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August 10, 2020

Medicare and Medicaid Telehealth Reimbursement - the COVID-19 Pandemic and Beyond

By Nina Zhang, Esq., Arcarius Law, Los Angeles, CA

Telehealth is a promising development. It may help address barriers to care, such as (1) insufficient numbers of providers, (2) inadequate transportation options, (3) long distances and travel time required to get to healthcare providers, and (4) concerns about confidentiality and stigma for patients needing behavioral health services. Telehealth may also give patients more control to determine when, where and how they access benefits, thus increasing access to patient-centered care. However, regulations, including those that govern reimbursement, have lagged behind the pace of telehealth, posing barriers to the delivery of telehealth services. That may change because of the COVID-19 pandemic. 

Telehealth reimbursement in the Medicare and Medicaid programs has also been the subject of scrutiny by the Department of Health and Human Services’ Office of Inspector General (OIG) in recent years. In 2018, the OIG released a report on telehealth reimbursement in Medicare, concluding that in 2014 and 2015 the Centers for Medicare & Medicaid Services (CMS) paid practitioners $3.7 million for telehealth services that did not meet Medicare requirements, in part because providers were not aware of the requirements.1 The OIG is expected to report in 2020 whether selected states’ Medicaid payments for services delivered using telecommunication systems met Medicaid requirements.2  And in June 2020 the OIG added to its work plan a new project to determine (1) whether state agencies and providers complied with federal and state requirements for telehealth services under the national emergency declaration, and (2) whether the states provided adequate guidance on telehealth requirements.3

If the April 2018 report is any indication, the OIG recognized the dearth of adequate guidance from CMS in telehealth reimbursement. It appears from the June 2020 addition to the work plan that the OIG has the same concern regarding states. While providers may breathe a sigh of relief that currently the OIG’s focus on telehealth reimbursement is on governmental oversight and not provider compliance, they should still monitor the potential cataclysmic shift in telehealth reimbursement currently taking place because the many changes have caused confusion and there is the potential to make errors that could later subject a provider to governmental scrutiny. Highlights of the changes are discussed below.

CMS Relaxes Rules for Medicare Telehealth Reimbursement During the Pandemic

On March 13, 2020, President Donald J. Trump announced an emergency declaration under the Stafford Act and the National Emergencies Act. Consistent with that action, CMS has expanded Medicare’s telehealth benefits under the 1135 waiver authority of the Social Security Act and the Coronavirus Preparedness and Response Supplemental Appropriations Act.4

Relaxed  Definition of Telehealth Communication 


Medicare Part B covers telehealth services.5 Medicare Part B pays for covered telehealth services included on the telehealth list provided by CMS6 and when delivered by an interactive telecommunications system.7 “Interactive telecommunications system” means audio and video equipment permitting two-way, real time interactive communication between the patient and distant site physician or practitioner.8 For the duration of the pandemic, by the authority of the CARES Act, telephones, facsimile machines and electronic mail systems can meet the definition of interactive telecommunications system.9

Originating Sites

Medicare telehealth payments comprise of (1) a professional fee, paid to the practitioner performing the service at a distant site; and (2) an originating site fee, paid to the facility where the beneficiary receives the service.10 Now, by the authority of the 1135 waiver, for the duration of the pandemic originating sites also include a patient’s home.11 Prior to the 1135 waiver, Medicare could only pay for telehealth on a limited basis: when the person receiving the service is in a designated rural area and when he/she leaves his/her home and goes to a clinic, hospital, or certain other types of medical facilities for the service.12

Eligible Practitioners

Under the authority of the CARES Act, which broadens the authority of the 1135 waiver, CMS has relaxed who can provide Medicare telehealth services, expanding the types of healthcare professionals that can furnish distant site telehealth services to include all those that are eligible to bill Medicare for their professional services.13 This allows previously ineligible healthcare professionals, such as physical therapists, occupational therapists and speech language pathologists, to furnish and bill for Medicare telehealth services.14 Prior to this waiver, only physicians, nurse practitioners, physician assistants, clinical nurse specialists, nurse-midwives, clinical psychologists, clinical social workers, registered dietitians or nutrition professionals and certified registered nurse anesthetists could deliver Medicare telehealth services.15 Newly eligible providers must still comply with applicable state licensure requirements.

