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Medicare reimburses for telehealth services offered by a healthcare provider at a distant site, to a Medicare beneficiary (the patient) at an originating site. The originating site must be in an HPSA (Health Professional Shortage Area).  The types of originating sites authorized by law are: 

  • Physicians or practitioner offices 
  • Hospitals 
  • Critical Access Hospitals (CAH) 
  • Rural Health Clinics 
  • Federally Qualified Health Centers 
  • Hospital-based or CAH-based Renal Dialysis Centers 
  • Skilled Nursing Facilities (SNF) 
  • Community Mental Health Centers (CMHC) 

The patient must be in an HPSA. In order to be eligible for Medicare reimbursement, the patient (Medicare beneficiary) needs to be receiving virtual care at one of the clinical settings mentioned above, which is also located within a Health Professional Shortage Area (HPSA). To see if the health facility is in an HPSA, type in their address to CMS tool. Only certain CPT and HCPCS codes are eligible for telemedicine reimbursement. Medicare has a specific list of CPT and HCPCS codes that are covered under telemedicine services. Since that list is subject to change each year, we also recommend you check the CMS website.   

Use the proper  modifier: When billing for telemedicine visits, you need to use the 95 modifier code for commercial insurance plans, while the “GT” modifier must be included for Medicare and Medicaid plans. 

Telehealth billing a facility fee: Medicare will also pay the originating site a facility fee as reimbursement for hosting the telemedicine visit. For details on the facility fee, look up the HCPCS code Q3014. A new place of service (POS) code 02 has been created for telehealth. 

Telemedicine reimbursement rates: Medicare reimburses telemedicine services at the same rate as the comparable in-person medical service, based on the current Medicare physician fee schedule. Plus, the facility serving as the originating site can charge an additional facility fee. With 49 million Americans enrolled in Medicare, it’s important for providers to understand how this program makes determinations about telemedicine reimbursement. Generally speaking, fee-for-service Medicare reimbursement is dictated by four key areas: the patient setting, the type of technology, geography, and provider type. 

Patient Setting: Medicare requires that the patient setting, termed the “originating site,” be a clinical site such as a doctor’s office or hospital. However, multiple congressional efforts have focused on expanding Medicare payment and demonstrating the clinical and financial value of serving this population through telehealth technologies. The Alliance for Connected Care estimates that choosing telemedicine visits over in-person treatment for acute care when medically appropriate would result in cost savings for Medicare—$45 per visit—a convincing argument for defining the patient setting more broadly. In fact, as part of its Next Generation ACO initiative, Medicare will remove this restriction for participating ACOs, arguably the first step toward lifting this restriction for its entire population. 

Technology: Medicare is quite forward-thinking when it comes to the technology, defining reimbursable telemedicine as “interactions between a healthcare professional and a patient via real-time audio-video technology” (CFR Title 42, Part 410.78, “Telehealth Services”). This definition is in line with the model policy of the Federation of State Medical Boards (FSMB), which represents the 70 state medical and osteopathic regulatory boards. Because the FSMB is considered the ultimate arbiter of quality in medical practice and regulation, its recommendation carries considerable weight, setting the standard for the industry. 

Geography: Medicare is also the most focused on geographic restrictions, while many state Medicaid programs and private insurers are more likely to see telemedicine as location-agnostic. Geography refers to the type of area in which the patient resides (i.e., urban, rural, etc.). Medicare only covers telemedicine when the patient is presenting from a defined rural area termed a Professional Shortage Areas or a county outside of a defined Metropolitan Statistical Area. While this is currently a barrier to telemedicine adoption, the Next Generation ACO initiative will also remove these restrictions, painting a hopeful picture for future policy change. 

Provider Type: Medicare scores well here, reimbursing a reasonable number of defined provider types for telemedicine encounters. These include physicians, nurse practitioners, psychologists, social workers, and dietitians, among others. 

Medicare Advantage: While the current telemedicine landscape for fee-for-service beneficiaries is limited, primarily due to “originating site” restrictions, many Medicare Advantage enrollees are currently covered for telemedicine services, regardless of location. Commercial plans have added telemedicine as a supplemental benefit, realizing the clear value and benefit that exist for the Medicare population. This is an extremely positive sign for the future, as these at-risk, capitated plans are not known to make investments that don’t yield resultsii