Medicare reimbursement for telehealth services is notoriously patchy. Much to the chagrin of telehealth vendors and healthcare providers, and despite many attempts to change the status quo through legislation, CMS still has a lot of restrictions on the geography of users and provider (rural versus urban, at home versus at a clinic, etc.) and on the technology used (video is reimburseable, for instance, while telephone calls generally are not).

However, a new report from the Office of the Inspector General (OIG) shows that these restrictions are sometimes ignored, both by physicians submitting claims and by CMS when it reviews them. In a random sample of 100 claims audited by OIG, 31 ought not to have been accepted, according to the report. Extrapolating from that sample, OIG estimates CMS may have paid out $3.7 million in such claims in 2014 and 2015.

OIG focused its investigation on 191,118 claims in which the site where the provider was located filed a reimbursement claim, but the site where the patient was located (called the originating site) did not. That decision was based on a 2009 study from the Medicare Payment Advisory Commission, which showed such claims were more likely to have unallowable payments. OIG then took a stratified random sample of 100 of those claims and audited it.

The majority of the erroneous claims, 24 out of 31, should have been denied because the patient wasn't located in a rural area. Outside of a few demonstration programs, CMS rules restrict coverage for telemedicine care to patients in rural areas. 

The second most common unallowable claim were those from ineligible institutions. Generally CMS requires practitioners to file claims, allowing institutions to do so only in specific cases related to critical access hospitals and medical nutritional therapies. Seven claims in the audit fell under this category.

In addition, a handful of claims were unallowable for other reasons, either in addition to our instead of those two. Three claims had patients at ineligible originating sites. Except in a few limited cases, Medicare won't reimburse for telemedicine when the patient is at home, but two of the patients in the examined claim were (the other was at an independent dialysis facility, which isn't allowable under 2015 Medicare rules).

One claim used the telephone rather than video technology. Another used asynchronous "store and forward" telemedicine outside of the limited context in which CMS allows it. One claim reimbursed for a service that CMS doesn't allow to be performed via telemedicine. Finally, one claim was filled for a physician in Pakistan, even though Medicare rules don't allow reimbursement when the physician is outside the United States.

According to the OIG report, the main reason these clerical errors occured is that CMS systems are not equipped to handle telemedicine at all. 

"The majority of our findings related to claims for unallowable geographic locations of the originating sites, for which no oversight exists," the OIG wrote. "The [Medicare Administrative Contractors (MACs)] could not implement edits for these types of errors because the claim form did not have a designated field for the originating-site location. CMS officials stated that adding such a field would be impractical because practitioners use the same claim form for non-telehealth claims, which do not need the field. Claim payment edits would also not detect other errors, such as if a practitioner used an unallowable means of communication. Without applicable MAC edits, other means of monitoring telehealth services, such as postpayment reviews, would be necessary to detect claims that do not meet Medicare telehealth requirements."

In addition to fixing these systems, OIG recommended that CMS offer trainings to better educate doctors on what can and can't be reimbursed.