HRSA Telehealth - 2000 Reimbursement/Legislative Update

Issue: Reimbursement/Legislative Update
The Balanced Budget Act of 1997 (BBA) requires that, starting January 1, 1999, the Health Care Finance Administration (HCFA) reimburse select telemedicine services for patients located in Health Professional Shortage Areas (HPSAs). To date, HCFA has reimbursed about 200 telemedicine consultations. Why is federal telemedicine reimbursement so limited, and what is the Department of Health and Human Services or Congress doing to address these limits?

Discussion
DISCUSSION: While acknowledging that any Medicare reimbursement of telemedicine is a great step forward from no reimbursement at all, we believe it is still important to shed light on the current limitations on telemedicine reimbursement. For example, the BBA requires that only patients located in Rural Health Professional Shortage Areas (HPSAs) are eligible for telemedicine reimbursement.

This requirement greatly limits the number of eligible consultations that can be reimbursed. OAT grantees have identified additional barriers that have made it difficult for them to qualify for telemedicine reimbursement under Medicare. According to the preliminary results of the University of Missouri's report, Medicare Reimbursement for Telehealth: An Assessment of Telehealth Encounters, Jan. 1, 1999-June 30, 1999,¹, some issues have been especially problematic, including:

Fee Sharing Between Referring Physician and Specialist:
"The required fee sharing between a referring physician and specialist has posed several problems. First, in the majority of OAT grantee cases, the specialist does not want to receive less for a teleconsultation than a traditional consultation. Second, neither specialist nor referring physician has accounting systems set up for such a fee split. Third, both referring and consulting physicians fear anti-kickback laws may apply. Fourth, the fee split requires that the patient presenter be an employee of the referring physician, which for the most part, is not the case."

Eligible Presenters:
"The majority of OAT grantee presenters are Licensed Practicing Nurses or Registered Nurses who are not eligible for reimbursement under Medicare. Only 7% of the presenters in the report were referring physicians or employees of the referring physician."

In addition, the perceived costs of expanding telemedicine reimbursement can be another significant barrier. For example, the Congressional Budget Office (CBO) recently estimated that new legislative bills expanding telemedicine reimbursement could cost HCFA as much as $1 billion. This estimated cost has made passage of these bills difficult. However, CBO did not have statistically significant data or information to calculate its estimates. Thus, OAT plans to engage the services of experts to develop models for estimating demand for telemedicine services, which could serve as the basis for an unbiased cost estimation methodology.

The 106th Congress has introduced a number of bills that address some limitations to telemedicine reimbursement. These include S770, S980, HB3420 and HB1344 and S2505.

S2505 was introduced at the beginning of May, sponsored by Senators Jeffords (R-VT) and Rockefeller (D-WV). This bill eliminates fee sharing, eliminates the requirement for a tele-presenter and allows reimbursement in non-MSAs, and rural and urban HPSAs.
HB1344 and HB3420 expand the definition of "presenter" to include a registered nurse in a telehomecare setting.
SB 770 and SB 980 greatly expand the eligible presenter definition to include "any health care provider acting on instruction from the referring physician or practitioner."
All bills expand the definition of eligible practitioner for consulting to include physical, occupational and speech therapists. SB770, SB980, and the new Jeffords bill also include clinical psychologists as eligible consulting practitioners.
HB 1344, HB 3420, SB 770 and S2505 address the fee-sharing problem.
The Health Care Financing Administration (HCFA), with input from the Agency for Healthcare Research and Quality (AHRQ) and OAT, has drafted recommendations for the Secretary of Health and Human Services. Final HCFA recommendations are expected in the near future.

List of HPSA Areas
Medicare Reimbursement for Telehealth: An Assessment of Telehealth Encounters January 1, 1999 - June 30, 1999 (PDF format-requires Adobe Acrobat Reader)
Library of Congress
To get updated information on the following legislative information, type the bill number (e.g., "HR 1344" or "S770") in the search field:
- HB 1344: Triple-A Rural Health Improvement Act of 1999; Introduced by Congressman Nussle on March 25, 1999
- SB 770: Comprehensive Telehealth Act of 1999; Introduced by Senator Conrad on April 13, 1999
- SB 980: Promoting Health in Rural Areas Act of 1999; Introduced by Senator Baucus on May 6, 1999
- HB 3420: Telehealth Improvement Act of 1999; Introduced by Congressman Bilbray, November 17, 1999

Next Steps
OAT plans to fund the development of cost models for estimating demand for telemedicine services using a variety of reimbursement assumptions. Leading policy analysts, program administrators and project directors would refine these models. By providing the CBO with an unbiased and informed methodology for estimating telemedicine costs, OAT hopes to move the issue of telemedicine reimbursement forward.

