In March 2018, the Medicaid and CHIP Payment and Access Commission (MACPAC) made its 2018 report to Congress, which included the Commission’s evaluation of telehealth services provided through the Medicaid program. Chapter 2 of MACPAC’s report had a positive outlook on telehealth’s contribution toward better accessibility of health care services to underserved individuals as well as individuals with disabilities.

Unlike its larger counterpart, Medicare, federal policy has not placed many restrictions on state Medicaid programs in terms of adopting or designing telehealth coverage policies. For example, there is limited reimbursement coverage of telehealth services provided through the Medicare Fee-For-Service (FFS) program (e.g., geographical restrictions). However, there is little federal guidance or information regarding the implementation of telehealth services in state Medicaid programs or coverage for these services. As a result, state Medicaid coverage of telehealth services is highly variable across state lines, in terms of telehealth modalities, specialties and services, provider types, and even permissible site locations where telehealth services may be rendered. This high degree of variability stems, at least in part, from the unique federal-state partnership that provides the foundation for all state Medicaid programs.

Federal Medicaid Program Requirements. Although the federal requirements for coverage of telehealth services provided through the Medicaid program are few, in comparison to comparable requirements under the Medicare FFS program, some broad CMS guidelines do require Medicaid providers to practice within the scope of their state practice laws and to comply with all applicable state professional licensing laws and regulations. Additionally, any payments made by state Medicaid programs for telehealth services must satisfy the federal Medicaid program requirements for efficiency, economy, and quality of care. Furthermore, although Medicaid program requirements for comparability, state-wideness, and freedom of choice do not apply to telehealth services, states choosing to limit access to telehealth services (e.g., limited to particular providers or regions) must ensure access to and cover face-to-face visits in areas where such services are not available. Moreover, states are not required to submit a Medicaid state plan amendment to cover and pay for telehealth services as long as the program is in a state where telehealth parity laws are in effect, which are intended to ensure same coverage and payment of telehealth services as those provided in-person.

State-to-State Variations in Medicaid Coverage of Telehealth Services. A big focus of the MACPAC report was the impact that state-by-state variations may have on providing access to telehealth services through state Medicaid programs. As previously noted, because of the lack of any unified federal telehealth policy, state Medicaid program coverage of telehealth services is inconsistent. Some states, like West Virginia, mirror their Medicaid policies and regulations after the Medicare program, meaning that telehealth services are covered only if the originating site is in a rural location that either meets the definition of a non-metropolitan statistical area or a rural health professional shortage area, or originating site must be at hospitals, critical access hospitals, physician offices, federally qualified health centers, etc. In other words, in these states, Medicaid recipients would be required to travel to particular qualified locations for their telehealth service to be covered under Medicaid. Interestingly, MACPAC reported that some states that initially adopted these Medicare-like standards have changed their policies over time, as the state Medicaid programs have gained experience and understanding of the implications for access, cost, and quality. Other states are increasingly allowing homes, workplaces, and schools to serve as originating sites for telehealth services, while some states do not explicitly require patients to be at any specific sites in order to receive telehealth services. For example, while West Virginia’s Medicaid program specifies that originating sites must be a physician’s or other health care practitioner’s office, hospitals, rural health centers, skilled nursing facilities, etc., Medicaid recipients in Washington state may choose the location they would like to receive telehealth services, without these types of restrictions.

Similarly, the types of telehealth services that are covered vary greatly from state-to-state. For example, Idaho’s Medicaid program covers live video telehealth for mental health services, developmental disabilities services, primary care services, physical therapy services, occupational therapy services, and speech therapy services. In contrast, Arizona’s Medicaid program covers live video telehealth for a variety of specialty services including cardiology, dermatology, endocrinology, pediatric subspecialties, hematology-oncology, home health, infectious diseases, neurology, obstetrics and gynecology, oncology and radiation, ophthalmology, orthopedics, pain clinic, pathology, pediatrics, radiology, rheumatology, and surgery follow-up and consultation.

Across state Medicaid programs there also is wide variation regarding the types of health care practitioners who may provide telehealth services to Medicaid program recipients. Nineteen states (e.g., Connecticut, Florida, Hawaii, Iowa, Kansas, Louisiana, Maine, Massachusetts, Mississippi, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Tennessee, Utah, and Vermont) do not specify the type of providers that may provide health care services via telehealth and therefore are presumed to have the most inclusive provider policies. There also is variation with respect to professional licensure requirements for these providers, with some state policies allowing out-of-state practitioners to provide telehealth services as long as they are licensed in the state from which they are providing the service and are registered with the state’s Medicaid program (e.g., Arizona) while other state policies require practitioners to be licensed or certified to practice in the state unless only providing episodic consultation services (e.g., Arkansas).

