As telehealth continues to grow, there are a number of legal, regulatory, and operational issues that threaten to stall its progress.  We have tackled many of these issues in previous blog posts.  But no obstacle looms larger than the issue of payment.  How can providers get consistently and appropriately reimbursed by payers for use of telehealth?  Absent a clear answer, telehealth will likely find it difficult to fulfill its great promise—at least in the United States.  Other countries are pulling ahead.  Here is a look at the current reimbursement landscape facing providers and what could change in the coming years.

Medicare Coverage and Reimbursement

No payer lags further behind in reimbursing for telehealth than Medicare.  For professional fees, the Medicare program currently covers fewer than 20 categories of telehealth services encompassing about 30 or so codes.  The Medicare statute and regulations that provide coverage for telehealth are very restrictive.  For example, telehealth is defined generally as an interactive audio and video telecommunications system that allows real-time communication between providers and patients.  There is no coverage for so-called asynchronous or “store and forward” technology limiting the way in which providers can make best use of technology for treatment.

Beyond the definition for telehealth, there are even more restrictions.  Telehealth services are only covered if the patient is seen:

1.  By approved originating sites (including physician offices, hospitals, and skilled nursing facilities);

2.  By approved providers (such as physicians, nurse practitioners, and clinical psychologists); and

3.  For a small defined set of services (including consultation, office visits, pharmacological management and individual and group diabetes self-management training services).

Moreover, the services must be provided to a Medicare beneficiary who lives in, or uses a telehealth system in an eligible facility located in a rural Health Professional Shortage Area, in a county that is  not included in a Metropolitan Statistical Area—in other words, the most rural of counties.  Given the severe restrictions imposed by Medicare, it should surprise no one that Medicare spent only about  $6 million under the telehealth benefit in 2011—a mere drop in the ocean considering the hundreds of billions Medicare annually spends to reimburse providers under its various programs.

It will literally take an act of Congress to expand the Medicare telehealth benefit.  And that appears unlikely in the near future given that federal regulators are not fully persuaded by clinical efficacy of  telehealth for many indications, and fear increased costs due to telehealth expansion.  This coupled with the bias towards keeping the telehealth benefit only available for rural beneficiaries in areas with a shortage of health care professionals will make getting a bill successfully through Congress a daunting task.

Medicaid Coverage and Reimbursement

There are about 40 states that provide some form of coverage and reimbursement for telehealth under their respective Medicaid programs.  For example, the California Medicaid program reimburses for telehealth services such as telepsychiatry, selected psychiatric therapeutic services, teleophthalmology, telehome care, and remote monitoring services.  Colorado's Medicaid program reimburses for telehealth claims provided in real time including office visits for preventive and routine medical care, psychotherapy and obstetrical ultrasounds.  The Kansas Medicaid program reimburses for office visits, individual psychotherapy, pharmacological management, and home telehealth services.  Providers need to check with their state Medicaid programs to determine the extent of coverage for telehealth.  But Medicaid is more expansive in telehealth coverage than Medicare.

Private Payer Coverage and Reimbursement

There is some relatively good news.  Many leading private insurers provide coverage and reimbursement for telehealth, although their policies vary.  Generally, however, insurers who do provide coverage for telehealth reimburse only for real-time communications in which a patient is located at an approved health care facility and services are provided by certain practitioners. But the landscape is changing in favor of broader telehealth coverage.

A growing number of states are enacting so-called telehealth parity statutes. These laws generally require health insurers to pay for services provided via telehealth the same way they would for services provided in-person. Almost a third of all states have enacted these statutes, and I predict more states will be coming on board.  Maryland became one of the latest states to jump on the bandwagon when the state’s governor signed a telehealth parity statute earlier this year.  California’s Telehealth Advancement of Act of 2011 became effective on January 1, 2012, and breaks down many of the barriers that prevented wider use of telehealth. Other states, such as Virginia, Georgia, Kentucky, and Oregon have also enacted similar laws.


Despite the stumbling blocks, I believe there are opportunities available to expand coverage for telehealth, including:

  • Significant telehealth coverage in other government programs (i.e., Veterans Administration) providing a model for Medicare, Medicaid, and private payers.
  • Increased attention to telehealth and data monitoring through various health care reform initiatives (i.e., Center for Medicare & Medicaid Innovation) which should lead to data showing the efficiency and cost-saving potential of telehealth.
  • Increased focus on preventing readmissions may force Medicare to look at treatment alternatives.
  • Many telehealth initiatives underway with private health plans which will result in new data.
  • There may be more flexibility and opportunity for Medicare coverage for telehealth services under Medicare Advantage.

The takeaway for providers looking to expand their telehealth portfolios is that the payment landscape for telehealth, while currently restrictive, is evolving.  Along with the state telehealth parity statutes and coverage available under many private insurance plans, the many initiatives underway (at both public and private payers) present opportunities for providers to make their case.

Back to Health Law Advisor Blog

Search This Blog

Blog Editors

Related Services



Jump to Page


Sign up to receive an email notification when new Health Law Advisor posts are published:

Privacy Preference Center

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

Strictly Necessary Cookies

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.

Performance Cookies

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.