturers and wholesalers. He has significant experience with the state licensure and federal program enrollment requirements impacting these businesses. He also frequently assists with the healthcare regulatory components of mergers and acquisitions as well as state and federal agency investigations and audits. Connect with Todd at (806) 345-63352 or [email protected] to learn how he can support your business with strategic, experienced legal counsel.
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AAHOMECARE’S EDUCATIONAL WEBINAR
Loan Closets, Employee Liaisons, and Other Arrangements with Referral Sources
Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato & Noel Neil, ACU-Serve
Tuesday, November 10, 2026
1:30-2:30 p.m. CENTRAL TIME
In the non-health care world, businesses (e.g., auto parts stores) have very few restrictions regarding their relationships with referral sources. By contrast, the health care world is a totally different animal. Because a large portion of a DME supplier’s revenue is derived directly (or indirectly) from tax dollars, there are myriad federal and state laws designed to protect the tax dollars from fraud. Many of these laws focus on relationships health care providers have with physicians, hospitals, and other referral sources. This program will discuss such relationships between DME suppliers and referral sources. These arrangements include (i) loan closets (also known as consignment closets and stock and bill arrangements), (ii) employee liaisons, (iii) Medical Director Agreements, (iv) physician advisory boards, (v) preferred provider agreements, (vi) patient service agreements, (vii) marketing service arrangements, and (viii) subcontract agreements. The program will discuss how these relationships can be legally entered into…and pitfalls that need to be avoided.
Register for Loan Closets, Employee Liaisons, and Other Arrangements with Referral Sources on Tuesday, November 10, 2026, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq. and Noel Neil.