The ABCs of Telehealth Compliance & Privileges: Licensing & Credentialing for Telehealth Providers

In this article we explore key trends that detail this expansion, break down the critical aspects of telehealth reimbursement, and provide insights into how Medicare and Medicaid adjustments are influencing virtual care practice dynamics.

Amid economic uncertainty, healthcare organizations are on the hunt for ways to broaden access to care, uphold quality, and boost operational efficiency. Virtual care is leading the charge, transitioning from novelty to norm and reshaping how healthcare is delivered.

In this article we explore key trends that detail this expansion, break down the critical aspects of telehealth reimbursement, and provide insights into how Medicare and Medicaid adjustments are influencing virtual care practice dynamics.

Telehealth Use Trends: A Look at the Numbers

According to Grand View Research, the global telemedicine market hit nearly $115 billion in 2023 and is projected to soar at a growth rate of 17.96% annually until 2030, with forecasts suggesting a jump to $286.22 billion. Fortune Business Insights echoes this prediction, highlighting the burgeoning demand for telemedicine services.

A 2022 Kaiser Permanente study sheds light on the U.S. telehealth landscape prior to the pandemic, revealing a basic level of integration, with 76% of hospital systems having some telehealth capacity. Yet, the onset of the pandemic catalyzed a surge in telehealth, with insurance claims for remote consultations skyrocketing by 766% within three months, making up over 20% of all medical consultations in the U.S. during 2020.

Before the pandemic struck, 65% of U.S. medical professionals had not engaged with telemedicine, and 23% had seldom used it. But at the height of the crisis, an overwhelming 97% of healthcare professionals turned to telemedicine, with 43% conducting half of their consultations remotely. Looking ahead, 44% of U.S. doctors anticipate that 10% to 49% of their future consultations will be conducted via telehealth.

In a recent national survey conducted by Public Opinion Strategies from January 25-31, 2024, involving 1,008 adults, 54% reported having a telehealth session, reflecting steady growth in telehealth usage since 2019. This number has dramatically increased from just 10% in June 2019 to 55% in 2023. User satisfaction is remarkably high, with 89% of telehealth users reporting satisfaction with their latest virtual care experience—a statistic that has consistently stayed above 86% over four years.

As the telehealth market continues to surge, driven by increasing demand and technological advancements, providers face the challenge of navigating a complex regulatory environment. The decentralized nature of virtual care, with services potentially being provided across multiple locations, introduces significant hurdles in terms of licensing, credentialing, and, crucially, reimbursement. Each of these factors is heavily influenced by the specific conditions and regulations dictated by federal and state agencies, which vary widely and affect the operational and financial aspects of telehealth delivery.

Elements of Telehealth Reimbursement Policy

Telehealth reimbursement policies are intricate, often focusing on four main areas: the type of services covered, the location requirements, eligible providers, and the delivery modality. These policies can significantly differ based on the regulatory environment of each state or federal agency, meaning there's no one-size-fits-all approach to understanding these rules.

Here’s a straightforward breakdown of the core components of telehealth reimbursement:

1. What services are reimbursable? This could range from mental health consultations to physical therapy sessions.
2. Who gets reimbursed? Typically, this includes professionals like physicians, therapists, and nurses.
3. Where must the patient be during the service? Location requirements can vary widely, from a medical facility to a patient's home.
4. How are the services delivered? Options include live video, telephone calls, or other digital communication methods.

The variability in these policies is evident in how different programs apply them. For instance, one state’s Medicaid might cover live video sessions exclusively for mental health services, while another might reimburse a broader spectrum of telemedicine services across any licensed provider registered with Medicaid.

Understanding these distinctions is crucial to ensure providers meet all criteria for reimbursement.

Understanding Medicare Reimbursement for Telehealth Services

Medicare, the federal health insurance for individuals over 65, those with specific disabilities under 65, and patients with end-stage renal disease, offers reimbursement for a select range of telehealth services, provided certain criteria are met. This program is managed by the Centers for Medicare and Medicaid Services (CMS).

Currently, Medicare covers only those telehealth services that are delivered via live video. Exceptions include store-and-forward services in Alaska and Hawaii as part of CMS's telehealth demonstration projects. Services eligible for reimbursement are designated by specific codes, either Current Procedural Terminology (CPT) or Healthcare Common Procedure Coding System (HCPCS).

Each year, the U.S. Department of Health and Human Services reviews proposals for new services that might be eligible for telehealth delivery. These proposals can come from healthcare providers, advocacy groups, and other stakeholders. The aim is to expand the roster of services that qualify for Medicare reimbursement.

