Home sleep apnea testing faces payment cut under 2027 CMS rule

The American Medical Association's (AMA) Current Procedural Terminology (CPT) Editorial Panel has retired three decades-old home sleep testing codes (95800, 95801, 95806), replacing them with six new "unattended sleep testing" codes built for modern technology, such as artificial intelligence (AI)-assisted scoring and home electroencephalograms (EEGs). The change, which the American Academy of Sleep Medicine (AASM) advocated for, takes effect Jan. 1, 2027.

Now AASM is fighting a related but separate battle: opposing a CMS proposal that would value the most complex new code lower than the recommendation from the AMA's own Relative Value Scale Update Committee (RUC) — a cut that could have significant financial implications for both payers and providers.

The new unattended sleep testing CPT codes

According to Sleep Review, the AASM, the American Thoracic Society (ATS), the American College of Chest Physicians (CHEST), and the American Academy of Neurology (AAN) had been working collaboratively for years on updating the codes. They faced several roadblocks over the years — constant changes and adjustments meant that proposed code sets were often withdrawn. Ultimately, the old coding set did not reflect current testing capabilities.

Skip Ashmore, chief commercial officer at Onera Health, told the outlet, "We commend the AASM for its initiative to update and revise the HST code structure to reflect recent technological advancements, including the integration of home-based polysomnography (hPSG). Modern hPSG systems can capture the full array of signals required for a comprehensive sleep evaluation—providing differentiated diagnoses equivalent to in-lab testing. This includes the assessment of sleep architecture, limb movements, and a range of sleep disorders beyond obstructive sleep apnea (OSA), as isolated conditions and as comorbidities occurring with OSA, enabling clinicians to develop more targeted, personalized treatment plans that address the full spectrum of a patient's sleep pathology. Expanding access to hPSG will enhance diagnostic capabilities and reduce the time to diagnosis and initiation of therapy."

Although the code change is supported, and according to some arguably needed, CMS separately proposed a baseline reduction to the overall Medicare conversion factor of 1.19% to 1.68% for 2027. This conversion-factor cut applies to all physician services under the Medicare Physician Fee Schedule — it isn't specific to sleep testing. It's a second, separate cut that stacks on top of the sleep-specific RVU reduction (1.60 to 1.42). AASM actively opposes these reductions, warning that the cuts could ultimately harm sleep medicine clinics and reduce patient access to care.

It's also dramatically changing how the tests are billed. Starting in January 2027, reimbursement will no longer be determined by the type of device used or its brand, but will instead be tiered based on the complexity of the data collected, into three categories:

• Low complexity

• Moderate complexity

• High complexity

Now payers and providers need to evaluate where their current studies land on the new complexity spectrum and prepare to adjust accordingly. If CMS finalizes a lower valuation, it puts severe pressure on in-lab testing, reduces in-lab testing volume and forces adoption of cheaper diagnostics. Providers and clinics will have to pivot to remote monitoring, which could lead to widespread clinic closures and hospital absorption of those clinics.