Telehealth Delivery Options and Reimbursement

Many healthcare providers and patients, eager for a way to connect without increasing risk of exposure to COVID-19, have learned telehealth options also present other benefits, including convenience, efficiency related to cost and time, and improved access to hard-to-reach and high-risk populations. Consequently, after years of slow growth as a primarily supplemental service, the COVID-19 public health emergency (PHE) quickly mainstreamed the use of telehealth services in a matter of weeks to months in early 2020. 

The Centers for Medicare and Medicaid Services (CMS) reported 43.5 percent of Medicare beneficiaries’ primary care visits were performed via telehealth in April 2020. And the number was even higher for beneficiaries living in metropolitan areas that were harder hit by the virus.¹ As reported by Inside Health Policy, a Medicare Payment Advisory Commission (MedPAC), there were 8.4 million telehealth services paid for under the physician fee schedule in April 2020, compared to just 102,000 in February 2020.² During 2020, 30 percent of Medicare beneficiaries nationwide had at least one telehealth visit, amounting to tens of millions of visits.³ 

Although virtual visit utilization has decreased significantly from its peak during last year’s second quarter, it’s become apparent that telehealth will remain a significant part of the healthcare system as the country emerges from the pandemic. How prominent its use will be depends in large part on the same factors that inhibited its growth during the preceding decade: regulation and reimbursement models.

Referencing a 2020 article in the Journal of American Medical Association, Modern Healthcare reported that Medicare reimbursement for audio and video telehealth calls was just $15 prior to the COVID-19 PHE, “a rate that researchers said did not even cover the cost of submitting the insurance claim.”⁴ Additionally, very few Medicare services were approved for reimbursement in past years, although some private insurers and Medicare Accountable Care Organization (ACO) participants were reporting some early success with virtual wellness visits. 

Telehealth Flexibilities During the COVID-19 PHE

Under certain circumstances, the secretary of the Department of Health and Human Services (HHS) may use section 1135 of the Social Security Act to temporarily modify or waive certain Medicare, Medicaid, Children’s Health Insurance Program or Health Insurance Portability and Accountability Act (HIPAA) requirements. These waivers can be issued individually or as a blanket waiver for all providers to help beneficiaries continue to sufficiently access health services and supplies. 

Various Section 1135 telehealth waivers have been issued during the COVID-19 PHE. In addition, CMS added more than 140 telehealth services to the physician fee schedule, including emergency department visits, initial nursing facility and discharge visits, home visits and therapy visits.^5,6,7 Some of these services will become permanent, while others are set to expire either by the end of 2021, unless extended, or at the end of the PHE. 

According to Medicare, beneficiaries may currently use telehealth “for office, hospital visits and other services that generally occur in-person.” Additionally, regardless of where someone lives,* established Medicare patients “may have a brief communication service with practitioners via a number of communication technology modalities, including synchronous discussion over a telephone or exchange of information through video or image,” or have non-face-to-face patient-initiated communications with their doctors by using online patient portals. 

Some telehealth services do not presently require both audio and video capabilities and can be conducted by phone only. Healthcare providers also currently have the option of supervising services through audio or video communication instead of in-person.^8,9

When video or text capabilities are used, a notification of enforcement discretion¹⁰ issued by the Office of Civil Rights (OCR) at HHS authorizes covered healthcare providers to use widely available, nonpublic-facing communication applications to deliver telehealth. Furthermore, OCR indicates it “will exercise its enforcement discretion and will not impose penalties for noncompliance with the regulatory requirements under HIPAA rules against covered healthcare providers in connection with the good faith provision of telehealth during the COVID-19 nationwide public health emergency.” 

Examples of public-facing applications, which are not permitted, include Facebook Live and Twitch. The following are video chat and text-based applications that are allowed during the PHE: 

Video chat applications

• Apple FaceTime

• Facebook Messenger video chat

• Google Hangouts video

• Zoom

• Skype

Text-based applications

• Signal

• Jabber

• Facebook Messenger

• Google Hangouts

• WhatsApp

• iMessage

With few exceptions, any provider eligible to bill Medicare for professional services is eligible to bill for telehealth during the PHE, and telehealth visits billed to Medicare are paid at the same Medicare fee-for-service rate as an in-person visit. Providers should just make sure their billing departments use the correct telehealth modifier(s) with the billing code. 

Medicaid covers some telehealth services, and many states have secured special Section 1135 waivers for its expanded use, but coverage differs from state to state. Multiple commercial plans have also broadened their coverage of telehealth during the pandemic, with coverage likewise varying widely by provider. 

