How to Get Reimbursed for Telehealth?

How to Get Reimbursed for Telehealth?

Telemedicine is one of the most trending topics in healthcare, as more and more consumers embrace this patient-provider communication technology and are willing to consult doctors remotely. In a 2017 study that used more than 4,000 participants, 65 percent of the health care consumers were interested in seeing their primary care providers (PCP) through telehealth. But, the majority of them prefer to interact with the PCP they already know and trust and know over a video conference. 20% of respondents indicated that they were ready to switch over to a PCP who provided video visits. This number is definitely set to increase in the future. So, healthcare professional who wish to acquire new patients as well as hold on to their current patients, should look into making telehealth a part of their primary care offerings.

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Research about telemedicine usage has shown a positive pattern in patient engagement and the outcomes.  Savings of about $126 were observed for acute care over an in person visit.  Over 83% of patient issues get resolved during the very first telehealth visit.  Since its evident that telemedicine is an amazing step forward in the healthcare system, why haven’t more physicians incorporated it into their practice models?

The confusion regarding provider reimbursement for telemedicine seems to account as a one of the primary factors for this lag. The lack of clarity or the understanding in how the major payers such as Medicare, Medicaid, and private payers reimburse telemedicine visits is preventing many providers from adopting this technology.

A little effort towards learning how the payment system works for this patient care software, not only provides important knowledge regarding the subject, but also a better understanding of the positive trends in telemedicine reimbursement.

Telemedicine Reimbursement from Medicare

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One trillion dollars in social security benefits is expected to be distributed among 63 million Americans in 2018. As per statistics, about 12 million people with Medicare have saved approximately $26 billion on prescription drugs since 2010 while more than 40 million Medicare beneficiaries have used free preventive services in 2016.

Considering the staggering number of Americans enrolled in Medicare, telemedicine providers must decode Medicare’s policies regarding telemedicine reimbursement. The fee-for-service under Medicare reimbursement is divided into four key areas: the geography, originating site, the technology used and the provider type.

The Originating Site:

A particularly restricting factor in Medicare’s telemedicine reimbursement rules is that it insists upon a clinical site such as a doctor’s office or hospital as the ‘patient setting’ or the ‘originating site’. Strong congressional efforts are being made for expanding Medicare payments by emphasizing the clinical and financial benefits in using telehealth technologies.  Since research by the Alliance for Connected Care observed that telemedicine visits result in costs savings of about $45 per visit for Medicare over in-person treatment for acute care, this rule is set to change shortly.  In 2015, the Centers for Medicare and Medicaid Services (CMS) had allowed Accountable Care Organizations (ACOs) to use telehealth services.  More and more restrictions are being relaxed by the Medicare as telehealth is proving to be a value-based care and a bonus for all involved.


Medicare defines reimbursable telemedicine as “interactions between a healthcare professional and a patient via real-time audio-video technology”. This matches the policy of the Federation of State Medical Boards (FSMB), which sets the standard for the medical industry.
The FSMB speaks on the behalf of 70 state medical and osteopathic regulatory boards and is considered the final authority of quality in medical practice and regulation. So its recommendation carries considerable weight and sets the standard for the industry.


While most private insurers or Medicaid programs consider telehealth solutions as location-agnostic, Medicare has several geographic restrictions. Medicare reimburses telemedicine only for patients from areas classified as Professional Shortage Areas. These are the geographical locations in which the patient resides, that are acknowledged for their shortage of specialist medical care. Healthcare providers are hopeful that these barriers to telehealth software adoption will also be removed soon.

Provider Type:

Medicare has a defined criterion for who all are eligible for telemedicine reimbursement. These provider types for this patient engagement software include primary care physicians, psychologists, dietitians and so on.


As per the statistics reported on the official Medicaid website, “Nearly 16.4 million additional individuals were enrolled in Medicaid and CHIP in January 2018 as compared to the period prior to the start of the first Marketplace open enrollment period (July - Sept. 2013), in the 49 states that reported relevant data for both periods, representing over a 29 percent increase over the baseline period.”

This makes it clear that Medicaid is a payer that telemedicine providers need to take seriously. One of the major differences in Medicaid from Medicare is that each state has the flexibility to decide its own policies for telehealth reimbursement. Medicaid programs in 48 states offer telemedicine coverage. Though it is important to review state-specific rules of Medicaid telemedicine reimbursement, there are some significant factors like the following:

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Medicaid policies do not specify the originating site or patient setting as a condition for reimbursement. In fact, the Medicaid policies of 25 states accept the home as an originating site. This allows patients to take advantage of the convenience of telehealth solutions sitting in the comfort of their homes without having to travel to the hospital.


Though state specific, Medicaid accepts a variety of telehealth software’s, from the telephone, and video to remote monitoring and store & forward technologies.

Provider Type:

While 15 states do not have any restriction on the provider type for telemedicine, four state policies of Medicaid restrict reimbursement to just physicians. In general, Medicaid offers better benefits to providers than Medicare as there soon may be more coverage for mental and behavioral health services delivered via telemedicine.

Commercial Payers

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Private insurers have embraced telemedicine as a very profitable healthcare innovation and are steadily expanding their coverage by partnering with telehealth software companies. Over time telemedicine is expected to get parity footing with in-person consultations. 29 states and the District of Columbia have parity laws that order private insurers to offer comparable coverage and reimbursement for telemedicine services as that for in-person services.

More than the laws, what has incentivized private insurers to cover telemedicine is its high potential for providing value-based care at much lower costs. An average of $126 per visit has been observed for acute care in the commercial sector. Though private insurers are also in the process of determining their coverage for various specialist services and the telemedicine codes for their claims systems, telemedicine reimbursement through commercial payers is the least confusing and the most promising for the service providers.