How Much Does Medicare Reimburse for Telehealth? The Real Story

The Robert J. Waters Center for Telehealth and e-Health Law (CTeL) can now tell the real story about how much the Centers for Medicare & Medicaid Services (CMS) has reimbursed for telehealth encounters.

When the original telehealth CMS reimbursement legislation was passed by Congress, the budget analysts at the Congressional Budget Office (CBO), Congress’s arbitrator for how much a program will cost, stated that Medicare telehealth reimbursement would cost the Federal treasury $150 million during the first five years.

That figure was based on most of the restrictions in place today (e.g. only rural designation, limited providers, codes, distant sites and originating sites and only interactive audio/video).

We know this because Dr. Karen Edison, former CTeL Board Member and the Director of the Center for Health Policy at the University of Missouri, was instrumental in getting the current telehealth legislation passed by Congress.  Upon arriving in Washington in 1999, Dr. Edison, a Congressional Fellow assigned to one of the Senate’s health care committees, turned to CTeL’s founder, Bob Waters, for guidance in “how to work the inside” in order to get telemedicine legislation passed.

As a teledermatologist, Dr. Edison knew telemedicine and had practiced it in Missouri for several years.   However, new to “The Hill”, she didn’t know how Congress operated.

For Bob, the call from Dr. Edison was an easy one for him to take.  He was a pioneer of telemedicine’s legal and regulatory issues, and was a veteran Congressional chief of staff, having served as the first chief of staff to Senator Tom Harkin, now the chairman of the Senate’s Health, Education, Labor and Pensions Committee.  With Bob’s legal expertise in telehealth and his deep experience in how Congress operated, he and Dr. Edison worked as a team to advance the foundation of CMS’s telehealth reimbursement policy.

Without the efforts of Dr. Edison and Bob Waters, it’s unlikely we would see the telehealth reimbursement policy we see today.

So, we know how reimbursement policies passed Congress in 2001.  And we know the CBO who advised Congress said it would cost CMS $150 million during the first 5 years, or $30M/year to reimburse for telehealth encounters.

What’s the truth?  “Scoring” legislation in Congress is not an exact science.  But they missed it by a “country mile.”

Working with Senate telehealth supporters, CTeL is able to provide information directly from CMS on how much the Federal government reimburses for telehealth.  In 2011, CMS reimbursed approximately $5,621,780 for Distant Site charges.  Because this amount reflects both CMS reimbursement and the beneficiary’s copay, this amount could be reduced by 20 percent to $4,497,424 as the actual CMS payment.  There also is $751,297 for Originating site charges.



That means in 2011, CMS’s actual payments were $5,248,721.  CBO missed their analysis by $25 million, or 83 percent!

There is a phrase on Capitol Hill that legislators and their staff use to describe a $5.2 million expenditure inside a multi, multi billion dollar budget.  They call it “budget dust” or sometimes, “a rounding error.”

And, it’s important to keep in mind that this is not “additional reimbursement.”  As we know, telehealth encounters and reimbursement are just the same reimbursement, but through a different medium.  Instead of CMS paying for an in person visit, the encounter occurs through telemedicine.

The purpose of a telehealth encounter is to get the right care to the right person at the right place and at the right time, resulting in early diagnosis and treatment and more efficient care.   For example, if a patient has to wait three months to see a dermatologist, the disease progression can be significant, and potentially more costly.

Reform of the health care system is here.  Whether it is the existing health care reform or another.  It is well past time for policymakers to recognize the vital role that telehealth can play in a more efficient, reformed healthcare system that rewards quality care and successful outcomes rather than today’s model that rewards providers on a transactional basis—the more they do, the more money they make.

The numbers don’t lie.  Telehealth will not break the bank, but is the only way to bring true equity of healthcare access to all Americans, no matter where they live.  Those of us in the industry have known it all along.  Now we have the proof.

Rob Sprang, MBA
President, CTeL
Director, Kentucky Telecare


CTeL welcomes your comments below!


Click here for the CTeL Fact Sheet on CMS Medicare Telehealth Reimbursement Statistics for Calendar Years 2001-2011.


One Comment

  1. Gordon Alloway
    Sep 07, 2012

    My thanks to Rob and CTeL for this valuable documentation. Now we have the facts available to perhaps remove that nasty cloud that the CBO’s estimates placed over the head of telemedicine from the beginning.

    (Maybe get telemedicine included in Meaningful Use Stage 3???)

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