Medicare Reimbursement
Medicare is the federal health insurance for America’s senior citizens. Most of the financing and reimbursement for telemedicine services comes from Medicare. The Center for Medicare and Medicaid Services (CMS), formerly the Health Care Financing Administration (HCFA), provides health insurance for over 75 million Americans through Medicare, Medicaid, and the State Children’s Health Insurance Program (SCHIP). The expanding role of Medicare in reimbursement began when Congress passed the Balanced Budget Act of 1997 (BBA) that mandated that Medicare reimburse telemedicine care and fund telemedicine demonstration projects.
The BBA called for the coverage and payment for telemedicine consultations to Medicare beneficiaries in rural health professional shortage areas (HPSA). The BBA also required that a Medicare practitioner be with the patient at the time of the consultation and specified that teleconsultant fees had to be shared between the consulting physician and the referring physician. These new rules were seen, by some, to be too restrictive while attempting to implement telemedicine reimbursement schemes. The new statutory language did not match the practical realities of telemedicine practice. Under the BBA, Medicare rules required that a telehealth provider be present to be eligible for Medicare reimbursement. These requirements essentially limited the reimbursement to “live” telemedicine services, which constitute only about 10% of telemedicine services.
There was some hesitation about amending the BBA because of worries that telemedicine reimbursement would somehow threaten the Medicare trust fund. The HCFA had to ensure that health care expenditures did not outstrip funding, a major challenge given the growing senior citizen population.
A major concern in revising the telemedicine reimbursement provisions was the exceedingly high cost (“scoring”) affixed to telemedicine reimbursement legislation by the Congressional Budget Office (CBO). In 2000, the Center for Telemedicine Law, with funding from the Office for the Advancement of Telehealth, coordinated a project to use available telemedicine reimbursement claims data to develop a more accurate funding projection. The results of this project clearly indicated that expanding telemedicine reimbursement would have minimal financial impact. Data from this report was accepted by CBO in scoring proposed telemedicine reimbursement revisions.
After several attempts to amend current law and refine telemedicine reimbursement, the push to improve rural access to telemedicine prevailed in mid-December 2000, when Congress passed the final of its 13 appropriation bills, the Consolidated Appropriations Act of 2001 (CAA). In addition to appropriating funds for Departments of Labor, HHS, and Education, this bill contained a number of smaller bills such as one dealing with telemedicine reimbursement (H.R. 5661, Section 223).
Beginning October 1, 2001, H.R. 5661, also known as the Benefits Improvement and Protection Act of 2000 (BIPA), amended section 1834 of the BBA to provide for a new subsection (m) “Payment for Telehealth Services” which expanded the payment for telemedicine services. However, BIPA also limited reimbursement to those eligible individuals that received services at originating sites. These sites include: office of a physician or practitioner, critical access hospital, rural health clinic, federally qualified health center, or a hospital.
This amendment provided for an expansion of Medicare payment for telehealth services. The newly passed provisions expand the scope of reimbursement by not requiring a telepresenter and adding additional services over a broader geographic area. Among the provisions passed were the following:
- eliminated the provider "fee sharing" requirement;
- eliminated the requirement for a Medicare participating "tele-presenter";
- expanded telemedicine services to include direct patient care, physician consultations, and office psychiatry services;
- included payment for the physician or practitioner at the Distant Site at the rate applicable to services generally; expanded the definition of Originating Sites to include physician and practitioner offices, critical access hospitals, rural health clinics, federally qualified health centers, and hospitals (but did not include nursing homes);
- expanded the geographic regions in which Originating Sites are located to include rural health professional shortage areas, any county not located in a Metropolitan Statistical Area, and from any entity approved for a federal telemedicine demonstration project; and
- permitted use of store and forward applications in Alaska and Hawaii for federal demonstration projects.
These Medicare reimbursement revisions were expected to expand the access of medical care to rural and other medically underserved areas. Just as importantly, it was anticipated that improved Medicare reimbursement would also pave the way for broader private payer reimbursement.
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