Why Hospitals Need to Rethink Billing in Telemedicine

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By Anton Arbatov

When it comes to billing insurers for professional services, most physicians work one of two ways: either the hospital they serve handles the billing through reassigned benefits (billing rights), or they manage or outsource it themselves. But when a hospital contracts with a telemedicine company with geographically distributed physicians, the best thing for both the hospital and the rendering physician is for the telemedicine provider to manage the process. 

It is not every hospital’s favorite thing to do – to circumvent its established and refined billing operations – but due to federal laws, and the variability of state telemedicine policy across the country, it should be considered a best practice.

Revenue cycle management is the primary form of collecting revenue for most hospitals. As a result, they are rightfully keen to control the processes associated with revenue generation, such as the billing of payors and patients for professional services. 

Hospitals have traditionally used telemedicine as a way to improve specialty care available to patients. Stroke specialists are on-call to assist with life-saving decisions regarding tPA administration in hospitals around the country. TelePsychiatrists remotely fill the role of on-site psychiatric support for emergency departments that cannot staff enough mental health clinicians to meet patient demand. In rural hospitals, tele-specialists bridge the gap across multiple medical disciplines that are nearly impossible to staff in remote locations. Telemedicine is used in hospitals large and small, urban and rural, ensuring patients get the care they need, when they need it. 

But things can get complicated when it comes to billing, compliance, and liability. 

Take for example the reassignment of billing rights for a physician. A hospital billing for the services of a telemedicine provider knows that they must bill a patient’s insurer for a particular service. But what they might not know is that to bill Medicare for telemedicine services, the place of service is considered the home state of the tele-physician, not that of the hospital where the patient is located. 

So, if a teleNeurologist based in California provides a service to a patient located in a hospital in Montana, the procedures for billing Medicare dictate that the hospital bill the Medicare Administrative Contractor or “MAC” (the commercial carrier who administers Medicare benefits) for California, not Montana. To do so compliantly, the hospital must ensure that the rendering provider is enrolled with Medicare through their home MAC, and that the hospital that received the billing rights reassignment from the physician is enrolled in its home MAC andin the provider’s home MAC. Thus, in a distributed tele-physician model, the hospital may potentially need to enroll in multiple MACs across the country to bill compliantly. 

It’s the kind of mistake in billing for telemedicine that hospitals make all the time, because revenue cycle teams are often not used to telemedicine billing and all the associated inter-state regulatory considerations. The U.S. Department of Health and Human Services’ Office of the Inspector General (OIG) audited a set of 191,118 paid claims in 2018 and found that 31 percent of claims did not meet Medicare’s conditions of payment. Each year, CMS recovers billions in paid claims from audits at hospitals. Compliant reassignment and billing are among a multitude of concerns for hospitals billing for telemedicine services.

Telemedicine policy is not clearly defined even for those with expertise in the matter, and exceedingly more convoluted for those only occasionally approaching the subject. 

When you look at the legal and regulatory considerations in aggregate, the hospitals that choose to manage telemedicine billing for contracted tele-physicians bear significant risk. As do the doctors who reassign their benefits (since they are jointly and severally liable according to the OIG). With increased attention to fraud, waste and abuse throughout the health care industry, and a well-publicized increase in attention to telemedicine billing on the OIG work plan, more claims will be scrutinized, and mistakes may ultimately lead to painful audits and reduced profits for hospitals that choose to manage billing themselves.

This is exactly why hospitals implementing telemedicine programs should consider forgoing the reassignment of billing rights and look for an experienced telemedicine partner to avoid financial risk and disruption to otherwise refined and optimized billing and credentialing operations. 

Telemedicine policy is complex, especially when delivering care across state lines. Hospitals and physicians must grow more comfortable with the unique and geographically variable telemedicine billing rules before accepting the associated risk. When a telemedicine provider offers to capture the professional service revenue for hospitals through its own revenue cycle management processes, it should be a no-brainer. 

About the Author

Anton Arbatov MHA, FACHE, Vice President, Revenue Cycle Management and Compliance for SOC Telemed

Anton Arbatov leads revenue cycle management, corporate compliance program, and government relations for SOC Telemed. A Fellow of the American College of Healthcare Executives and former Army Combat Medic, Mr. Arbatov is passionate about improving access and quality of care for patients across the continuum of care.

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