Many predict one lasting impact of the COVID-19 pandemic will be expanded use of telehealth. As patients and providers now appreciate the convenience of virtual home visits, the traditional office visit will become the exception, not the rule.
Not so fast. Absent statutory and regulatory changes, we’ll be right back where we were with telehealth.
Pre-pandemic, telehealth comprised a fraction of a percentage of Medicare spending. The story wasn’t much different for state Medicaid programs and commercial health plans. According to an October 2019 report from JD Power, “Nationwide consumer adoption of telehealth services has been stubbornly low, with just 10% of healthcare consumers having used such services.”
A. Medicare Rules
The root cause of the problem was Section 1834(m) of the Social Security Act, which defines the scope of the Medicare telehealth benefit. The statute imposes five requirements for coverage:
- The geographic requirement. The beneficiary must reside in a rural area.
- The location requirement. The beneficiary must be physically present at a healthcare facility when the service is provided.
- The service requirement. The service provided must be listed as an approved telehealth service (as defined by CPT® or HCPCS code).
- The technology requirement. The service must be provided using a telecommunications technology with audio and video capabilities that permit real-time interactive communication.
- The provider requirement. The service must be furnished by an eligible provider, including physicians, non-physician practitioners, clinical psychologists, clinical social workers, registered dieticians, and nutrition professionals.
In the last few years, Congress approved a handful of exceptions to the Section 1834(m) requirements:
- Telestroke. Effective 01/01/2019, geographic and location requirements do not apply to services furnished to diagnose, evaluate, or treat symptoms of acute stroke.
- Substance Use Disorder. Effective 07/01/2019, geographic and location requirements do not apply to services relating to SUD and co-occurring behavioral health conditions.
- End-Stage Renal Disease. Effective 01/01/2019, geographic and location requirements do not apply to ESRD services relating to home dialysis.
- Medicare Advantage. For 2020 plan year, the MA plan may eliminate geographic and location requirements.
Also, CMS approved specific exceptions for providers participating in the Medicare Shared Savings Program and Center for Medicare & Medicaid Innovation initiatives.
Pre-pandemic, several bills were introduced to expand Medicare telehealth coverage by eliminating the Section 1834(m) requirements. The Congressional Budget Office (CBO), however, has assigned a high price tag to such legislation, refusing to assume telehealth services would substitute for, or reduce the use of, other Medicare-covered services.
Because its PAYGO rules require any increase in entitlement spending be offset by tax increases or cuts in mandatory spending, Congress was unwilling to raise taxes or cut other spending to expand telehealth coverage. Concerns about widespread fraud and patient privacy also have been cited as reasons for not expanding Medicare coverage.
B. Other Payers
While the Section 1834(m) restrictions apply only to Medicare, other payers also have resisted fee-for-service reimbursement for telehealth services. States have tried to push payers forward by adopting parity laws. According to Foley & Lardner’s 2019 50-State Survey of Telehealth Commercial Payer Statutes, 42 states and the District of Columbia have some sort of commercial payer statute requiring coverage for telehealth services.
However, only 16 states have laws that address reimbursement and only 10 states require payment at the same rate as face-to-face services, per the Foley & Lardner survey. Moreover, state telehealth parity laws do not apply to ERISA-regulated health plans (i.e., large-employer self-funded plans).
Rather than reimbursing a patient’s regular physician for telehealth services, many health plans now contract with third-party vendors to provide on-demand telephone consults for their members. These “phone-a-doc” services, however, are intended to discourage emergency department utilization, rather than facilitate an ongoing physician-patient relationship.
C. Value-Based Contracting
One bright spot on the pre-pandemic telehealth landscape was the use of telehealth by providers under risk-based arrangements. For example, Kaiser Permanente, one of the largest vertically integrated healthcare delivery systems, makes available to patients a broad range of telehealth services as part of its integrated care delivery.
In its initial response to the COVID-19 pandemic, Congress gave the CMS authority to waive Section 1834(m)’s geographic and location requirements for the duration of the public health emergency. With this waiver authority and through the publication of two interim final rules, CMS has significantly expanded telehealth Medicare fee-for-service reimbursement. PYA’s complete, up-to-date summary of these temporary rules is available here.
State Medicaid programs and commercial plans have followed suit, temporarily providing expanded telehealth coverage and reimbursement. And the Federal Communications Commission is making available $200 million in grant funding to support providers’ acquisition of telehealth technology and monitoring devices.
Essentially overnight, physician practices pivoted from clinic visits to virtual visits. According to a Merritt Hawkins survey released April 22, 48% of physicians now are treating patients with telehealth. New market research shows 59% of patients are more likely to use telehealth services now than previously, and more than a third would switch their physician to have access to virtual care.
When the declaration of the national COVID-19 public health emergency expires, Medicare’s temporary expansions of telehealth coverage and reimbursement will expire with it. Significant legislative and regulatory changes will be required to re-capture any gains made during the pandemic.
First and foremost, Congress will need to act on Section 1834(m), overcoming concerns about cost, fraud, and privacy. Most likely, that will require the CBO to revise its cost estimates to account for Medicare savings generated by expanded use of telehealth.
Industry leaders will need to make a compelling case that fraud can be adequately controlled, and privacy can be properly protected. More in-depth research regarding provider and patient experience with telehealth during the COVID-19 crisis will bolster the case for expanded Medicare coverage.
Legislative action also may be required if commercial payers retreat to their pre-pandemic positions regarding telehealth reimbursement. In fact, legislation was introduced in late April to require ERISA-regulated plans to provide coverage and reimbursement parity for telehealth services, and it appears to be garnering support. Similarly, state legislatures will need to expand existing telehealth parity laws to include reimbursement parity.
In addition to actively engaging in these lobbying efforts, providers should consider expanding their use of communication technology-based services (CTBS) now covered by Medicare and other payers. In the 2019 Medicare Physician Fee Schedule Final Rule, CMS recognized a distinction between telehealth services subject to Section 1834(m) and CTBS, which are not subject to the statute’s requirements. While the agency previously interpreted the Section 1834(m) geographic and location requirements as applying to any virtual service, CMS decided these requirements apply only “to a discrete set of physicians’ services that ordinarily involve, and are defined, coded, and paid for as if they were furnished during an in-person encounter between a patient and a healthcare professional.”
By contrast, “services that are defined by, and inherently involve the use of, communication technology” are not subject to Section 1834(m). In making this distinction, CMS opened the door to new payment for CTBS, including remote patient monitoring, virtual check-ins, and interprofessional internet consultations, as well as ambulatory care management.
While not a substitute for full coverage for telehealth services, CTBS reimbursement offers a means to maintain some of the gains made in virtual care during the COVID-19 pandemic. Also, remote patient monitoring supplements visual-only telehealth services by providing physicians patients’ physiologic data.
It’s hard to find any silver lining to the COVID-19 cloud under which we now live, but a real-life experiment demonstrating the value of virtual care may be one. However, any gains made will be fleeting unless providers and patients push policymakers to cement them into law.
If you have questions related to telehealth reimbursement, or would like additional guidance related to COVID-19, visit our COVID-19 hub, or contact one of our PYA executives below at (800) 270-9629.
Disclaimer: To the best of our knowledge, this information was correct at the time of publication. Given the fluid situation, and with rapidly changing new guidance issued daily, be aware that some or all of this information may no longer apply. Please visit our COVID-19 hub frequently for the latest updates, as we are working diligently to put forth the most relevant helpful guidance as it becomes available.