States set their own payment levels for telehealth services provided to Medicaid recipients. Some payment rates for telehealth services may be lower than payment rates for the same services provided in-person. State Medicaid programs also vary in terms of payments for facility fees and transmission fees, which assist providers with covering associated telecommunications costs. Additionally, state Medicaid policies for telehealth services may differ between managed care and FFS plans. Some states do not require Medicaid managed care plans to provide services via telehealth at all. For example, Florida’s live video telehealth is covered under Medicaid FFS but is optional for Medicaid managed care plans, while in Massachusetts telehealth services are not covered under Medicaid FFS but there is some coverage under at least one of the state’s Medicaid managed care plans.

Despite these variations, MACPAC found that Medicaid plays a significant role as a payor with respect to the following types of telehealth services:

Behavioral Health. MACPAC reported that non-institutionalized adult, children, and adolescents covered by Medicaid have a higher rate of behavioral health disorders compared to their privately insured counterparts. Barriers to care include fragmented delivery systems, lack of accessibility to provider and resources, and patients’ concerns regarding confidentiality and fear of stigma attached to seeking mental treatment. MACPAC reported that there is increasing evidence that telehealth has the potential to improve access to evidence-based care for mental health and substance use disorders for individuals located in underserved areas. As of now, all state Medicaid programs that cover telehealth services include as part of that coverage access to behavioral health services via videoconferencing, although the scope of coverage varies state-to-state. Generally, most commonly covered services include mental health assessments, individual therapy, psychiatric diagnostic interview exams, and medication management. Although most state Medicaid programs will cover behavioral health services via telehealth if provided by licensed or certified psychiatrists, advanced practice nurses, and psychologists, some states also will cover those services if treatment is delivered by social workers and/or counselors. MACPAC reported that there is a growing number of studies showing that behavioral health care services provided via telehealth is effective, particularly for assessment and treatment of conditions such as depression, post-traumatic stress disorder, substance use disorder, and developmental disabilities. MACPAC reported high patient satisfaction with behavioral health care services via telehealth was on par with non-Medicaid payor populations, although MACPAC indicated that more research is needed.

Oral Health. Oral health services among Medicaid participants are relatively low. Barriers to oral health care include cost, difficulty of finding dentists who accept Medicaid, and inconvenience of location and time. MACPAC reported that the use of telehealth in dentistry has been recognized for its potential in improving access to primary and specialty oral health care services in communities that either lack or have limited provider capacity. Typically a patient is joined by an oral health professional at the originating site during a real-time video consultation with a dentists or specialty dentists for diagnosis and development of a treatment plan. Store-and-forward modality allows the provider at the originating site to send images (i.e., x-rays, photographs, lab results) to the dentist for review. As of 2017, 11 states were identified for including some Medicaid coverage for teledentistry (e.g., Arizona, California, Colorado, Florida, Hawaii, Minnesota, Missouri, Montana, New Mexico, New York, and Washington). Studies have shown that certain teledentistry services such as screening of childhood dental caries and orthodontic referrals appear to be as effective as in-person visits. MACPAC reported that patients expressed satisfaction of these dental health care services provided via telehealth because of greater convenience and improved access to care.

Maternity Care. In 2010, although state Medicaid programs covered nearly half of all births in the U.S., nearly 50 percent of U.S. counties had no obstetrician-gynecologists providing direct patient care. Telehealth can be used to manage pregnancies in several ways including the use of videoconferencing between a patient and her regular maternity care provider or between two providers during labor and delivery. Live videoconferencing could also be utilized during genetic counseling or even neonatal resuscitation. MACPAC reported that pilot studies have tried videoconferencing for prenatal care visits, group prenatal care, and breastfeeding support, which include women with both high-risk and low-risk pregnancies. MACPAC also reported that an emerging practice is the use of telehealth to diagnose congenital heart defects via live videoconferencing between the radiographer and fetal cardiologists, or the use of store-and-forward technology to allow a specialist to review echocardiograms post hoc.

MACPAC Recommendations. Before integrating or expanding telehealth services in their respective Medicaid programs, MACPAC recommended that states weigh the costs and the resource requirements associated with using or implementing telehealth against their goals of improving access for Medicaid recipients to needed health care services. One of the primary concerns voiced against greater use of telehealth services is the inappropriate use or overuse of those services. For example, MACPAC asked the states to consider whether inclusion of facility or transmission fees would increase the overall costs to their Medicaid programs if telehealth services replaced in-person services. MACPAC also asked states to consider whether telehealth services had the potential to increase fragmentation of care if services were provided by different telehealth providers or providers were unable to obtain updated patient medical records. MACPAC emphasized that while there appeared to be growing number of studies showing the effectiveness of telehealth services, there are still very few published studies addressing the effect of telehealth in Medicaid populations.

