News | Telemedicine

As the Senate Finance Committee considers telehealth expansion, payment approaches are a key talking point

News | Telemedicine

As the Senate Finance Committee considers telehealth expansion, payment approaches are a key talking point

  • During a congressional hearing, a healthcare policy expert said fee-for-service is not a viable way to fund a Medicare telehealth expansion.
  • Implementation of capitated payment models for telehealth is essential both to manage overall spending and to promote innovation, experts said.
  • Pending legislation would permanently incorporate some of the telehealth waivers that were established in response to the public health emergency.

As Congress mulls the future of telehealth policy, one expert says continuing to fund virtual care using traditional payment models is not sustainable.

“Fee-for-service is a particularly inappropriate payment method for most telehealth services,” Robert Berenson, MD, senior fellow at the Urban Institute, said during a May 19 hearing before the Senate Finance Committee. That’s why he thinks simply codifying waivers that were implemented during the COVID-19 pandemic would be detrimental.

Berenson cited three reasons why fee-for-service is an ineffective way to fund widespread telehealth utilization:

  • Administrative complexity
  • Billing costs in relation to payment levels
  • Increased volume and spending

Issues with billing for telehealth services seemed to resonate with Sen. Ron Wyden (D-Ore.), chairman of the Finance Committee, who bemoaned “this process of billing and approvals bouncing from office to office to office, leaving patients and providers in something resembling a bureaucratic never-never land.”

Wyden said he and Sen. Mike Crapo (R-Idaho), the ranking member of the Finance Committee, have made streamlining administrative issues around telehealth “a special priority. If we’re going to get it right and squeeze out every bit of value for both patients and providers, as well as taxpayers, we’ve got to sort this out.”

Payment approaches that can work

Instead of relying on fee-for-service, telehealth should be covered via capitated models that also incorporate periodic lump-sum payments for specialists, Berenson said.

“Admittedly, pursuing these recommendations would be challenging; it would be easier politically and operationally to simply ratify the PHE [public health emergency] changes going forward, as many stakeholders advocate,” Berenson said. “That would be a mistake both because it could produce sustained increases in Medicare spending for years to come and because of the missed opportunity presented by telehealth to adopt alternative payment models that would produce greater value than even improved fee-for-service is able to produce.”

Berenson’s point was echoed in the hearing by Narayana Murali, MD, executive vice president of care delivery and chief strategy officer with Marshfield Clinic Health System and executive director and board member with America’s Physician Groups.

A transactional system such as fee-for-service does not lend itself to the type of innovation needed to establish an ideal telehealth model, Murali said.

“If you need transformation, you need prospective payments,” he said. “Capitated payments allow the physician groups to focus on what’s important, as well as [the] industry infrastructure required to provide optimal telehealth that is integrated in electronic medical records.”

Deciding on a payment rate

Fee-for-service could be considered as an interim payment strategy for telehealth, Berenson said. As far as the actual rate, “I don’t have the magic number. If we pay based on the traditional resource-based, relative-value-scale approach to payments, the low end of telehealth would be too low to actually have it performed.

“Parity, where we’re now paying three times what that proper amount should be, is too high. I think some smart people could get into a room and come up with some middle ground … but it should be in the context of: We’re moving into something different” in terms of a payment mechanism.

Murali seemed to disagree that payment parity is inappropriate, stating that rates need to be high enough to incentivize virtual care.

“Congress must ensure payment parity between in-person and virtual visits,” Murali said. “Allowing for expanded telehealth without the guarantee of payment parity will create another barrier to adoption, limit overall uptake by providers and stagnate access to this important treatment mechanism for patients.

“Congressional action on this front will also send an important message to commercial payers to guarantee parity across insurance markets.”

The current legislative picture

Regardless of the funding model, the push to make telehealth coverage a permanent part of Medicare is accelerating.

“When the Medicare program was designed, it was built to cover acute conditions,” Wyden said. “Modern-day Medicare is about cancer, diabetes, heart disease and more of the chronic health conditions that are a lot more complicated and more expensive to treat. Telehealth is going to be a bigger part of that transformation going forward.”

The Connect for Health Act, which has bipartisan sponsorship in the Senate, includes provisions that would:

  • Remove geographic restrictions on a permanent basis
  • Expand originating-site requirements to include the home and other appropriate sites
  • Remove restrictions for emergency medical care services

A bill proposed in March 2020 by Sen. Steve Daines (R-Mon.) became part of the CARES Act, exempting members of high-deductible health plans (HDHPs) from having to pay their deductible before being covered for telehealth services during the public health emergency. Daines in recent days teamed up to introduce bipartisan legislation that would make first-dollar coverage for HDHP members permanent.

Kisha Davis, MD, a member of the Commission on Federal and State Policy with the American Academy of Family Physicians, said AAFP supported temporarily waiving the deductible for telehealth visits. But the association has concerns about keeping the provision due to the possibility “of creating a two-tiered system where low-income enrollees are only able to afford virtual care.

“We recommend that the committee pass legislation to allow high-deductible health plans to waive the deductible for primary care and mental health services both in-person and [via] telehealth,” she said.

About the Author

Nick Hut

is a senior editor with HFMA, Westchester, Ill. (

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