New Services

In March 2020, CMS added 80 new telehealth services to the list of services covered by Medicare.16 In May 2020, CMS added 55 more.17 These services are temporary, only to last the duration of the pandemic.18 They include group psychotherapy, group psychotherapy partial hospitalizations, initial observation care, initial hospital care, subsequent observation care,  critical care first hour care, and emergency department visits.19


Payment Parity


To encourage and support the use of telehealth, CMS has increased payments for telehealth services, such as telephone visits, to match payments for office and outpatient visits.20

State Action Regarding Medicaid and Telehealth

The federal Medicaid statute does not recognize telemedicine as a distinct service.21 Medicaid’s definition of telehealth is modeled on Medicare’s definition of telehealth.22 Because of the lack of guidance on the definition of telehealth, states have flexibility in defining telehealth as well as in establishing limitations or restrictions on coverage. State approaches to telehealth vary in several ways, including modalities, specialties and services, providers authorized to deliver services, and sites of service.

States decide if and how their Medicaid programs reimburse for telehealth during the COVID-19 pandemic and beyond.  Further, CMS’s 1135 waiver allows states to receive federal waivers and implement flexibilities in their Medicaid and Children’s Health Insurance Program (CHIP).23 One such flexibility is the ability of states to temporarily waive requirements that physicians and other healthcare professionals be licensed in the state in which they are providing services, so long as they have an equivalent license in another state.24 For instance, according to the Alabama Board of Medical Examiner’s COVID-19 update, for physicians to practice telemedicine in Alabama, they need either a full traditional license, a license via the Interstate Medical Licensure Compact, or a special purpose license.25

With the onset of the pandemic, many states have taken additional steps to remove barriers to utilizing telehealth.26 For example, Florida has permitted behavioral services to be delivered audio-only, expanding the modalities to provide behavioral health.27     

Looking Back to Look Forward: the 2018 OIG Report

In the OIG’s 2018 report, the OIG examined a 100-claim sample size of telehealth claims. The OIG identified more than a third (38) as not meeting Medicare reimbursement requirements:  (1) 24 claims where the beneficiaries received services at nonrural originating sites; (2) seven claims billed by ineligible institutional providers; (3) three claims for services at unauthorized originating sites; (4) two claims for services by an unallowable means of communication; (5) one claim for noncovered service; and (6) one claim for services provided by a physician located outside the United States.28

The OIG has placed the onus on CMS to ensure future compliance. As the OIG identified, CMS did not guarantee: (1) oversight to disallow certain payments; (2) that all contractor claim edits were in place; and (3) practitioners’ awareness of Medicare telehealth requirements.29 The OIG recommended that CMS take the following steps: (1) Conduct periodic post payment reviews; (2) Work with Medicare administrative contractors (MACs) to implement all telehealth claim edits listed in the Medicare Claims Processing Manual; and (3) Offer training sessions to practitioners on Medicare telehealth requirements and related resources.30

CMS concurred with the OIG’s recommendations. In its letter to the OIG, CMS committed to do the following: (1) review medical documents submitted to support telehealth claims, as part of the Comprehensive Error Rate Testing Program;31 (2) continue to work with MACs to implement telehealth claim edits; and (3) use the Medicare Learning Network, weekly electronic newsletters and quarterly compliance newsletters to educate and provide training sessions for practitioners on Medicare telehealth requirements and related resources.32 CMS has made at least one inroad in providing guidance to providers; in March 2020, CMS produced a 13-page Medicare Learning Network booklet on telehealth services.33

Will Any Telehealth Reimbursement Changes Become Permanent?

While these changes in telehealth reimbursement are temporary and a direct response to the pandemic, the outcomes achieved may compel CMS, states, and Congress to adopt permanent changes. On June 1, 2020, U.S. House Representative Robin Kelly (D. Ill.) introduced a bill to study the effects of changes to telehealth under the Medicare and Medicaid programs during the COVID-10 emergency.34 The bill directs Health and Human Services Secretary Alex Azar to oversee a telehealth study and submit it to the House’s Energy and Commerce and Ways and Means Committees, and to the Senate Finance Committee.35 The report would include the number of telehealth visits, the types of services patients received, and what kinds of clinics offered those services during the pandemic.36 According to Kelly, the study will be used to evaluate the possible use of telehealth after the pandemic concludes.37 Under the bill, Secretary Azar would also award grants to states so they can conduct their own studies on Medicaid telehealth use.38

CMS has already announced it will retain the telehealth policy and payment flexibilities for home health services that had been adopted due to the pandemic.39

If the OIG 2018 audit were conducted today, based on the waivers in place, the only claim that would fail Medicare reimbursement requirements is the one where a physician located outside the United States provided services.  This suggests that it might be considerably easier for providers to comply with the reimbursement rules should they remain in place. 

Moreover, some states have already decided to retain several telehealth rules that affect reimbursement. For example, Michigan has made permanent several changes, including that the originating site can be the patient’s home and the distant site any site considered appropriate by the provider.40


While the regulatory environment has historically lagged behind innovation in healthcare, this time it looks like it might just support the latest technology. Hopefully this will produce additional guidance to providers regarding how to conduct and bill for telehealth services. As it is likely that scrutiny of telehealth will continue, providers should take note of the developments and closely monitor how CMS and the states advise on compliance. 