MACPAC also noted several factors that contributed to limited adoption of telehealth in Medicaid. The combination of lower payment rates for Medicaid and yet potential high costs for licensing across different state lines may deter providers from using telehealth for Medicaid services. Telehealth technology is dependent on reliable and affordable broadband connectivity. Unfortunately many rural areas and Native American reservations still lack such connectivity. An estimated 53 percent of individuals living in rural areas lack access to broadband speeds needed to support telehealth. Furthermore, costs of broadband can be almost three times that in urban areas. Costs associated with the acquisition, installation, and maintenance can be quite cost-prohibitive to providers and affect their ability or willingness to adopt telehealth. Additionally, telehealth-focused remote prescribing laws vary from state-to-state while prescribing of controlled substances are limited by the Ryan Haight Online Pharmacy Consumer Protection Act of 2008. The law generally prohibits prescribing of controlled substances through the internet without a valid prescription, which requires the prescriber to have conducted at least one in-person medical examination of the patient. Although the law includes a telehealth exemption, the exemption requires the originating site to be located at Drug Enforcement Administration (DEA)-registered clinic or hospital. In addition, state medical licensing boards may also limit the circumstances in which providers can prescribe controlled substances via telehealth. As illustrated above, the varying length and degree of Federal and state laws and regulations governing telehealth services is complex and may deter providers from entering into the telehealth service market.

Overall, the MACPAC report illustrates a positive outlook on telehealth’s integration into state Medicaid programs. However, in its recommendation to Congress, MACPAC did not outright push states to adopt telehealth into their Medicaid programs. Rather, the Commission continues to seek more research and collaborative studies among states to gain better insight and understanding of the effects of telehealth on access to care, quality, and cost of care of the Medicaid program.

stethescopeAs you all know, the subject of telehealth reimbursement continues to vex the community. For example, Medicare lags far behind.  According to the Center for Telehealth and eHealth Law, Medicare reimbursed approximately $14 million total under its telehealth benefit for 2014.  This represents less than .0025 percent of the total Medicare reimbursed for services that year.  Medicaid is something of a mixed bag with the vast majority of states providing some coverage for telehealth, but many lagging in coverage and reimbursement for store-and-forward services and remote patient monitoring. Generally speaking, private payers have been ahead of the curve with the majority of states having parity laws in place requiring insurers to cover telehealth services in many circumstances.

One of the issues about which I am often asked is whether there is any data surrounding private pay reimbursement for telehealth.  A paper published by the Health Care Cost Institute provides some interesting data into telehealth billings.  The good news is that telehealth has extensive room in which to grow.  Among other issues, the paper analyzed one of the largest private claims databases to analyze trends in telehealth billings from 2009-2013.  Here are some key takeaways:

  • There were 6,506 claims for services related to telehealth submitted by primary care providers (compared to the 95.9 million non-telehealth claims).
  • Family practice providers submitted the most claims for telehealth followed by internal medicine.
  • Non-telehealth service reimbursements increased every year since 2009, from $57 to $61.
  • Average reimbursements for telehealth claims, however, declined substantially after 2011, decreasing from $68 to $38 in 2013—40% lower than that for non-telehealth claims in 2013.
  • California and New York had relatively small numbers of claims when analyzed against their large populations.
  • Among seven unique CPT codes for an office/outpatient visit for evaluation or management of a patient, average telehealth reimbursements were nearly the same or lower than the non-telehealth service for six of these procedures.
  • The most commonly diagnosed problem seen by primary care providers using telehealth (in descending order) were diabetes mellitus (almost 14% of all telehealth claims); depressive disorders; acute sinusitis; biopsy of the lymphatic structure; obstructive sleep apnea; bipolar disorder; and acute upper respiratory infections.

The paper notes that despite the increased use of telehealth, claims for telehealth services to private insurers are rare which the paper acknowledges could be due to the “considerable time lag in the translation of [state telehealth policies] into provider behaviors.  There is also some discussion suggesting that low telehealth billings may be due to confusion regarding the appropriate billing codes to use.

