Summary
The Centers for Medicare and Medicaid Services (CMS) recently enacted modest but important expansions in Medicare’s telehealth policy.
Telehealth, which uses telecommunications to support virtual health care delivery to improve access to and quality of health care, is moving from promise to reality. The benefits are appealing: Patients can interact with their providers remotely, which improves access to care and can help providers manage chronic conditions from afar.
However, a number of federal policies hinder its proliferation in Medicare. As a result, only one-quarter of 1 percent (0.25%) of beneficiaries — or 90,000 people with fee-for-service (FFS) Medicare — used about 275,000 telehealth services in 2016.
The limited use of telehealth in Medicare is largely driven by requirements that restrict telehealth coverage to beneficiaries residing in rural areas and to services performed at authorized “originating sites,” which typically do not include a beneficiary’s home. These limitations, CMS acknowledges, reflect the fact that the Medicare telehealth benefit was implemented nearly 20 years ago. Since then, any potential expansion of the benefit has been shaped in part by the Congressional Budget Office’s (CBO) history of “scoring” telehealth expansion proposals as potentially high-cost, under the assumption that providers would deliver telehealth in addition to in-person services for the same episode.
However, recent federal policy changes suggest a broader application of telehealth in Medicare in the near term. These changes span new legislative authorizations, enhanced regulatory flexibilities, and testing of innovative approaches through demonstrations.