Medicare Physician Fee Schedule Expands Telehealth Coverage in 2014

The Centers for Medicare & Medicaid Services (“CMS”) recently released the final rule for Medicare’s Physician Fee Schedule for 2014 Calendar Year (“CY).  While physicians are expected to see a 20.1% reduction to their Medicare payments, the Fee Schedule also includes expanded coverage for telehealth services and increased reimbursement payments for such services.

Expansion of the Geographic Criteria for Originating Patient Sites

Under the finalized fee schedule, Medicare coverage for telehealth services will be expanded to rural areas as defined by the Office of Rural Health Policy to allow payment for telehealth services originating in certain rural areas of Metropolitan Statistical Areas (“MSAs”).  This new language will expand Medicare coverage of telehealth into the “fringes of metropolitan areas.”  Specifically, CMS modified the definition of “rural” under Section 332(a)(1)(A) of the Public Health Service Act (“PHSA”). Previously, Medicare coverage for telehealth services was limited to counties outside of an MSA, designated rural health professional shortage areas (“HPSA”), and sites that participated in a federal telemedicine demonstration project.  The final rule modified the definition of “rural” by defining it to include “geographic areas located in rural census tracts within MSAs.”

CMS stated that expanding this definition would allow for the inclusion of additional HPSAs as areas for telehealth originating sites and will provide access to healthcare services for Medicare beneficiaries residing in rural areas.  These changes should also enhance the ability of Medicare beneficiaries who face significant challenges to obtain necessary services.

Establishing Geographic Eligibility on Calendar Year

Additionally, CMS is changing telehealth policy so geographic eligibility for an originating site will be established and maintained on an annual basis.  CMS believes this change will reduce the likelihood that mid-year changes to geographic designations would result in sudden disruptions to access to services and unexpected changes in eligibility for established originating sites.  However, CMS said it does not have the authority to “waive the geographic telehealth requirements” for rural health clinics “that do not meet any of the requirements to serve as an originating site.”  CMS officials said the agency is working with the Health Resources Services Administration to create a website to help providers determine their eligibility to serve as an originating site for telehealth services.

New CPT Codes & Other Supportive Changes

In its final rule, CMS added CPT codes 99495 and 99496 for transitional care management (“TCM”) services to the list of telehealth services on a Category 1 basis.  Both TCM CPT Codes will be covered in CY 2014 as Medicare telehealth services.  Accordingly, CMS will provide Medicare reimbursement for the relatively new TCM services where there is communication (direct contract, telephone, electronic) with the patient and/or caregiver within two business days of discharge with parameters defined by the complexity as well as length of time post-discharge.  Furthermore, as it does ever year, CMS requested updates and additions to the types of services covered by the list of Medicare telehealth services.  The deadline to submit requests is December 31 for the next rulemaking cycle.

Facility Fees Increase

Lastly, CMS also provides payment of a facility fee to approved originating patient sites.  For 2014, CMS updated the Medicare telehealth originating site facility fee, as mandated by statute.  Specifically, for CY 2014, the payment for the telehealth originating site facility fee is increased to 80% of the lesser of the actual charge or $24.63.  This is a 0.8% (20 cent) increase from $24.43 in CY 2013.

The CEO of the American Telemedicine Association, Jonathan Linkous, said “The proposed new rules, while incremental, represent another step toward integrating the use of telecommunications technology into the delivery of health care.”  (ATA release, 11/30/13).

For more information on telehealth services, the 2014 Physician Fee Schedule,  or related issues, please feel free to contact Daniel Meier or any member of our health care practice group for a further discussion.

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