My sense is that a lot has changed since 2013, and that should a review be done today, telehealth billings would have significantly increased.  Nevertheless, the paper clearly confirms telehealth has plenty of room in which to grow.

medicare1As many of you know, reimbursement for telehealth services is a mixed bag.  On the one hand, private payers generally seem ahead of the curve.  Many leading private insurers reimburse for telehealth.  Generally these coverage policies provide reimbursement for telehealth services when they involve the use of real-time interactive audio, video, or other electronic media for diagnosis and consultation.  Just as significantly, more than half the states and the District of Columbia have passed telehealth parity statutes which require health insurers to provide coverage for services provided via telehealth if those services would be covered if provided in-person.  The picture for private insurer telehealth coverage is generally good and getting better.

On the other end of the scale is Medicare.  I think it is fair to say that no payer lags further behind in reimbursing for telehealth than Medicare.  The numbers tell the story.  The Center for Telehealth and eHealth Law reports that in calendar year 2014, Medicare reimbursed approximately $14 million under its Part B telehealth benefit—or about .0023 percent of total Medicare spending in 2014—a mere pittance.  The real reason for this is that the Medicare telehealth benefit was primarily intended for rural patients.  In addition:

  • The definition of “telehealth” is limited to real-time audio visual communication between provider and patient (in other words, there is no coverage for so-called asynchronous or “store and forward” technology).
  • Fewer than 100 codes are reimbursable under the telehealth benefit.
  • Other restrictions exist related to type of facility where a patient may present, and what kind of provider may deliver services (e.g., physicians, nurse practitioners).

Medicare Advantage offers more opportunities for telehealth coverage, but overall the current Medicare telehealth reimbursement picture is relatively bleak.

medicaidMedicaid Reimbursement for Telehealth

Medicaid telehealth reimbursement exists somewhere in the space between private payers and Medicare.  As you know, Medicaid provides health coverage to about 70 million low-income adults, children, pregnant women, and others.  The program is administered by states who are required to cover certain mandatory services (such as hospital and physician services, home health), but is funded jointly by the states and the federal government.  States do have flexibility to decide what optional services (such as telehealth) to cover beyond the mandatory services.  This has resulted in a patchwork of different coverage policies that vary by state.

Fortunately, there a number of stakeholders that closely track Medicaid telehealth coverage policies by state.  One of these is the Center for Connected Health Policy, which issues a quarterly report reviewing various telehealth legal and regulatory issues for all states.  In its last report (July 2015), the Center found the following regarding Medicaid telehealth coverage:

  • 47 states and the District of Columbia provide some coverage for telehealth (Iowa, Massachusetts, Rhode Island do not according to the report).
  • In many Medicaid programs, the definition of “telemedicine” or “telehealth’ for purposes of reimbursement is limited to services that take place in real time—thereby excluding asynchronous or remote patient monitoring from coverage.
  • Live video is the most predominantly reimbursed form of telehealth with almost all of the states that cover telehealth offering some type of live video reimbursement in their Medicaid programs.
  • Services provided via telephone, e-mail, or fax are seldom covered unless they are used along with other forms of care delivery.
  • Only 9 states (including Illinois, New Mexico, and Virginia) currently reimburse for store-and-forward services. Even in states that do cover store-and-forward, covered services may be iStock_000043291394_Smalllimited—such as in California, where only store-and-forward services related to teledermatology, teleophthalmology and teledentistry are reimbursable under Medicaid.
  • 16 states (including Colorado, Maine, and South Carolina) provide Medicaid coverage for remote patient monitoring although many restrictions exist. For example, in some states, coverage for remote patient monitoring is limited to home health agencies. There are also restrictions regarding the conditions which may be monitored and the type of monitoring devices that may be used.
  • 29 states reimburse a transmission and/or facility fee.
  • 29 states (including Connecticut, Kansas, and Maryland) require some form of informed consent prior to the use of telehealth.

All in all, the picture for Medicaid reimbursement for telehealth is far better than it has been in the past. Each state Medicaid program is different, so stakeholders need to carefully analyze each state’s telehealth coverage policies. My sense is that given the serious fiscal and clinical (e.g., provider shortages, network inadequacy) issues faced by many Medicaid programs, telehealth will increasingly be viewed as a means to seriously address these challenges. We are starting to see this play out in the Medicaid managed care space.

Medicaid Managed Care Coverage

By way of quick background, a majority of states contract with managed care organizations to provide services to certain Medicaid beneficiaries. Generally, these managed care plans receive a monthly premium from the states for each enrollee, and have greater flexibility to cover more services and allows the states to better target and customize services. As the American Telemedicine Association noted in its report on telehealth and Medicaid managed care published last year, “states have increasingly used [Medicaid managed care] to create payment and delivery models involving capitated payments to provide better access to care and follow-up for patients, and also to control costs.” Because of this flexibility, a number of leading Medicaid managed care plans are either already covering telehealth or are developing telehealth initiatives and pilots—especially related to telemental health and teledermatology. In my view, the future looks bright when it comes to Medicaid managed care and telehealth.

