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  » Telemedicine  »   Legislative, legal and policy issues in telemedicine & telehealth

Medicare and Medicaid Issue Summary

by Glenn Wachter, November 9, 1999

Background and Recent CMS Regulations

Securing payment for practitioners involved in telemedicine has long been seen as a key to overcoming the high installation and operating costs for a given telemedicine network. Unfortunately, at least in its early development, payment for practitioners of telemedicine has been somewhere between non-existent and strictly limited in the United States. Significant speculation as to whether or not a lack of reimbursement is being responsible for preventing telemedicine's wider assimilation into health care practice.

Federal reimbursement established 1997, inaugurated in 1999
In recent years initial steps for telemedicine reimbursement have been made. The 105th Congress passed the Balanced Budget Act of 1997 (BBA), which among numerous other Medicare and rural health care provisions, included language that mandated Medicare reimbursement for telemedicine care. (BBA also funded telemedicine demonstration projects and mandated a government study of telemedicine.) The conditions and limitations for the reimbursement portion of this law are discussed below.

Centers for Medicare & Medicaid Services (CMS) promulgated administrative rules based on section 4206 of BBA's statutory language. By November 1998, the final rule had been published that established specific criteria under which Medicare reimbursement would be permitted. Statutory vagueness is credited as the basis for many of the administrative rules as implemented by CMS (i.e. store and forward technology was not mentioned in BBA, yet it is excluded from Medicare reimbursement).

Reimbursement Underway, yet Progress is Unclear

Payment for professional telemedicine consultations was officially mandated to commence on January 1, 1999. It is unclear to this point how much reimbursement has actually occurred, how effective this has been at improving rural health care access, or how much funding remains unused and why. CMS projected that it would make reimbursements in 1999 to range from $60 million to $690 million.

What is Currently Reimbursable?
Currently, Medicare reimburses interactive telemedicine care for its beneficiaries who are treated in rural Health Practice Shortage Areas (HPSAs). The following summary of criteria also apply. More detailed information on Medicare reimbursement is available from CMS's regional offices.

  1. Only interactive modes of telemedicine consultations will be reimbursed, which specifically excludes store-and-forward modes of telemedicine technology from being used.
  2. Reimbursement will occur in rural HPSAs only. HPSAs are federally designated and annually reviewed by the Department of Health and Human Services. HPSA's are regions that have a shortage of primary care physicians, dentists, and/or mental health care practitioners. They can be designated as large as whole county areas or as small as hospital service areas or census tracts. Review the current 1999 list of HPSAs.
  3. Reimbursement may occur for any Medicare beneficiary, regardless of whether or not he/she is a resident of a rural HPSA. The referring health care practitioner and the teleconsultation must originate from a designated rural HPSA, however.
  4. Physicians who provide teleconsultations are reimbursed at 75% of the rate of an in-person (non-telemedicine) consultation. The consulting practitioner will receive the Medicare payment and then remit 25% of that payment to the referring practitioner. By time that the consulting practitioner has finished the billing procedure, he/she will be paid at least 25% less than his/her normal fee for treating Medicare patients. If a practitioner is delivering a reasonable volume of care via telemedicine, this added complexity may reduce the 75% net further. At the end of the day, the consulting physician may spend more time and money on billing and receive less revenue than if he/she had performed the telemedicine consult in-person.
  5. Reimbursement for a teleconsultation is contingent on the type of practitioner that presents the patient. In addition to physicians, CMS regulations will permit a physician assistant, nurse practitioner, clinical nurse specialist (MSN or equivalent), nurse anesthetist, anesthesiologist, nurse-midwife, social worker, or clinical psychologist to present the patient. Registered nurses, as well as other allied health staff, are not included on the list of eligible presenters even though they may be well-equipped to present a patient during a telemedicine consultation.

Several of the above regulatory components are expected to have a chilling effect on the use of Medicare telemedicine reimbursement, and therefore fewer of America's senior citizens will benefit. Specifically, the exclusion of store-and-forward consultations, bundling the payment for the consultant to split, and requiring the presenting practitioner to be a mid-level practitioner, require a legislative action to resolve.

Several Bills Seek to Fix Medicare Reimbursement

Several bills have emerged in the first session of the 106th Congress as potential solutions to some of the more apparent limitations in current Medicare reimbursement for telemedicine. Unfortunately, none of the bills has reached the House or Senate floor but remain in committee.

A short list of the more notable first session bills include:

  • S.770 (introduced by Senator Kent Conrad)
  • S.980 (introduced by Senator Max Baucus)
  • HR 1344 (introduced by Representative Jim Nussle)
  • HR 3146 (introduced by Representative Tom Bliley)

There remains the possibility that these bills may be taken up during the second session in January 2000. Check back on the TIE for future updates.

Among the provisions included in Congressional bills:

  • End current fee-splitting provision. Medicare payments would go to the consulting practitioner, without being shared with the referring practitioner
  • The referring practitioner is not required to present the patient to the consulting practitioner
  • Any healthcare practitioner may be present, not just those recognized by Medicare to receive payment
  • Expansion of the healthcare services for which Medicare payments can be made
  • Expansion of eligible location to include all rural areas, not just those which are defined as HPSAs
  • Inclusion of all technologies used to deliver healthcare services electronically, both store and forward and interactive technologies.

We thank Telemedicine Research Center for information.