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Telehealth/Telemedicine: An Opportunity for Physicians and Providers to Add a New Line of Service

The cost effectiveness of providing health care via telemedicine or telehealth promises to be an effective tool to increase coverage and reimbursement of healthcare provided remotely or through telehealth. Towers Watson, a national consulting company, recently published a 2014 study that suggests that telemedicine could save $6 billion annually for the health care industry. "Achieving this savings requires a shift in patient and physician mindsets, health plan willingness to integrate and reimburse such services, and regulatory support in all states," according to Dr. Allan Khoury, a senior consultant at Towers Watson.[1] Recent studies have assigned significant cost savings generated by telehealth use that include cost savings of $537 million per year for emergency departments using telehealth to reduce transfers and spending reductions of 7.7% to 13.3% per person per quarter in the cost of care for chronically ill Medicare beneficiaries using a health buddy via telehealth. [2] As the cost effectiveness of providing services via telehealth and telemedicine is proven, Medicare, most state Medicaid programs and commercial insurers are increasing coverage as well as reimbursement for telehealth services. State law requirements for providing telehealth and coverage differ greatly. Consequently, physicians and health care providers should be aware of the complexity of providing telehealth and its requirements, but should also incorporate telehealth services into their practices as a new way of providing services and a new line of business.

What is Telemedicine/Telehealth?

Simply defining telemedicine can be tricky, as there is no single definition. CMS defines “telemedicine” as the “provision of clinical services to patients by practitioners from a distance via electronic communications.”[3] The American Telemedicine Association (“ATA”), a nonprofit organization dedicated to integrating telemedicine into health care systems, defines it as “the use of medical information exchanged from one site to another via electronic communications to improve a patient’s clinical health status.”[4]

Mobile devicesIn April 2014, the Federation of State Medical Boards ("FSMB") adopted a model telemedicine policy and defined “telemedicine” as “the practice of medicine using electronic communications, information technology or other means between a licensee in one location, and a patient in another location with or without an intervening healthcare provider.”[5] On the heels of the FSMB policy, the American Medical Association (“AMA”) approved “guiding principles” regarding telemedicine in June, but offered no single definition. The AMA report instead addresses telemedicine within three broad categories of telemedicine technologies: store-and-forward telemedicine, remote monitoring telemedicine, and real-time interactive telemedicine services.[6]

At the state level, Kentucky’s Medical Practice Act[7] defines telehealth as “the use of interactive audio, video, or other electronic media to deliver health care. It includes the use of electronic media for diagnosis, consultation, treatment, transfer of medical data and medical education.” Telehealth is often used as a synonym for telemedicine, but precise definitions, as evident from above, may differ.[8] Importantly, the Kentucky Board of Medical Licensure (“KBML”) has recently adopted a very helpful policy that accepts the FSMB’s model policy as the accepted and prevailing standard of practice for use of telehealth tools when practicing medicine. In a detailed opinion, the KBML recognizes that a patient/physician relationship via telehealth can be established with the informed consent of the patient, but includes complicated requirements for establishing the patient/physician relationship, obtaining informed consent, providing examination and treatment services, keeping medical records, maintaining patient privacy and prescribing. While recognizing prescribing via telemedicine to be at the professional discretion of the physician, the KBML emphatically points out that all requirements for prescribing whether in person or via telemedicine must be met and physicians will be held to the same standards for in-person prescribing when prescribing via telemedicine. While the opinion does not rule out prescribing controlled substances via telemedicine, all statutory and regulatory requirements must be met. The KBML’s policy specifically states that using an on-line tool alone is not sufficient for prescribing. Thus, Kentucky physicians have guidance from the KBML about telemedicine, but still must address issues like prescribing thoughtfully and carefully as there is no specific recipe for compliance with Kentucky’s prescribing requirements via telemedicine.

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It is also interesting and important to note what telemedicine may not be. According to CMS, telemedicine does not include phone calls, emails, images transmitted via fax, and text messages without the visualization of the patient.[9] On the other hand, the ATA has interpreted telemedicine to include transmission of an evaluative or therapeutic act through any means, method, device, or instrumentality, including emails and phone calls.

Contrary to its definition of what telemedicine is not, CMS has announced an important new benefit that will pay a monthly fee to physicians, nurse practitioners, physician assistants and others to manage the care of patients with two or more chronic conditions starting in January 2015 without face to face communication. Significantly, this new benefit will cover case/care management services for patients with chronic diseases without visualization of patients. To be provided efficiently, these services will require communication via telephone, secure messaging and email. Use of these telehealth tools, however, does not mean that CMS considers the services to be telehealth; consequently, these services do not have to meet Medicare’s telehealth regulatory requirements even though the services meet the ATA’s definition of telemedicine.

