Medicare Payment Advisory Commission Report Recommends Continuation of RHC Telehealth Special Payment Rule

NARHC Disagrees with Recommendations

Sarah Hohman, Director of Government Affairs

Last month, the Medicare Payment Advisory Commission (MedPAC), an independent congressional agency comprised of 17 appointed members who advise Congress on Medicare payment policy, released their annual report, Medicare and the Health Care Delivery System. While MedPAC’s recommendations are non-binding, the Commission’s recommendations are often influential.

In this 500+ page report, MedPAC provided advice to Congress on topics including standardized benefits in Medicare Advantage plans, behavioral health services in the Medicare program, and of particular interest for RHCs, telehealth. The telehealth report and recommendations were specifically mandated by the

Consolidated Appropriations Act of 2022. Congress directed MedPAC to “study the expansions of telehealth services under the Medicare program” including “Medicare payment policy for telehealth services and alternative approaches to such payment policy, including for federally qualified health centers and rural health clinics.”

Ultimately, in considering how much Medicare should pay for telehealth services in RHCs, MedPAC recommended that if Congress decides to permanently cover distant-site telehealth services in RHCs and FQHCs (after the temporary flexibilities granted through December 31, 2024) that they continue to reimburse at the rate “based on PFS rates for comparable telehealth services,” which is effectively an endorsement of the current G2025/special payment rule.

While not entirely surprising that MedPAC recommended against paying parity between in-person and telehealth services, as they believe this is something that would cost the Medicare program additional money, NARHC is disappointed by the rationale used to justify the recommendation.

1. MedPAC first says, “paying FQHCs and RHCs their standard rates for all telehealth services would increase costs for the program and beneficiaries…..Depending on beneficiaries’ supplemental insurance coverage, these high payment rates (especially for RHCs) could discourage access because of high out-of-pocket spending.”
   
   NARHC Response: MedPAC reports that RHC Medicare spending for telehealth was just 3% and 2% of total Medicare spending for RHCs in 2020 and 2021, respectively. Even if granted payment parity, we believe it is highly unlikely that this would significantly increase overall Medicare program spending, despite the significant potential benefits for safety net providers and patients.
   
   
2. Next, MedPAC raises the concern that “practitioners who furnish telehealth services do not need to be physically located in an underserved area, so the higher rates for FQHC- and RHC-provided telehealth services would not be necessary to ensure access.”
   
   NARHC Response: MedPAC is correct in that there are currently no limitations as to where a provider offering telehealth services can be located, but if telehealth flexibilities are to continue long-term, Congress would likely institute some type of guardrails to protect the integrity of the benefit which we would support. Those guardrails could include requiring the provider to be in the clinic, some type of service area requirement, or an occasional in-person visit. Further, the MedPAC recommendation would disincentivize rural providers from investing in telehealth technologies and services due to low reimbursement, while incentivizing urban and suburban providers to offer telehealth services to rural patients with no physical proximity to them.
   
   
3. “Third, paying standard rates for telehealth visits could also be a disincentive to furnish in-person care since telehealth visits likely cost less than in-person visits due to reduced facility costs. Providers should make decisions about what mode of care is most beneficial to the patient based on clinical considerations, not on what is most financially advantageous.”
   
   

   NARHC Response: NARHC is not confident that there is strong evidence, particularly in rural areas, clearly demonstrating that telehealth costs less to provide than in-person services. While we also disagree with the assumption that RHC providers would choose a less clinically advantageous mode of care for their patients based on reimbursement, the fact remains that the strongest way to ensure that clinical considerations remain the primary consideration is to pay parity between in-person and telehealth visits. In its efforts to avoid an incentive to focus on telehealth, MedPAC’s recommendation here is creating a significant financial incentive to not invest in and recommend telehealth.

4. “Because telehealth services can be delivered to beneficiaries outside FQHCs’ or RHCs’ local service areas, paying these providers rates far above PFS rates could increase costs for the Medicare program and beneficiaries (without improving access) in areas that are not underserved and could undermine competition (as clinicians compete to bill under the highest-paid facility as opposed to competing for patients based on quality and service).”
   
   NARHC Response: MedPAC is raising the concern that if RHCs receive payment parity for telehealth and in-person visits, there would be a financial incentive for RHC providers to provide telehealth services to non-rural, medically underserved patients and yet still receive a higher reimbursement than fee-for-service rates. NARHC agrees that with no guardrails there is the potential for abuse of the benefit. However, simply offering lower reimbursement to safety net providers through a crude special payment rule is not an appropriate guardrail. This continues to limit safety net providers’ ability to invest in these important technologies. MedPAC should instead consider other guardrails, for example, the occasional in-person visit requirement established by Congress for mental health services provided via telehealth.

Since the release of the report, NARHC sent a letter to the Chairman of the Commission, explaining our rebuttals to the rationale used for the RHC recommendations. We will continue to make our telehealth policy position known to both MedPAC and Members of Congress who will make the ultimate determination.

On a more positive note, the same day that the MedPAC report was released, the CONNECT for Health Act of 2023 was reintroduced in both the House and Senate. This bipartisan legislation includes a provision to permanently allow RHCs and FQHCs to offer telehealth services and reimburse them at parity with in-person visits!

While this legislation is unlikely to pass on its own, it signifies that telehealth remains a priority among Members of Congress as we approach the December 31, 2024 “telehealth cliff” when many current flexibilities expire.

For more information on current RHC telehealth flexibilities please visit NARHC.org.