Telemedicine Arrangements

In recent years, the utilization of telemedicine (or “telehealth”) has seen a rapid increase due to the many benefits it can provide to hospitals, providers, and patients alike. When leveraged effectively, telemedicine has proven to be an effective tool for hospitals attempting to source coverage for service lines experiencing recruiting difficulties or for facilities looking for more efficient staffing models. Some specialties in higher demand for telemedicine coverage include:

  • Neurology / Stroke Medicine
  • Psychiatry
  • Cardiology
  • Genetics
  • Infectious Disease
  • Maternal Fetal Medicine
  • Radiology

Effective hospital utilization of telemedicine can provide a more cost-effective solution in covering these service lines, as telehealth providers are typically able to offer more economies of scale and efficiencies in comparison to a standard boots-on-the-ground coverage model. The benefits of telemedicine are not limited to the hospitals receiving this coverage, but also extend to providers as well as patient populations. For providers, telemedicine can offer more flexibility in scheduling and can expand their access to patients, which in turn can improve population health in underserved or in-need areas.

Reimbursement for telehealth services continues to move towards parity with on-site services, especially in the wake of the COVID-19 pandemic. In compensating for these services, there are many different types of telemedicine arrangement structures, and configuring the appropriate payment model is critical. From our professional experience across over 400 telemedicine engagements, typical fee structures could include the following for both the purchasing and the selling of telemedicine services:

  • Availability fee
  • Per consult fee
  • Consult guarantees
  • Fixed fee based on presumed utilization
  • Fees for other expenses (i.e. equipment, support, and other staff)

Determining fair market value telemedicine compensation represents a challenge for many market participants among many other issues.

VMG Health has insight into the latest trends and numerous telemedicine compensation structures based on our extensive experience in valuing telehealth arrangements. As a result, we can rapidly assist in confirming if an arrangement with a physician, physician group, or outreach facility, is fair market value.


Documentation illustrating that telehealth fees were set at fair market value represents best practice for compliance purposes. Based on regulatory guidance, fees should be derived based on a sound methodology reflecting the terms of the arrangement and relevant value drivers. A few examples of value drivers that should be considered in deriving a proper payment for telemedicine services include:

  1. Patient contact time
  2. Representative CPT code for the set of services provided
  3. Billing and collection rights
  4. Utilization expectations
  5. Equipment and other expenses

VMG Health has a keen understanding of these factors, and a myriad of other valuation drivers associated with telemedicine arrangements.

Relevant Publications & Presentations on Telemedicine Arrangements

Telehealth’s Response to COVID-19 for Post-Acute Outpatient Services
Telehealth Value Surge in Battling COVID-19
Payments and FMV Considerations in Reviewing Telemedicine Arrangements
Telemedicine: Trends & Fair Market Value Considerations