Telemedicine and Getting Paid: The history of payer support for telemedicine and where it’s headed

Whether you are simply curious about telemedicine or have already begun to offer some remote care options to your patients, you probably have some questions about getting paid. I know I did when I was first getting started with telemedicine. Will insurance companies reimburse me for these services, I wondered? If so, how does the reimbursement compare to what I would receive for a traditional, in-person visit?

Laws regarding telehealth coverage are changing every year as more and more states pass parity regulations, requiring that private insurers cover telemedicine at the same rate for which they cover in-person healthcare. But even if you live in a telemedicine parity state, you may wonder if you will be reimbursed by payers.

I know these, and other such concerns, were forefront in my mind as I decided whether telemedicine would be beneficial to both my patients and my practice. To help you get a better picture of what payment for telemedicine looks like, I’ll walk you through a brief history of payer support past and present and then try to give you some indicators of where it might be headed in the future.

The use of technology to offer medical services remotely is far from a new idea. Suggestions that care be offered via telephone to reduce unnecessary office visits, for example, can be found as early as 1879 (Nesbitt 2012). However, payers have historically been somewhat reluctant to trust remote care. Prior to 1997, most third-party payers did not even have policies that covered payments for telemedicine services. Then the Balanced Budget Act (BBA) allowed for telemedicine providers to be reimbursed for their services under Medicare. (Puskin 2001)

The BBA signaled a policy shift that would continue to allow for more and more telemedicine services to be covered by both public and private payers. But the change has been a slow one. Even though the BBA was signed in 1997, the provisions relating to telemedicine did not go into effect until the beginning of 1999. And they were somewhat limited. Under that first inclusive Medicare policy, for example, two providers had to be involved in care—a referring physician who was required to be present with the patient during care and a remote physician who was actually offering the consultation. The remote provider received 75% of the payment, while the referring provider received 25%.

Now let’s see how far we have come. As we noted, back in the early 1990’s, policy regarding telehealth services was almost non-existent. Now compare that to a report on the National Conference of State Legislatures website, which was last updated in 2016. The report notes that at the time 32 states had a policy in place regulating private payer coverage for telehealth services and 48 had policies allowing for reimbursement under Medicaid. By the next year, two additional states had added policies that required telemedicine services to be covered by insurance companies. While change may have been somewhat slow in coming, it definitely came and we are continuing to see movement toward universal coverage.

Improvement can be seen not just in the number of states that now require some form of coverage for telehealth services, but also in the quality of that coverage. The requirement that a second, referring provider be present at the time of care in order for it to be covered under Medicare was removed in 2001, allowing for the consulting provider to receive the full amount of payment.

Another example could be seen last year when Oklahoma enacted a policy that allowed providers to begin a doctor-patient relationship without an in-person visit. These kind of changes are making it easier for providers to offer remote care to patients and to be adequately reimbursed for their services.

As we move forward, we are expecting the current trends of increasing coverage to carry on. Medicare growth in particular is expected to continue, for example, due to the difficulty of access to care experienced by many older people. Rural and urban seniors alike may find it difficult to travel to a doctor’s office for a visit, making telemedicine an excellent alternative. As the demand for care increases, policy regarding coverage should as well.

The FCC is considering changes to its Rural Health Care Program, which supports the use of telemedicine for patients living outside of urban areas. The program began in 1997, but the annual cap has not been changed since then. They are now considering adjusting for inflation, which would result in an increase from $400 to $571 million. These type of financial changes reflect a growing confidence in the telemedicine industry. More and more the benefits of telemedicine are coming to be looked on as fact.

An article published in the American Journal of Managed Care suggests that one of the challenges in earning payer support for telemedicine has been the traditional fee-for-service (FFS) payment plans. Under FFS plans, providers are paid for each individual service they provide to the patient. The authors suggest that the industry is beginning to explore other payment models, which will serve to increase both provider and payer confidence in telehealth.

They give as an example capitation, which establishes a fee based on a fixed amount of time spent with each patient, rather than the individual services provided. The benefit of this model to you as a provider includes the fact that telemedicine technology is often less costly than traditional tools. While the patient pays the same for an in-person visit as they would for a remote visit, you are paying less for the technology involved and therefore receive a greater profit.

Universal trust and acceptance of telemedicine care options has been slow in coming, but as you can see, it has begun to gain traction in recent years. We are looking forward to a future in which telemedicine is a norm for many levels of patient care. As this happens, payer support will continue to increase, making it ever more feasible and beneficial for healthcare providers to add telemedicine services to their options of patient care.