Telehealth Coverage After the COVID-19 PHE

The good news for telehealth fans is that several services have already been made permanent, and they are expected to continue and increase for better access and quality of care. These include 60 of the 144 telehealth services that had been temporarily approved by the end of President Trump’s term, including services for cognitive assessment and care planning; group psychotherapy, psychological and neuropsychological testing; and domiciliary, rest home or custodial care for established patients. There is also a lot of discussion in Congress and at CMS about supporting the permanence — or at least the extended trial — of many more services. 

To support the advancement of telehealth, CMS has created a process for adding codes to the list of services eligible for reimbursement from Medicare that includes assigning requests to one of three categories. Category 1 is for services on the Medicare telehealth list similar to those already approved (e.g., professional consultations and office visits). Category 2 is for services not similar to current telehealth services on the Medicare list, but which pose a significant benefit for the patient. Category 3 services are those that were added during the pandemic that will remain covered until the end of the calendar year when the COVID-19 PHE is declared over, but for which there is not yet enough evidence available to consider the services permanent additions under Category 1 or 2.¹¹

One of the persisting questions is how Medicare providers should be paid for telehealth services. Although reimbursement rates for telehealth and in-person services are currently the same, without further Congressional action, payment parity will expire at the end of the PHE. 

Most providers prefer to see parity continue; however, some officials and payers are concerned that keeping telehealth rates the same as for in-person visits will result in its overutilization. Congress could pass legislation to expand telehealth services Medicare is allowed to cover, as well as direct CMS to create fair rates, but it is widely expected most of the details regarding payment will be left to CMS. 

In mid-March 2021, MedPAC, an organization that advises Congress on Medicare policy, published recommendations to Congress regarding telehealth as part of the COVID-19 PHE response. MedPAC advised Congress to continue some telehealth coverage expansions for one to two years to allow more time for collecting data on the impact of services on access, quality and the cost of care before making any policies permanent, but to revert to lower payment rates. 

MedPAC’s argument for lower payment rates was based on its conclusion that “services delivered via telehealth likely do not require the same practice costs as services provided in a physical office.”¹² However, opponents to this viewpoint argue that although overhead costs may eventually be less for certain providers if a significant portion of their services are provided via telehealth instead of in-person, those savings are still theoretical and would not been seen until much later. Furthermore, the hourly compensation for professionals providing telehealth services is no different than if they were providing the services in-person. Many parties also believe telehealth will result in cost savings to the healthcare system as a whole and believe sharing the benefits of savings with providers would encourage new innovation and the most efficient models of care to evolve. 

In its report to Congress, MedPAC also recommends continuing to allow audio-only interactions for clinical assessments and other clinically beneficial visits (e.g., management visits with established patients). To help combat potential fraud, the group advises CMS to establish additional safeguards, including closer scrutiny of claims from outlier clinicians who bill significantly more telehealth services than others; prohibiting “incident-to” billing for telehealth services provided by clinicians who are able to bill Medicare directly; and requiring an in-person visit before clinicians can order costly lab tests or durable medical equipment for a beneficiary. 

CMS and the House Committee on Ways and Means Committee, which has jurisdiction over Medicare financing, continue to take recommendations from MedPAC and others regarding what telehealth coverage should look like after the COVID-19 PHE. And, while it is not likely Congress will mandate parity in the commercial market, it’s worth noting that history has shown private insurers often feel compelled to follow Medicare’s lead. 

Guidelines Will Ensure Quality Care

According to an article by McKinsey & Co., an organization that helps private, public and social sectors create change, “approximately $250 billion — or 20 percent of all Medicare, Medicaid and commercial outpatient, office and home health spend, could potentially be virtualized,” a number that would reflect a diversion of approximately 20 percent of emergency department visits, 24 percent of outpatient office visits and 35 percent of home health services.¹³

Most would concede there are some healthcare services that simply can’t be replaced — at least effectively — by a virtual alternative. Still, many services can, and they may even be more effective than an in-person visit for one reason or another. 

For providers and healthcare consumers alike, it will be important to remain vigilant for both national and local telehealth updates, as well as to actively advocate for desired change. If they have not already taken the step, providers should proactively establish best-practice telehealth guidelines. Telehealth unavoidably changes the nature of the encounter between clinician and patient/client, and establishing guidelines and expectations will not only help ensure quality care, but it could also instill confidence in the future of telehealth with regulators and payers.