Who knew?!  Buried among more than 1,000 pages of a new final rule with comment period on payments to physicians, released on October 31, 2014, the Centers for Medicare & Medicaid Services (“CMS”) finally has given telehealth providers a glimpse of its plans to expand reimbursement for telehealth services provided to Medicare beneficiaries. 

The final rule includes a provision that would cover remote chronic care management using a new current procedural terminology (“CPT”) code, 99490 (with a monthly unadjusted, non-facility fee of $42.60).  This new CPT code can be bundled with the existing CPT code 99091 for collecting and reviewing patient data, which does not require the beneficiary to be present and pays an average monthly fee of $56.92 to the physician.  The final rule also includes a provision that would cover remote-patient monitoring of chronic conditions using existing CPT code 99091 (with a monthly unadjusted, non-facility fee of $56.92).  This provision will significantly broaden Medicare payments for remote patient monitoring of chronic conditions—while CPT code 99091 has been available for coverage of patient monitoring for many years, CMS traditionally has required (and will continue to require), that 99091 be billed in conjunction with evaluation and management (“E&M”) services (CPT codes 99201-99499), the most common of which are office visits.  Yet, since the new CPT code 99490 is an E&M code and is intended for coverage of monitoring chronic conditions, the two services can now be combined as chronic care management and remote patient monitoring with a combined monthly fee of approximately $100.  Notably, the 99490 and 99091 codes are available nationwide, as they are not considered by CMS as rural-only “telehealth” services.  CMS also added seven new procedure codes for telehealth services, including annual wellness visits, psychotherapy services, and prolonged services in the office.  Coverage under these new codes would begin in 2015.

Historically, Medicare has provided limited coverage for telehealth services, which has included coverage for interactive audio and video telecommunications that provide real-time communications between a practitioner and a Medicare beneficiary while the beneficiary is present at the encounter (Social Security Act § 1834(m); 42 C.F.R. § 410.78; Centers for Medicare & Medicaid Services, Medicare Benefit Policy Manual, ch. 15, § 270).  Medicare only has covered the provision of telehealth services if the beneficiary is seen: (a) at an approved “originating site” (e.g., physician offices, hospitals, skilled nursing facilities); (b) by an approved provider (e.g., physicians, nurse practitioners, clinical psychologists); and (c) for a small defined set of services, including consultations, office visits, pharmacological management, and individual and group diabetes self-management training services.

In a November 1, 2014 news release, American Telemedicine Association CEO Jonathan Linkous stated that the new final rule “has been a long time coming, but this rulemaking signals a clear and bold step in the right direction for Medicare” and, importantly, “allows providers to use telemedicine technology to improve the cost and quality of healthcare delivery.”

By:  Alaap Shah and Marshall Jackson


With the New Year, come new protections for health care entities and individuals utilizing electronic health records (EHRs).  On December 27, the U.S. Department of Health and Human Services, Office of Inspector General (OIG) and the Centers for Medicare and Medicaid Services (CMS), issued final rules regarding the Stark Exception and the Anti-Kickback Safe Harbor permitting certain health care organizations to subsidize up to 85% of the donor’s cost of certain EHR items and services (the “Final Rules”). The Final Rules amended the 2006 original rule (the “Original Rule”).  The Final Rules:

  • Extend the expiration of the protections from December 31, 2013 to December 31, 2021;
  • Exclude laboratory companies from the list of eligible “Protected Donors” that may donate EHR items and services;
  • Update the provisions under which an EHR donor or recipient can ascertain, with certainty, that EHR is interoperable;
  • Remove requirements that donated EHR include e-prescribing capabilities; and
  • Clarify the requirement prohibiting any action that limits or restricts the use, compatibility, or interoperability of donated EHRs.


            Under the Original Rule, EHR donation regulations were set to expire on December 31, 2013.  The Final Rules extend the expiration of the protections until December 31, 2021.


            As a change from the Original Rule, the protections under the Final Rules no longer extend to laboratory companies as a type of entity that may donate EHR items and services.  However, this exclusion under the Final Rules does not apply to hospitals who furnish clinical laboratory services through a laboratory that is a department of the hospital.  It should be noted that a hospital-affiliated or hospital-owned company that furnishes laboratory services, which have a billing number assigned to the company as opposed to the hospital, would be excluded from the protections under the Final Rules.


