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Risk Watch

HIGH

CMS finalized changes to Medicare telehealth policy in the CY 2025 Physician Fee Schedule (89 FR 96480, Nov 2024) that take effect January 1, 2025, including new in-person visit requirements for new mental health patients. Texas HHSC is in the process of updating 26 TAC §354.1431 to conform; confirm current HHSC guidance before implementing. Organizations that have been operating under COVID-era waivers without updating compliance policies are at elevated audit risk.

Research Question

What are the applicable Medicare and Texas Medicaid billing requirements governing the delivery and reimbursement of telehealth behavioral health services, and what clinical documentation must be maintained to support such claims?

Summary of Applicable Standards

Medicare and Texas Medicaid both permit reimbursement for telehealth behavioral health services, subject to distinct eligibility, originating site, technology, and documentation requirements. The Consolidated Appropriations Act of 2023 extended key COVID-era telehealth flexibilities through 2024 and, in some cases, permanently. Texas Medicaid has adopted parallel policies under 26 TAC §354, with additional requirements for managed care organizations. Organizations must maintain contemporaneous documentation demonstrating medical necessity, interactive audio-video technology, provider credentials, and patient consent.

Federal Standards

Medicare covers telehealth behavioral health services under 42 CFR §410.78 and §414.65. Following the CAA 2023, originating site restrictions for mental health services were removed for patients in their homes. Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) may serve as distant sites. Providers must use interactive, real-time audio-video technology unless the patient lacks access, in which case audio-only is permitted for certain mental health services.

•Provider must be enrolled in Medicare and practicing within their state scope of practice

•Services must be provided via two-way, real-time audio-visual communication (audio-only permitted for 98966–98968 for established patients)

•Covered CPT codes include 90832–90838 (individual psychotherapy), 90847 (family therapy), 90853 (group therapy), and 99202–99215 (E/M with telehealth modifier)

•Append modifier -95 (synchronous telehealth) or -GT to indicate telehealth delivery

•Patient home as originating site requires prior in-person visit within 6 months for new mental health patients (CAA 2023 requirement effective Jan 1, 2025)

•Informed consent for telehealth must be documented in the medical record

State Standards — Texas

Texas Medicaid covers behavioral health telehealth under 26 TAC §354.1431. The Texas Health and Human Services Commission (HHSC) requires synchronous audio-video delivery as the default. Texas has enacted comprehensive telehealth parity under Tex. Occ. Code §111.001 et seq., requiring commercial insurers and Medicaid to reimburse telehealth at parity with in-person services. Key state-specific requirements include: (1) initial in-person assessment within 12 months for certain behavioral health conditions; (2) controlled substance prescribing compliance under 22 TAC §174; (3) MCO telehealth parity under 26 TAC §354.1431; (4) FQHC encounter rate billing; (5) provider must hold active Texas license regardless of physical location.

•Texas requires an initial in-person assessment within 12 months for certain behavioral health conditions (exception applies in rural/underserved areas)

•Prescribing controlled substances via telehealth requires compliance with 22 TAC §174 (Texas Medical Practice Act); buprenorphine prescribing has separate SAMHSA requirements

•Managed care organizations must cover telehealth under 26 TAC §354.1431 and may not impose additional prior authorization requirements beyond fee-for-service

•Federally Qualified Health Centers serving Texas Medicaid must use HHSC-designated billing codes; encounter rate applies to telehealth visits

•Texas requires provider to be licensed in Texas regardless of physical location during service delivery

How Federal and State Standards Interact

Texas Medicaid follows Medicare's covered service list by reference for most behavioral health telehealth codes but adds its own prior authorization requirements for Managed Care Organizations. Where Medicare permits audio-only for established patients (CPT 98966–98968), Texas Medicaid requires audio-video unless the patient demonstrates inability to access video technology — providers should document this exception explicitly. Texas's parity law provides stronger protections than federal parity (MHPAEA) for commercial insurance but does not apply to Medicaid directly; HHSC has implemented equivalent parity by rule.

