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Getting Medicare Reimbursement for Telehealth Lab Services: The New CONNECT for Health Act

by | May 19, 2021 | Blog, Blog-Recent

Like most cliches, the one about the COVID-19 pandemic’s transformation of medicine forever is laden with truth. Telemedicine is Exhibit A. Of course, telemedicine goes back decades. But the pandemic accelerated the breakdown of resistance on the parts of providers, regulators and above all, patients. It was supposed to be just temporary. But to use […]

Like most cliches, the one about the COVID-19 pandemic’s transformation of medicine forever is laden with truth. Telemedicine is Exhibit A. Of course, telemedicine goes back decades. But the pandemic accelerated the breakdown of resistance on the parts of providers, regulators and above all, patients. It was supposed to be just temporary. But to use still one more cliché, now that the toothpaste is out of the tube, it becomes a matter of figuring out how to regulate it effectively. Ironically, but hardly unexpectedly, one of Congress’ first attempts to impose systematic regulation involves recycling a piece of legislation that failed to gain support in pre-pandemic times but may make it into law this time. Here’s a quick overview of the so-called CONNECT for Health Act and what lab managers should know about it.


CONNECT Four May Be the Charm

Formally known as the Creating Opportunities Now for Necessary and Effective Care Technologies for Health Act of 2021, CONNECT is a massive amoeba of a bill introduced into Congress to address telehealth, connectivity and Medicare through the end of the pandemic and beyond. The 2021 version represents the fourth iteration of CONNECT introduced in Congress, the latest being in 2016. But this time things are different, the bill’s backers insist, not the least of which is its bipartisan by 50 U.S. Senators led by Senator Brian Schatz (D-HI). The newly introduced CONNECT bill enjoys the support of more than 150 influential organizations, including Healthcare Information and Management Systems Society (HIMSS), American Telemedicine Association, eHealth Initiative, American Medical Association, American Nurses Association and the AARP.


But what’s really different this time around is that Americans have actually tried telehealth—and they like it. A March 2021 survey by Sykes found that of 2,000 Americans polled, almost 88 percent said they had tried and want to continue using telehealth for nonurgent consultations after COVID-19 has passed, while almost 80 percent say that it is possible to receive quality care virtually. These findings represent a dramatic contrast from a March 2020 Sykes survey in which roughly 65 percent of Americans said they felt hesitant or doubtful about the quality of telemedicine, and 56 percent didn’t believe it possible to receive the same level of care as compared to in-person appointments.

Over 85 percent of 2021 surveyed respondents also agreed that telehealth has made it easier to get needed health care and over 64 percent said that going forward, they would like to have at least part of their annual exams done via telehealth. Another 74 percent said they would be willing to share data collected on a fitness tracker or smart medical devise with their physicians. Among the perceived benefits of telehealth is the convenience and ease of not having to commute to a doctor’s office, and not having to wait in a doctor’s waiting room around other sick patients. (For more details, see DTET, May 2021)

The 4 Key Coverage & Reimbursement Elements of the CONNECT Bill

CONNECT 2021 is a giant amoeba that incorporates 23 other different bills that have also been introduced into Congress. Here are the four parts of the bill that will likely have the most direct and immediate impact on freestanding, hospital and physician office labs.

  1. Elimination of Statutory Barriers to Telehealth

First and foremost, CONNECT would make the temporary of expansion telehealth during the pandemic permanent after the public health emergency ends. Specifically, it would:

  • Give HHS authority to waive current statutory restrictions banning Medicare reimbursement for telehealth services as long as it determines that there’d be no “adverse impact to quality of care,” beginning Jan. 1, 2022;
  • Eliminate the requirement that the originating site of the telehealth service be: (i) located in a rural health professional shortage area; (ii) located in a county not included in a Metropolitan Statistical Area (MSA); or (iii) an entity that participates in a federal telemedicine demonstration; and
  • Expand originating sites to include the home, presumably including home collection of samples for lab testing.

While providing much more leeway than under current rules, many of the new forms of telehealth expansion must still run through HHS.

