Photo by Anna Shvets from Pexels:

Fuelled by the drastic changes brought by the Covid-19 pandemic, Telehealth is undeniably reshaping the healthcare landscape in America. 

But, while virtual medicine is making medical care more accessible and affordable for millions of patients, its adoption comes with some teething problems that providers shouldn’t underestimate – including the development of payments and reimbursement methods.

Here is what you need to know to promote a smoother adoption of telehealth.

For Patients: Changes In Insurance Coverage

There is no lack of evidence of how telehealth is improving the healthcare industry – and how fast it is being adopted across the nation. Compared to 2019 figures, in 2020, 1.6 million telemedicine visits were conducted between January and March, a 50% year-on-year increase.

This growing adoption of virtual medicine tools has encouraged insurance companies to adapt and provide financial coverage to patients leveraging virtual healthcare. 

Private Health Insurance

Private health and term life insurance providers are now required in over 43 states to reimburse the cost of telemedicine services. And, even in states and municipalities where the law does not make this a requirement, most insurance providers will cover at least some aspects of telehealth. 

It is important to note that what is covered will vary from state to state and from provider to provider. That is why it is important for healthcare providers to review the changes in the coverage provided by the insurers they accept. And, for consumers, it is important to verify their coverage details before booking a virtual appointment. 

Medicaid and Medicare Coverage for Telehealth Services

Committed to making healthcare more accessible for low-income households and people with disabilities, Medicaid and Medicare now cover a range of telehealth services. These include outpatient care, prescriptions, preventive services, and visits with a healthcare professional. 

Coverage limits and covered services vary depending on the specific enrollment plan of each patient. In particular, these plans aim to support the administration of accessible healthcare services in rural areas.

For Providers: Traditional & Value-Based Reimbursement Models

Not unlike other types of innovations in the early adoption phase, telehealth services come with challenges and pitfalls. Among these, payment and reimbursements systems represent a significant hurdle, especially due to the introduction of new payment codes and difficulties in establishing the correct pay for each service. 

However, most established payment models can be adapted to telemedicine, including the following ones.

Fee for Service (FFS)

FFS reimbursements are one of the most common payment models used in healthcare. When using it for telehealth, providers will charge patients according to each treatment code’s price, which is decided by the CMS (for Medicaid and Medicare coverage) or by private insurers. 


Capitation is not different from a “salary”, or a fixed payment received to cover all services provided based on the cost of each patient’s care in a specific unit of time. 

According to industry professionals, this model is making a comeback in the age of telehealth because of its simplicity and accessibility, which makes it an efficient payment method for most low acuity services, such as telemedicine routine checks and follow-ups.

Episode-Based Payments

Also called bundled payments, this reimbursement model is based on the total cost of a medical event or episode of care. 

Traditionally, this model is used for episodes such as hips replacement and maternity care, which will involve various procedures and individual care needs. While this form of payment is not as widespread in telehealth, it remains a valid alternative to explore as more healthcare treatments can be offered virtually.

Value-Based Reimbursement

Value-based reimbursement (VBR) represents an attempt to encourage providers to focus on value and deliver better healthcare at a lower cost. When using this model, providers are financially rewarded for performing better than expected, delivering affordable care, and exceeding patients’ expectations.

Ultimately, VBR rewards providers for their services’ outcomes, which promotes preventive care, better patient management, and innovation adoption. This model is primarily used in telehealth, which is promoting an industry-wide transformation towards value-based care.

Telehealth Payment Models: Challenges and Benefits

Telemedicine coverage and payments remain one of the biggest hurdles to overcome for most practices looking to offer telehealth services. The two main reasons for it are a lack of payment parity and common mistakes that are likely to happen during the reimbursement process.

These mistakes include:

  • Incorrect billing codes
  • Lack of necessary patient documentation – including patient consent
  • Time and reasons for the telehealth visit
  • Incorrect code categories for audio-only and audio and video visits

Due to the unparalleled benefits that the widespread adoption of telehealth might offer, more insurance companies and federal programs are now offering coverage. States are also changing their legislature to promote the introduction of telemedicine tools, and healthcare providers are shifting towards a value-based model of care.

While full-scale adoption is still underway, telehealth services are becoming more accessible and easy to manage for providers.