Hospital Facility Fees and Telehealth During COVID-19 Pandemic

This article examines Medicare billing during the COVID-19 pandemic health emergency (PHE) for telehealth services of provider-based physicians to patients who otherwise would have been seen at hospital outpatient departments.  Our focus is on whether hospital facility fees are reimbursable under this scenario in light of recent waivers and rule making by the Centers for Medicare & Medicaid Services (CMS).  As further discussed below, such fees are not reimbursable at this time, though CMS is apparently looking into this issue in response to various comments.

As part of the blanket waivers issued on March 30, 2020, but effective March 1, 2020,¹ CMS included waivers pertaining to telehealth services.  Among these, hospitals and physicians are now permitted to bill for certain services provided off-campus using telehealth technology.  For example, hospital emergency departments may use telehealth to assess patients in order to free emergency space for those most in need.²

Also as part of these blanket waivers, the location requirement for provider-based status is being waived for the duration of the PHE.  According to CMS—

it is waiving certain requirements under the Medicare conditions of participation at 42 CFR §482.41 and §485.623 . . . and the prover-based department requirements at §413.65 to allow hospitals to establish and operate as part of the hospital any location meeting those conditions of participation and other requirements not waived by CMS.³

This implies that, when seen during the PHE remotely by a provider-based physician, the physician should bill using the outpatient department site-of-service code and be paid at the applicable Medicare facility rate.  And it would seem to follow that the hospital could be paid the facility fee.  As it turns out, the former proposition is correct but not the latter, at least at the present time.

On April 6, 2020, CMS issued an interim final rule concerning the use of telemedicine in connection with the PHE.⁴ In this interim final rule, CNS confirmed that physicians billing Medicare for telehealth services should use the point-of-service code that would have been appropriate had the patient visit been in person.⁵  If this would have been in a non-facility physician office, this means that the physician would be reimbursed under the office rate, which is typically higher than under the facility rate for the physician’s professional services.  CMS’ rationale is that office-related costs to physician practices may not significantly differ whether the professional services are provided via telehealth or in person.

CMS rationale for paying provider-based physicians for telehealth services at the lower facility rate is that the hospital, and not the physician, is incurring the facility costs, such as clinical staff, supplies, and equipment.⁶   But in the final interim rule, CMS indicates that the hospital itself cannot be reimbursed for facility fees when one of its provider-based physicians performs telehealth services for a patient at home who otherwise would have presented at the provider-based clinic:

As provided in the amendments to section 1135(b)(8) of the [Social Security] Act, when telehealth services are furnished under the waiver to beneficiaries located in places that are not identified as permissible originating sites in section 1834(m)(4)(C)(ii)(I) through (IX) of the [Social Security] Act, no originating site facility fee is paid.⁷

The patient’s home in this context is not identified as a permissible originating site under this latter section of the Social Security Act cited above, indicating that here the facility fees are not reimbursable.  This interpretation was confirmed during a recent teleconference hosted by CMS.⁸ 

So at present, it appears that hospitals will not be paid facility fees in connection with the telehealth services of their provider-based physicians.  In the same teleconference as referenced above, however, CMS personnel indicated that the agency is revisiting this issue in light of recent comments.  Thus hospitals should continue to monitor CMS guidance with respect to this issue, as CMS may change its position in future guidance.

If you have specific questions or require further information, please contact R. Michael Barry or Neil W. Hoffman, Ph.D. Please refer to AGG’s Coronavirus (COVID-19) Resource Center for additional legal alerts.

[1] COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers.  Available at: https://www.cms.gov/about-cms/emergency-preparedness-response-operations/current-emergencies/coronavirus-waivers.

[2] Id., at p. 4.  See also, List of Telehealth Services.  Available at: https://www.cms.gov/Medicare/Medicare-General-Information/Telehealth/Telehealth-Codes.

[3] COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers, at p. 7.

[4] 85 Fed. Reg. 19230 (Apr. 6, 2020).

[5] Id., at 19233.

[6] Id.

[7] Id.

[8] COVID-19 Office Hours (Apr. 16, 2020).