Does Medicare Permit Physicians to Reassign Their Billing Rights to Hospitals?

Home GPT Latest News Does Medicare Permit Physicians to Reassign Their Billing Rights to Hospitals?

One question I’ve been asked repeatedly is whether a physician who provides the professional component of telemedicine services may reassign his or her Medicare billing rights to a hospital. This occurs regularly in two different scenarios. First, the hospital may be the originating site, and the hospital would bill both for the distant site professional services and the originating site facility fee, and then reimburse the physician, whether as an employee or an independent contractor.  Second and likewise, the hospital may be a distant site hub, and deliver telehealth services to rural originating sites, submit reassigned claims, and reimburse the physician as an employee or independent contractor. This is known as the “hub and spoke” model.

Both of these are common telehealth billing models.  Why would there be any concern?

Interestingly, CMS regulations state that “[o]nly the physician or practitioner at the distant site may bill and receive payment for the professional service” and “[p]ayments made to the physician or practitioner at the distant site, including deductible and coinsurance, for the professional service may not be shared with the referring practitioner or telepresenter.”[1] Similarly, the Medicare Claims Processing Manual lists only individual practitioners (such as physicians, nurse practitioners, and physician assistants) who may bill for distant site telehealth services—not hospitals or other facilities[2]—and that “the only claims from institutional facilities” that can be reimbursed by Medicare at the distant site are medical nutrition therapy or in Critical Access Hospitals using a specific billing method.[3]

How, then, are the most common telehealth billing models permitted?  How can they be reconciled with a literal reading of CMS’s (relatively) clear rules?

This is a question I’ve seen many practitioners—and many health care attorney—struggle with. The answer lies in a few different regulatory provisions, as well as common sense. The bottom line is that practitioners can reassign their billing rights to hospitals or institutional providers, who can in turn bill for distant telehealth services, but that hospitals cannot themselves provide telehealth distant site services, cannot bill a professional fee for serving as the originating site, and cannot be paid a referral or telepresenter fee by a distant site practitioner.

First, Medicare has detailed rules on inter-jurisdictional reassignment of billing rights that specifically permit, and describe in detail how, a telehealth practitioner can reassign his or her claims to “an entity” located in another state.[4] Those rules state that a reassignee “includes any provider or supplier that is permitted to bill and receive payment under a reassignment, in accordance with existing Medicare policy,” suggesting any provider or supplier—like a hospital—who may normally be reassigned billing rights, may be reassigned telehealth distant site practitioner billing rights. If CMS regulations were interpreted to prohibit reassignment to hospitals or other “institutional providers,” then such an interpretation would gut the apparent purpose and scope of these rules for reassigning telehealth benefits to any “entity.”

Second, the plain text of the regulation cited above may also be read to indicate that telehealth services can only be billed when the distant site services are provided “via an interactive telecommunications system,” and that an originating site cannot bill a professional fee for presenting the patient to the distant site practitioner.[5]  These readings are consistent with the text—the poorly worded text that led to the ambiguity and confusion in the first place.  Likewise, the Medicare Claims Processing Manual can also be interpreted to mean that Medicare will only reimburse claims for telehealth services when the distant site services are provided by one of the listed eligible professionals—not that another entity cannot bill on the eligible practitioner’s behalf[6] (as clearly permitted by the inter-jurisdictional reassignment rules).

Third, CMS’s preamble guidance that promulgated the final rules for telemedicine services indicate that the language in the regulation is meant to prohibit kickbacks for referrals[7] and to prevent services payable directly to the hospital under Part A from being separately billed as telehealth services,[8] not to restrict a useful otherwise permissible billing method.

Fourth, the OIG recently audited a large sample of telehealth services and in April 2018, published a report entitled “CMS Paid Practitioners for Telehealth Services that Did Not Meet Medicare Standards.”[9]  Nowhere in that lengthy report are there any concerns with physicians reassigning billing rights to hospitals.  But the OIG did find that “[f]or seven claims, institutional providers billed outpatient claims for telehealth services performed at distant sites for beneficiaries located at rural originating sites, but the distant sites were not CAHs, and the services provided were not MNT services.”[10]  The concern was that a hospital billed for distant site telehealth services as hospital services (i.e. on an institutional claim to Medicare Part A); not as professional services via reassignment (i.e. to Medicare Part B).

Fifth and finally, I have personally contacted representatives from two separate Medicare Administrative Contractors to discuss this very scenario (and the apparent regulatory contradiction). Both have confirmed that a hospital can submit claims for a physician’s distant site telehealth services when the physician has reassigned his or her benefits to the hospital. The restrictions found in the regulation and Medicare Manual, according to the MAC representatives, simply state that the hospital cannot be the distant site provider.

Although the odd restrictions presented by a literal reading of this regulation is a common source of confusion and heartburn among telehealth providers and attorneys alike, they don’t need to be.  Interpreting CMS rules to prohibit practitioner reassignment to hospitals is nonsensical. Optimally, CMS would update their rules or publish clarifying guidance, shedding light on the issue for everyone. But until then, there is a reasonable explanation. Provided the practitioner and hospital follow all reassignment rules and also remain mindful both federal and state fraud and abuse laws, Medicare does permit physicians to reassign their billing rights to both distant site and originating site hospitals.


[1] 42 C.F.R. § 414.65(a)(2) and (3).

[2] Medicare Claims Processing Manual, Chpt. 12, § 190.6.

[3] Medicare Claims Processing Manual, Chpt. 12, § 190.7.

[4] Medicare Program Integrity Manual, Chpt. 15, §

[5] 42 C.F.R. § 414.65(a)(2) and (3).

[6] Medicare Claims Processing Manual, Chpt. 12, § 190.6.

[7] 66 Fed. Reg. 55332, 55282 (Nov. 1, 2001) (“The Office of the Inspector General has advised us that permitting the physician or practitioner at the distant site to pay the telepresenter creates a significant risk under the anti-kickback statute. Therefore, we establish in § 414.65 that payments made to the distant site physician or practitioner for professional fees, including deductible and coinsurance (for the professional service), are not to be shared with the referring practitioner or telepresenter.”).

[8] 73 Fed. Reg. 69936, 69880-81 (Nov. 19, 2008) (“we pay distant site physicians or practitioners for furnishing services via telehealth only if such services are not included in a bundled payment to the facility that serves as the originating site . . . telehealth is a delivery mechanism for otherwise payable Part B services; that is, services which would be separately payable under Part B if “furnished without the use of a telecommunications system” . . . distant site professional services can qualify for separate telehealth payment only to the extent that they are not already included within a bundled payment to the facility that serves as the originating site.”).

[9] Department of Health and Human Services, Office of Inspector General, “CMS Paid Practitioners for Telehealth Services that Did Not Meet Medicare Standards,” A-05-16-00058 (Apr. 2018), available at

[10] Id. at 6.