Medicare Spending on Telehealth Grew in 2016, But is Still Low

Good news/bad news when it comes to Medicare and telemedicine: While the program spent more money on reimbursement for telehealth services in the past year than they ever had in the past, Medicare’s spending on it still only accounts for a small percentage of its overall budget. As mHealth Intelligence first reported, recently released data from the Centers for Medicare and Medicaid Services (CMS) both showed an upward trend in spending and highlighted the still-limited nature of Medicare reimbursement for telehealth care. “Providers continue to successfully integrate telehealth services into their traditional health care delivery approaches,” Nathaniel Lacktman, an attorney who specializes in telehealth law, wrote in an analysis published on LinkedIn of the new CMS numbers, while also acknowledging the existing limitations.

Lacktman notes that there was a 28 percent increase in CMS payments for telehealth from 2015 to 2016, with reimbursement totaling $28.7 million, and a 33 percent increase in the number of claims that providers submitted. Driving the higher number of claims: “More providers using telehealth services with their traditional [fee-for-service] beneficiaries.” More specifically, the number of originating site claims rose. Still, Lacktman explains, of the more than $600 billion that Medicare spends each year, telehealth still only accounts for a small fraction. What’s more, it also falls far short of the 2001 Congressional Budget Office (CBO) estimate that inspired the current limitations that Medicare places on telehealth reimbursement. “In 2001, the Congressional Budget Office estimated it would cost the Medicare program $150 million to cover telehealth services for the first five years ($30 million a year),” Lacktman states. “Fifteen years later, total payments (2011-2016) still have not cracked that $150 million forecast and annual spend has not hit $30 million.”

Through its Telehealth Reimbursement Coalition, CTeL has been working to make a research-based case to the CBO for expanded federal telehealth reimbursement. And many of the telehealth-related bills introduced in the current Congress specifically target Medicare restrictions. The bipartisan Evidence-Based Telehealth Expansion Act, for example, would authorize the Health and Human Services (HHS) Secretary to, upon review, waive certain current restrictions on Medicare telehealth reimbursement. Similarly, the Creating Opportunities Now for Necessary and Effective Care Technologies (CONNECT) for Health Act would remove a number of current Medicare restrictions on telehealth and remote monitoring services. Bolstering the case for these bills: the April Government Accountability Office (GAO) study asserting that outdated Medicare reimbursement policies and other coverage limitations are standing in the way of wider utilization.

Click here to read the mHealth Intelligence article on Medicare telehealth spending.

Click here to read the analysis from Nathaniel Lacktman on Medicare telehealth spending.

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