Navigating Virtual Health Reimbursement 101

Sg2 Consultant Kelly Chen, RN, contributed to the content of this article.

Navigating virtual health reimbursement can be difficult. Reimbursement varies depending on the payer, state, practicing clinician, geographical location and more. As virtual health policies are undergoing constant change, health systems may have a hard time implementing virtual health in accordance with current payer requirements to obtain a positive financial return on investment. Read on for reimbursement policies for each major payer in the US (Medicare, Medicaid, private payers and alternative payment models), as well as strategies for health system success.

Medicare Reimbursement Is Based on Location, Facility Type, Practitioner and CPT Code
Medicare reimbursement depends on how the virtual health program is structured. In order for CMS to reimburse for virtual care through Medicare, several criteria must be met. Specifically, patients must be present in an approved medical facility in a rural area and be receiving care under a preapproved CPT code by a specific type of provider. Reimbursement eligibility can be determined based on the CMS Fact Sheet and the algorithm below (must answer “yes” to all questions to be eligible):

  • Is the patient located outside of a metropolitan statistical area (MSA) or in a health professional shortage area (HPSA)?
  • Are these services within the CPT code range listed on the CMS Fact Sheet?
  • Are the services delivered by an eligible practitioner?
  • Is the patient receiving care in a designated originating site listed on the CMS Fact Sheet?

Additionally, the US Health Resources & Services Administration created a telehealth payment eligibility analyzer to clarify which specific addresses are eligible for payment, taking all CMS’s geographical restrictions into consideration.

Strategic Considerations

  • Assess your current Medicare population. Where are Medicare patients located? What proportion of them are located outside of an MSA/in an HPSA?
  • Determine which medical facilities in your system would be eligible for payment using the telehealth payment eligibility analyzer.
  • Partner with IT to embed the requirements into your EHR and align billing for eligible services.

Medicaid Reimbursement Varies by State
While similar language is used in many states’ Medicaid virtual health policies, no 2 states are exactly alike in how they define virtual health. This affects how and for which virtual services Medicaid reimburses, and has a significant effect on health systems expanding virtual health programs across states. Despite this variation, 48 state Medicaid programs and the District of Columbia are now reimbursing for live video visits; 19 state programs reimburse for remote patient monitoring; and 30 offer a transmission or facility fee for virtual care.

To access the latest Medicaid legislation for your state, refer to the American Telemedicine Association’s State Policy Matrix and the Center for Connected Health Policy’s interactive map on State Laws and Reimbursement Policies.

Strategic Considerations

  • Assess the current Medicaid population. Determine where Medicaid patients are located and how virtual health can create efficiencies in their access to care.
  • Understand Medicaid virtual health policies in your state. Consider the following: What technology can be used to conduct the virtual visit? What are the applicable originating sites? Can a facility fee be collected?
  • Work with IT to build in Medicaid requirements and align billing for eligible services.

Private Payer Reimbursement Depends on Your State’s Virtual Health Parity Laws
Since federal law does not require private payers to cover virtual health, commercial payment varies both by state and by payer. Virtual health parity laws are state policies that require commercial payers to reimburse for virtual health services in a similar way they would for traditional in-person health services. While 34 states and the District of Columbia now have virtual health parity laws, and some states mandate some sort of reimbursement, many states do not mandate reimbursement at the same level as in-person visits for all conditions.

Strategic Considerations

  • Determine your state’s virtual heath parity law status and if the parity law mandates coverage, equal reimbursement, or both.
  • Reach out to major private payers in your market to learn about their virtual health payment policies: what they consider a virtual health visit, what services they cover, any geographical restrictions they have, and whom they consider to be eligible providers.
  • Partner with private payers to determine how virtual health may align both parties’ corporate goals, such as initiatives in population health, cost savings and margin management.

Alternative Payment Models Incent Virtual Health Utilization
With payment reform and the continued shift of fee-for-service payment to value-based models, some virtual health services have recently become reimbursable under alternative payment models.

Under the Comprehensive Care for Joint Replacement (CJR) Model, organizations in 67 geographic areas are financially accountable for the quality and cost of hip and knee replacement surgeries—specifically, CJR hospitals receive episode target prices for these procedures. To help reduce costs under CJR, CMS has waived the traditional Medicare geographic and originating site requirements for participants. This has enabled hospitals to use virtual health to facilitate patient transfers to skilled nursing facilities and/or their homes.

Enrollment in Medicare Advantage (MA), which allows private insurers to provide Medicare benefits, has continued to grow, with one-third of Medicare beneficiaries enrolled under MA in 2016. Through this program, CMS pays approved insurance companies to provide Medicare coverage, so virtual health requirements are determined by the private payers. If there is a virtual health parity law that applies to the commercial payer, more than likely the payer will have virtual health coverage/policies in effect.

Strategic Considerations

  • Determine the payment model(s) your organization is participating in and whether there is a virtual health waiver built into that model.
  • Work together with respective teams (eg, financial leadership, care transformation team, physician group liaisons) to have any virtual health applications submitted with the alternative payment model application.
  • Assess your market to determine where these patients are located and how virtual health can create efficiencies in their access to care.

Organizational Tactics to Generate Revenue From Virtual Health
In many cases, these reimbursement models may not apply to an organization’s market, or the cost and time spent establishing reimbursement fall short of actual payments received. So, how can organizations still generate some revenue from virtual health? Consider the following tactics.

  • Develop relationships with regional health systems and other nonaffiliated providers to offer virtual services for an additional revenue stream.
  • Create a pricing strategy to decide a market price and determine what costs can be passed along to the patient.
  • Establish cost savings metrics, so you can identify any services virtual health has helped streamline (and associated reductions in system costs).

Sources: CMS. CMS Telehealth Fact Sheet 2016. November 2016; American Telemedicine Association. 2017 State Telemedicine Legislation Tracking. Updated January 26, 2017; Center for Connected Health Policy. State Laws and Reimbursement Policies. Accessed February 2017.

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