HCFA submits telemedicine proposal for comment

July 1, 1998

HCFA submits telemedicine proposal for commentReimbursement policy would exclude store-and-forward consultations Lack of Medicare reimbursement has long been considered a primary stumbling block to the implementation and expansion of

HCFA submits telemedicine proposal for comment

Reimbursement policy would exclude store-and-forward consultations

Lack of Medicare reimbursement has long been considered a primary stumbling block to the implementation and expansion of telemedicine services in the U.S. Without the Health Care Financing Administration's seal of approval, there has been little impetus for many providers and private insurers to adopt the service.

HCFA's long-awaited Medicare reimbursement policy for telemedicine has finally arrived, albeit in draft form. The proposed policy is intended to implement section 4206 of the Balanced Budget Act of 1997 (BBA), signed into law a year ago, which directs HCFA to develop a Medicare payment methodology for rural telemedicine services and begin reimbursing for such services by Jan. 1, 1999.

This initial reimbursement proposal is a mixed bag, reflecting HCFA's struggle to reconcile its apprehensions about telemedicine with the requirements of the BBA. The rules also reveal how the agency's hands are tied by existing legislation that limits its ability to draft reimbursement policies.

"We are limited by law to reimbursing only for what is defined in the Social Security Act," said a HCFA source who asked not to be identified. "Payment cannot exceed the current maximum for consulting reimbursement fees. So if that fee is zero, we cannot set a reimbursement fee."

At present, that means the agency would pay only for medical services delivered via telecommunications that are equivalent to face-to-face encounters. For example, the proposed reimbursement rules exclude payment for store-and-forward consultations, one of the fastest growing application areas in telemedicine. Only real-time video consults will be covered; the patient must be present, and the telecommunications technology must allow the consulting practitioner to control an interactive medical exam. Full-motion video is not required, just interactive real-time audio-video communication.

"We believe that, although asynchronous transmission may be sufficient for diagnostic interpretation of images (such as radiological images), a teleconsultation is equivalent to a traditional, face-to-face consultation only if it permits the consultant to control the examination of the patient as (it) is taking place," HCFA states in the draft proposal. "With store-and-forward technology, the consultant is reviewing an examination that has already occurred and is limited to whatever information was recorded at that time."

The HCFA proposal raises an interesting contradiction. The agency already allows Medicare coverage of teleradiology, but in this case is making a distinction between teleradiology and other store-and-forward applications such as dermatology, pathology, cardiology, and ophthalmology.

"HCFA has chosen to ignore the intent of Congress and propose a rule that doesn't allow one of the most cost-effective means of providing medical care to rural populations," said Jon Linkous, executive director of the American Telemedicine Association (ATA) in Washington, DC.

This discrepancy could eventually be challenged in the courts, according to some observers.

But the news wasn't all bad for telemedicine advocates. In its proposal, HCFA has chosen a liberal interpretation of the BBA's definition of health professional shortage areas (HPSAs). The original legislation required that Medicare coverage initially be confined to telemedicine services provided to beneficiaries residing in a rural county designated as a HPSA. The agency expressed concern that Congress may have intended this to mean only county-wide HPSAs, which would exclude many beneficiaries and communities in partial-county HPSAs.

For example, beneficiaries in at least one eastern state would not be entitled to telemedicine coverage because there are no county-wide HPSAs in that state, according to HCFA. Similarly, the agency found that 50% to 95% of rural HPSAs in several western states would be excluded for the same reason. An estimated three million Medicare beneficiaries reside in designated HPSAs. Nationally, about 33 million people are enrolled in the Medicare program.

"(It) would seem illogical to restrict coverage of teleconsultations to county-wide HPSAs," HCFA states in its proposal. "The purpose of this provision is to provide access to health care for beneficiaries who now may face barriers to that care because they reside in rural areas where there is a shortage of medical professionals."

The agency thus suggests that teleconsults be covered by Medicare in all rural HPSAs, not just county-wide HPSAs.

Some telemedicine advocates raise concerns, though, over how the proposal determines who qualifies for reimbursement and how much they are paid. For example, the proposed rules limit reimbursement for telemedicine services to physicians or other healthcare providers who already qualify for Medicare reimbursement. Thus, presenters must be physicians, physician assistants, nurse practitioners, clinical nurse specialists, registered nurses, certified midwives, clinical social workers, or clinical psychologists. The rules also state that a physician must be present during each consult.

In addition, under the proposed rules, reimbursement for medical services provided via telemedicine is the same as for comparable face-to-face consultations, but payment must be split between the two participating healthcare providers. Claims can only be submitted by and paid to the consulting physician, and the referring physician is eligible for only 25% of the total claim. This means that specialists will likely receive between $70 and $140 per teleconsult, while primary-care physicians will receive between $15 and $40.

Such low fees may create a disincentive for providers-especially referring physicians and presenters-to use telemedicine with their Medicare patients. In addition, the consulting practitioner is responsible for billing the beneficiary for coinsurance and deductible amounts and remitting the 25% payment to the presenting practitioner, which adds to that physician's paper workload.

"We really feel that store and forward is not the number-one issue here," said Glenn Wachter, who handles policy and research services for the Association of Telemedicine Service Providers (ATSP) in Portland, OR. "There are other administrative problems that may have somewhat of a chilling effect on physicians wanting to do telemedicine."

Such concerns are prompting the ATSP and ATA to become even more aggressive in their lobbying efforts during the public-comment period, which runs through August 21. Both organizations are encouraging members to review the proposed regulations and submit comments to HCFA. In addition, they are contacting members of Congress and other rural and health organizations to garner broader support for the telemedicine industry.

In the meantime, HCFA is looking to its three-year telemedicine demonstration program to support the current reimbursement proposal. That program, which runs through September 1999, is expected to yield enough data to enable the agency to develop and implement a broader payment plan for telemedicine services. A cost-effectiveness study is due to Congress soon after the demonstration program is concluded.