Medicare Reimbursement

2014 CTeL Medicare Reimbursement Checklist for Telehealth Professional Fees and Originating Site Facility Fees

Medicare is the federal health insurance for America’s senior citizens. Most of the financing and reimbursement for telehealth services comes from Medicare.  The expansion of Medicare reimbursement began when Congress passed the Balanced Budget Act of 1997 (BBA), which mandated that Medicare reimburse telehealth care and fund telehealth demonstration projects.

The BBA called for the coverage of and payment for telehealth consultations to Medicare beneficiaries in rural health professional shortage areas (HPSA).  The BBA also required that Medicare practitioners be with the patient at the time of the consultation and specified that teleconsultant fees had to be shared between the consulting physician and the referring physician.

These new rules were seen, by some, to be too restrictive to the implementation of telehealth reimbursement schemes.  The new statutory language did not match the practical realities of telehealth practice.  Under the BBA, Medicare rules required that a telehealth provider be present to be eligible for Medicare reimbursement. These requirements essentially limited the reimbursement to “live” telehealth services, which constitute only about 10 percent of telehealth services.

There was some hesitation about amending the BBA because of worries that telehealth reimbursement would somehow threaten the Medicare trust fund.  The Health Care Financing Administration, now the Centers for Medicare and Medicaid Services, had to ensure that health care expenditures did not outstrip funding, a major challenge given the growing senior citizen population.

A major concern in revising the telehealth reimbursement provisions was the exceedingly high cost (“scoring”) affixed to telehealth reimbursement legislation by the Congressional Budget Office (CBO).  In 2000, the Center for Telemedicine Law, with funding from the Office for the Advancement of Telehealth, coordinated a project to use available telehealth reimbursement claims data to develop a more accurate funding projection. The results of this project clearly indicated that expanding telehealth reimbursement would have minimal financial impact. Data from this report was accepted by the CBO in scoring proposed telehealth reimbursement revisions.

After several attempts to amend current law and refine telehealth reimbursement policies, the push to improve rural access to telehealth prevailed in mid-December 2000, when Congress passed the final of its 13 appropriation bills, the Consolidated Appropriations Act of 2001 (CAA).  In addition to appropriating funds for the Departments of Labor, HHS, and Education, this bill contained a number of smaller bills, one of which included language on telehealth reimbursement policies (H.R. 5661, Section 223).

Beginning October 1, 2001, H.R. 5661, also known as the Benefits Improvement and Protection Act of 2000 (BIPA), amended section 1834 of the BBA to provide for a new subsection (m) “Payment for Telehealth Services”, which expanded the payment for telehealth services.

However, BIPA also limited reimbursement to those eligible individuals that received services at originating sites.  These sites included: offices of a physician or practitioner, critical access hospitals, rural health clinics, federally qualified health centers, and hospitals.

This amendment contained provisions that expanded Medicare payment for telehealth services.  The newly passed provisions expanded the scope of reimbursement by not requiring a telepresenter and adding additional services over a broader geographic area.  The following are among some of the provisions passed:

  • elimination of the provider “fee sharing” requirement;
  • elimination of Medicare participating “tele-presenter” requirement;
  • expansion of telehealth services to include direct patient care, physician consultations, and office psychiatry services;
  • inclusion of payment for the physician or practitioner at the Distant Site at the rate applicable to services generally;
  • expansion of the definition of Originating Sites to include physician and practitioner offices, critical access hospitals, rural health clinics, federally qualified health centers, and hospitals (not including nursing homes);
  • expansion of the geographic regions in which Originating Sites are located to include rural health professional shortage areas, any county not located in a Metropolitan Statistical Area, and any entity approved for a federal telehealth demonstration project; and
  • permission for the use of store and forward applications in Alaska and Hawaii for federal demonstration projects.

These Medicare reimbursement revisions were expected to expand the access of medical care to rural and other medically underserved areas.  Just as importantly, it was anticipated that improved Medicare reimbursement would also pave the way for broader private payer reimbursement.