  1. Elimination of Provider-Specific Telehealth Restrictions

CONNECT would also remove restrictions for specific types of providers or services potentially affecting many affiliated testing labs, including via:

  • Permanently allowing Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) to furnish and get reimbursed for telehealth services as distant site providers;
  • Removing originating site restrictions for Indian Health Services and Native Hawaiian Health Care Systems;
  • Removing restrictions for emergency medical care services; and
  • Allowing telehealth for recertification of a beneficiary for the hospice benefit.
  1. Expansion of Medicare Reimbursable Telehealth Services

Old Rules: Before the pandemic, labs, hospitals and other stakeholders that wanted CMS to add a service to the Medicare Telehealth Services List had to submit a request under one of two categories:

  • Category 1 for services that were similar to the professional consultations, office visits and office psychiatrist services already on the List; or
  • Category 2 for services not similar to those already on the List.

CMS reviewed Category 2 requests once a year to determine whether: (i) the corresponding code accurately describes the service when delivered via telehealth, and (ii) use of telecommunications provides demonstrated clinical benefit to the patient. This rigid, two-tiered system made the expansion of new services to the List slow and cumbersome.

New Rules: CONNECT would permanently establish a new Category 3 pathway created as part of the 2021 Medicare Physician Fee Schedule (MPFS) allowing the temporary addition of telehealth services that have a “reasonable potential likelihood of clinical benefit and improved access to care.” Although the details aren’t fully clear yet, under CONNECT, Category 3 added services would presumably stay on the List even after the public health emergency ends. The other important details to be supplied is the standard for Category 3 approval.

Open Question: Medicare Reimbursement Rate for Telehealth Services

Some of the most important aspects of the newly proposed CONNECT legislation is what it doesn’t include. One significant omission deals with rates of Medicare reimbursement for telehealth services. Some have argued that Medicare providers should receive lower reimbursement rates for telehealth services because they require less overhead and costs to deliver than in-person services. Of course, while that might be true for most providers, labs might actually have to incur higher overhead to provide tests via telehealth given the logistic challenges of specimen collection that performing lab services ordered by a provider without in-person patient contact. Accordingly, labs may be better served with the school of thought that reimbursement should be based on time and complexity, regardless of whether the encounter occurs in person or via telehealth.

  1. Kickback Liability for Telehealth Equipment

Lab compliance officers also need to be aware of the new “program integrity” rules designed to prevent telehealth services fraud and abuse. One big issue is whether labs and other providers would be liable under the Anti-Kickback, Stark and False Claims Act for network interfacing, interoperability and other technology they provide patients so for purposes of delivering telehealth services. The good news is that CONNECT includes clarification that providing technology necessary for delivery of services wouldn’t be considered “remuneration” under fraud and abuse laws. However, the details will have to be ironed out. This offers labs much less comfort and room for maneuver than previous versions of the bill that included broader liability protections.

Meanwhile, CONNECT would provide the OIG $3 million to carry out telehealth audits and investigations. It also requires HHS to create training and educational resources for providers and patients on telehealth payment, privacy and security within six months after the law takes effect.

Open Question: Telehealth Privacy & Cybersecurity

CONNECT doesn’t get into the telehealth privacy and cybersecurity implications of telehealth. Separate legislation will be needed to address questions like whether to preserve HIPAA waivers that allow continued access to telehealth resources via less secure but potentially more accessible means like Skype and FaceTime. There will also be a need for discussions about how to safeguard sensitive personal health information when more health care encounters occur via telehealth, as well as whether reporting obligations or penalties should be revised for telehealth practice and, if so, how.


Although it represents massive progress, the CONNECT bill is also a bit of a downer in the sense that it doesn’t go as far as many had hoped in making telehealth services reimbursable and protecting labs and other providers from liability. Thus, for example, even though CONNECT establishes the home as an originating site for coverage purposes, it would still require that other originating sites be established via the administrative process. By contrast, rival legislation, including a bill called the Telehealth Modernization Act (TMA), would fully repeal both originating site and geographic restrictions.

On the positive side, it does go beyond the more conservative approach advocated by the Medicare Payment Advisory Commission and some members of Congress that the temporary telehealth coverage and payment changes be extended beyond the public health emergency but only for a limited duration and not on a permanent basis unless and until there’s more definitive proof of the value and quality of telehealth services

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