Telemedicine: An Overview on Licensing and Reimbursement

     With any new technology, there is also a challenge. In this case, our current licensing and reimbursement policies can be viewed as a threat to the adoption of telemedicine. Unfortunately, to complicate things even further, regulations and requirements vary among federal, state and private payers.

Telemedicine is making a huge impact in the healthcare industry. As technology continues to move forward, so does the affordability and accessibility of telemedicine in the industry.


According to The American Telemedicine Association (ATA), over half of all U.S. hospitals now use some form of telemedicine. Telemedicine offers many benefits including improved access to patients, as well as allowing physicians to expand their reach beyond their offices.


But with any new technology, there is also a challenge. In this case, our current licensing and reimbursement policies can be viewed as a threat to the adoption of telemedicine. Unfortunately, to complicate things even further, regulations and requirements vary among federal, state and private payers. None of these are alike when it comes to how telemedicine services are covered and reimbursed.


In terms of licensing and credentialing there is also a challenge because they vary depending on the state, and providers are required to be licensed in every state they work. There isn’t a “universal license” when it comes to telemedicine.


Thankfully, there has been an implementation of procedures that facilitate the licensing process for providers. It is important for providers to always be vigilant and aware of new policies and regulations since these are constantly changing.


We know that it can be difficult for providers to try and figure out licensing and how to charge for telemedicine services. Fortunately, we have broken down some steps you can take that will facilitate your research and will allow you to understand how licensing and reimbursement works in the telemedicine industry.


Payor type


The best thing you can do to figure out which type of reimbursements you will be getting will be to track your enrolled patients by payer type. It will also help in terms of what regulations are applicable to you telemedicine practice.


This will assure that you are in compliance with applicable regulations, and also that you will receive the appropriate reimbursement for provided services.



  • Medicare


When it comes to Medicare, it only reimburses telemedicine if it pertains to certain types of care, provider, locations, and technology.


In terms of providers, the following are the only ones eligible for telemedicine reimbursement: physician, nurse practitioner, physician assistant, nurse midwives, clinical nurse specialists, clinical psychologists, social workers and registered dietitians or nutrition professionals.


There are only four types of telemedicine applications allowed by Medicare for reimbursement: video conferencing, store-and-forward, remote patient monitoring, and mHealth.


There a couple more categories not listed, but it is best to consult the Centers for Medicare and Medicaid Services (CMS) Telehealth fact sheet.  


  • Medicaid


Even though states are beginning to expand reimbursement policies, many others continue to restrict and place limitations on telemedicine services. Currently, there are 48 states including the District of Columbia that have some form of reimbursement.  


According to The Center for Connected Health Policy (CCHP), 9 states and Washington, DC provide reimbursement for some form of video conferencing, 15 states provide it for store-and-forward, 20 states provide it for remote patient monitoring, 23 states limit the type of facility that can serve as an originating site, 32 states offer a transmission fee when telemedicine is used, and 38 states and the District of Columbia have a law that governs private payer reimbursement policy.


It is best to consult each state’s Medicaid website to learn more about the reimbursement policy for telemedicine in each state.


We also recommend visiting the CCHP’s interactive map with state telehealth laws and reimbursement policies

  • Private payers


Private payers reimbursement policies for telemedicine also vary from state to state. There are 29 states including the District of Columbia that have enacted parity laws that mandate private payers to cover for telemedicine services. Even though under parity laws, coverage and restrictions still vary by state, video conferencing is always covered to some extent by private payers.


In this case, it is best to check the provider’s individual or practice payer contract. This contract should list the terms relating to telemedicine services reimbursement.


Licensing and credentialing  


In terms of licensing, it only becomes an issue when the physician has to treat a patient out-of-state, in this case, the physician must be licensed in the state where the patient is located.


Fortunately, the Federation of State Medical Boards (FSMB) offers an expedited licensing for physicians that allows them to practice across states through the Interstate Medical Licensure Compact.


Currently, 22 states credit the compact making it easier for physicians to practice in multiple states.


For those physicians who practice out of a hospital, the organization is required to credentialing all physicians. The process can definitely be more tedious for hospitals since physicians need to be credentialed at the facility from which they provide services as well the originating site.


The CMS recognizes the process of credentialing by proxy, which means that the originating site can usethe credentialing completed at the distant site to establish privileges for physicians at the originating site.

In order to successfully implement telemedicine services to your organization, it is critical to have an understanding of all federal and state requirements and policies.

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