Telemedicine Reimbursement Policy

October 2003  | Center for Telemedicine Law for the Office for the Advancement of Telehealth, HRSA

HRSA, U.S. Department of Health and Human Services

Introduction
The absence of consistent, comprehensive reimbursement policies is often cited as one of the most serious obstacles to total integration of telemedicine into health care practice. This lack of an overall telemedicine 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 (BBA) of 1997. The narrow scope of this reimbursement prompted efforts towards expansion and revision of the 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 related to 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 telemedicine programs entered into collaboration with state Medicaid programs to develop telemedicine reimbursement policies, often with the anticipation that telemedicine could offer transportation cost savings. Currently, 27 state Medicaid programs acknowledge at least some reimbursement for telehealth services. The most rapid expansion is in the area of behavioral health. Other state Medicaid agencies are amenable to establishing or enhancing telemedicine reimbursement policies, but are facing serious budget constraints; therefore, addition of any new coverage or services must be based on solid cost and benefit data.

As with Medicaid, regulations for telemedicine reimbursement by private insurers are set by the states. Five states have enacted laws requiring that services provided via telemedicine must be reimbursed if the same service would be reimbursed when provided in person. 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 telemedicine services as long as the rationale for using telemedicine 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 additional coverage of telemedicine services. A few states simply pay claims regardless of whether the encounter was in person or via telemedicine. Introduction of managed care, for both Medicaid and the private sector, complicates the telemedicine reimbursement picture, since a number of state programs acknowledge use of telemedicine 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 telemedicine include charitable organizations (including foundations), long-term care and community health providers, special population agencies, self-pay and self-insured groups. Although telemedicine payment policies are evolving at a steady
but somewhat erratic pace, limited reimbursement continues to be a major barrier to the expansion of telemedicine. This barrier may preclude timely, quality, appropriate care for patients throughout the nation--especially those in rural or underserved areas.

 Full report is available here.