Telemedicine Fair Market Value

Telemedicine (also referred to as “telehealth” or “e-health”) is a rapidly-expanding industry that is transforming the delivery of healthcare services. Multiple studies evaluating the effectiveness of telemedicine have found that it is a promising treatment modality with the ability to:

1) Improve access to care
2) Enhance the quality of value-based care   & patient interaction
3) Offer substantial cost and time savings

Accordingly, many hospitals and health systems are entering into arrangements for on-call telemedicine services to supplement, or replace, their existing on-call arrangements. While the services offered under telemedicine on-call arrangements may be similar to those offered under traditional on-call arrangements in many regards, determining the fair market value (FMV) of compensation under telemedicine on-call arrangements requires a firm grasp of the unique legal and regulatory issues surrounding telemedicine services.


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Although telemedicine services arrangements have been steadily growing in utilization, there is still a significant disparity in how the healthcare provider is reimbursed. With respect to commercial payors, many states have enacted telehealth parity laws, which require commercial payors to reimburse telehealth services at rates that are at least equivalent to in-person visits. However, the statutes vary considerably, with many states restricting coverage based on the type of provider and the technology used.

Similarly, almost all state Medicaid programs provide some degree of coverage for telehealth services, and, in many states, the coverage is quite broad. However, each state’s requirements differ, with many state Medicaid programs restricting coverage based on the patient setting, the technology used, and the type of provider. Under Medicare, coverage for telehealth services is very limited, and strict requirements exist regarding the provider type, technology used, patient setting, and conditions covered.

When determining the Fair Market Value (FMV) of compensation under telemedicine call coverage arrangements, valuators must be aware of the state and federal laws surrounding reimbursement for telehealth services in the area(s) in which the services will be provided. In cases where a provider is expected to bill and collect for telehealth services, failure to consider federal and state laws impacting the provider’s ability to bill and collect for such services can lead to significant over- or under-compensation.

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While traditional and telemedicine on-call arrangements are similar in certain regards, hospitals and their valuators must understand the nuances associated with telemedicine in order to appropriately value telemedicine services arrangements. Valuators must consider the state and federal laws surrounding reimbursement for telehealth services, particularly where the provider is expected to bill and collect for such services.

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