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Relevant Case Law & Agency Guidance

OIG Advisory Opinion 23-07

HHS Office of Inspector General · 2023 · OIG-23-07

OIG Advisory

Addresses permissibility of telehealth arrangements between behavioral health providers and hospitals under the Anti-Kickback Statute, approving fair-market-value compensation structures.

The OIG concluded that the proposed arrangement would not generate prohibited remuneration under the AKS, noting the absence of volume-based compensation tied to federal program referrals.

Baylor Scott & White Health v. Texas HHS Commission

5th Circuit · 2022 · No. 21-50854

Case Law

Upheld HHSC's authority to impose telehealth-specific documentation requirements as a condition of Medicaid reimbursement, rejecting argument that documentation rules exceeded statutory authority.

The court found that HHSC's telehealth documentation regulations fell within the agency's broad authority to establish Medicaid reimbursement conditions and did not constitute an unlawful expansion of federal requirements.

Authorities Cited

All authorities drawn from official government sources.

Cms Telehealth Policy

42cfr410

Tx 26 Tac 354

Tx Occ Code 111

Common Compliance Pitfalls

•Failing to append modifier -95 or -GT to telehealth claims — results in claim denial as in-person visit at incorrect place-of-service

•Using audio-only without documenting patient's inability to access audio-video technology — creates audit exposure under both Medicare and Texas Medicaid

•Prescribing Schedule IV controlled substances without verifying DEA registration covers Texas — out-of-state providers need Texas DEA registration for Texas patients

•Missing informed consent documentation — both Medicare and Texas Medicaid require contemporaneous notation in the medical record, not just a signed form in a separate file

•Treating MCO telehealth policies as identical to Medicaid fee-for-service — each MCO may have additional requirements; always verify the specific contract

•Not obtaining prior in-person assessment for new patients with complex presentations — some Texas MCOs require in-person initial evaluation regardless of HHSC fee-for-service flexibility

Audit-Ready Checklist

Verify provider holds active Texas license and Medicare/Medicaid enrollment before initiating telehealth services

Confirm audio-video technology is HIPAA-compliant and BAA is executed with the platform vendor

Document patient's physical location at time of service (required for Medicare place-of-service code 02 or 10)

Obtain and document verbal or written informed consent for telehealth delivery

Ensure CPT code selected matches service complexity and time; confirm telehealth modifier applied

For new mental health patients: document prior in-person assessment or applicable exception

Verify MCO-specific prior authorization requirements before rendering service

Review DEA registration for controlled substance prescribing; verify Texas DEA coverage

Confirm clinical documentation supports medical necessity (diagnosis, treatment plan, patient response)

Check billing NPI is the rendering provider's individual NPI, not group NPI, for Medicare claims

Documentation Requirements

•Telehealth consent documentation (verbal or written) including patient acknowledgment of telehealth delivery and right to in-person care(Retention: 7 years (Medicare); 5 years (Texas Medicaid))

•Patient physical location at time of service (city and state sufficient for Medicare; street address required for Texas Medicaid)(Retention: 7 years)

•Technology attestation: notation that synchronous audio-video technology was used or documentation of exception(Retention: 7 years)

•Clinical note meeting E/M or psychotherapy documentation standards: chief complaint, history, mental status exam, assessment, plan(Retention: 7 years (Medicare); 10 years (Texas Medicaid managed care))

•Prior in-person visit documentation for new mental health patients (post-Jan 1, 2025 Medicare requirement)(Retention: Duration of patient relationship + 7 years)

Recommended Next Steps

1Review your current telehealth consent forms against the Medicare and Texas Medicaid requirements outlined above — update to capture patient location, technology type, and right to in-person alternative

2Audit the last 90 days of telehealth claims for modifier -95/-GT compliance and place-of-service code accuracy

3Confirm BAAs are executed with all telehealth platform vendors and document this in your HIPAA Risk Analysis

4Pull your MCO contracts and verify each plan's telehealth prior authorization requirements — note any requirements that exceed HHSC fee-for-service rules

5Schedule a medical records review for new mental health patients seen via telehealth after January 1, 2025 to verify in-person visit documentation is in place

6Assign responsibility for monitoring the HHSC 26 TAC §354.1431 update — subscribe to Texas Register for rule publication notices

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