The Original Rule required that donated or subsidized software be “interoperable”.  The rule stated that software is interoperable if a certifying body recognized by the Secretary of the Department of Health and Human Services certified the software within 12 months of the time it was provided to a physician.  Under the Final Rules, software is deemed to be interoperable if, on the date it is provided to the physician, it has been certified by a certifying body authorized by the National Coordinator for Health Information Technology to an edition of EHR certification criteria.  Significantly, the protections under the Final Rules are not limited to donations to individuals and entities eligible to participate in the EHR Incentive Programs (the “Meaningful Use Program”), but also extend to other entities and individuals if the donations meet the conditions of the safe harbor.


In order to foster the free exchange of data, the Final Rules have made limited clarifications to require that a donor not take any action to limit or restrict the use, compatibility or interoperability of the items or services with other electronic prescribing or EHR systems.  The Final Rules included examples, making it clearer that this prohibition applies to any donor action that limits the use of donated software with any other health information technology.


The Original Rule required that donated software contain an electronic prescribing capability.  However, under the Final Rules, effective March 27, 2014, the requirement that the donated software contain an electronic prescribing capability has been eliminated.


The Final Rule attempts to strike the right balance between competing interests.  On the one hand, the Final Rule seeks to foster continued adoption of EHRs and increased interoperability, which are ongoing goals within CMS, ONC and much of the healthcare industry.  On the other hand, OIG has shifted its position to better control risks associated with misuse of EHR donation by certain entities that seek to secure kickbacks.  Recognizing these competing concerns, OIG has extended the safe harbor and improved alignment with ONC to ensure companies have better guidance to meet the interoperability requirements.  Therefore many organizations emerge as winners under the Final Rule, including EHR vendors, protected EHR donors and EHR recipients.  However, laboratory companies are at a significant loss as a result of OIG’s tightening of the definition of “Protected Donor”.


Follow Alaap Shah on Twitter: @HealthITLawyers

During and after a recent presentation regarding telehealth before a health care executive group, we were inundated with the following question:  Why should a hospital provide telehealth services when often times it will not get paid for those services?  It is, on its face, a great question.  After all, few of us would want to provide services we know will not be reimbursed.  But, in many ways, the question misses the boat.  While a hospital may not be paid directly for providing telehealth services, it nevertheless could significantly benefit in a number of ways that prove just as valuable to the hospital.  This is especially the case as we transition from a fee-for-service system to one rewarding quality of care, patient outcomes, and clinical integration.  In other words, measuring the value of telehealth services solely based on direct reimbursement is misguided.

The Indirect Benefits of Hospitals Providing Telehealth

The questions raised during our presentation, however, gave us an opportunity to organize our thoughts about telehealth’s “indirect” benefits.  Here are four reasons why it may be worth providing telehealth even in circumstances in which a hospital or provider is not directly reimbursed for providing the service.

  • Penalty/Cost Avoidance: Providing telehealth is a great way to avoid certain future costs, especially those related to inpatient readmissions, ED admissions, and post-acute care management.  Take readmissions—almost 20 percent of Medicare beneficiaries are readmitted to the hospital within a month of discharge.  Many of the discharges are avoidable and the result of poor transitional care.  And Medicare now reduces payments to hospitals with excess readmissions.  Telehealth interactions are one effective way to better engage patients, more closely monitor disease states, and help reduce complications—all great tools in the fight against excess readmissions.  So, in this context, using telehealth as a means to reduce readmissions (and not incur penalties) may outweigh the lack of direct reimbursement for those services.  This is a scenario likely to play out repeatedly as we transition out of fee-for-service into a system in which hospitals and providers are rewarded for the value of care they provide—not the volume.
  • Branding/Geographic Reach:  Telehealth may provide a great vehicle for a hospital to extend its brand further outside its market in ways previously inconceivable.  In many of the programs I see being implemented around the country, the institution is often providing telehealth services to other hospitals (such as rural hospitals) and facilities (clinics, physician offices) it would otherwise have little opportunity to interface with.  There are countless examples, many involving telestroke, teleICU, and telepsychiatry programs.  What is increasingly becoming clear is that telehealth is a highly effective way to increase a hospital’s market footprint just in the course of normal business.
  • Short-supply specialists. Many hospitals and other health care facilities often lack specialty care.  Some of the specialties suffering the most acute shortages include cardiology, critical care, oncology, psychiatry and neurology.  Hospitals are now turning to telehealth as a means to provide specialty care to their patients who would otherwise not have access to such care.  By leveraging the power of telehealth, many institutions are actually treating patients who would likely otherwise be unable to receive the care they need—thereby reducing further complications and potentially significant downstream costs.
  • Patient Satisfaction. Patient satisfaction with telehealth has always historically been high.  Patients report that they appreciate: i) the ability to connect with health care professionals with the expertise to treat their conditions—regardless of the distance; and ii) as well as the individualized personal care they receive from telehealth interactions.  A number of studies further confirm these conclusions.  One such study showed that patient satisfaction from the use of telehealth increased by 85 percent. Patient satisfaction, in addition to being measured in many payers’ quality matrices, plays a significant role in how a hospital is viewed in the community.

