New CMS Proposed Rule Expands Medicare Reimbursement For Telehealth Services


The Centers for Medicare and Medicaid Services (CMS) has once again released its Physician Fee Schedule Proposed Rule for Calendar Year 2017.

Ned Milenkovich, PharmD, JDThe Centers for Medicare and Medicaid Services (CMS) has once again released its Physician Fee Schedule Proposed Rule for Calendar Year 2017 (the Proposed Rule). As part of the release, CMS received multiple requests from stakeholders to establish Place of Service (POS) codes identifying telehealth. CMS responded by including an expanded list of telehealth services that are eligible for Medicare reimbursement in its Proposed Rule.

Impact On Pharmacy

The new physician fee schedule provides for expanded reimbursements for treatments that are rendered via telehealth. This is an evolutionary trend. Previously, not only were practitioners not reimbursed, but it was deemed to be illegal to treat a patient in this way.  As a result, prescriptions that were written for and dispensed were not deemed to be legitimate. Now that laws are changing in the various states and telemedicine is becoming much more accepted, pharmacists can be assured that the prescriptions written are acceptable, can be dispensed for a legitimate patient purpose and can be reimbursed properly for the drug dispensed. Currently, only select providers are being reimbursed for treatment under the telehealth model. In the future, a more expansive reimbursement model might include other health care practitioners.

Medicare Telehealth Services, Reimbursement and the Legal Landscape

Telehealth is one of the fastest growing sectors in healthcare due to increased pressure to improve efficiency and the desire to reduce health care costs. As a result, the list of covered telehealth and telemedicine services continues to grow. Section 1834(m) of the Social Security Act provides Medicare the authority to reimburse providers for telehealth services under the Proposed Rule.

To be eligible for reimbursement, the services must be:

  • On the list of Medicare telehealth services;

  • Furnished via telecommunication systems provided by authorized physicians or practitioners; and

  • Provided at an approved “originating site” to an eligible telehealth individual

The Proposed Rule would add the following telehealth services beginning on January 1, 2017:

  • End Stage Renal Disease (ESRD)-related services;

  • Advance care planning;

  • Telehealth consultations for a patient who requires critical care services


While these services are slated to be included, CMS also received requests to add services to the telehealth list that it determined did not meet CMS’s criteria for reimbursable telehealth services. CMS rejected the addition of observation codes; emergency department services; psychological testing; and physical therapy, occupational therapy and speech-language pathology services. CMS explained that a lack of evidence supporting the notion that these services are as effective when provided via telecommunication versus in a more traditional setting was the basis for rejecting these additional services.

CMS also rejected inclusion of physical therapy, occupational therapy and speech-language pathology services citing the definition of authorized practitioners in Section 1834(m) of the Social Security Act. Physical therapists, occupational therapists and speech language pathologists are not currently on the list of authorized practitioners and therefore services provided by these practitioners should not be added to the list of approved telehealth services, according to CMS.

Place of Service (POS) Codes

CMS also received multiple requests to establish POS codes specifically for telehealth services. In response, CMS explained that POS work groups within CMS manage the establishment of POS codes and that such a process is not contingent on Physician Fee Schedule rulemaking.   However, CMS is proposing how a POS code specifically for telehealth services would be used under the Physician Fee Schedule to the extent they would become available. The proposition is that physicians or practitioners furnishing telehealth services would be required to report the telehealth POS code to indicate that the billed service is furnished as a telehealth service from a distant site.

CMS is also proposing to use the facility practice expense relative value units to pay for reported telehealth services. Lastly, to receive the correct reimbursement rate, CMS proposes that the originating site continue to bill for the facility fee and continue to use the POS code for the patient’s location, whether it be facility or non-facility.

The comment period for the Proposed Rule ran through September 6, 2016.

Ned Milenkovich is chair of the healthcare law practice at Much Shelist PC and vice chair of the Illinois State Board of Pharmacy. Call him at 312-521-2482 or


Key Points for Pharmacists

- Prescriptions written are acceptable

- Prescriptions can be dispensed for a legitimate patient purpose

- The pharmacy can be reimbursed properly for the drug dispensed

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