The Path Forward for Telehealth in Medicare

The COVID-19 pandemic brought about a rapid expansion of telehealth services to ensure that patients were able to obtain necessary medical care without exposure to illness. Prior to this point, Medicare was very hesitant to cover telemedicine given lack of evidence regarding quality and cost, as well as effects on outcomes. As the Public Health Emergency (PHE) ended in May 2023, Congress turned to the Medicare Payment Advisory Commission (MedPAC) for an evaluation of the current state of telehealth services, and for recommendations on how to provide payment for telehealth services in the future.

MedPAC is an independent, non-partisan commission of experts in healthcare and health economics that advises Congress on issues relating to the Medicare program. They release two reports in March and June of each year that outline recommendations to the US legislature on issues requested by Congress. In the June 2023 report, MedPAC released a “Mandated Report: Telehealth in Medicare” in response to a directive within the Consolidated Appropriations Act of 2022.

The Patient and Physician Experience

MedPAC conducted focus groups with Medicare beneficiaries who receive, and clinicians who provide telehealth care. Overall, both groups were satisfied with the care experience. By 2022, most physicians reported that they had varying degrees of continued care delivery via telehealth, although at a much lower rate than the quick expansion during the initial phase of the pandemic. Although some clinicians appreciated the ease, accessibility, and flexibility of telemedicine, others endorsed a preference for in-person evaluations, citing need for a physical exam, etc. MedPAC’s report conveyed a sense of appreciation of the fact that there are definitely advantages of virtual care in select cases. The historical concerns regarding quality of telehealth services have been somewhat alleviated by studies cited within the report that demonstrate reduced hospitalizations due to ambulatory-care sensitive diagnoses in high telehealth-intensity areas. Those reductions were seen both pre-pandemic and during the PHE. However, the data examining ED visits was less conclusive. Longitudinal data since that end of the PHE may help provide a more accurate understanding of quality and outcomes as they relate to virtual care usage.

Trends in Telehealth Medicare Spending

Obviously, pre-pandemic telehealth spending was much lower than after the PHE went into effect ($130 million in 2019). The peak was in Q2 2020, when it rose to $1.9 billion, but dropped to $827 million in Q4 2021. E&M services accounted for nearly all of Physician Fee Schedule (PFS) telehealth spending. The majority of spending was centered around care for mental, behavioral, and neurodevelopmental disorders.

Alternative Telehealth Payment Models

Prior to declaration of the PHE, Medicare coverage of telehealth was very limited – only certain modalities, providers, and rural locations were covered, and the patient was required to be located at an “originating site” with the physician located at a “distant site.” However, these provisions were suspended during the PHE to allow for virtual care despite mandated lockdowns. At present, as well as during the pandemic, there is payment parity between in person and virtual visits. Further, audio-only visits are also covered. Within the report, MedPAC suggests including telehealth services within a larger payment bundle under the Physician Fee Schedule to disincentivize a provider over-billing for services. However, this would require creation of a bundled payment model, therefore in the interim, MedPAC suggests that the Centers for Medicare and Medicaid Services (CMS) pay a lower rate for all telehealth services. They suggest that this lower rate is justified due to the fact that virtual services are provided with lower practice costs than care obtained in a physical office. However, MedPAC does acknowledge that CMS should collect data on costs incurred to provide telehealth services and adjust future payments accordingly. Regarding audio-only visits, MedPAC does not make specific recommendations for or against payment parity, but encourages study of audio-only services (in 2023, providers must identify audio-only visits for Medicare patients).


Overall, both Congress and MedPAC support continued use of telehealth services in appropriate situations. The MedPAC report strengthens the case for coverage, but acknowledges that parity between virtual and in-person visits may not be cost-effective for CMS. Forthcoming legislation will likely address the future of telehealth services, but all signs suggest that telemedicine is here to stay.

Written by: Ruchika Talwar, MD, Urologic Oncology Fellow, Department of Urology, Vanderbilt University Medical Center, Nashville, TN

Published July 2023