Reimbursement Overview

The absence of consistent, comprehensive reimbursement policies is often cited as one of the most serious obstacles to total integration of telehealth into health care practice.  The lack of an overall telehealth reimbursement policy reflects the multiplicity of payment sources and policies within the current United States health care system.  The vast majority of health care costs are paid by private insurers, Medicare, and Medicaid.

Partial Medicare reimbursement for telehealth services was authorized in the Balanced Budget Act of 1997 (BBA).  The narrow scope of reimbursement prompted efforts towards expansion and revision of Medicare reimbursement regulations.  The Benefits Improvement and Protection Act of 2000 (BIPA) included amendments to the Social Security Act and removed some of the prior constraints, yet maintained substantial limitations on geographic location, originating sites, and eligible telehealth services.

Unlike Medicare, most state Medicaid programs provide reimbursement for health care-related transportation costs.  A number of states with telehealth programs entered into collaboration with state Medicaid programs to develop telehealth reimbursement policies, often with the anticipation that telehealth could offer transportation cost savings.  Currently, 39 state Medicaid programs provide at least some reimbursement for telehealth services, with behavioral health experiencing the most rapid expansion of reimbursement policies.  Other state Medicaid agencies are amenable to establishing or enhancing telehealth reimbursement policies but are facing serious budget constraints.  Therefore, the addition of any new coverage or services must be based on solid cost and benefit data.

As with Medicaid, regulations for telehealth reimbursement by private insurers are set by the states.  Fifteen states have enacted laws requiring that services provided via telehealth must be reimbursed if the same service would be reimbursed when provided in person.  These states include:

The 15 states currently mandating coverage for telehealth services are:

  • California
  • Colorado
  • Georgia
  • Hawaii
  • Kentucky
  • Louisiana
  • Maine
  • Maryland
  • Michigan
  • New Hampshire
  • Oklahoma
  • Oregon
  • Texas
  • Vermont
  • Virginia

Some insurance programs cover specific telehealth services, e.g., behavioral health.  Even in the absence of a definitive policy, some insurers and Medicaid agencies will reimburse for telehealth services as long as the rationale for using telehealth is justified to the agency’s satisfaction.  State waivers or special programs offering remote diagnostics, remote monitoring for specific disease entities or for particular populations, allow for additional coverage of telehealth services.  A few states simply pay claims regardless of whether the encounter was in person or via telehealth.  The introduction of managed care, within Medicaid and the private sector, has complicated telehealth reimbursement policies since a number of state programs acknowledge using telehealth within managed care but not to keep specific utilization data.  In many cases, state Medicaid managed care and fee-for-service are separate programs with separate guidelines.

The array of non-traditional payers for telehealth services include charitable organizations (including foundations), long-term care and community health providers, special population agencies, and self-pay and self-insured groups.  Although telehealth payment policies are evolving at a steady but somewhat erratic pace, limited reimbursement continues to be a major barrier to the expansion of telehealth.  This barrier may preclude timely, quality, appropriate care for patients throughout the nation–especially those in rural or medically underserved areas.