Getting Reimbursed for Telehealth Services

  • Medicare and Medicaid

After a long period of indecision, Medicare announced final requirements for telehealth services in July 2014. To qualify for Medicare reimbursement of telehealth services, a beneficiary must be located in an area outside a metropolitan statistical area or in rural health professional shortage area (“HPSA”). In addition, Medicare “ will only pay for a face to face, interactive consultation service where the patient is present in an approved healthcare facility (hospitals, rural health clinics, skilled nursing facilities, physician offices and community mental health centers), known as an “originating site.” As a condition of payment, an interactive audio and video telecommunications system must be used that permits real-time communication between the provider at the distant site and the beneficiary at the originating site.

Professionals who may receive payment for covered Medicare services include physicians, physician assistants, nurse practitioners, nurse-midwives, clinical nurse specialists, clinical psychologists and clinical social workers, and dieticians or nutrition professionals. In July 2014, CMS released its CY 2015 Physician Fee Schedule which expands Medicare-reimbursable telehealth services to include remote medical services, psychological testing, psychotherapy, prolonged office visits, annual wellness check-ups and non-face-to-face chronic care management as well as psychiatric and behavioral health services. These are welcome changes and cover key areas that have, to date, not been reimbursable. Under the final rule, CMS added codes for psychoanalysis and family psychotherapy as well as codes that will allow mental health providers to report sessions that require more than the one hour visit. In addition, codes for the new management of chronic illness have been issued.

In July of 2013, Kentucky Medicaid issued final rules expanding the coverage of telemedicine services for Medicaid beneficiaries. Although providers are still limited to using only interactive video-conferencing to qualify for reimbursement under Kentucky’s new rules, Medicaid beneficiaries now have access to a broader list of providers and telemedicine services. It is important to note that Kentucky has statutory requirements that include approval of equipment by its telehealth network. Providers have reason to be hopeful about future policy changes that will expand Medicare and Medicaid payment for services provided through telemedicine

Commercial Insurers

While expansion of commercial coverage of telemedicine often depends on whether state law requires parity vis a vis other services, insurers are expanding telehealth coverage to reduce unnecessary costs including urgent care and emergency department visits. Quite simply, attractive cost savings will drive commercial insurers and employers to cover and provide more services via telemedicine. Insurers already often encourage members to access contracted providers to address questions via telephone or email. The expansion of these services to include evaluation and treatment appears logical. The same critical analysis must be undertaken by providers, insurers and managed care organizations alike to determine whether services may be provided under state law through telehealth as well as the requirements for how those services should be performed via telehealth. Issues to keep in mind include state laws addressing telehealth/telemedicine, requirements for equipment, state professional licensure laws and guidance, prescribing laws, location of the patient, privacy, security and confidentiality of medical records as well as other miscellaneous concerns.


Widespread adoption and use of telemedicine is inevitable; so, too, is the potential for noncompliance and a minefield of problems. The requirements outlined just a few of the issues that providers must keep in mind as they establish innovative and exciting telehealth services. Telehealth services are the way of the future and will change the how health care is provided. Providers who incorporate telehealth as a new line of service may have tremendous opportunities to increase reimbursement.

Lisa English Hinkle

Lisa English Hinkle is a Member of McBrayer law.  Ms. Hinkle concentrates her practice area in healthcare law and is located in the firm’s Lexington office.  She can be reached at lhinkle@mcbrayerfirm.com or at (859) 231-8780, ext. 1256. 

Services may be performed by others.

This article does not constitute legal advice.

[1] Katie Wike, “Telemedicine Could Save $6 Billion Per Year” Health IT Outcomes (August 15, 2014)

[2] Laurence Baker Integrated Telehealth and Care Management Program for Medicare Beneficiaries with Chronic Disease Linked to savings, Health Affairs, September 2011.

[3] 76 Fed. Reg. 25553 (May 5, 2011).

[4] ATA, What Is Telemedicine?, available at www.americantelemed.org/learn/what-is-telemedicine.

[5] Federation of State Med. Bds., "Model Policy for the Appropriate Use of Telemedicine Technologies in the Practice of Medicine (2014)," available at http://www.fsmb.org/pdf/FSMB_Telemedicine_Policy.pdf.

[6] AMA, Report of the Council on Medical Service, Coverage of and Payment for Telemedicine, June 2014.

[7] KRS 311.550(17).

[8] See The Joint Commission, Hospital Accreditation Standards, Glossary (Oakbrook Terrace, IL 2013).

[9] 42 C.F.R. 410.78(a)(1),(3).

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