skip to main content
Close Icon We use cookies to improve your website experience.  To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy.  By continuing to use the website, you consent to our use of cookies.
Global Search Configuration

Ovum view


Why are telehealth services not being used extensively in the US? Not because of a lack of technology-readiness or demand, but because of a lack of complete reimbursement coverage. Inadequate reimbursement for telehealth stems from the fear of escalated costs at a time when the Centers for Medicare and Medicaid Services (CMS) is focusing on rationalizing healthcare expenditure. However, telehealth proponents seem to have gathered enough evidence to convince the CMS to expand its coverage for telehealth services. Several clinical studies prove that telehealth lowers the cost burden and improves the quality of outcomes. Industry groups such as the American Telemedicine Association (ATA) have long argued that complete coverage for telehealth services will eventually help the CMS to cut costs elsewhere.

Interestingly, private insurers in 25 states and Medicaid in 45 states have already expanded coverage for telehealth, while Medicare, which has the largest market share, has been the late adopter. The US Senate is set to reintroduce the bill to waive some of the Medicare restrictions on telehealth services, which will drive their use. The recent move by the CMS to expand coverage is welcome, as it not only widens the target population for telehealth but also provides a much-needed boost for mobile technologies that focus on remote patient monitoring.

Expanded coverage is a step in the right direction, although there is room for improvement

The adoption of telehealth is largely driven by what is reimbursed and what is not. Healthcare providers currently have limited incentives to promote its extensive use: the lack of reimbursement for data charges incurred during remote consultations, strict rules about the location of the hospital and the patient to be eligible, and the high upfront cost involved in setting up telemedicine infrastructure are major factors inhibiting fully fledged use. Although costs related to telemedicine infrastructure are being addressed by software vendors developing affordable yet effective solutions, reimbursement issues need to be resolved before providers include telehealth as a mainstream component of healthcare delivery.

The proposed changes to the bill are expected to promote the use of the technology. Telehealth services are not covered if patients are not located in rural areas, but the proposed legislation will expand coverage to all patients and hospitals regardless of their location. Also, Medicare does not reimburse telehealth services if patients are located at home, but the proposed legislation will cover home-based video services for hospice care, home dialysis, and homebound seniors.

However, the CMS will still not cover expenses related to data-collection services. These mainly include data charges incurred by healthcare providers for remote consultations and the storage and transmission between patients and physicians of vital-signs data. Although this is a major drawback, the CMS has acknowledged that data collection is a valuable service and will be a part of chronic care patient management, which implies that data collection expenses could be reimbursed as an additional payment in future, though billed as a part of chronic patient management in the proposed legislation. The CMS has allocated a new CPT code, 99490, for chronic patient care management, which is not part of the telehealth code. This facilitates hospitals’ provision of telehealth services to patients regardless of their location.


Further reading

“Telemedicine should be better exploited in India,” IT0011-000344 (January 2015)

On the Radar: VSee, IT0011-000333 (November 2014)


Srikanth Venkataraman, Analyst, Healthcare Technology

Recommended Articles

  • Service Provider Markets, Consumer & Entertainment Services,...

    MWC 2018 Highlights

    By Ronan De Renesse 27 Feb 2018

    Over 20 of our senior Ovum analysts and consultants attended this year’s Mobile World Congress in Barcelona at the end of February. In between meetings, briefings and presentations, our analyst team were blogging and tweeting about key developments, trends and rumors. Have a look through our daily MWC 2018 Highlights to find out what happened.

    Topics 5G AI IoT Cloud Payments SDN/NFV Smart home

  • Internet of Things

    IoT Viewpoints 2018

    IoT Viewpoints explore the IoT opportunity in 2018 and beyond. Download our latest e-book to get our newest collection of thought leadership articles on the emerging IoT trends, technologies and opportunities.

    Topics IoT

  • Consumer & Entertainment Services

    US pay TV: Is it facing an existential threat?

    By Adam Thomas 28 Mar 2018

    With US pay TV having endured the worst year in its history, thoughts have inevitably turned to the future. The likelihood remains that the immediate future will remain highly uncomfortable for everyone except the scaled multinational digital platforms.


Have any questions? Speak to a Specialist

Europe, Middle East & Africa team - +44 (0) 207 017 7700

Asia-Pacific team - +61 (0)3 960 16700

US team - +1 646 957 8878

Email us at

You can also contact your named/allocated Client Services Executive using their direct dial.
PR enquiries - Call us at +44 788 597 5160 or email us at

Contact marketing -

Already an Ovum client? Login to the Knowledge Center now