In a move to streamline this process, CMS's 2024 Final Physician Fee Schedule introduced a significant change. Starting in CY 2025, the classification system for telehealth services will shift from three categories to a simpler binary system—labeling services as either 'permanent' or 'provisional.' This revision aims to make the process of adding or removing services from the Medicare telehealth list more straightforward and transparent.

The CMS has laid out a five-step procedure for service code proposals, which includes providing:

1. The name, address, and contact details of the person or organization making the request.
2. The specific HCPCS code that describes the proposed service.
3. A description of the types of medical professionals who would provide the telehealth service.
4. A detailed rationale for why the service should be included as a Medicare-reimbursable telehealth service.
5. Justification that the service cannot currently be billed under existing telehealth provisions, along with supporting evidence that it meets the criteria for either a category 1 or category 2 addition.

While Medicare itself does not mandate obtaining informed consent before providing telehealth services, many states have their own regulations within their Medicaid programs or broader healthcare rules that require informed consent. This often stems from concerns about protecting health information and ensuring patients fully comprehend the nature of the telehealth services, including potential benefits and risks. Informed consent in telehealth typically involves a patient signing a written form or providing oral acknowledgment, which is then documented in their medical records.

State laws vary considerably when it comes to informed consent for telehealth. Some states require healthcare providers to obtain informed consent at every telehealth encounter, whereas others only require it for the first visit in a treatment series for a particular condition. Generally, the requirement for prior informed consent is more common for invasive or experimental procedures, rather than for standard telehealth services. Mandating informed consent for each telehealth interaction could falsely present telehealth as a fundamentally different or riskier type of healthcare service, rather than as a valuable tool that enhances the overall quality and accessibility of care.

Eligible providers and geographic location

Medicare specifies a select group of healthcare professionals eligible to provide telehealth services. These professionals include physicians, nurse practitioners, physician assistants, nurse midwives, clinical nurse specialists, certified registered nurse anesthetists, clinical psychologists, clinical social workers, registered dietitians, nutrition professionals, and as of CY 2024, marriage and family therapists and mental health counselors. Notably, clinical psychologists and clinical social workers cannot bill for psychotherapy services that entail medical evaluation and management.

The location where the patient receives services, known as the "originating site," is primarily rural areas defined by Medicare. Eligible originating sites include provider offices, hospitals, critical access hospitals, rural health clinics, federally qualified health centers, skilled nursing facilities, community mental health centers, hospital-based or critical access hospital-based renal dialysis centers, and rural emergency hospitals. These sites must be in a Health Professional Shortage Area (HPSA) or outside of a Metropolitan Statistical Area (MSA). However, this rural limitation has faced criticism for excluding many underserved areas that could benefit from telehealth services.

Medicare has designated exceptions for specific scenarios such as end-stage renal disease (ESRD) services, mental health treatments, acute stroke care, and the treatment of substance use disorders alongside mental health conditions.

Additionally, Medicare reimburses for certain non-telehealth specific services termed as Communication Technology-Based Services (CTBS) which began in January 2019. These services include brief virtual check-ins, remote evaluations of pre-recorded patient information, and interprofessional internet consultations, which are not confined by the typical telehealth restrictions. These services are designed to facilitate quick interactions between healthcare providers and patients and are only available to providers who can independently bill Medicare for Evaluation and Management (E/M) services.

Restrictions apply to these CTBS services, for example, if they originate from a related E/M service provided within the previous week, or if they lead to an in-person E/M service soon after, they are not billable separately. Additionally, verbal consent must be obtained from patients to ensure they are aware of any potential costs associated with these services.

While audio-only delivery is currently accommodated under temporary COVID-19 measures until the end of 2024, future allowances for this modality will be restricted to mental health services, requiring an in-person visit within six months prior to the initial telehealth session and another within the following year, although exceptions may apply under certain circumstances.

Medicare advantage, APMS, and ACOS

Medicare has crafted specific exceptions to its standard geographic and originating site rules through innovative programs like the Next Generation ACO, Shared Savings Program, Episode Payment Models, and Comprehensive Care for Joint Replacement Models. Starting in 2020, these two-sided ACOs, including those participating in the Shared Savings Program, can now receive reimbursements for telehealth services provided directly to patients' homes, bypassing the usual geographic restrictions imposed by Medicare.

Under the Bipartisan Budget Act of 2018, Medicare Advantage (MA) plans gained the flexibility to offer additional telehealth benefits. These plans aren't bound by the usual Medicare restrictions on geographic location, service sites, and types of services offered, although they must still adhere to the list of eligible telehealth providers and state-specific telehealth regulations, such as requirements for informed consent before a telehealth session.

