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Teleconsultation reimbursement changes

By James V. Schuster, Esq.

To some, advances in communications technology raise the potential for the promotion of a laudable policy goal of government: providing easier access to higher quality health care to those whose access may be limited. Whether this goal can be achieved will be affected by, among other things, the willingness of third party payors such as the Medicare program to pay for health care services provided remotely. Thus far, the federal Health Care Financing Administration (HCFA) has taken a conservative approach to Medicare reimbursement for telemedicine. Yet, the agency’s approach has recently received harsh criticism from members of Congress and the private sector, which may suggest that the time for covering physician telemedicine consultations (teleconsultations) might just be the here and now.

Reimbursement Policy Currently

Currently, Medicare limits telemedicine coverage to services where the provider “can visualize some aspect of the patient’s condition without the interposition of a third person’s judgment,” such as X-rays, electrocardiograms, electroencephalograms, and tissue sample interpretations. Medicare, however, currently generally precludes coverage for physician telemedicine (remote) consultations. Fee-for-service coverage for physician consultations is, instead, limited to instances where the physician examines the patient in-person, face-to-face.

On October 1, 1996, HCFA received formal clearance from the Office of Management and Budget to implement a waiver demonstration program to allow for coverage for teleconsultations on a limited basis. Under the program, 57 sites (53 short-term hospitals, a state psychiatric hospital, and three rural clinics) in four states (Georgia, Iowa, North Carolina and West Virginia) will be permitted to receive provider reimbursement for teleconsultations.

According to HCFA: The objectives of [its] telemedicine demonstration are to assess the feasibility, acceptability, cost and quality of services available through the use of teleconsultations for Medicare beneficiaries. HCFA will also evaluate the effects of such payment on access to service and quality of care.

Of the 57 sites, 12 will serve as hub sites to provide telemedicine specialist consultant services to the other 45 remote, rural spoke sites. The sites, which were selected from proposals submitted during HCFA’s 1993 and 1994 general research demonstrations, will run for three years. To avoid cross-state licensure problems, the demonstration program will run on an intrastate basis only (i.e., hub sites of one State only consulting with spoke sites of that same State).

Criticisms of Reimbursement Approach

However, instead of receiving praise for its “forward-looking vision” to reimburse for teleconsultation services, HCFA has been cited for not moving far or quickly enough on Medicare coverage for teleconsultations, especially where rural and underserved areas are concerned. One such criticism comes from the nation’s leading telemedicine association, the American Telemedicine Association (ATA). The ATA recommends that, instead of indecisively “assessing” the issue further, HCFA should follow the recommendations of a 1995 study by the Center For Health Policy Research that supported a limited policy for reimbursing for teleconsultations, as determined by the type of clinical consultation involved and the rural/underserved area served.

Meanwhile, the 104th Congress indicated its view that HCFA should have had its demonstration program well under way by now, instead of just beginning. Under the recently-enacted health reform legislation, HCFA is required to report to Congress by March 1997 on the issue of Medicare telemedicine reimbursement as based on data from the “current demonstration projects already under review.” However, because the demonstration program is not yet formally under way, there will be little, if any, data available for HCFA to make its report to Congress by the March 1997 deadline. Instead, according to one HCFA official, the agency will be “forced to do what it can do.”

Most recently, Sen. Kent Conrad (D-North Dakota) introduced legislation that would leapfrog HCFA’s waiver demonstration program to require HCFA to begin making Medicare Part B payments for professional teleconsultations of program beneficiaries residing in rural areas. Instead of waiting for HCFA to assess the findings of the waiver demonstration program, Sen. Conrad has resolved that “Medicare reimbursement policy is an essential component of helping integrate telehealth into the health care infrastructure, and must be explored.” In this regard, Conrad’s legislation would require HCFA to immediately determine Medicare teleconsultation reimbursement amounts.

Finally, critics have cited HCFA for only giving salutary lip-service to funding teleconsultations in the face of potential increases in Medicare costs and utilization. Specifically, HCFA has been chided for taking a “wait and see” attitude on what private sector payors decide to do regarding coverage for telemedicine.

Reasons For HCFA’s Reluctance To Cover Teleconsultations

HCFA articulates several grounds for its conservative teleconsultation reimbursement policy. The first is increased aggregate costs that are expected to result from greater access to medical care by beneficiaries. According to HCFA, “It is important to point out that, regardless of any cost savings that may be gained from telemedicine, greater access to medical care, particularly specialty care [that] may involve expensive diagnostic and therapeutic procedures, will automatically generate higher expenditures for [Medicare].” Similarly, HCFA fears that “telemedicine will be used excessively, that is, without regard for medical necessity.” HCFA wants to utilize its waiver demonstration program to assess these risks and determine ways to balance the provision of wider access to care against growing program costs.

HCFA also believes its waiver demonstration program will permit it to better monitor telemedicine quality of care considerations. In particular, HCFA believes that data that will be gained from the waiver demonstration program will allow the agency to determine whether standards of care will otherwise be compromised by telemedicine, as well as to carefully evaluate provider satisfaction with teleconsultation services.

Finally, HCFA has concerns about the increased financial impact that teleconsultations could have on program beneficiaries. Because there could be both a local physician and a specialist at two different facilities involved in each teleconsultation, program beneficiaries might find themselves receiving multiple copayment requests for the same service. To alleviate this problem during the waiver demonstration program, HCFA has instituted a policy whereby “only the consulting specialist at the hub end of the teleconsult will bill for deductibles or coinsurance, while Medicare will pay 100 percent of the applicable payment at the spoke end.”

What The Future Holds

It remains to be seen what conclusions HCFA will reach from its waiver demonstration program. One HCFA official is confident that the demonstration program will result in more formal acceptance of a Medicare reimbursement policy for teleconsultations; however, no one can be certain how limited or broad that policy might be. Moreover, whatever direction HCFA might ultimately wish to take, it might not be fast enough and expansive enough for the upcoming 105th Congress, which, according to Sen. Conrad, will find that “now is the time to come forward with creative solutions to these important issues.”

James V. Schuster, Esq., is a health care attorney with Reed Smith Shaw & McClay. The law firm has offices in Washington, D.C., where Mr. Schuster resides, and in Philadelphia, Harrisburg and Pittsburgh, Pennsylvania, among other cities.

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