Facility Fee for Telehealth Visit? "You must," said CMS

A recent Kaiser Health News article critiquing the charging of facility fees by hospital for telehealth visits has received a lot of attention, here on LinkedIn and elsewhere. But the article did not address the whole story and created a lot of undeserved anger directed at hospitals and health systems. So allow me to fill in the details.

Prior to the COVID-19 pandemic and public health emergency (PHE), limited telehealth visits were permitted under Medicare. For these visits, the patient had to go to a rural medical facility where they would use a facility computer to connect to a physician at a distant site. In those cases, the facility where the patient was located was permitted to bill an originating site fee, HCPCS Q3014, and the physician could charge for their professional fee and apply the -GT modifier and place of service 02.

When patients were seen in person, representing the vast majority of visits, the physician billed their visit with the corresponding E&M code, and used the appropriate place of service (POS) code, with independent physicians billing POS 11 and employed physicians billing POS 19 or 22. Payment to the physician varied depending on the POS. If the physician billed POS 11, their fee included payment for their professional services and payment for the office overhead. On the other hand, the employed physician’s fee was limited to their professional service as the facility billed for the overhead using HCPCS G0463 – hospital outpatient clinic visit facility fee.

When the PHE was declared, the CMS staff worked day and night to adapt the rules to the unprecedented circumstances, waiving many regulations and modifying billing guidelines. (Their work should not be underestimated; no one can simply ignore laws so they had to make modifications that were legal and practical and their efforts were nothing short of amazing.) Included in those changes was allowing telehealth visits to be performed in non-rural sites with the patient at home. CMS knew that patients needed ongoing medical care for chronic and acute health conditions and the risk of an in-person visit often exceeded the benefit.

As this flexibility was introduced, there was initial confusion over billing for those services. If the physician is not sitting face-to-face with the patient, was it a telehealth visit? Was it an office visit? Was it a telephone call? Was any Medicare regulation ever written that accounted for the ubiquitous use of FaceTime or Zoom? It was finally determined that during the public health emergency, CMS would allow a patient’s home to be “declared” a temporary office location and the audio-visual visit to be therefore billed as if the patient was sitting in the exam room with the physician.  

And along with this flexibility, CMS directed physicians to bill the visit as if the patient was seen in person, using the same E&M codes and place of service. That meant the independent physician would use POS 11 and the employed physician POS 19 or 22. But as you recall above, the employed physician gets a lower professional fee than the independent physician because a facility fee is generally charged, so it would not be equitable payment for the same physician care to be paid at a different rate. (I am going to put aside the controversy over the facility fee itself since CMS is already addressing this with ongoing regulatory changes.)

CMS therefore determined that for a virtual visit between a patient and an employed physician, the facility fee G0463 could still be charged. But to charge that fee, the facility must continue to provide a service, in this case registering the patient for the visit, confirming insurance, following the Medicare Secondary Payer rules, and arranging any testing or follow up care. CMS had a choice here. They could have instructed facilities to charge the lesser valued Q3014, the originating facility charge, or require employed physicians to use place of service 02 and/or modifier 95 and make payment adjustments on the back end or even use POS 11 as do independent physicians.

But CMS did not. CMS told hospitals and health systems to bill the facility fee as if the patient was seen in person. Hospitals were doing exactly what they were told to do. They had to do it. There are very strict anti-kickback laws in place and facilities could not simply waive this charge without risking accusations of offering beneficiary inducements. As always hospitals could waive the patient liability on a case-by-case basis if need was determined, but the blanket cost-sharing waivers put in place by CMS only applied to COVID-19 testing and treatment and would not apply to a visit performed to follow up on a patient’s diabetes or any other non-COVID issue.  Other payers had the prerogative to make their own payment rules and waive whatever patient costs they felt appropriate but in the midst of a pandemic, most hospitals did not have the time nor the personnel to figure out which payers would allow costs to be waived and which did not, so they billed the facility fee as required by CMS.

Throughout the pandemic, many restaurants have adapted by increasing their takeout business but yet not one restaurant in my area cut their prices because I was no longer dining in. What about the money they saved on not having to pay as many servers or dishwashers and did not have to pay for linen service or staff to bus tables? Is it fair to pay the same price? And when I do self-check out at the grocery store, I do not get a discount for not using a cashier. Medical care is similar and many of the fixed costs do not change simply because the mode of delivery of the service has changed temporarily.   

The COVID-19 pandemic and PHE has upended so many of the usual things we do. But what remained intact was the need to follow the regulations and maintain compliance. It may have been a catchy headline and story but the true story was that hospitals and health systems did exactly as they were told.