Medicaid for Telehealth Services

Medicaid, established in 1965, serves as a cornerstone of medical assistance for low-income families in America, making it the largest health-related funding source for economically disadvantaged populations.

Administered jointly by federal and state governments, Medicaid offers states the flexibility to tailor their telehealth policies within federal guidelines emphasizing efficiency, economy, and quality of care. Unlike other federal programs, states do not need to amend their state plans to offer telehealth services if they are reimbursed equivalently to in-person services.

• As of fall 2023, all fifty states along with Washington D.C. have provisions for reimbursing at least some telehealth services via live video, though the specific policies of Puerto Rico and the Virgin Islands remain less defined. On the forefront of expanding telehealth coverage, states like Florida, Montana, North Dakota, South Carolina, and Utah have recently increased their support for store-and-forward telemedicine services, albeit with certain restrictions and specific code requirements.
• Additionally, thirty-seven states now support reimbursement for remote patient monitoring (RPM), with recent additions including Florida, Idaho, and Iowa. Meanwhile, the trend towards supporting audio-only telehealth consultations continues to grow, with states such as Alabama, Idaho, Kansas, and several others recently expanding their telehealth offerings to include this modality, addressing accessibility for patients without advanced technology.
• Notably, twenty-five states, including Alaska, Arizona, California, and others, now reimburse for all four major telehealth modalities: live video, store-and-forward, RPM, and audio-only services. These states have developed comprehensive telehealth policies that aim to cover a broader spectrum of medical services and modalities to enhance access to care.
• Furthermore, forty-three states and the District of Columbia have enacted private payer laws concerning telehealth reimbursement, with twenty-four states enforcing payment parity to ensure telehealth services are compensated at the same rate as in-person consultations. Although no new states have introduced private payer laws since the spring of 2023, several have revised existing legislation to better integrate telehealth services into their healthcare frameworks, demonstrating an ongoing commitment to refining and enhancing telehealth accessibility and reimbursement.

Telehealth and Private Payers

Telehealth services are increasingly being covered by private insurance plans, yet there's no federal mandate requiring these payers to offer telehealth coverage. As a result, the landscape varies significantly across states, with forty-three states and the District of Columbia enacting laws that influence how private insurers handle telehealth reimbursement. These laws differ widely; some ensure telehealth services are reimbursed, while others require that reimbursement rates match those of in-person services, contingent on specific conditions.

The regulatory environment for telehealth is complicated further by varying state-level restrictions, especially those concerning the cross-state licensing of health professionals. These restrictions are among the most significant barriers to expanding telehealth services, as they limit where healthcare providers can practice remotely. To address these and other challenges, state health professional boards are proactively setting telehealth standards tailored to the needs and regulatory climates of their respective states.

Legislatively, both federal and state governments are actively working to enhance telehealth access and integration. In 2023 alone, state legislatures passed 170 bills related to telehealth, focusing predominantly on issues like Medicaid reimbursement, private payer policies, and the establishment of standards by telehealth professional boards. These bills often tackle critical issues such as prescribing rights, patient consent requirements, and cross-state licensing—barriers that, if unaddressed, could hinder the effective deployment of telehealth services. Additionally, some states are exploring telehealth through pilot programs designed to evaluate the technology's effectiveness and cost-efficiency, aiming to better integrate telehealth into public healthcare initiatives. These efforts underscore a growing commitment to refining telehealth practices and policies to better serve the public and healthcare providers alike.

Telehealth Provider Licensing

Telehealth licensing is transforming how healthcare reaches across distances, thanks to robust broadband connections enabling technology-driven consultations. However, while such advancements broaden access to care, licensing restrictions typically confine healthcare providers to practice within the states where they are licensed.

During a telehealth session, the patient's location is considered the "place of service." Consequently, providers at distant sites must comply with the licensing rules of the state where the patient resides, regardless of the provider's location. Across the U.S., the rules for telehealth and physician licensing differ significantly. Some states allow healthcare to cross state lines under specific conditions, while others impose strict bans.

Federal initiatives have aimed to simplify these challenges. Historical legislative efforts have sought to redefine the "place of service" from the patient's location to the provider's, which would allow providers to be licensed only in their own state. Despite these efforts, no legislation has successfully passed to change this practice broadly.

