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Telehealth services are drawing scrutiny from the U.S. Department of Health and Human Services Office of Inspector General (OIG), which in recent months has added Medicare and Medicaid telehealth payment audits to its work plan.

In November, the OIG announced upcoming audits to determine whether Medicaid payments for services delivered through the use of telecommunication systems comply with Medicaid requirements.1 Nearly all state Medicaid programs cover telehealth services, subject to wide variations of coverage from state to state.2 The work plan does not specify which state Medicaid programs will be subject to review.

The work plan already includes audits of Medicare payments for telehealth services.3 The Medicare audits were announced this summer and apply to distant site claims for telehealth services without corresponding claims from originating sites.

Medicare telehealth coverage is limited to specified services furnished through an interactive communication system4 by physicians or certain other health care practitioners for patients located at an originating site in a qualifying rural area.5 The originating site must be a rural hospital, critical access hospital, physician (or practitioner) office, rural health clinic, federally qualified health center, hospital-based renal dialysis center, skilled nursing facility, or community mental health center. Medicare pays the distant site provider the Medicare Physician Fee Schedule amount and pays a fixed telehealth facility fee of about $25 to the originating site.

The OIG’s new-found attention to telehealth can be viewed as a mixed blessing for telehealth providers and programs, highlighting the expansion and promise of telehealth as well as the need to carefully structure telehealth arrangements to address reimbursement limitations and compliance issues. In its Medicaid work plan description the OIG pointed to significant increases in Medicaid claims for telemedicine, telehealth, and telemonitoring services along with expectations that the trend will continue. Furthermore, recent surveys reveal significant growth and expected expansion in telehealth programs.6

The Medicare Payment Advisory Commission (MedPAC) in 2016 pointed to statistics showing that 55 percent of Medicare 2014 telehealth claims from distant sites did not have a corresponding originating site claim, and that 44% of the distant site claims without an originating site claim were associated with urban beneficiaries.7 The MedPAC report cited those studies as suggesting that beneficiaries may be receiving telehealth services from locations such as a home or urban area that does not qualify as an originating site as required for Medicare payment. The focus of the Medicare work plan description on eligible originating sites and on the review of distant site claims without corresponding originating site claims suggests a similar concern.   

OIG reports for these work plan projects are scheduled for the 2018 fiscal year with respect to Medicare and the 2019 fiscal year with respect to Medicaid and may provide guidance on payment or compliance issues for telehealth providers and programs.

Copyright 2017, American Health Lawyers Association, Washington, DC. Reprint permission granted.

1 https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000259.asp
2 MedPAC found that 49 of 51 Medicaid programs cover telehealth services to some degree. Report to the Congress: Medicare and the Health Care Delivery System, Medicare Payment Advisory Commission (MedPAC), June 2016, p. 250.
3 https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000236.asp
4 For federal telemedicine demonstration programs in Alaska or Hawaii telehealth services can also be furnished through asynchronous store and forward technologies.
5 See 42 C.F.R. § 410.78 and 42 C.F.R. § 414.65.
6 See KLAS-CHIME Study: Healthcare Industry Moving Ahead With Telehealth Despite Concerns, https://chimecentral.org/klas-chime-study-healthcare-telehealth-concerns/; 2017 Telemedicine and Digital Health Survey, Foley & Lardner LLP https://www.foley.com/files/uploads/2017-Telemedicine-Survey-Report-11-8-17.pdf.
7 Report to the Congress: Medicare and the Health Care Delivery System, Medicare Payment Advisory Commission (MedPAC), June 2016, p. 243.
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