Payers, providers clash over telehealth reimbursement as Congress mulls changes

Payers, providers clash over telehealth reimbursement as Congress mulls changes


As members of Congress decide how to expand access to telehealth after the pandemic, one of the biggest questions has centered around how much Medicare providers should be paid for virtual care.

While the rates Medicare pays for telehealth and in-person services are currently the same, that arrangement—along with several other CMS telehealth waivers—expires at the end of the public health emergency absent Congressional action.

Now providers are pressuring Congress and CMS to keep payment parity—or something close to it—after the pandemic ends, but some government officials and insurers worry the fee-for-service structure of the traditional Medicare program will incentivize overutilization of telehealth visits. Payers view changing Medicare’s payment model around telehealth as an opportunity to push value-based care forward in the healthcare industry, which they say will result in lower overall healthcare costs and better health outcomes.

“A doctor’s time is a doctor’s time whether it is virtual or if it’s in-person,” said Kyle Zebley, director of public policy for the American Telehealth Association, which supports a “fair rate” that accounts for the costs of maintaining and continuing to improve a telehealth program.

A 2020 article in the Journal of American Medical Association pegged Medicare reimbursement for audio and video calls at just $15 before COVID-19, a rate that researchers said did not even cover the cost of submitting the insurance claim.

“We recognize that not having brick and mortar costs should be a factor in terms of telehealth reimbursement, but we also think that there’s a level of investment required to get this technology off the ground and continue to innovate,” Zebley said.

The American Medical Association, Federation of American Hospitals and other groups are also pushing for increases in pay for telehealth services, compared to what Medicare paid pre-pandemic.

Of course, none of that matters unless Congress moves to expand access to telehealth in Medicare post-pandemic.

The pandemic has forced Congress to revisit antiquated laws on the books that prevent the traditional Medicare program from covering telehealth except in limited circumstances.

Lawmakers generally agree that laws that only allow Medicare coverage of telehealth when done from a medical facility in a rural area are outdated and need to be changed before the end of the public health emergency.

With the waivers expiring at the end of the public health emergency—which has no set date yet— providers want Congress to make those changes sooner rather than later, or risk Medicare beneficiaries losing access to telehealth. Congress would also need to take action to allow CMS to permanently expand the list of providers who are eligible for telehealth reimbursements. For example, telehealth coverage of some behavioral health visits in Medicare expires at the end of the PHE. Providers also want Medicare to permanently cover audio-only telehealth.

After the PHE, “literally almost everything where the patient is at home and it’s a digital contact, to get paid for it would require Congress to allow it. If Congress allows it, then you have the issue of how it would be paid for,” said Chip Kahn, president and CEO of the Federation of American Hospitals, the advocacy group representing for-profit hospitals.

Congress could change the laws restricting what telehealth services Medicare is allowed to cover and direct CMS to come up with fair rates, but is expected to leave most of the particulars regarding payments up to CMS.

But CMS is getting conflicting advice on how much Medicare should pay for those telehealth services, complicating the future of an already multibillion-dollar industry that has exploded in popularity during the COVID-19 pandemic.

MedPAC—which advises Congress on Medicare policy—recommends Congress and CMS temporarily continue some of the telehealth expansions under Medicare but revert to lower payment rates, citing what it says are the cheaper costs of providing care virtually and the risks of overutilization, rising healthcare spending and uncertainty around the impact on health outcomes.

“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,” the recommendations read.

“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 service may be more clinically appropriate.”

Some members of Congress have indicated they disagree.

“I think we got a real feel for the medicine of the future. So what do we do about the reimbursement rate? Is it 100%? Is it the same? Is it slightly different for some reason?” Sen. Maria Cantwell (D-Wash.) said this week when questioning President Joe Biden’s nominee to lead CMS, Chiquita Brooks-LaSure. Brooks-LaSure didn’t offer any commitments, but Cantwell gave the answer she’d hoped to hear.

“I’m good with examining the savings but I would say to people that this is just a new efficiency discovered in the information age, with COVID being the thing that prompted us here. My guess is we’re going to see huge savings. I would say we should be at or close to the reimbursement rate we’re at today,” Brooks-LaSure said.

The House Ways & Means Committee—which has jurisdiction over Medicare financing—is currently trying to work through what telehealth coverage should look like post-pandemic.