More Payers Are Reimbursing Than You Think

As we have discussed, there are many “indirect” benefits for hospitals providing telehealth—but we cannot lose sight of the fact that many payers do indeed reimburse providers for telehealth.   Many leading private insurers provide coverage and reimbursement for telehealth.  Generally these coverage policies provide reimbursement for telehealth services involving the use of real-time interactive audio, video, or other electronic media for diagnosis and consultation.  Note that an increasing number of the largest health plans have various telehealth initiatives underway that directly reimburse providers for services such as teleconsults.

There are also a growing number of states that have passed telehealth parity statutes which require health insurers to pay for services provided via telehealth the same way they would for services provided in-person.  Almost a third of all states have enacted these statutes, and another dozen or so states are considering similar legislation.  Additionally, about 44 Medicaid programs currently reimburse in some way for telehealth.  Medicare, however, lags behind other payers in reimbursing given its many restrictions—but even Medicare provides some coverage for telehealth.

As telehealth continues to grow, there are a number of legal, regulatory, and operational issues that threaten to stall its progress.  We have tackled many of these issues in previous blog posts.  But no obstacle looms larger than the issue of payment.  How can providers get consistently and appropriately reimbursed by payers for use of telehealth?  Absent a clear answer, telehealth will likely find it difficult to fulfill its great promise—at least in the United States.  Other countries are pulling ahead.  Here is a look at the current reimbursement landscape facing providers and what could change in the coming years.

Medicare Coverage and Reimbursement

No payer lags further behind in reimbursing for telehealth than Medicare.  For professional fees, the Medicare program currently covers fewer than 20 categories of telehealth services encompassing about 30 or so codes.  The Medicare statute and regulations that provide coverage for telehealth are very restrictive.  For example, telehealth is defined generally as an interactive audio and video telecommunications system that allows real-time communication between providers and patients.  There is no coverage for so-called asynchronous or “store and forward” technology limiting the way in which providers can make best use of technology for treatment.

Beyond the definition for telehealth, there are even more restrictions.  Telehealth services are only covered if the patient is seen:

1.  By approved originating sites (including physician offices, hospitals, and skilled nursing facilities);

2.  By approved providers (such as physicians, nurse practitioners, and clinical psychologists); and

3.  For a small defined set of services (including consultation, office visits, pharmacological management and individual and group diabetes self-management training services).

Moreover, the services must be provided to a Medicare beneficiary who lives in, or uses a telehealth system in an eligible facility located in a rural Health Professional Shortage Area, in a county that is  not included in a Metropolitan Statistical Area—in other words, the most rural of counties.  Given the severe restrictions imposed by Medicare, it should surprise no one that Medicare spent only about  $6 million under the telehealth benefit in 2011—a mere drop in the ocean considering the hundreds of billions Medicare annually spends to reimburse providers under its various programs.

It will literally take an act of Congress to expand the Medicare telehealth benefit.  And that appears unlikely in the near future given that federal regulators are not fully persuaded by clinical efficacy of  telehealth for many indications, and fear increased costs due to telehealth expansion.  This coupled with the bias towards keeping the telehealth benefit only available for rural beneficiaries in areas with a shortage of health care professionals will make getting a bill successfully through Congress a daunting task.

Medicaid Coverage and Reimbursement

There are about 40 states that provide some form of coverage and reimbursement for telehealth under their respective Medicaid programs.  For example, the California Medicaid program reimburses for telehealth services such as telepsychiatry, selected psychiatric therapeutic services, teleophthalmology, telehome care, and remote monitoring services.  Colorado’s Medicaid program reimburses for telehealth claims provided in real time including office visits for preventive and routine medical care, psychotherapy and obstetrical ultrasounds.  The Kansas Medicaid program reimburses for office visits, individual psychotherapy, pharmacological management, and home telehealth services.  Providers need to check with their state Medicaid programs to determine the extent of coverage for telehealth.  But Medicaid is more expansive in telehealth coverage than Medicare.

Private Payer Coverage and Reimbursement

There is some relatively good news.  Many leading private insurers provide coverage and reimbursement for telehealth, although their policies vary.  Generally, however, insurers who do provide coverage for telehealth reimburse only for real-time communications in which a patient is located at an approved health care facility and services are provided by certain practitioners. But the landscape is changing in favor of broader telehealth coverage.

