The Medicare originating site fee incentivizes telemedicine

Medicare pays an originating site fee, spurring telemedicine for Medicare recipients, but many facilities do not know how to find the rules or whether they are eligible. Medicare rules are complicated, and sometimes they are laid out in a variety of places – statutes, regulations, guidance documents, and Medicare benefit policy manuals.

For example, here’s a quick look at some of the rules governing the originating site fee:

Section 270.5 from Chapter 15 of the Medicare Benefit Policy Manual, provides as follows:

The term originating site means the location of an eligible Medicare beneficiary at the time the service being furnished via a telecommunications system occurs… The originating site facility fee is a separately billable Part payment. The contractor pays for it outside of other payment methodologies. This fee is subject to post payment verification.

For telehealth services furnished from October 1, 2001, through December 31 2002, the originating site facility fee is the lesser of $20 or the actual charges. For services furnished on or after January 1 of each subsequent year, the originating site facility fee is updated by the Medicare Economic Index. The updated fee is included in the Medicare Physician Fee Schedule (MPFS) Final Rule, which is published by November 1 prior to the start of the calendar year for which it is effective….

The originating site facility fee is a separately billed Part B payment. The payment amount to the originating site is the lesser of 80 percent of the actual charge or 80 percent of the originating site facility fee, except CHAs. The beneficiary is responsible for any unmet deductible amount and Medicare coinsurance.

The originating site facility fee payment methodology for each type of facility is clarified below:

[The rule next addresses: where the originating site is a hospital outpatient department; hospital inpatients; a critical access hospital; an FQHC or RHC.]

Where the originating site is a physician or practitioner’s office, the payment amount, in accordance with the law, is the lesser of 80 percent of the actual charge or 80 percent of the originating site facility fee regardless of geographic location. The geographic cost index (GPCI) should not be applied to the originating site facility fee. This fee is statutorily set and is not subject to the geographic payment adjustments authorized under the MPFS.

[The rule next addresses a hospital-based or critical access hospital-based renal dialysis center, a SNF, a CMHC, and in 270.5.1, ESRD-related services.]

Note that under Section 30 (Physician Services), Subsection B (Telephone Services):

Services by means of a telephone call between a physician and a beneficiary, or between a physician and member of a beneficiary’s family, are covered under Medicare, but carriers may not make separate payment for services under the program. The physician work resulting from telephone calls is considered to be an integral part of the prework and postwork of other physician services, and the fee schedule amount for the latter services already includes payment for the telephone calls.

The publication for CMS entitled,, Summary of Policies in the Calendar Year (CY) 2013 Medicare Physician Fee Schedule (MPFS) Final Rule and the Telehealth Originating Site Facility Fee Payment Amount, states:

Section 1834(m)(2)(B) of the [Social Security] Act establishes the payment amount for the Medicare telehealth originating site facility fee for telehealth services provided from October 1, 2001, through December 31 2002, at $20. For telehealth services provided on or after January 1 of each subsequent CY, the telehealth originating site facility fee is increased by the percentage increase in the Medicare Economic Index (MEI) as defined in Section 1842(i)(3) of the Act.

In fact, the statute states:

(m) Payment for Telehealth Services.—

(1) In general.—The Secretary shall pay for telehealth services that are furnished via a telecommunications system by a physician (as defined in section 1861(r)) or a practitioner (described in section 1842(b)(18)(C)) to an eligible telehealth individual enrolled under this part notwithstanding that the individual physician or practitioner providing the telehealth service is not at the same location as the beneficiary. For purposes of the preceding sentence, in the case of any Federal telemedicine demonstration program conducted in Alaska or Hawaii, the term “telecommunications system” includes store-and-forward technologies that provide for the asynchronous transmission of health care information in single or multimedia formats.

(2) Payment amount.—

(A) Distant site.—The Secretary shall pay to a physician or practitioner located at a distant site that furnishes a telehealth service to an eligible telehealth individual an amount equal to the amount that such physician or practitioner would have been paid under this title had such service been furnished without the use of a telecommunications system.

(B) Facility fee for originating site.—With respect to a telehealth service, subject to section 1833(a)(1)(U), there shall be paid to the originating site a facility fee equal to—

(i) for the period beginning on October 1, 2001, and ending on December 31, 2001, and for 2002, $20; and

(ii) for a subsequent year, the facility fee specified in clause (i) or this clause for the preceding year increased by the percentage increase in the MEI (as defined in section 1842(i)(3)) for such subsequent year.

Let’s translate that into English: if you’re an originating site facility under Medicare rules, you can get the lesser of $20 or the actual charges, for telehealth services; the rule is different if the originating site is a physician or practitioner’s office; telephone calls are not considered “telemedicine;” and there’s a schedule for increasing the originating site facility fee over time.

If you’re a telemedicine provider or telemedicine site, interested in Medicare originating site fees and telemedicine rules, contact our telemedicine attorneys.