Reimbursement for telehealth services

Here’s how Medicare, Medicaid and private payers now handle payment

by Legal & Regulatory Affairs Staff

March 31, 2011—No universal definition exists for telehealth services, also known as telemedicine. Nor is there a universal reimbursement policy among public and private sector payers governing payment for these services.

When used broadly by regulators and others, the term telehealth services may refer to all interactions between health care professionals and their patients that do not happen in person. By contrast, payers often use much narrower definitions of telehealth services.  

During a March 2011 State Leadership Conference workshop, Deborah Baker, JD, director for prescriptive authority & regulatory affairs for the APA Practice Organization, summarized how Medicare, Medicaid and private payers handle reimbursement for these services. Here’s a quick rundown for members.


Psychologists are included on the list of qualifying practitioners who may bill Medicare for “telemedicine” services under specified conditions. As identified by the Centers for Medicare and Medicaid Services (CMS), the billing codes available for telemedicine reimbursement include psychotherapy as well as health and behavior services.

Under Medicare, telemedicine reimbursement is on par with reimbursement for the same service when provided face-to-face.

Yet a number of limitations apply, including:

  • Technology is limited to real-time, interactive audio-video telecommunications, not “store-and-forward” technology such as email.

  • Eligibility for reimbursement is limited to services provided to a Medicare beneficiary located at an eligible site in specified geographic areas – either a “rural health professional shortage area” or a county outside a Metropolitan Statistical Area.

  • CMS limits the sites where a Medicare beneficiary may be located when receiving telehealth services. Eligible sites include a provider’s office, hospitals, skilled nursing facilities, rural health clinics and federally qualified health clinics. Additional information is available online at the Medicare Learning Network and the CMS telehealth fact sheet

  • CMS requires that claims submitted for telehealth reimbursement use the GT modifier along with the appropriate billing code. 


CMS has not formally defined telemedicine for the Medicare program. Because the federal government does not mandate reimbursement for telehealth under Medicaid, states have the option to reimburse for Medicaid services furnished through telehealth.

It’s up to each state to specify what telemedicine/telehealth services, if any, are eligible for Medicaid reimbursement. For states that do offer telehealth reimbursement under Medicaid, relevant issues impacting reimbursement include: Does therapy fall under the state's Medicaid covered services (or is it an optional service)? Are psychologists included in the state's Medicaid list of qualifying providers? And are there specific requirements that providers must follow when submitting claims for services furnished using telehealth?

As many as 35 states allow for at least some reimbursement for telehealth services. Medicaid reimbursement for telehealth services by psychologists is available in as many as 13 states: Alaska, Arizona, California, Colorado, Hawaii, Kansas, Maine, Michigan, Nebraska, North Carolina, Oklahoma, Utah, and Virginia. Coverage and billing requirements vary by state.

Private Payers

To date, 12 states have enacted legislation requiring private sector insurance companies to pay for telehealth services. The states are: California, Colorado, Georgia, Hawaii, Kentucky, Louisiana, Maine, New Hampshire, Oklahoma, Oregon, Texas, and Virginia. While all of these states mandate coverage, not all require reimbursement rates on par with rates for face-to-face services.

A 2007 Michigan State University survey indicated that 130 private payers were reimbursing for telehealth services. Based on survey results, Blue Cross/Blue Shield has been identified as a leading payer for these services.

Important caution

Check with any applicable payers to find out their reimbursement policies before providing and billing for telehealth services.

For additional information about telehealth based on the 2011 State Leadership Conference workshop in the Spring 2011 issue of Good Practice magazine for members from the APA Practice Organization.