HCFA, with input from AHRQ and OAT, is currently drafting recommendations for the Secretary of Health and Human Services regarding Medicare telemedicine policy. Issues under evaluation include the use of store-and-forward technology in delivering health care; use of nurses and other medical professionals not recognized as a practitioner to act as tele-presenter; and whether there are other services beyond consultation that may be appropriate for Medicare telemedicine coverage. HCFA plans to submit these recommendations to the Secretary later this year.

The Balanced Budget Act of 1997 (BBA) required that, the Health Care Finance Administration (HCFA) reimburse select telemedicine services for patients located in Rural Health Professional Shortage Areas (HPSAs), starting Jan. 1, 1999. In the first year of this new rule, many telehealth practitioners have found the Health Care Finance Administration's (HCFA) interpretation of the BBA too narrow for practical telemedicine practice. To date, HCFA has reimbursed about 200 telemedicine consultations.

Two HCFA requirements have greatly limited the number of reimbursable telemedicine consultations: the fee sharing requirement and the eligible presenter definition. Additionally, the BBA requires that only patients located in Health Professional Shortage Areas are eligible for reimbursement.

A preliminary draft report, Medicare Reimbursement for Telehealth: An Assessment of Telehealth Encounters, Jan. 1, 1999-June 30, 1999,¹ provides some insights from OAT grantees' experiences. The University of Missouri Telemedicine Program surveyed OAT grantee networks, regarding their experience with Medicare reimbursement over the past year. These networks consist of one or more "hub" sites that provide specialty consultations to a number of associated rural "spoke" sites. Preliminary results are highlighted from 20 telehealth networks representing 4,761 telehealth encounters between Jan. 1, 1999 and June 30, 1999.

Rural Health Professional Shortage Areas (HPSAs)
Since the BBA requires that only patients located in Rural Health Professional Shortage Areas (HPSAs) are eligible for telemedicine reimbursement; the number of eligible consultations that can be reimbursed is greatly limited by this requirement alone. According to the University of Missouri study:

Seventeen networks provided information for patients living in or using telehealth facilities that are located in a federally designated Health Professional Shortage Area (HPSA). The total number of telehealth encounters at these 17 sites was 4,002.
25.4 percent, or 1,018 patients, were living in or using facilities in HPSA areas. Applying this percentage to the number of Medicare cases in this study indicates that approximately 141 of the 563 cases would be eligible for HCFA reimbursement IF the HPSA requirement was the only criteria to be met.
Four hundred and twenty-two of these Medicare cases would be automatically ineligible for reimbursement because they would not have met the HPSA criteria.

Fee-sharing between referring physician and specialist
HCFA's fee-sharing requirement between the referring physician and the consulting physician has been a major barrier to reimbursement. Consulting physicians find this problematic both in terms of the lower-than-normal pay rate and in terms of IRS taxes since HFCA reports consultant payment at 100 percent, even though the physician receives only 75 percent of the fee.

Other problems with fee-sharing include the accounting and tracking of these fees. Most rural practitioners are not equipped to track these split fees. Finally, perhaps the most important ramification of the fee-split requirement is that the eligible presenter must either be the referring physician or an employee of the referring physician. In many cases, the presenter is not an employee of the referring physician but rather an employee of the local hospital or clinic.

