Telehealth Expansion 2025: Maximize Your PFS Revenue (42 CFR § 414.65)

Telehealth is a permanent pillar of outpatient care, but successful expansion in 2025 depends on aligning operations with Medicare’s telehealth payment framework in 42 CFR § 414.65. This regulation governs who may bill for telehealth professional services, how and when the originating-site facility fee applies, limits on professional payment sharing, and sanctions for noncompliance. For small practices, these rules directly shape workflows, contracts, coding logic, and audit risk. This guide translates § 414.65 into a practical, resource-light blueprint to expand telehealth profitably and compliantly in 2025.

Patients increasingly expect convenient virtual access, while telehealth rules continue to evolve annually through the Medicare Physician Fee Schedule (PFS). The foundational payment rule for Medicare telehealth is 42 CFR § 414.65, which ties professional payment to the Physician Fee Schedule and sets firm guardrails:

• Only the distant-site practitioner may bill the professional service

• Eligible originating sites may bill a separate facility fee

• Professional payments may not be shared with referring practitioners or telepresenters

• Deductible, coinsurance, assignment, and sanctions provisions apply

For lean clinics, the core question is not whether to expand telehealth, but how to do so in a way that is compliant, defensible, and sustainable.

Understanding Telehealth Expansion Under 42 CFR § 414.65

What § 414.65 does—and why it matters in 2025

Section 414.65 establishes the payment architecture for Medicare telehealth:

• Professional services: The distant-site physician or practitioner bills and is paid the applicable fee schedule amount for telehealth services furnished via an interactive telecommunications system.

• No revenue sharing: Professional payment (including deductible and coinsurance) may not be shared with a referring practitioner or telepresenter.

• Originating-site facility fee: When applicable, only the originating site may bill the facility fee (Q3014), updated annually by the Medicare Economic Index.

• Assignment and cost-sharing: Telehealth services remain subject to assignment, deductible, and coinsurance.

• Sanctions: Improper billing or revenue sharing can trigger sanctions.

Together, these provisions define how money flows, how contracts must be structured, and how EHR and billing systems should be configured.

How § 414.65 fits with annual CMS updates

Each year, CMS updates the telehealth services list and clarifies operational flexibilities in the PFS. An effective expansion plan uses two guardrails:

1. Track changes to the CMS telehealth list and related PFS policies

2. Keep § 414.65 as the constant framework for payment, assignment, and sanctions

While CMS governs payment, the HHS Office for Civil Rights (OCR) enforces HIPAA privacy and security requirements for telehealth. As practices scale telehealth, OCR expectations include:

• Executed Business Associate Agreements (BAAs) with telehealth vendors

• Reasonable safeguards for video and audio-only encounters

• Identity verification when appropriate

• Incident-response procedures for privacy or security events

Integrating privacy artifacts into a telehealth compliance binder reduces exposure as volume grows.

Step-by-Step Compliance Guide for Small Practices

Step 1: Decide your telehealth portfolio

Comply: Identify visit types to deliver virtually and confirm each code appears on the current CMS telehealth list, including POS/modifier and audio-only parameters.
Document: A one-page Telehealth Code Crosswalk.
Tip: Start with follow-ups you already deliver in person.

Step 2: Standardize the telehealth note header

Comply: Require a header capturing patient location, modality (with audio-only rationale if used), platform, practitioner, and time when relevant.
Document: Template printout and clinician quick guide.

Step 3: Lock down practitioner eligibility and locations

Comply: Ensure only eligible distant-site practitioners bill and claims reflect CMS-permitted enrolled locations.
Document: Practitioner roster and location SOP.

Step 4: Respect § 414.65 revenue-sharing limits

Comply: Do not share distant-site professional payments with referring clinicians or telepresenters.
Document: Reviewed agreements and compliance memo.

Step 5: Build a privacy-first vendor stack

Comply: Execute BAAs; verify encryption, access controls, and audit logs.
Document: Vendor security summaries and BAAs.

Step 6: Train the team (45 minutes)

Comply: Role-based training on documentation, audio-only use, coding, and privacy.
Document: Agenda and attendance.

Step 7: Run a 10-chart monthly audit

Comply: Review headers, modality, location, codes/modifiers, and privacy safeguards.
Document: Audit log and corrective actions.

Step 8: Maintain an incident-response mini-playbook

Comply: Define containment, notification, and documentation steps.
Document: Playbook and tabletop exercise notes.

• Only distant-site practitioners billed professional services

• No prohibited revenue sharing

• Facility fee billed only when eligible

• Assignment and cost-sharing applied correctly

• Telehealth headers complete

• BAAs on file; incidents logged

• Monthly audit completed

Common Pitfalls to Avoid

• Sharing telehealth revenue with referrers

• Billing services not on the telehealth list

• Missing modality or patient-location documentation

• Using platforms without BAAs

• Skipping routine monitoring

Assign clear owners (clinical, revenue cycle, privacy), standardize templates, publish a one-page “Telehealth Rules for 2025,” and reinforce behaviors through monthly dashboards and audits.

42 CFR § 414.65 defines the payment guardrails for Medicare telehealth in 2025. Small practices that standardize documentation, align billing and contracts to the regulation, govern vendors, and monitor performance can expand telehealth confidently while minimizing denials and enforcement risk.

 An effective way to reinforce compliance is through a regulatory platform. Such systems track evolving requirements, generate ongoing risk insights, and ensure your practice remains audit-ready, minimizing liabilities while strengthening patient trust.

• 42 CFR § 414.65 ,  Payment for telehealth services (eCFR/LII)
  

• List of Telehealth Services for Calendar Year 2025 ,  CMS
  

• Calendar Year (CY) 2025 Medicare Physician Fee Schedule Final Rule ,  CMS Fact Sheet
  

• Guidance on How the HIPAA Rules Permit Audio-Only Telehealth ,  HHS OCR
  

• Medicare Telemedicine Snapshot ,  CMS Data Resource