Telehealth Post-PHE: How to Prepare for Reduced Reimbursement and Increased Regulatory Scrutiny

The Medicare Payment Advisory Commission (MedPAC) issued its annual 2021 March Report to the Congress Medicare Payment Policy (Report). MedPAC is an independent agency that advises Congress on the Medicare Program. In the “Telehealth in Medicare after the coronavirus public health emergency” section of the Report, MedPAC recommends reducing telehealth reimbursement, increasing scrutiny of high-volume fee-for-service telehealth providers, and instituting other requirements to combat potential fraud.MedPAC has consistently considered three key factors when making recommendations for the Medicare program: access, quality, and cost. By its very nature, telehealth provides greater access to providers for Medicare beneficiaries. Before the Public Health Emergency (PHE), Medicare required synchronous audio-visual capabilities for a claim to be submitted. However, during the PHE, specific procedures could be performed and billed as audio-only services. CMS also increased the breadth of telehealth services that are reimbursable during the PHE. These policy changes instituted by the Centers for Medicare and Medicaid Services (CMS) allowed for the provision of care in circumstances where beneficiaries may have otherwise not received any care at all.The scale at which telehealth services were provided during the PHE was unprecedented. While access has improved during the PHE, the PHE policy changes, if unchanged, could result in increased cost to Medicare. They may also potentially increase the opportunity for bad actors in the program to increase fraud, waste, and abuse. All these concerns occur against a backdrop of uncertain clinical outcomes and quality. In the minds of MedPAC Commissioners, a question remains regarding the quality of the telehealth services provided. The impact of a combination of telehealth and in-person care on quality is unknown.

MedPAC Recommendation: Extend Coverage to Get More Data

Given the uncertainty referenced above, MedPAC recommended an extension of the current policy to gather more data about the impact of telehealth. MedPAC recommended a temporary continuation of certain telehealth expansion policies for a limited duration (e.g., one to two years) to gather more evidence about telehealth's impact on access, quality, and cost. During the limited period:

  • Medicare should temporarily pay for specified telehealth services provided to all beneficiaries regardless of their location.
  • Medicare should temporarily cover selected telehealth services in addition to services covered before the PHE if there is potential for clinical benefit.
  • Medicare should temporarily cover certain telehealth services when provided through an audio-only interaction if there is potential for clinical benefit.

MedPAC Recommendation: Reduce Reimbursement and Offset Cost

To ensure access to care, in addition to increasing the breadth of reimbursable services, it provided increased reimbursement rates for telehealth services and waived the collection of co-pays for Medicare beneficiaries. MedPAC recommends the elimination of both policy changes post PHE. MedPAC recommends that consistent with the purposes of other cost-sharing mechanisms, providers should not be allowed to reduce or waive copays for telehealth services after the PHE.Before the PHE, Medicare reimbursed services at the facility rate under the Medicare Physician Fee Schedule (MPFS). During the PHE, Medicare reimburses procedures at the rate the provider would be paid if the procedure were performed in person (i.e., the higher nonfacilty rate). MedPAC recommends that after the PHE, Medicare should return to paying the fee schedule’s facility rate for telehealth services and collect data on the cost of providing these services. MedPAC included its current view of telehealth cost in the Report.

“We expect the rates for telehealth services to be lower than rates for in-person services because services delivered via telehealth likely do not require the same practice costs as services provided in a physical office…Although telehealth may require upfront investments in technology and training, in the long run, the marginal cost of a telehealth service should be lower than that of an in-person service. Therefore, continuing to set rates for telehealth services equal to rates for in-office services after the PHE ends could distort prices and lead clinicians to favor telehealth services over comparable in-person services, even when an in-person visit may be more clinically appropriate.”

One could certainly argue that some costs such as supplies (paper lining on an exam table, other disposables, sanitation costs post-visit) would not be incurred during a telemedicine visit. However, in contrast, one could also argue that fixed overhead such as occupancy or semi-fixed staff costs are not reduced. Additionally, MedPAC believes that the investment in technology is a fixed up-front cost; however, under SaaS pricing, an increase in volume can increase practice costs in some circumstances. A key question is whether the current difference between facility and nonfacilty rates appropriately accounts for the actual cost difference providers incur between in-person and virtual visits.