According to the preliminary findings in the University of Missouri's draft report:

Eligible Presenters
HCFA's interpretation of eligible presenters also greatly limits reimbursable consultations, especially in places where rural clinics are staffed only by registered nurses (RNs), licensed practical nurses (LPNs) or health technicians who are all ineligible presenters under the Act. The University of Missouri's draft report found that:

Although LPNs and RNs make up the majority of patient presenters in almost all telehealth networks, they are not eligible presenters.
One hundred and seventy-one, or 3.6% of all encounters involved a patient interaction with either an occupational, physical, speech therapist or clinical psychologist.
Only 7 percent (328) of referring practitioners or employees of the referring practitioner acted as a patient presenter in consultations. This suggests that if all of the reported 4,761 telehealth activities were Medicare, less than 7 percent of all cases would meet HCFA's eligible presenter criteria.
Eighty-one percent (3,865) of the activities involved physician-to-patient encounters and of these, 529 were reported to involve patients who would have been covered by Medicare if the care had been delivered in person.

Other Issues: Eligible Technologies
In most store-and-forward applications, a practitioner at the remote site will typically examine the patient and send a video clip or a photographic scan, along with the patient's medical record to a distant consulting practitioner. The consulting practitioner will then review the file and make a diagnosis.

Medicare will not cover this type of telemedicine application because it does not allow for live interaction between the consulting practitioner and the patient and the referring practitioner at the rural site. Medicare will cover some uses of store-and-forward technology as a consultation if the patient is present and there is real-time video and audio interaction level of video or audio interaction between the consulting practitioner and the patient.

The University of Missouri's draft report shows that 14 out of 20 networks (70 percent) indicated that the use of store and forward technologies for telehealth should be reimbursed and that interactive video should not be a requirement when using such technologies.

Legislative Solutions
In the first session of the 106th Congress, both the House and the Senate introduced a number of bills that have attempted to address some of these reimbursement limitations. Four bills that predominately address telemedicine reimbursement were introduced in the 106th first session (1999), and at least one bill (S2505) has been introduced in the second session in 2000.
The four bills from the first session include S770, S980, HB3240 and HB1344.

Whereas HB1344 and HB 3420 expand the definition of "presenter" to include a registered nurse in a tele-homecare setting, both SB 770 and SB 980 greatly expand the eligible presenter definition to include "any health care provider acting on instruction from the referring physician or practitioner." All bills expand the definition of eligible practitioner to include physical, occupational and speech therapists.

SB770, SB2505 and SB980 also include clinical psychologists as eligible practitioners. HB 1344, HB 3420 address the 25/75 percent fee split problem by proposing that the Secretary of Health and Human Services develop a fee schedule. SB 770 addresses the sharing of payment by eliminating payment to the referring practitioner or tele-presenter for teleconsultation and provides 100 percent of the payment for teleconsultation to the consulting practitioner.

S2505, sponsored by Senators Jeffords (R-VT) and Rockefeller (D-WV), was introduced at the beginning of May 2000. This bill addresses several reimbursement limitations including the fee-split, eligible presenters and HPSA requirements. S2505 entirely eliminates the fee-sharing requirement. It requires that the Secretary pay to:

Click here for an updated comparative table of Telehealth reimbursement legislation on major issues.

Legislative Barriers
Perhaps one of the reasons that the telemedicine reimbursement bills introduced last year have not been adopted is the perceived cost of expanding telemedicine reimbursement. The Congressional Budget Office (CBO) is responsible for "scoring" (i.e. estimating the cost) all bills such as those introduced in the 106th Congress to address telemedicine reimbursement limitations.

In the absence of statistically significant data or unbiased methodologies for predicting the cost of these bills, the CBO has had to develop cost estimates for telemedicine reimbursement bills based on limited information. Their most recent calculations for proposed telemedicine reimbursement costs have been as high as $1 billion. These CBO calculations represent a significant barrier to the passage of legislation even though the "true" cost of telemedicine reimbursement may not be that expensive.

Next Steps
OAT plans to fund the development of models for estimating demand for telemedicine services using a variety of reimbursement assumptions. Leading policy analysts, program administrators and project directors would refine these models. By providing CBO with an unbiased and informed methodology for estimating telemedicine costs, OAT hopes to move the issue of telemedicine reimbursement forward.

Additionally, HCFA, with input from AHRQ and OAT, is currently drafting recommendations for the Secretary of Health and Human Services regarding Medicare telemedicine policy. Issues being evaluated include the use of store-and-forward technology in delivering health care, use of nurses and other medical professionals not recognized as a practitioner to act as tele-presenter, and whether there are other services beyond consultation that may be appropriate for Medicare telemedicine coverage. HCFA plans to submit these recommendations to the Secretary later this year.

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