The Medicare Payment Advisory Commission (MedPAC) has recommended a return to pre-pandemic facility rate requirements for telehealth services. In their report to Congress, MedPAC highlights the surge in telehealth utilization during the COVID-19 pandemic but notes a subsequent decline in spending. They also found that telebehavioral health accounted for a significant share of telehealth spending. MedPAC suggests resuming lower facility rate payments for telehealth services and emphasizes the importance of monitoring telehealth’s impact on healthcare access, quality, and costs for future policy decisions.
In its recent report to Congress, the Medicare Payment Advisory Commission (MedPAC) proposed a return to pre-pandemic facility rate requirements for telehealth services. MedPAC, an independent congressional agency composed of 17 members, advises the United States Congress on matters concerning the Medicare program. The report covers various topics, including addressing drug prices under Medicare Part B, standardizing benefits in Medicare Advantage plans, and aligning fee-for-service payment rates across ambulatory settings.
The report also fulfills the requirements outlined in the Consolidated Appropriations Act, of 2022, by examining the usage of telehealth services during the public health emergency (PHE) and exploring the relationship between expanded telehealth coverage and healthcare quality, access, and costs.
During the COVID-19 PHE, Congress relaxed several telehealth requirements, leading to significant adoption and utilization of telehealth services. The regulatory flexibilities included the removal of originating site restrictions, expanded provider eligibility for telehealth services, and increased coverage of audio-only services. Many of these flexibilities were extended until December 31, 2024.
Consequently, fee-for-service (FFS) Medicare spending on telehealth services surged from $130 million in 2019 to $1.9 billion in the second quarter of 2020. However, telehealth spending declined in the latter half of 2020 and 2021, reaching $827 million in the fourth quarter of 2021.
The number of FFS beneficiaries receiving at least one telehealth service paid under the physician fee schedule also rose dramatically, from 239,000 in 2019 to 14.2 million in 2020. However, this figure dropped to 9.7 million in 2021.
While telebehavioral health saw an increase in Medicare spending between 2020 and 2021, the report highlights that mental, behavioral, and neurodevelopmental disorders accounted for the highest share of telehealth spending in 2021, surpassing the share in 2020.
To assess the impact of expanded telehealth coverage on healthcare quality, access, and costs, MedPAC analyzed four population-based measures: ambulatory care-sensitive hospitalizations per FFS Medicare beneficiary, ambulatory care-sensitive emergency department visits per FFS Medicare beneficiary, total clinician encounters per FFS Medicare beneficiary, and the total cost of care for Part A and Part B services per FFS Medicare beneficiary. These measures were compared between the second half of 2019 and the second half of 2021.
The commission found that risk-adjusted rates of ambulatory care-sensitive hospitalizations decreased at a slower rate in hospital service area (HSA) groups with high telehealth use compared to those with low telehealth use. Similarly, risk-adjusted rates of ambulatory care-sensitive emergency department visits were lower during the 2021 period than in 2019 for both low and high telehealth usage HSAs.
Moreover, total clinician encounters per beneficiary decreased in the second half of 2021 across all HSAs. However, HSAs with high telehealth use experienced a slower decline compared to their low-telehealth-use counterparts.
In terms of costs, the total cost of care per beneficiary increased in 2021 compared to 2019 in both high and low-telehealth use HSAs. However, the costs increased more in HSAs with high telehealth usage.
The report concludes that during the pandemic, greater telehealth use was associated with minimal changes in measured quality, slightly improved access to care for some beneficiaries, and slightly increased costs to the Medicare program.
As part of its mandated report, MedPAC also recommends alternative approaches to paying for telehealth services. The commission suggests that the Centers for Medicare and Medicaid Services (CMS) should resume paying the lower facility rate for telehealth services as soon as feasible after the PHE.
Before the pandemic, CMS paid clinicians conducting telehealth visits the lower facility-based payment rate regardless of their location, whether in a facility setting or non-facility setting like a clinician’s office. However, the agency modified its policy during the pandemic to consider the clinician’s location for both in-person and telehealth services.
Additionally, the commission advises policymakers to monitor the impact of telehealth on healthcare access, quality and costs continuously. This data can inform permanent policy changes in the future.
