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Medicare Spending on Telehealth Increases, But Barriers Remain

CMS spent more money in 2016 on telehealth, with increases reported in reimbursements, claims submitted and originating sites. But reimbursement restrictions are hampering widespread adoption.

Source: ThinkStock

By Eric Wicklund

- Healthcare providers may be using more telehealth and telemedicine than ever before, but Medicare Is still a significant barrier to growth.

An analysis of the Centers for Medicare and Medicare Services’ 2016 payments for telehealth and telemedicine shows a strong uptick in total reimbursements, claims submitted and originating site claims, but the total is still a small fraction of CMS’ total payments of $600 billion-plus and nowhere near what the federal government anticipated spending some 15 years ago.

That difference between actual use and potential use is pushing a groundswell of support to change how CMS reimburses for digital and connected health technology. Aside from several letters calling on CMS to loosen the purse strings, more than a half-dozen bills have surfaced in Congress seeking those changes.

Those efforts are bolstered by the numbers released last month.

An analysis by noted telehealth attorney Nathaniel Lacktman of Foley & Lardner, drawing upon data first reported by David Pittman in Politico, finds that CMS paid out $28,748,210 in telehealth and telemedicine claims in 2016, up 28 percent over the $22,449,968 shelled out in 2015. The number of claims, meanwhile, rose 33 percent, from 372,518 to 496,396.

Those numbers represent a continued upward trend. Last year, Medicare payments for telehealth and telemedicine increased by 25 percent over 2015, while the total number of claims jumped 27 percent.

Lacktman, who chairs the law firm’s telemedicine and virtual care practice, sees a more telling statistic in claims for originating sites, defined as the patient’s location at the time services are received. Whereas two years ago less than half of all distant site claims – defined as the location of the healthcare provider – did not have a corresponding originating site, now two-thirds of those claims include both sites.

This means healthcare providers are starting to pay more attention to where their telemedicine and telehealth services are going – namely, to one of eight locations that qualify as originating sites: physician offices, hospitals, critical access hospitals, rural health clinics, federally qualified health centers, hospital-based or CAH-based renal dialysis centers (including satellites), skilled nursing facilities and community mental health centers.

Notable for its absence is the patient’s home. Medicare does not reimburse for telehealth or telemedicine services provided to a patient at home, hindering many mobile health and remote monitoring programs.

Healthcare providers have to meet a number of provisions to qualify for telehealth and telemedicine reimbursement under Medicare. They must be one of 10 qualifying distant site practitioners (physicians, nurse practitioners, physician assistants, nurse-midwives, clinical nurse specialists, certified registered nurse anesthetists, clinical psychologists, clinical social workers, registered dietitians and nutrition professionals), the patient must be in a federally designated rural zone, they must be using a real-time audio-visual platform (store-and-forward is only covered in Alaska and Hawaii, and only there in demonstration programs) and they must use a current CPT/HCPCS code.

“In order to bill Medicare for telehealth services, the distant site practitioner must fully comply with each of these requirements,” Lacktman wrote. “If the service does not meet each of these above requirements, the Medicare program will not pay for the service. If, however, the conditions of coverage are met, the use of an interactive telecommunications system substitutes for an in-person encounter (i.e., it satisfies the “face-to-face” element of a service).”

The basis for this argument rests in 2001, when CMS implemented its reimbursement program. A Congressional Budget Office report that year estimated that Medicare would have to pay out some $150 million over the first five years, or $30 million a year, to cover telehealth services.

Lacktman noted CMS hasn’t cracked that threshold after 15 years, and annual payments haven’t hit the projected $30 million mark yet.

Earlier this year, a study of telehealth and remote patient monitoring use in Medicare by the Government Accountability Office highlighted the potential cost savings in those platforms and noted successful programs launched by the Veterans’ Administration and Department of Defense. But that report also called out the low percentage of patients using telehealth and telemedicine – from less than 1 percent of Medicare beneficiaries to 12 percent of VA members – and cited coverage as the chief barrier to provider adoption.

The numbers point to two conclusions: Telehealth and telemedicine use among Medicare beneficiaries increased by almost a third in 2016, with much of that increase contained within the rigid boundaries of CMS reimbursement guidelines. If those boundaries are relaxed, the industry might have the chance to reach its potential.

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