As Telehealth Payment Reform Inches Forward, Technology Speeds Ahead to a Future of Connected Health

October 07, 2014

CMS reimbursement update and impact

In July of this year, the Centers for Medicare and Medicaid Services (CMS) proposed a fee schedule update that expands reimbursable telehealth services to include annual wellness visits and psychotherapy. Industry groups from the American Medical Association to the American Telemedicine Association and the American Hospital Association have released official statements supporting the changes. Reimbursement is consistently cited as a primary barrier to telehealth adoption and any expansion of covered services is good news, particularly coming from CMS which pays health care costs for 50 million Americans through Medicare.

Still, complexities and restrictions remain. Scratch the surface of telehealth payment policy and underneath is a labyrinth of rules and regulations for everything from what’s covered (i.e. psychiatry, chronic disease, wellness), where it’s covered (i.e. specified rural locations vs. urban areas) and what delivery modes (i.e. video, email, fax, mobile device) are allowed. Added to this complicated mix is a layer of healthcare payers, including the federal Medicare program, 50 state-run Medicaid* programs and 35 plus private insurance companies, each with its own set of regulations and policies.

From any angle, the situation is bleak. When a provider that wants to use telehealth asks, “Who’s going to pay for this?” there is no clear and certain answer. A rural primary care provider, for example, that wants to connect their patient with a specialist could do so efficiently and effectively through a video consult while the patient is at the rural clinic. However, the varying degrees of reimbursement by payer, which generally ranges from some to none, discourages use of such services. As a result, we see patients in need of specialist care either traveling long distances, waiting many months or just postponing treatment until a crisis erupts.

Driving telehealth services adoption

Despite financial uncertainties, the promise of faster access to specialists is one of the many benefits that has put telehealth in the agenda of innovative providers. Large healthcare organizations, such as the Mayo Clinic, University of Pittsburgh Medical Center and Intermountain Health Systems, are forging ahead using telehealth to bring desperately needed services to rural patients, which in turn improves care and lowers costs. Some self-insured companies are even going so far as to create their own Current Procedural Terminology (CPT) codes for telehealth services. [2] Doctors use CPT codes to bill their time and no CPT code means no payment. Simply providing doctors with a way to bill their time can drive telehealth adoption.

With the use of mobile devices, these providers are expanding access to telehealth using the smartphones and tablets already in their doctors hands. The benefits of using mobile devices for telestroke, as one example, far outweigh the lack of reimbursement. When stroke specialists located at large urban hospitals have mobile access to images of rural patients, the can deliver time-critical care and saving lives and money by eliminating costly emergency transport over long distances. Providers like the simplicity that smartphones and tablets offer, allowing them to view images for consultation and diagnosis from wherever they happen to be - at home, in a clinic or on the road.

The lesson from providers that offer telehealth is forge ahead and work with payer partners to clarify existing reimbursement uncertainties. More use and field evidence will further pressure CMS and state legislatures to revise their policies to stay in step with the realities of telehealth use which is already improving the patient care and keeping unneeded expenditures in check.


* Each state has its own version of Medicaid with managed care contracts, benefit designs and coverage decisions that vary significantly.

1. Center for Connected Health Policy (September 2014). State Telehealth Policies and Reimbursement Schedules: A Comprehensive Scan of the 50 States and the District of ColumbiaI, page 5.

2. Darves, Bonnie (September 5, 2014). “Technology Advances Boosting Telehealth, but Challenges to Widespread Use Remain.” iHealthBeat.