A growing number of states are enacting so-called telehealth parity statutes. These laws generally require health insurers to pay for services provided via telehealth the same way they would for services provided in-person. Almost a third of all states have enacted these statutes, and I predict more states will be coming on board.  Maryland became one of the latest states to jump on the bandwagon when the state’s governor signed a telehealth parity statute earlier this year.  California’s Telehealth Advancement of Act of 2011 became effective on January 1, 2012, and breaks down many of the barriers that prevented wider use of telehealth. Other states, such as Virginia, Georgia, Kentucky, and Oregon have also enacted similar laws.


Despite the stumbling blocks, I believe there are opportunities available to expand coverage for telehealth, including:

  • Significant telehealth coverage in other government programs (i.e., Veterans Administration) providing a model for Medicare, Medicaid, and private payers.
  • Increased attention to telehealth and data monitoring through various health care reform initiatives (i.e., Center for Medicare & Medicaid Innovation) which should lead to data showing the efficiency and cost-saving potential of telehealth.
  • Increased focus on preventing readmissions may force Medicare to look at treatment alternatives.
  • Many telehealth initiatives underway with private health plans which will result in new data.
  • There may be more flexibility and opportunity for Medicare coverage for telehealth services under Medicare Advantage.

The takeaway for providers looking to expand their telehealth portfolios is that the payment landscape for telehealth, while currently restrictive, is evolving.  Along with the state telehealth parity statutes and coverage available under many private insurance plans, the many initiatives underway (at both public and private payers) present opportunities for providers to make their case.

 A significant yet little-noticed trend is underway. And its effects could be far-reaching.  A growing number of states are enacting so-called telehealth parity statutes. These laws generally require health insurers to pay for services provided via telehealth the same way they would for services provided in-person. Almost a third of all states have enacted these statutes, and I predict more states will be jumping on the bandwagon. Telehealth is indeed going mainstream.

Maryland became one of the latest states to jump on the bandwagon when the state’s governor signed a telehealth parity statute in May. California’s Telehealth Advancement of Act of 2011 became effective on January 1, 2012, and breaks down many of the barriers that prevented wider use of telehealth.  Other states, such as Virginia, Georgia, Kentucky, Hawaii, and Oregon have also enacted similar laws. Indeed, last week, the Michigan legislature passed a law that prohibits insurers from requiring face-to-face contact between providers and patients in lieu of a telehealth encounter.

Given the nature of this forum, I will not analyze the particulars of all these statutes—but I will briefly look at the Maryland and California statutes to give you a flavor of how state legislators are approaching telehealth coverage and reimbursement issues.

The Maryland statute has several key provisions, including:

  • Telehealth is defined as “interactive audio, video or other telecommunications or electronic technology by a licensed health care provider to deliver a health care service”
  • Does not apply to audio-only phone conversations, e-mail messages or faxes between providers and patients
  • Insurers are required to provide coverage for health care services provided appropriately using telehealth
  • Coverage cannot be denied because services are  provided via telehealth rather than in-person
  • Insurers can require deductibles, copayments or coinsurance for telehealth services as they would for in-person services
  • Insurers may not differentiate  between rural and urban patients to determine coverage for telehealth services

The California statute is more comprehensive than other state laws, and is based on a report and model statute developed by the Center for Connected Health Policy.  Among other things, the California law:

  • Defines telehealth broadly to including any mode of delivering health care services using  information and communication technologies for diagnosis, consultation, treatment, education, care management, and self-management of patients at a distance from health care providers
  • Modifies the existing requirement for an additional written patient consent specifically for telehealth services to a verbal patient consent
  • Eliminates restrictions on reimbursement of services provided via email or telephone
  • Eliminates restrictions on the location where telehealth services may be provided (i.e., hospitals, physician offices)
  • Allows California hospitals to use new federal rules to more easily establish medical credentials of telehealth providers
  • Broadens the types of health care practitioners covered to include all medical professionals licensed by the state

For hospitals, providers, vendors, and investors looking to broaden their telehealth footprint, I think it makes sense to first look at the approximately 15 states with these telehealth parity laws.  In addition to breaking down barriers that stifle greater use of telehealth, operating in these states at least assures that telehealth services will be reimbursed by insurers. I believe that such an approach is all the more important since public payers lag far behind. Medicare telehealth coverage is very limited while Medicaid coverage varies by state, and often relies on the old model in which a patient has to present at a certain facility and be treated by a physician or midlevel practitioner.  The bad news is that only a third of the states have these laws.  The good news is that I see a trend developing and I predict that in a few years, the majority of states will have telehealth parity laws.