Telemedicine and CMS Reimbursement Rules

February 27, 2017

Administered by the Centers for Medicare and Medicaid (CMS), Medicare and Medicaid are the largest providers of health insurance in the country. According to the published 2015 CMS Statistics, over 55 million people are enrolled in Medicare. Medicaid monthly enrollments are estimated at nearly 69 million. Because of the sheer enormity of these programs and their criticality to the economic viability of most health care providers, the rules imposed by these programs become the de facto rules for many aspects of health care delivery. It is no different for telemedicine. Most private insurers tailor their coverage with an eye toward what CMS covers and providers respond.

As noted in a previous installment, one of the great promises of telemedicine is the potential for cost savings. An August 2014 piece published in Health IT Outcomes reported on an analysis which estimated that telemedicine could save consumers six billion dollars a year but that the largest barrier to realizing these savings was the lack of reimbursement for the services. Reports such as this seek to be a catalyst for change, beginning with CMS. To understand these pressures and how practices may evolve, it is necessary to understand where the process is now and why. In doing so, we discuss the general outlines of Medicare reimbursement provisions. While Medicaid programs follow most federal reimbursement requirements and Medicare conditions of participation, Medicaid is a separate entity with some different rules, the specifics of which are beyond the scope of this installment.

One of the recognized benefits of telemedicine is its ability to provide medical services to patients who might not otherwise have access to the provider’s specialty. This is analogous to a concept well understood and promoted by CMS: the need to direct medical services to underserved geographic locations. In advancing this latter policy, CMS adopted the concept of a “rural health professional shortage area” (HPSA). While treatises can be written on the nuances of HPSAs and reimbursements to providers in those areas, in broad brush terms the concept is straightforward: CMS provides various economic incentives for providers to serve underserved areas.

Starting with this mindset, CMS developed its initial rules regarding telemedicine reimbursement, and understanding this requires just a little more terminology. Patients seeking services through telemedicine go to an “originating site.” They interact with a healthcare professional at a “distant site.” In order to preserve the quality of care, and incentivize the delivery of care to underserved communities, CMS determined that there would be coverage for telemedicine services only when the originating site is a particular type of facility and is located in a rural HPSA, as determined by CMS on a yearly basis. The facilities covered are private offices, hospitals, critical access hospitals, rural health clinics, hospital-based renal dialysis centers, skilled nursing facilities, community mental health centers and grandfathered DHHS project sites. Consistent with this approach, the distant site need not be in a HPSA, nor is it required to be at one of the listed facilities.

Additionally, and in conformance with the idea of promoting interactions that might not otherwise occur, CMS purports to cover only services using real time audio visual platforms. The reader will recall from a prior installment that most commentators include both real time audio visual links and asynchronous store-and-forward technologies as within the ambit of telemedicine. This does not mean all store-and-forward technology is excluded; to the contrary well-established practices like radiology and pathology are by fiat simply not considered to be telemedicine and are thus reimbursed.

CMS also dictates which providers can bill for telemedicine services, as well as the services that are covered. Specifically, CMS authorizes physicians, physician assistants, nurse practitioners, nurse midwives, clinical nurse specialists, clinical psychologists, clinical social workers, and registered dieticians and nutritionists to provide and bill for telemedicine services. The specific types of services for which CMS will reimburse include office visits, professional consultations, individual psychotherapy, individual pharmacology, transitional care management, group and individual medical nutrition therapy, and alcohol and other drug abuse counseling.

While the list of these providers and services covers many things, the list is part of a “go slow” approach articulated by CMS. Each year, it considers new services and providers. Also, one must remember that these are all generally providers licensed by their respective states and which have a scope-of-practice limitations imposed on them by their licensing bodies. Simply because CMS identifies something as a service for which it would reimburse does not mean that the service is either authorized by state telemedicine licensing or that the provider is specifically licensed to provide the service.

Against this background, there is enormous pressure being exerted by employers and others who see cost saving promises to hasten CMS expansion and persuade private insurers to adopt more lenient standards for reimbursement. One of the great growth areas for this expansion is the privately funded health plans of large employers who are also integrating other telehealth protocols into their workplace plans.

Over time, it is presumed that these practices will coalesce into uniform standards, but for the time being, they are not. Nevertheless, understanding where the regulations are presently and how they came to be can help one understand where growth and expansion are likely to occur. In the next installment, we look at additional regulatory structures that have influenced and restricted the growth of telemedicine.