Reimbursement is a vital driver for widespread use and acceptance of telemedicine throughout the nation. This is important because telemedicine, if implemented correctly, can lead to greater efficiency and delivery of healthcare, and most importantly, improved patient satisfaction and outcomes.

Unfortunately, many significant barriers still exist which fragment the market. Telemedicine service availability varies widely by specialty, insurance plan, medical facility, policies, and geographic location. For reimbursement specifically, there is no widespread standard among private payers and the federal government has given little direction for telemedicine reimbursement. This article briefly covers telemedicine reimbursement policies from a federal (Medicare), state (Medicaid), and private payer standpoint.



The Center for Connected Health Policy’s (CCHP) latest edition of “State Telehealth Laws and Reimbursement Policies” was released in August 2016. It provides an invaluable summary guide of telehealth-related policies for all 50 states. The guide primarily focuses on Medicaid policies, as most states pay for healthcare services through their Medicaid program.

Each state’s law differs widely, so below are a few broad categories to conceptualize the definitions used and scope of services covered:

  • Medicaid reimbursement: Forty-eight states and the District of Columbia (D.C.) offer some form of reimbursement of telemedicine through their Medicaid program. Only Massachusetts and Rhode Island were determined not to have any definitive policies on reimbursement.
  • Live video: This term is used when a medical provider meets with a patient via a real-time live video. Every state offers reimbursement for live video services in their Medicaid program (except Massachusetts and Rhode Island), but a wide spectrum of restrictions differ for each state. Generally, states restrict reimbursement based on specialty type, type of services and provide that can be reimbursed, and “originating” site (where the patient resides with respect to the medical service that is provided).
  • Store-and-forward: This refers to electronic transmission of medical information (i.e., digital images, pre-recorded videos) usually through secure email transmission. Only 12 states offer some type of reimbursement for store-and-forward services, as many restrictions are placed based on whether the service is being provided in real time, which eliminates the possibility of reimbursement for store-and-forward services.
    • The states that offer reimbursement for store-and-forward are Alaska, Arizona, Connecticut, California, Hawaii (effective Jan. 2017), Illinois, Minnesota, Mississippi, Missouri, New Mexico, Virginia, and Washington.
  • Remote patient monitoring (RPM): Broadly defined, this is the collection of patients’ medical and health data that is then transferred to a provider elsewhere who can monitor the data at any time. Many states have restricted reimbursement for RPM based on limiting qualifying sites, clinical conditions to monitor, and type of monitoring device and information that’s stored. Nineteen states offer reimbursement for RPM in their Medicaid programs: Alabama, Alaska, Hawaii, Illinois, Indiana, Kentucky, Louisiana, Maine, Minnesota, Mississippi, Missouri, New York, South Carolina, Texas, Utah, Vermont, and Washington.
  • Email/phone/fax: Defined as any medical information communicated over email, phone, or fax. All states are either silent or explicitly exclude these types of telemedicine services.
  • Transmission/facility fee: Thirty states will reimburse for a transmission and/or facility fee.
  • Location of service: Some policies restrict reimbursable telehealth services to certain defined areas, such as a rural or underserved area. Another common practice is to limit the type of facility that may be an originating site. All states have a policy or some definition restricting reimbursement by location of the service provided.



Medicare has very restrictive reimbursement policies for telemedicine services, as determined by medical codes specific to tele-delivered services. RPM services are prohibited, as well as store-and-forward services, except when used in demonstration programs hosted by Center for Medicare and Medicaid Services (CMS) in Alaska or Hawaii. Thus, interactive audio and video telecommunication must be occurring in real-time between the beneficiary and the physician.

In regards to qualifying locations and practitioners allowed to be reimbursed for telemedicine services:

  • “Distant Site” Practitioners: Physicians, nurse practitioners, nurse midwives, clinical nurse specialists, registered nurse anesthetists, dieticians, clinical psychologists, and clinical social workers (although the last 2 practitioners have a few more restrictions on what they can bill for).
  • Originating Site: The site where the Medicare beneficiary is at the time the telehealth service occurs. Medicare only reimburses for the service if they are in an originating site located in:
    • A rural Health Professional Shortage Area (HPSA)
    • A county outside of a Metropolitan Statistical Area (MSA)
    • Sites that are authorized are usually medical facilities located in an HPSA or outside an MSA, such as physician offices, hospitals, and rural health clinics.

As of August 2015, there are around 60-70 medical codes that allow reimbursement for telemedicine services, which is a small subset of the thousands of medical codes approved by the federal government. The current restrictions listed above limit telemedicine reimbursement in several ways, which hinders the growth of telemedicine services that could be used powerfully and meaningfully for Medicare’s beneficiaries.

However, the U.S. Department of Health and Human Services (HHS) considers new submissions for telehealth-delivered services every year, and will approve the medical code if it meets the requirements in one of the following categories:

“Category 1: Services are similar to existing services, such as professional consultations, office visits, and office psychiatry services, which already are approved for telehealth delivery. In deciding whether to approve the new codes, similarities between the requested and existing telehealth services are examined, including interactions among the beneficiary and the practitioner at the distant site and, if necessary, the telepresenter, and similarities in the technologies used to deliver the proposed service.

Category 2: Services not similar to Medicare-approved telehealth services. Reviews of these requests include an assessment of whether the service is accurately described by the corresponding CPT code when delivered via telehealth, and whether the use of technology to deliver the service produces a demonstrated clinical benefit to the patient.”

In February 2016, Senate Bill (SB) 2484, known as the Creating Opportunities Now for Necessary and Effective Care Technologies (CONNECT) for Health Act, was proposed with bipartisan effort. CONNECT for HealthAct expands the definition of telehealth so that telecommunications services can be used for delivery of healthcare, health information, or health education at a distance. It also includes video conferencing for RPM and store-and-forward technologies for transferring medical data. This expansion of definition helps reduce the restrictions on telemedicine reimbursement, which has several implications for the rest of the country—if Medicare allows reimbursement for several more telemedicine services, other states and private payers may follow suit, especially if telemedicine service can reduce costs. Avalere Health, a policy-focused consulting firm, analyzed SB 2484 and concluded there could be $2 billion in savings if the bill passes. Thus, SB 2484 may pose a strong case for approval as it goes through legislation.


Private payers

Private payers are mandated to reimburse telemedicine services if the state they operate in has passed a telemedicine parity law. Generally, a telemedicine parity law requires health plans to pay providers the same or equivalent rate whether they provide service in-person or using telehealth technologies. Significant variation occurs per health plan and between levels of coverage, but every health plan will cover the same services as required by the parity law passed in their state.

From the American Telemedicine Association’s (ATA) tracker in 2016, as shown below, 29 states have passed a telemedicine parity law, 7 states had proposed or pending legislation for a parity law, and 14 states have no parity legislative activity, mostly in the northern Midwest and a few Southern states.

Coverage of Telemedicine 2016


In conclusion, the growth of telemedicine is limited by many legal, technical, and political issues. The most important player to break down these barriers and provide telemedicine reimbursement is the federal government. States reimbursement policies are subject to local politics which can lead to state specific gaps in coverage. Private payers left on their own will make coverage decisions based on their individual assessment of cost efficiency. Some policy experts believe that widespread telemedicine reimbursement policies will have to be implemented at the federal level if we are to accelerate the use of telemedicine services.


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