Our recent survey of senior-level health care executives reinforced that lack of reimbursement remains the primary barrier to providers in adopting telemedicine services. Of our respondents, 41 percent indicated that their organizations receive no reimbursement for telemedicine visits.

While telemedicine’s impact on increased access and quality of patient care seems clear – especially in areas deemed a Health Professional Shortage Area (HPSA) by the Health Resources and Services Administration (HRSA) and the Census Bureau — what should be covered is not. The HRSA views Medicare coverage as a standard, but acknowledges that there is no single standard for reimbursement on single-payer services.

What’s the Hold Up With Telemedicine Reimbursement?

In a word, policy.

Reimbursement for telemedicine services stands as one of the biggest hurdles to widespread implementation and adoption of telemedicine. Just as a car needs gas to run, providers need revenue to fuel their service offerings. Providers expecting to rely solely on Medicare or Medicaid to fund their telemedicine offerings will be disappointed.

Medicare only covers telemedicine services in certain geographic locations, a limited scope of services, and remains largely tied to facility-based practices. CMS did recently expand the scope of covered telehealth services in the recent final rule for the 2015 Physician Fee Schedule. Most notable in that rule was the inclusion of a monthly recurring payment for chronic care management, through which telemedicine technologies can be used to monitor the patient’s care (whether remote patient monitoring, telemedicine oversight, etc.). Beginning in 2015, CMS will now pay for chronic care management services separately for Medicare beneficiaries who have two or more significant, chronic conditions. The final rule establishes a payment rate (approximately $42.00) for chronic care management services that may be billed once per month for each qualified patient. Chronic care management services include communication and coordination among a care team, medication management, and consistent review of a patient’s plan of care. It’s a step in the right direction.

Medicaid coverage of telemedicine varies wildly state-by-state, with approximately 47 states offering some type of Medicaid coverage for services provided via telemedicine. Approximately half of the states elected not to restrict Medicaid coverage to facilities, and instead permit some types of coverage for services where the patient is at his or her home. Some offer it for mental health, some for home health services, and some for remote monitoring. But by and large, no two states are identical.

Some of the greatest promise and opportunity rests with commercial insurance coverage, employer-sponsored plans, and payment models such as risk-based contracting. At this time, 21 states and the District of Columbia have parity laws in place regarding private insurance coverage of telemedicine. More than a dozen states proposed commercial reimbursement legislation and providers are hopeful that more states will enact such laws in 2015. Providers should think bigger than Medicare/Medicaid. Look to the private sector (commercial, self-pay, employer arrangements, capitation, and risk) when building out financial models to best tap into the reimbursement/payment opportunities in telemedicine. There are great opportunities for revenue and telemedicine providers are positioning themselves to capture it. Once we hit the tipping point on patient utilization and commercial coverage legislations, these opportunities will skyrocket.

Is Telemedicine Reimbursement Help on the Way?

The American Telemedicine Association, an excellent source for policy updates, notes there are 55 pieces of pending legislation related to telemedicine issues. The most comprehensive of these, the Medicare Telehealth Parity Act, was introduced this summer. Any solution regarding telemedicine standards and a reimbursement framework that will work across state lines needs to come from the federal government. Now that the mid-term elections are behind us, the U.S. Congress and state legislatures can be well-positioned to move forward on health care policy.