Current State of Telemedicine

As we previously reported, the CHRONIC Care Act of 2017 was introduced by Senate Finance Committee Chairman Orrin Hatch and Ranking Member Ron Wyden, along with Johnny Isakson and Mark Warner, the co-chairs of the Committee’s Chronic Care Working Group. The bill is largely unchanged from the previous version, which was introduced in December 2016. The bill will have an especially large impact on telehealth services in the United States by allowing MA plans the ability to include telehealth services; gives some ACOs the opportunity to provide telehealth services; gives those receiving dialysis treatments at home the ability to check-in with their physician at home; and expands the availability of telehealth to ensure individuals who may be having a stroke receive the correct diagnosis and treatment.

Expanding Telemedicine Adoption

As of late 2012, 42 percent of U.S. hospitals had adopted telemedicine, but adoption rates vary significantly by geography. Alaska was the highest with 75 percent, while Rhode Island had minimal adoption. Additionally, states often require physicians to be licensed to practice in the “originating” site, i.e., the patient must be in the same state in which the attending physician is licensed to practice. Some states require that providers maintain a license with the board where the patient is located, which can lead to extra costs and paperwork for the providers.

Recent Telemedicine Developments

MACRA contained a number of provisions that aim to expand telemedicine. One provision limits restrictions on telemedicine only to fee-for-service (FFS) as opposed to alternative payment models (APMs) created through the law. It also directed the GAO to study telemedicine. Telemedicine is also promoted in the new “improvement activities” category in MIPS.

Furthermore, the 21st Century Cures legislation included provisions related to telemedicine, including requirements of CMS and the Medicare Payment Advisory Commission (MedPAC) to provide detailed information to Congress regarding the potential uses of telemedicine in Medicare. The Cures Act focuses on Medicare’s “originating site” requirement as well as the role of CMMI regarding telehealth. The law also on the House Energy & Commerce Committee Telemedicine Workgroup to develop next steps on Medicare telehealth.

Reimbursement for telemedicine

Among public payers, Medicare offers the most limited coverage of telehealth. Medicare pays for a narrow set of services and only in rural areas. Fee-for-service (FFS) Medicare covers a defined set of outpatient services furnished to an eligible beneficiary via an approved real-time interactive audio and video telecommunications system. Beneficiaries are eligible for the services if they receive care from an “originating site” located in a county outside of a Metropolitan Statistical Area (MSA) or A rural Health Professional Shortage Area (HPSA) located in a rural census tract.

Medicare covers a number of telehealth services in lieu of in-person services – including

“consultations, office visits, psychiatry services, and some physician fee schedule services.” These services are reimbursed “at the same rate as the comparable in-person medical service” according to the codes and applicable payments set forth in the current Medicare Physician Fee Schedule (MPFS). Ultimately, roughly 80% of Medicare beneficiaries do not qualify for telemedicine services because they live in a metropolitan area. In general, telemedicine coverage and reimbursement restrictions have remained in place out of “concern that the service might increase Medicare expenses” due to an increase in beneficiaries’ use of services.

In the Medicare Advantage (MA) program, reimbursement for telemedicine depends on the private plan. In contrast to Medicare FFS, a number of MA plans as well as Medicare Accountable Care Organizations (ACOs) have turned to telemedicine as a means by which to facilitate greater care management and beneficiary engagement. This is predominantly due to the fact that “[MA] plans have the option to offer telemedicine without the tight restrictions in the traditional Medicare program because they are paid a fixed amount by the federal government to care for seniors. As a result, Medicare is not directly paying for the telemedicine services; instead, the services are paid for through plan revenue.”

In Medicaid, the American Telemedicine Association (ATA) reports that all 50 states provide some level of reimbursement for telemedicine services. While federal Medicaid statute does not explicitly recognize telemedicine as a distinct service, states have considerable flexibility in covering and reimbursing for these activities. State Medicaid reimbursement for telemedicine services must meet broad federal requirements “of efficiency, economy and quality of care,” though states are encouraged to use the flexibility of the program to establish payment methodologies that serve their residents’ needs. Due to the flexibility of the program, states do not need to submit a separate State Plan Amendment (SPA) for establishing the coverage of telemedicine services if it reimburses providers the same as a face-to-face service. However, states must obtain approval from CMS if reimbursement differs from the face-to-face service.

In the private insurance market, state-mandated telemedicine coverage of has become increasingly prevalent over the past decade. However, only 16 of the 24 states with telemedicine parity laws for private insurance “authorize state-wide coverage, without any provider or technology restrictions.” Telemedicine advocates are pushing for more states to pass legislation requiring that telemedicine services be covered to the same extent and in a similar manner as in-person services.

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