The Mismatch of Telehealth and Fee-for-Service Payment

“the “virtual check in” code introduced in the 2019 MPFS [Medicare Physician Fee Schedule] initiated payment for short communications with patients to avoid unneeded office visits. During the PHE [Public Health Emergency], restrictions on both telehealth visits and non-visit-based communications were loosened further, importantly permitting telehealth services to originate from the patient’s home instead of a medical facility. The Centers for Medicare and Medicaid Services also agreed to pay for routine phone calls between patients and their practitioners. Medicare initially set the rate for a 5- to 10-minute call comparable to a virtual check in—about $15—pegging the fee to relative cost calculations used throughout the MPFS.

[..] for the $15 payment, practices would also bear transaction costs for collecting the obligatory $3.00 co-insurance from the patient or supplemental insurer. [..] it makes no financial sense for practices to bill Medicare and patients for virtual check-ins. It is not surprising that in 2019 practices billed Medicare the check-in code only about 12,000 times, with allowed charges totaling less than $200,000 (M. J. Braid-Forbes, personal communication, August 10, 2020).

[..] Within a few weeks of adoption during the PHE, CMS raised the 5- to 10-minute phone call fee from $15 to $46—the rate for a level 2 office visit, better supporting financially strapped practices. As a temporary policy in the midst of the COVID-19 crisis, “overpaying” for high-frequency, low-cost services makes good policy sense. Post–COVID-19, however, we can expect a proliferation of telehealth services if Medicare continues to overpay for such communications. Policy makers face a dilemma. Using standard, relative cost calculations, they could establish “correct” fees, which primary care practices would rarely bill for or provide. Alternatively, Medicare could pay a rate far higher than the resource cost calculations would establish, making the services highly profitable and provided at high volume.

Policy makers similarly face unpalatable choices in setting rates for telehealth visits that are substitutes for in-person visits. Patients face substantial time costs in travel, waiting room, and, finally, time with their practitioner. Time costs are a major constraint on the volume of office visits but would mostly disappear if patients’ homes become routinely accepted as the originating telehealth site, as COVID-19 PHE policy permits. As permanent policy, then, there would likely be a massive increase of telehealth visits, especially if MPFS payments equaled office visit payments, despite the substantially lower production cost.

Fee schedules can function reasonably well when code descriptions are concise and specific to the provided service, producing reasonably reliable coding. Unfortunately, current MPFS telehealth codes are not concise, delineating the specific kind of technology employed, the patient’s location, who initiates the service, the duration of the visit or communication, the time interval from prior or subsequent office visits, and the frequency of allowed billing for the service, among other characteristics. These parameters were established for payment purposes alone; they do not reflect useful clinical distinctions. Given ever-changing technology capabilities, codes quickly will become outdated. And if generous payments continue, the Centers for Medicare and Medicaid Services could feel compelled to impose additional burdensome—and ultimately ineffective—documentation requirements as these services proliferate. In short, post–COVID-19, using the standard MPFS to pay for 250 or more telehealth codes would likely produce a quagmire of confusion, inadvertent or intentional miscoding, and clinician and patient complaints while raising spending substantially.

Our proposed solution is to pay primary care practices lump sum payments to cover the cost of virtual telehealth care when there is an established, ongoing patient relationship. A pool of money rather than fee-for-service payments for telehealth communications would allow practices to determine how best to provide care outside of in-person visits while also reducing exorbitant billing costs. For primary care practices in Medicare, this telehealth lump sum payment could be folded into monthly per capita payments that are a central component in current primary care demonstrations, such as in the forthcoming Primary Care First model. The need for ongoing support for telehealth beyond the MPFS should be the catalyst for promptly moving primary care demonstrations currently available to few practices to national adoption.”

Full article, Berenson R and Shartzer A. JAMA Health Forum, 2020.10.2