MedPAC Recommendation: Increase Program Safeguards and Provider Scrutiny

MedPAC recommended that CMS implement other safeguards to protect Medicare and its beneficiaries from unnecessary spending and potential fraud related to telehealth, including:

  • Applying additional scrutiny to outlier physicians who bill many more telehealth services per beneficiary than other clinicians.
  • Require clinicians to provide an in-person, face-to-face visit before they order high-cost durable medical equipment for high-cost clinical laboratory tests.
  • Prohibit ‘incident to’ billing for telehealth services provided by any clinician who can bill Medicare directly.
Additional Scrutiny to Physicians

MedPAC recommends additional scrutiny of physicians who are outliers regarding telehealth service volumes when compared to other clinicians. MedPAC suggests examining “the distribution of clinicians by the number of telehealth services they bill per beneficiary and identify clinicians in the extreme tail of the distribution.” MedPAC also suggested that “CMS could use billing information to estimate the amount of time that a clinician spends on telehealth services during a week or month” and compare that to the total number of hours in that period (i.e., week or month) to identify potential outliers.MedPAC recognizes that providers who primarily provide telehealth services in the direct-to-consumer market (e.g., Teladoc) could be flagged as outliers more frequently than other clinicians. Their claims would be subject to additional scrutiny but would not be denied if they met Medicare requirements.MedPAC also suggests CMS should instruct Medicare administrative contractors to apply additional scrutiny to telehealth claims submitted by identified outlier providers. The further scrutiny would include “traditional tools for targeted review of providers, which include reviewing the medical records that support clinicians’ claims to determine whether they meet Medicare’s rules for billing, coverage and medical necessity.”

Prohibit ‘Incident to’ Billing After the PHE

MedPAC recommends requiring that any clinician who is allowed to bill Medicare directly would have to bill using their national provider identifier (NPI) when performing a telehealth service after the PHE. Meaning, APRNs, PAs, physical therapists, licensed clinical social workers, registered dietitians, nutrition professionals, speech-language pathologists, and clinical psychologists would all bill Medicare directly for the telehealth services they perform. Adoption of this recommendation would allow greater insight into who is performing telehealth services. It could also reduce program expenditure as services provided by non-physician providers are reimbursed at 85% of the Medicare physician reimbursement rate.

How To Prepare for What’s Next

The PHE provided the impetus for many providers and patients to perform and receive care virtually for the first time. As described above, policies CMS implemented provided needed flexibility and reimbursement to continue patient care. However, these policies are temporary and if MedPAC recommendations are instituted, will revert to pre-PHE policies with increased regulatory burden for high volume telehealth providers. How should providers prepare for this change?

Consider Economic and Operational Changes

Post PHE, CMS may reinstitute reimbursement at the lower facility rate, and some procedures will no longer be covered as telehealth services. Providers should determine the variance in reimbursement between current nonfacility and expected facility reimbursement rates for telehealth services. The amount of this variance should be compared against the increased costs of providing the services in person. Various factors can impact costs, including changes in coverage hours, staffing mix and levels, and patient workflows, especially if a hybrid in-person and telemedicine model is clinically appropriate for a patient’s care. These factors, in turn, should be weighed against patient preferences for services to determine your ongoing virtual care strategy.Unfortunately, a change in outpatient Evaluation and Management (E/M) Coding from 2020 to 2021 complicates a comparison of reimbursement between nonfacility and facility rates. Calculating the difference may not be a simple rate change. Obtaining external assistance with financial projections and assessing changes to practice operations may be prudent in some circumstances.

Prepare for Increased Scrutiny

Separate from MedPAC recommendations referenced above, the Office of Inspector General (OIG) has made it clear in its most recent work plan that it is “…conducting significant oversight work assessing telehealth services during the public health emergency.” The OIG expects to issue seven separate reports related to telemedicine use during the PHE in 2021 and 2022.Compliance is a fundamental necessity for any provider. Given the aforementioned changes in E/M coding, MedPAC’s focus on high volume telehealth providers, and increased attention by the OIG on telehealth, providers should review current compliance plans, coding and billing policies and procedures, and educate physicians when regular audits reveal the need for improvement.As part of a broader range of virtual care, telehealth has become foundational to patient-provider interactions. With the significant increase in volumes, questions regarding cost, quality, fraud, waste, and abuse will be closely examined. Providers should prepare themselves now for the economic, operational, and compliance challenges ahead.

Additional Resources

Related Insights