Medicaid guidelines require all providers to practice within the scope of their state practice act. Some states have enacted legislation which requires providers using telemedicine technology across state lines to have a valid state license in the state where the patient is located. Any such requirements or restrictions placed by the state are binding under current Medicaid rules. Medicare Conditions of Participation (COPs) applicable to settings such as long-term care facilities, and hospitals may also impact reimbursement for services provided via telemedicine technology. For instance, the Medicare COPs for long-term care facilities require physician visits at set intervals. Current regulations require that the physician must be physically present in the same room as the patient during the visit.  This requirement must also be met for Medicaid to pay for services provided to Medicaid eligible patients while in a Medicare or Medicaid certified facility. Similarly, Federal regulations require face-to-face visits for home health, and telemedicine cannot be used as a substitute for those visits.  However, a telemedicine encounter may be used as a supplement to the required face-to-face visits.

Reimbursement for Medicaid-covered services, including those with telemedicine applications, also must satisfy Federal requirements of efficiency, economy, and quality of care. With this in mind, states are encouraged to use the flexibility inherent in federal law to create innovative payment methodologies for services that incorporate telemedicine technology. For example, states covering medical services that utilize telemedicine may reimburse for both the provider at the hub site for the consultation, and the provider at the spoke site for an office visit. States also have the flexibility to reimburse any additional cost (i.e., technical support, line-charges, depreciation on equipment, etc.) associated with the delivery of a covered service by electronic means as long as the payment is consistent with the requirements of efficiency, economy, and quality of care. These add-on costs can be incorporated into the fee-for-service rates or separately reimbursed as an administrative cost by the state. If they are separately billed and reimbursed, the costs must be linked to a covered Medicaid service.

In terms of medical codes used as a basis for identifying, tracking and reimbursing for telemedicine, some states use modifiers to the existing Physicians' Current Procedural Terminology (CPT) codes. The modifiers "TM" and "TV" are commonly used to make this distinction. Other states have developed their own local codes to distinguish telemedicine services.

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