How the 2026 Medicare Payment Proposal Could Impact Your Sleep Study Billing Services

The 2026 Medicare payment proposal may look good at first, with a small increase after years of cuts. But for sleep study billing services, the changes could cause problems. Beneath the raise are bigger changes that may lower payments, change how services are valued, and make it harder for providers to get paid what they deserve. These shifts could significantly impact how your sleep study billing services operate. 

Are you wondering how? Let’s explore it here. 

A Welcome Raise for sleep study billing services, But Only at First Glance 

Sleep centers, hospitals, and clinics offering sleep study services may feel some relief with Medicare’s proposed payment increase. The rise in the conversion factor sounds like progress, but it’s not enough. Costs for running sleep labs—such as equipment, staff, and compliance—continue to rise, while Medicare payments have not kept pace. After inflation, physician pay has dropped a lot since 2001. This small bump doesn’t fix years of underpayment. So, even with this increase, sleep study billing services will likely continue to face financial pressure. 

For the first time in decades, CMS is proposing four separate conversion factors. These are based on whether a provider is in an advanced payment model or not. But these conversation factors have raised more questions and complexities.  

Multiple Conversion Factors: More Complexity, More Questions: 

For the first time in years, Medicare is using four different conversion factors based on payment models. Sleep study clinics in advanced payment models will get slightly higher rates. Others will see a smaller increase. This new system adds to the confusion. Sleep study billing services must now determine which providers fall into which group and adjust claims accordingly. If not handled well, it could cause errors or delays in payments. 

CMS has decided to apply a 2.5% “efficiency” cut to many procedures. The idea is that physicians have gotten faster at delivering care over time, so they should be paid less for the same service. But this assumption doesn’t hold up for sleep studies. 

Here’s where things get tricky—and risky—for sleep study billing services 

Budget Neutrality and the Efficiency Cuts 

Sleep studies are time-based and need careful prep, monitoring, and analysis. They require skilled staff and take hours to complete. There isn’t much room to speed things up. Still, many services linked to sleep studies may face a 2.5% payment cut. CMS says time-based services are safe, but some related codes are still on the cut list. This causes confusion and risk. Sleep study billing services must stay alert, track these codes, and adjust fast to avoid losing money. Another vital concern that you should be aware of is Medicare’s plan to move practice expenses, as they aim to move more funds to office-based care instead of hospital-based sleep study services, thus leading to reduced payments for sleep study procedures conducted in labs or hospitals.  

Many sleep clinics operate as small, independent practices—especially in rural areas. These clinics face another major hurdle: MIPS penalties. 

MIPS Penalties: Small and Rural Sleep Centers at Risk 

If a sleep center scores below 75 in MIPS, it can face up to a 9% penalty. Small clinics are hit hardest. For sleep study billing services, this means less payment and more paperwork. Sleep study billing services providing teams may need extra help just to keep up, which adds cost and takes time away from focusing on patient care. 

As a provider or billing partner, waiting for policy changes to settle isn’t enough. Here’s what your sleep study billing services should focus on: 

Effective Sleep Study Billing Service Tips to Handle Policy Changes: 

Sleep study billing services need to stay alert and take action. Track CPT codes that may face cuts. Keep documentation strong to avoid denials. Use software to find where money is being lost and fix it quickly. Follow MIPS rules to avoid penalties, even if the system isn’t perfect.  

The 2026 Medicare physician fee schedule might look like a win, but for sleep study billing services, it’s a mix of small gains and big challenges. The shift toward efficiency cuts, redistributions in practice expense, and ongoing MIPS penalties all paint a tough road ahead—especially for smaller, rural sleep clinics. Are you one running a small or rural sleep study lab? If so, consider hiring a perfect sleep study billing service company that can take care of your end-to-end RCM process, while enabling you to save almost 80% operational costs and giving a strong revenue boost.  

So, hire a perfect sleep study billing services provider and enjoy seamless billing practices, while staying on top of all the CMS and private insurance payer guidelines.