Post-COVID-19, some states have started to develop licensing alternatives that permit out-of-state telehealth providers to practice without full licensure, although often still requiring application and fees. Another effort that allowed to streamline the licensing process, several professional fields have established interstate licensing compacts. These compacts allow for easier cross-state practice and include:

• Nurse Licensure Compact (NLC)
• Interstate Medical Licensure Compact
• The Physical Therapy Compact
• The Psychology Interjurisdictional Compact (PSYPACT)
• The Recognition of EMS Personnel Licensure Interstate CompAct (REPLICA)
• Audiology and Speech-Language Pathology Interstate Compact (ASLP-IC)
• Occupational Therapy Licensure Compact
• Counseling Compact
• APRN Compact
• Social Work Compact
• Physician Assistant Compact

There are additional Compacts also in development including for Licensed Marriage and Family Therapists.

Telehealth specific licenses are also making it easier for healthcare providers to offer remote services across state lines without needing a full medical license in each state where they have patients. These licenses are designed specifically for telehealth and usually come with different requirements and limitations compared to a full medical license. Typically, they're limited to remote services, meaning providers can't open a physical practice in the state. Providers must also follow the telehealth regulations of both the state where they are located and the state where the patient is.

The good news is that telehealth licenses often have a more streamlined application process with fewer requirements. This can lead to faster approval times, allowing providers to start offering remote services more quickly.

Telehealth Provider Credentialing

Just like licensing, telehealth credentialing poses unique challenges as well, since providers offering virtual care are not physically present at the hospitals where they deliver services. Both credentialing and privileging—a review of qualifications and competencies—are crucial yet resource-intensive processes, typically required before a provider can serve in any hospital.

Credentialing verifies a provider’s qualifications to ensure they can offer safe, competent care to patients. Once credentialed, the privileging process assesses the provider's specific competencies related to the care they will provide. Even for telehealth providers, hospitals must ensure these steps are rigorously followed to maintain high standards of care.

Historically, the challenge for institutions, especially those in remote or underserved areas, has been accessing specialist care without requiring patients to travel long distances. Telehealth bridges this gap by enabling care delivery from distant locations. To streamline the cumbersome processes of credentialing and privileging, some hospitals previously adopted a "privileging by proxy" model sanctioned by The Joint Commission (TJC). This model allowed recipient hospitals to accept the credentialing decisions of the distant hospital where the telehealth provider was located, significantly reducing redundancy and administrative load.

However, this model conflicted with the Medicare Conditions of Participation (CoPs), which require a hospital to be independently verified to meet specific standards to receive Medicare or Medicaid reimbursements. As a result, the Centers for Medicare & Medicaid Services (CMS) declared this proxy approach non-compliant.

To address these conflicts while still upholding quality and safety, CMS revised its regulations in July 2011, allowing a similar, though modified, credentialing-by-proxy process. This revised framework, also adopted by TJC in December 2011, maintains stringent checks but allows some collaborative flexibility between hospitals:

1. A formal agreement must be established between the two parties involved.
2. The distant-site hospital must participate in Medicare or be a recognized telemedicine entity.
3. The telehealth provider must have verified privileges at the distant-site hospital.
4. The originating-site hospital must receive a current list of the telehealth provider’s privileges.
5. The telehealth provider must be licensed or recognized in the state where the originating-site hospital is located.
6. The originating-site hospital must conduct and share internal reviews of the telehealth provider’s performance with the distant-site hospital.
7. The originating-site hospital is required to inform the distant-site hospital about any adverse events or complaints related to the telehealth services provided.

While some hospitals may choose to use the traditional, comprehensive credentialing process, others may opt for this streamlined method, depending on their specific needs and resource availability. This flexibility helps hospitals balance regulatory compliance with the practical needs of providing accessible healthcare through telehealth, especially in rural or underserved areas.

At Credsy.com, we understand the unique challenges that telehealth providers face in navigating the complex landscape of healthcare regulations. Our credentialing software is designed specifically to address these needs, offering a streamlined and efficient process for managing licenses, certifications, and practice privileges. This ensures that providers are credentialed quickly and accurately, which is crucial for expanding telehealth services across diverse regulatory environments.

Bottom Line

As telehealth continues to redefine the landscape of healthcare, it is imperative for healthcare providers and organizations to stay informed about the evolving regulations and reimbursement policies. The integration of telehealth not only offers a solution to accessibility challenges but also demands a strategic approach to navigate the complex regulatory environment effectively. By understanding and adapting to these changes, healthcare providers can leverage telehealth technologies to enhance patient care, optimize operational efficiencies, and expand their services to meet the needs of a broader patient base. Moving forward, the continued refinement of telehealth policies and the expansion of licensing compacts will play crucial roles in shaping a more connected and efficient healthcare system.