Medicaid Reimbursement Overview

Who does Medicaid serve?

  • Medicaid is a joint Federal/State funded program that provides comprehensive health and long term care for low income individuals and families, the elderly and disabled.

How is Medicaid administered?

  • Under federal guidelines, a state may:
  1. establish its own eligibility standards;
  2. determine the type, amount duration, and scope of services;
  3. set the rate of payment for services; and
  4. administer its own program
  5. Adherence to mandatory federal requirements is necessary if federal matching funds are to be received

What states reimburse for telemedicine services under their Medicaid program?

  • States (39) that reimburse for telemedicine services include:

Alaska / Louisana / North Dakota
Arizona / Maine / Ohio
Arkansas / Maryland / Oregon
California / Michigan / Pennsylvania
Colorado / Minnesota / South Carolina
Florida / Mississippi / South Dakota
Georgia / Missouri / Texas
Hawaii / Montana / Utah
Idaho / Nebraska / Vermont
Illinois / New Hampshire / Virginia
Indiana / New Mexico / Washington
Kansas / New York / Wisconsin
Kentucky / North Carolina / Wyoming

What are the standards for Medicaid reimbursement?

  • Standards for reimbursement are set by the individual states and vary widely
  • The last comprehensive review of Medicaid reimbursement by state was conducted in October 2003 by the Center for Telemedicine Law for the Office for the Advancement of Telehealth (OAT). At that time 27 states had laws governing Medicaid reimbursement. Information about those laws and information gained in a survey of state Medicaid agencies were included in this report. Full text of the report can be found on the OAT website located at
  • Since that time seven states have been added to the list of states providing Medicaid reimbursement for telehealth. Some of the states surveyed for the 2003 report have changed and /or updated their Medicaid policies.
  • There is a great deal of variation among the states with regard to Medicaid coverage. In a 2007 study Whitten and Buis found that:
  • Medical consultations or treatments were covered in 22 states;
  • Psychological consultations or treatments were covered in 12 states;
  • Home health was covered in 2 states;
  • Case management was covered in 2 states; and;
  • Patient education (diabetes) was covered in 1 state

How do states determine what telemedicine services are covered by Medicaid?

  • There is a lot of flexibility in how a state can determine which services Medicaid will reimburse, and therefore a lot of variation in state models:
  • Most often we think of legislation as the way to change Medicaid reimbursement, and many states have adopted that strategy. Bills are created and passed that mandate reimbursement for telemedicine services. Rules are promulgated and put into place by the responsible agency.
  • Each state regulates its own Medicaid telemedicine reimbursement policies. Regulatory initiatives can come from different venues:
  • The state Medicaid office can create a payer directive. The office the rules governing telemedicine reimbursement. Medicaid fee-for-service contractors must then implement on the effective date stated in the rule. Managed care contractors need to negotiate their next contract with the Medicaid office and include the new rule. The new rule would not take effect until the new contract period begins.
  • In some states the Medicaid office may not have the authority to make rules regarding reimbursement independent of the state Legislature.
  • The authority for regulating reimbursement policies and payment may lie within the Office of the Insurance Commissioner. In this case the Office could directly create the rules regarding reimbursement.
  • A Governor can create an Executive Order mandating that Medicaid reimburse for telemedicine. The office responsible for Medicaid regulation would then need to promulgate and implement rules to carry out the order. Using this venue was as strategy used early on by providers in a state seeking Medicaid reimbursement. Given the current economic environment, an executive order is not likely. In several states the Governor has created a task force to consider reimbursement and provide him with recommendations. Often, if the task force includes participants from the state Medicaid office and/or the legislature, the recommendations will be enacted without the need for Executive Order.
  • The Department of Health and Human Service (or similarly named department) can create an initiative requiring that legislated covered services be reimbursed when provided telemedically. Services likely to fall into this category are mental health and substance abuse and services for children. In addition to creating legislative mandates, the Department can offer grants to begin pilot programs for reimbursement.
  • One of the most desirable methods of developing regulations for state Medicaid reimbursement is by using a collaborative model. Third party payers, service providers, and Medicaid staff work together to create the regulations that will work best for all involved.
  • Finally state Medcaid regulations can be expanded by waivers provided by CMS or by working with program like SCHIP. Both provide the state with the opportunity to develop innovative healthcare delivery and reimbursement systems

An excellent source of information on Medicaid reimbursement for telemedicine is a report issued by the American Telemedicine Association in June 2006,Medical Assistance and Telehealth: An Evolving Partnership. Contributing authors are Antoniotti, N.; Linkous, J.; Speedie, S.; and McClosky Armstrong, T.