“Everybody wants to do it but how do we pay for it? That’s the stumbling point,” said Rep. Ami Bera (D-Calif.), a physician who has been working on telehealth policy. “I just think we have to figure out what the reimbursement would look like.”

Rep. Andy Harris (R-Md.), another physician working on telehealth policy, said he thinks “near parity” would be important.

“It is a little more efficient to do things by telemedicine,” Harris said. “We’d have to work with some of the physician groups to dissect how much savings is made by conducting telemedicine visits. I suspect there is some, even if it’s not parity.”

But some healthcare payers, including insurance companies and large businesses, warn against mandating parity for telehealth, arguing that virtual visits offer an opportunity for savings. While Congress is unlikely to mandate parity in the commercial market, private insurers often feel pressured to follow Medicare’s lead since it is the largest healthcare payer in the U.S.

“One of the main benefits of telehealth is it can be offered at a lower price,” said Shawn Gremminger, director of health policy for the Purchaser Business Group on Health, which advocates for self-funded employer plans. “Mandating pay parity gets rid of those savings.”

Doctors should not be penalized for their use of innovative care delivery tools, and patients should be able to access their provider through whatever method they prefer, Ceci Connolly, CEO of the Alliance of Community Health Plans. Once the public health crisis ends, the industry group believes that payment parity for digital health services should continue for a transition period of about five years. Then virtual visits should be part of value-based relationships between payers and providers. By sharing patient risk and offering a capitated rate that covers all the individuals providers treat virtually, Connolly said doctors will not overuse and abuse the service and be thoughtful about which treatments are a good fit for virtual care.

“If you were to say to me that, Medicare, tomorrow, cut telehealth reimbursement by 25%, I would be worried because a lot of clinicians are not yet ready to make that math work,” Connolly said. “You’ve got to give them time to get up to speed, get skills and get the technology that they need, and money helps to make that possible. We don’t want physicians to be losing their practice by trying to do something really great.”

Failing to update the payment models for telehealth could also complicate capitation bids that Medicare Advantage insurers submit to the CMS and force payers to axe some of the benefits they unveiled during the pandemic, particularly those related to the social determinants of health, Connolly said. Payers could also be forced to pass the higher cost of care onto patients in the form of elevated premiums, she added. Telehealth services should be part of insurers’ base bids and not viewed as a supplemental benefit, Connolly said.

“It’s not a different benefit, it’s just how you deliver a benefit,” she said.

The lobbying effort comes as several insurers unveil virtual-first plans, or benefits structures that require members to consult with their providers digitally before stopping by for an in-person visit. Insurers view these products as a way to cut costs, increase access and drive outcomes. As an example, Mark Wagar, a healthcare consultant and former head of Empire Blue Cross Blue Shield, pointed to someone calling their primary care provider on the weekend with a question, rather than visiting a costly emergency room.

“If you’re looking at what to pay for something, you have to look at the total impact,” Wagar said. “Does it help lower overall costs and result in better health status and quality?”

He said if payment parity for telehealth services were cut, adoption of virtual-first plans would be stalled. It could also slow the implementation of a range of digital monitoring and home care products that payers and providers have invested in during the pandemic. These new investments reflect the changed care delivery model, he said.

“The rudimentary physician fee schedules for telehealth were very low because they were very low acuity types of business,” Wagar said. “Now, with the technology that’s available, there’s a much broader range of care complexity that you can manage through telehealth.”

While America’s Health Insurance Plans trade group, and ACHP, believe that reimbursement for audio and video visits should remain equal, Wagar believes payment should vary based on the value of the service provided, not the method by which the patient is seen. Moreover, he thinks the healthcare industry should be at the forefront of bridging the digital divide. By educating seniors how to use their devices, working with manufacturers to create easy-to-use tools and partnering with community agencies to expand broadband and device availability, Wagar said health plans and providers can solve access issues, cut healthcare spending and promote better health.

“You’ve got to open up your brain about what will help people improve their health status and their life status,” Wagar said. “I do sympathize with the disparity thing and I think our challenge there is to solve what’s causing the disparity.”



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About the Author

Marie Maynes
Marie Maynes is a Sports enthusiast and writes for the Sports section of ANH.