Discussion
On January 1, 1999, Medicare joins approximately 11 state Medicaid programs and a handful of private health insurers in paying for telemedicine services. Medicare’s move into the telemedicine reimbursement arena represents a step into new and unfamiliar territory for the Health Care Financing Administration. As the largest payer of medical claims in the country, Medicare often sets the standard for how other payers will handle new or innovative services. More details

What You Need to Know
The Health Care Financing Administration published a final rule for this provision Nov. 2, 1998, in the Federal Register.

This final rule explains the regulations:

• What the geographic limits for reimbursement are?
• Which practitioners are eligible to present patients?
• Which practitioners are eligible to act as consultants?
• What teleconsultative services will be covered?
• How Medicare will pay for teleconsultations in rural health professional shortage areas?
• What technologies will be covered?

What's Next

Related sites:

• American Telemedicine Association (not a U.S. Government Web site)
• Telemedicine Information Exchange (not a U.S. Government Web site)
• Centers for Medicare and Medicaid Services
• American Nurses Association (not a U.S. Government Web site)

First Steps Toward Telemedicine Reimbursement

December 1998

The new Health Care Financing Administration’s (HCFA) telemedicine reimbursement rule is a notable change for the Medicare program. The program raises some critical questions for policy makers, practitioners and telemedicine networks on how best to pay for telemedicine services. As policy makers, practitioners and telemedicine service providers sift through the new regulations, several key issues have emerged about which services will be covered, which health care practitioners can take part in a consultation and what kind of telecommunications technology can be used.

Background
While telemedicine technology has made it easy to deliver health care services over a distance, few payers are covering these services. Currently, at least 11 state Medicaid programs and several Blue Cross/Blue Shield plans and some other private insurers pay for telemedicine services. Several other states have also recently passed laws requiring all insurers to pay for telemedicine services. Medicare, however, has been more cautious. Prior to enactment of the Balanced Budget Act (BBA) of 1997, Medicare did not have an explicit policy to pay for telemedicine services. Nevertheless, telemedicine services that did not traditionally require face-to-face contact between a patient and practitioner, such as EKG or EEG interpretation, teleradiology, and telepathology were covered under Medicare in most areas of the nation, in accordance with individual Medicare carrier policies.

The passage of the BBA required Medicare to pay for telemedicine consultation services using interactive video (i.e., teleconsultation) in rural "Health Professional Shortage Areas" (HPSAs) by Jan. 1, 1999. This signaled a major change in policy. The legislation limits eligibility for coverage to rural HPSAs and prohibits payment for line charges or for facility fees. In addition, Medicare payment is set at the consultant’s fee schedule and requires referring and consulting practitioners to share the payment. The final regulation, which was published in the Federal Register on Nov. 2, 1999, explains how Medicare initially will pay for these services and which services will be covered.

Site of Coverage
Under the BBA, there is only one type of shortage area applicable to the Medicare teleconsultation regulation: a "geographic" rural HPSA (Health Professional Shortage Area). Although some geographic rural HPSAs encompass an entire county, while others are only located in a portion of a county, HCFA decided to include all rural geographic HPSAs as eligible regardless of whether the entire county is a HPSA or not. The final rule stipulates the use of the site of presentation (patient location) as a proxy, or substitution, for beneficiary residence. However, if the beneficiary can show that he or she lives in a rural HPSA, Medicare will make payment regardless of where the teleconsultation occurred.

Eligible Presenting Practitioners
One of the more contentious issues in the formation of this regulation was deciding which health care practitioners should be paid for consultation. Telemedicine practitioners have used a variety of settings and practitioners for presenting patients to specialists and other consultants. For instance, some health care practitioners will refer a patient for a telemedicine consultation and then let a nurse at the telemedicine site present the patient to the specialist. Other primary care practitioners may present the patient themselves. Under this rule, however, Medicare has strictly defined which practitioners can be paid for participating in a teleconsultation at both ends, based on the parameters specified in the BBA.

Consultants
The BBA’s language only allows certain practitioners to be a teleconsultant, and specifies that the referring medical professional is either a physician or a practitioner as defined in the Social Security Act. This act very specifically defines which medical professionals are considered "practitioners" under the Medicare program. As a result, there are some practitioners who are eligible only to act as consulting practitioners and others who are eligible only to act as referring practitioners. For example, clinical nurse specialists, physician assistants, nurse practitioners, and certified nurse-midwifes can act as both referring and consulting practitioners for this provision. However, clinical social workers and clinical psychologists can only act as referring practitioners under this rule. Registered nurses, licensed practical nurses and other types of similar health care professionals cannot present patients for consultations because they are not considered practitioners under the Medicare program as defined by the Social Security Act.

Scope of Coverage
According to HCFA, the BBA limits the scope of coverage to a consultation for which payment may be made under the Medicare program. These services include initial, follow-up, or confirmatory consultations in hospitals, outpatient facilities, or medical offices. Eligible Current Procedural Terminology (CPT) codes are:

• 99241-99245;
• 99251-99355;
• 99261-99263;
• 99271-99275.

The Medicare final rule on teleconsultation specifies that these codes can be used for a number of medical specialties, such as cardiology, dermatology, gastrology, neurology, pulmonary, and psychiatry. According to HCFA, it will cover additional consultations for the same or a new problem if the attending physician or practitioner requests the consultation, and if it is documented in the medical records of the beneficiary.

Sharing of Fees
The BBA mandates that consulting and referring practitioners share payments. HCFA requires that 75 percent of the fee go to the consultant and the remaining 25 percent go to the referring practitioner. HCFA came up with this split based on the relative work for practitioners at both ends. There was also an inherent recognition that different consultations call for different levels of effort. As a result, the fee split reflects the projected level of new work done by each practitioner over the course of various teleconsultations.

Types of Technology Covered
HCFA’s payment policy was developed to replicate a standard consultation as closely as possible. Under Medicare, a separate payment for a consultation requires a face to face examination of the patient. This requirement is consistent with the American Medical Associations description of a consultation. To that end, Medicare’s teleconsultation rule requires a certain level of interaction between the patient and consulting practitioner because it offers the best substitute for a "face-to-face" consultation.

Regardless of the technology, the patient must be present during the consultation. That is because Medicare does not currently make separate payment for the review and interpretation of a previous examination or dermatology photos. Thus, this policy may preclude the use of standard store-and-forward technologies. In most store-and-forward applications, a practitioner at the remote site will typically examine the patient and send a video clip or a photographic scan, along with the patient's medical record to a distant consulting practitioner. The consulting practitioner will then review the file and make a diagnosis. Medicare will not cover this type of telemedicine application because it does not allow for live interaction between the consulting practitioner and the patient and the referring practitioner at the rural site. Medicare will cover some uses of store-and-forward technology as a consultation if the patient is present and there is real-time video and audio interaction level of video or audio interaction between the consulting practitioner and the patient.

Next Steps
Medicare’s telemedicine reimbursement rule represents a significant departure in policy for Medicare and how it pays for telemedicine services. Consequently, this new rule may undergo some changes in the years to come. The Secretary of Health and Human Services has asked HCFA to reexamine some key points, including what services are covered, which medical professionals are eligible to present the patient, and uses of store-and-forward technology. The Department will develop recommendations for Congress within the next year on potential modifications to the reimbursement rule. HCFA will be working with the Agency for Health Care Policy and Research (AHCPR) and HRSA’s Office for the Advancement of Telehealth in the development of these recommendations.