President Obama signed the 21st Century Cures Act on December 13, 2016. The act encourages biomedical research investment and facilitates innovation review and approval processes, but also serves as a vehicle for a wide variety of other health-related measures, including specifically calling out telehealth—the use of electronic information and communication methods to provide patient care when the healthcare professional and patient are not located at the same facility—as a potential means of delivering safe, effective, quality health care services to Medicare beneficiaries, and directs two federal agencies to investigate and report to Congress on its current and potential uses.

In Depth

On December 7, 2016, the US Congress approved the 21st Century Cures Act (Cures Act), substantial legislation intended to accelerate “discovery, development and delivery” of medical therapies by encouraging biomedical research investment and facilitating innovation review and approval processes, among other things. The massive bill specifically calls out telehealth—the use of electronic information and communication methods to provide patient care when the health care professional and patient are not located at the same facility—as a potential means of delivering safe, effective, quality health care services to Medicare beneficiaries, and directs two federal agencies to investigate and report to Congress on its current and potential uses.

President Obama signed the Cures Act on December 13, 2016, after previously expressing his support for the bill.

Overview of Key Telehealth Provisions in Cures Act

The legislation, if enacted, would require the Centers for Medicare & Medicaid Services (CMS) and Medicare Payment Advisory Commission (MedPAC) to report to the committees of jurisdiction in the House and Senate on the current and potential uses of telehealth in the Medicare program, to assist Congress in its ongoing assessment of Medicare coverage of telehealth services with a focus on the “originating site” requirement. The originating site—the site at which the patient is located at the time of the telehealth encounter—must be a certain type of health care facility that is located in a rural area, which significantly reduces the number of Medicare patients receiving care via telehealth.

Notably, Cures Act provides that it is the “sense of Congress” that eligible originating sites should be expanded and any expansion of telehealth services under the Medicare program should:

• Recognize that telehealth is the delivery of safe, effective, quality health care services, by a health care provider, using technology as the mode of care delivery;

• Meet or exceed the conditions of coverage and payment with respect to the Medicare program if the service was furnished in person, including standards of care; and

• Involve clinically appropriate means to furnish such services.

Congress’ “sense” statement communicates its desire for the development of a telehealth coverage expansion plan that contemplates the delivery of clinically appropriate types of services to Medicare beneficiaries in light of the applicable “standards of care”, which are generally the same whether the patient is seen in person or through telehealth technologies, and other conditions of coverage requirements.

Relevant Background and Impact of Cures Act on Medicare Telehealth Coverage

Currently, Medicare coverage of telehealth is limited to circumstances where the following four categories of requirements are satisfied:

Originating Site. An originating site is the location of an eligible Medicare beneficiary at the time the telehealth service occurs. Medicare beneficiaries are eligible for telehealth services only if they are presented from an originating site located in:

• A rural Health Professional Shortage Area (HPSA) located either outside of a Metropolitan Statistical Area (MSA) or in a rural census tract; or

• A county outside of a MSA.

The types of authorized originating sites are the offices of physicians or practitioners, hospitals, critical access hospitals, rural health clinics, federally qualified health centers, certain types of renal dialysis centers, skilled nursing facilities, and community mental health centers.

It is unclear whether Congress’ “sense” that the originating site requirement warrants expansion relates to its facility type or geographic components, or both.

Distant Site Practitioner. Practitioners at the “distant site” who may furnish and receive payment for covered telehealth services are physicians, nurse practitioners, physician assistants, nurse-midwives, clinical nurse specialists, certified registered nurse anesthetists, clinical psychologists and clinical social workers, and registered dietitians or nutrition professionals. The practitioner at the distant site must be licensed to furnish the service under state law. Unlike the originating site, there are no geographic or facility-specific requirements applicable to the distant site.

Telehealth Technologies. Only interactive audio and video telecommunications systems that permit real-time communication between the patient at the originating site and the practitioner at the distant site may be used.

Types of Services. While the list of covered telehealth services is expanding (albeit slowly), only a small defined set of services, including consultations, pharmacological management, office visits, and individual and group diabetes self-management training services, are currently covered by Medicare.

These limitations on Medicare coverage have severely limited the ability of health care practitioners to provide and get paid for the delivery of telehealth services to Medicare beneficiaries. To illustrate, in 2015, Medicare paid a total of $17,601,996 for telehealth services—an infinitesimal portion of the Medicare program’s $630+ billion budget.

Congress’ primary concern with expanding Medicare coverage of telehealth relates to cost. The Congressional Budget Office (CBO) acknowledges the difficulties associated with determining whether Medicare coverage for telehealth services would increase or decrease federal spending, as the extent to which telehealth services would be a substitute for (or reduce the use of) other Medicare-covered services is unclear.

According to CBO, if all or most telehealth services prevented the use of, or served as a substitute for, more expensive services, coverage of telehealth could reduce federal spending. On the other hand, if telehealth services are used in addition to currently covered services, then increased coverage of telehealth services would increase Medicare spending. Because many of the proposals considered by Congress to date focus on expanding Medicare beneficiaries’ access to health care services, CBO tends to generally view telehealth as cost prohibitive.

Cures Act directs CMS and MedPAC to gather and analyze the “hard data” necessary for Congress to better understand telehealth’s potential to improve patient care to Medicare beneficiaries and its financial impact, and to identify appropriate adjustments to the Medicare program (with a focus on expanding the “originating site” requirements) in light of these findings.

The gathering and analysis of this information will assist Congress and CBO to address certain ongoing financial and quality of care concerns about the use of telehealth outside of the narrowly defined “originating site.” Addressing these longstanding concerns may help to open doors for the delivery of telehealth services to Medicare patients who are located in non-rural areas or who have conditions that can be managed, treated and/or observed outside of the four walls of a medical facility, such as at home or work.

Considerations for Health Care Providers and Technology Companies

While it is unlikely that Cures Act will have an immediate and significant impact on Medicare’s approach to telehealth coverage, Cures Act (and other pieces of federal legislation focused on expanding telehealth services to Medicare beneficiaries) signals Congress’ continued consideration of telehealth’s ability to lower the costs of health care delivery and improve patient health. In light of this increased legislative activity and the change in administration, health care providers and telehealth technology companies should:

• Continue exploring ways to tailor their care delivery and revenue models to provide telehealth services to this large (and growing) segment of the population.

• Consider developing or participating in studies designed to test the efficacy and efficiency of telemedicine programs.

• Consider engaging with CMS and MedPAC on the issues in order to provide the federal government agencies charged with this investigation the best available industry information.

• Focus operational goals to achieve cost and value goals that are of concern to the government.