  1. [1] Office of Inspector General, CMS Paid Practitioners for Telehealth Services That Did Not Meet Medicare Requirements, (April 2018).
  2. [1] Office of Inspector General, Medicaid Services Delivered Using Telecommunication Systems, (last accessed June 24, 2020). According to the OIG’s website, the OIG will release the report in 2020.
  3. [1] Office of Inspector General, Medicaid Telehealth Expansion During COVID-10 Emergency, (last accessed June 24, 2020).
  4. [1] Centers for Medicare & Medicaid Services, President Trump Expands Telehealth Benefits for Medicare Beneficiaries During Covid-19 Outbreak, (March 17, 2020).
  5. [1] Medicare Advantage, or Medicare Part C, must offer the same telehealth services as Medicare Part B. See Social Security Act § 1852(a)(1)(A).
  6. [1] 42 C.F.R. § 410.78; See
  7. [1] 42 C.F.R. § 410.78 (b).
  8. [1] Id.
  9. [1] 42 C.F.R. § 410.78 (b)(i). Effective March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act  has given CMS the authority to waive the requirements of the Medicare statute so that telehealth services can include audio-only services, email and facsimile services.
  10. [1] Office of Inspector General, CMS Paid Practitioners for Telehealth Services That Did Not Meet Medicare Requirements, (April 2018).
  11. [1] Centers for Medicare & Medicaid Services, Medicare Telemedicine Healthcare Provider Fact Sheet, (March 17, 2020).
  12. [1] Id.
  13. [1] Centers for Medicare & Medicaid Services, COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers, (June 12, 2020).
  14. [1] Id.
  15. [1] 42 C.F.R. § 410.78 (b)(2.)
  16. [1] See
  17. [1] See Id.
  18. [1] See Id.
  19. [1] Centers for Medicare & Medicaid Services, List of Telehealth Services, (April 30, 2020).
  20. [1] American Telemedicine Association, CMS Interim Final Rule: Summary of Key Telehealth Provisions, (May 1, 2020).
  21. [1], Telemedicine, (last accessed June 24, 2020).
  22. [1] Id.
  23. [1] Centers for Medicare & Medicaid Services, COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers, (June 12, 2020).
  24. [1] Id.
  25. [1] Alabama Board of Medical Examiners & Medical Licensure Commission of Alabama, Telemedicine/Telehealth, (last accessed July 12, 2020). See also Center For Connected Health Policy, COVID-19 Related State Actions, (May 31, 2020).
  26. [1] Center For Connected Health Policy, COVID-19 Related State Actions, (May 31, 2020).
  27. [1] Agency for Healthcare Administration, Florida Medicaid Health Alert, (April 16, 2020). See also Center For Connected Health Policy, COVID-19 Related State Actions, (May 31, 2020).
  28. [1] Office of Inspector General, CMS Paid Practitioners for Telehealth Services That Did Not Meet Medicare Requirements, (April 2018).
  29. [1] Id.
  30. [1] Id.
  31. [1] CMS estimates the Medicare Fee-for-Service (FFS) program improper payment rate through the Comprehensive Error Rate Testing (CERT) program. Each year, the CERT program reviews a statistically valid stratified random sample of Medicare FFS claims to determine if they were paid properly under Medicare coverage, coding, and payment rules.
  32. [1] Office of Inspector General, CMS Paid Practitioners for Telehealth Services That Did Not Meet Medicare Requirements, (April 2018).
  33. [1] See
  34. [1] Evaluating Disparities and Outcomes of Telehealth During the COVID–19 Emergency Act of 2020, H.R. 7078, 116th Cong.
  35. [1] Evaluating Disparities and Outcomes of Telehealth During the COVID–19 Emergency Act of 2020, H.R. 7078, 116th Cong. § 1.
  36. [1] Id.
  37. [1] Kat Jerich, New Bill Will Mandate Research on Telehealth Regs After Coronavirus, (June 2, 2020).
  38. [1] Id.
  39. [1] Centers for Medicare & Medicaid Services, CMS Proposes Calendar Year 2021 Payment and Policy Changes for Home Health Agencies and Calendar Year 2021 Home Infusion Therapy Benefit, (last visited July 12, 2020).
  40. [1] Michigan Department of Health & Human Services, Medical Services Administration Bulletin No. 20-09, (March 12, 2020).

About the Author

Nina Zhang, Esq. is a healthcare attorney based in Los Angeles, California.  She has practiced in the areas of managed care litigation and government reimbursement. She also practices employment law. She can be reached at [email protected].