Telehealth Audit Survival: Pass the CMS Review (42 CFR § 410.78(c)(4))

Medicare telehealth audits evaluate whether services were furnished and billed in compliance with 42 CFR § 410.78 and related CMS guidance. Subsection (c) clarifies that a telepresenter is not required as a condition of payment unless medically necessary; however, auditors continue to review the full regulatory framework to validate payment. For small healthcare practices, surviving a telehealth audit depends on precise, repeatable documentation of the interactive technology used, patient and provider locations, modality (audio-video versus audio-only) and its clinical justification, accurate coding and modifiers, vendor safeguards such as Business Associate Agreements (BAAs), and a demonstrable monitoring program. This guide translates 42 CFR § 410.78(c) and CMS/OCR expectations into a practical survival plan tailored for small clinics.

Telehealth use expanded rapidly during the COVID-19 public health emergency, followed by increased medical reviews and audits examining whether services met Medicare standards. Small practices often operate with lean staffing and limited compliance infrastructure, making audits disruptive and costly.

Section 410.78(c) reduces one specific burden by clarifying that a telepresenter is not universally required, but it does not remove the broader documentation and operational controls auditors expect. CMS medical reviews focus on whether the encounter met the regulatory definition of telehealth, whether the originating site was documented and eligible, whether the modality used was permissible, and whether claims were coded correctly. This article provides a prioritized roadmap for small practices to prepare for audits, implement low-cost controls, and respond effectively if selected for review.

Understanding Telehealth Audit Survival Under 42 CFR § 410.78

42 CFR § 410.78 defines Medicare telehealth services and the conditions under which Medicare Part B pays for those services. While subsection (c) clarifies that a telepresenter is not required unless medically necessary, the remainder of the regulation remains fully enforceable. Auditors will test whether:

• The encounter used an interactive telecommunications system (generally two-way, real-time audio and video), or whether a permitted audio-only exception applied

• The patient’s originating site (physical location at the time of service) was recorded and met Medicare requirements or a permitted exception

• The clinician documented clinical appropriateness, including any rationale for audio-only visits or substitution for in-person care

• Claims used correct CPT/HCPCS codes, place of service, and modifiers, and the billed service level is supported by the clinical note and, when applicable, time documentation

Understanding § 410.78(c) as a limited easing, rather than a removal of audit exposure, is essential. Audit risk most often arises from vague documentation, inconsistent billing practices, missing vendor safeguards, and lack of monitoring.

The OCR’s Role in Telehealth Audit Risk

While CMS focuses on Medicare payment, the HHS Office for Civil Rights (OCR) enforces HIPAA privacy and security requirements for telehealth. OCR oversight intersects with audit risk in several ways:

• OCR investigations may follow patient complaints, breach self-reports, or referrals arising from CMS reviews

• OCR expects covered entities to maintain BAAs with telehealth vendors that are business associates

• Documentation of privacy steps, such as confirming the patient’s location and who is present, supports a finding of reasonable safeguards

An audit defense must therefore include both Medicare documentation and privacy/security artifacts. Absence of BAAs or incident logs can significantly increase the operational impact of a CMS audit.

Step 1: Build a minimum telehealth audit template

What to do
 Create a required header for every telehealth note that captures:

• Patient location (city/state; facility name or “home”)

• Modality (audio-video or audio-only)

• Platform used

• BAA on file (Y/N)

• Start/stop time or total time

• Identity verification

• One-line clinical justification

Why it matters
 Auditors expect clear evidence of the interactive system and originating site. Missing these elements is a frequent cause of denials.

Low-cost implementation
 Use EHR smart phrases or required fields. If customization is limited, use a standardized text block pasted at visit start.

Step 2: Confirm service eligibility and coding logic

What to do
 Maintain a short list mapping your common telehealth services to CMS-eligible codes, required modifiers, and place-of-service rules.

Why it matters
 Incorrect codes or missing modifiers trigger denials and medical review.

Low-cost implementation
 Use a one-page crosswalk spreadsheet reviewed by billing staff before claims are submitted.

Step 3: Capture time and clinical rationale when required

What to do
 Document start/stop times or total time for time-based services and link documented activities to the billed code.

Why it matters
 Time-based billing must be supported in the record to withstand review.

Low-cost implementation
 Paste session timestamps from the telehealth platform or require manual entry immediately after the visit.

Step 4: Maintain BAAs and vendor summaries

What to do
 Keep a central file of BAAs and a one-page summary for each vendor describing basic safeguards.

Why it matters
 OCR expects documented vendor governance; lack of BAAs can escalate enforcement.

Low-cost implementation
 Store BAAs in a shared drive and reference the vendor and BAA status in each telehealth note.

Step 5: Run monthly spot audits

What to do
 Each month, sample 10 telehealth charts and verify required documentation elements. Record findings and corrective actions.

Why it matters
 Documented monitoring demonstrates a compliance program and can mitigate audit findings.

Step 6: Maintain an incident log

What to do
 Log technical failures, privacy incidents, complaints, and remediation steps with dates and affected charts.

Why it matters
 OCR and CMS expect prompt documentation of incidents and corrective action.

Step 7: Prepare a compact compliance binder

What to do
 Maintain a single folder containing:

• Telehealth templates

• Consent language

• Vendor BAAs

• Audit logs

• Corrective action records

• Telehealth coding crosswalk

Why it matters
 Rapid production of records often shortens audit timelines and limits disruption.

A five-provider primary care clinic rapidly expanded telehealth during an emergency. Documentation varied widely, and the clinic lacked BAAs for all vendors. A CMS medical review sampled 25 telehealth claims and identified multiple notes missing patient location or modality documentation, as well as unsupported audio-only visits. CMS sought recoupment, and a patient complaint triggered an OCR inquiry.

Remediation steps

• Implemented a mandatory telehealth template

• Migrated to a HIPAA-compliant platform with a signed BAA

• Created an incident log and monthly audit process

Outcome
CMS reduced recoupment after accepting the corrective action plan, and OCR closed its inquiry without monetary penalties due to timely remediation.

• Telehealth header present in every note

• Patient location explicitly documented

• Modality and audio-only rationale recorded when applicable

• Time documented for time-based services

• Correct codes and modifiers applied

• Vendor BAA on file

• Monthly audit completed and logged

Common Pitfalls to Avoid

• Free-text-only notes without required fields

• Missing patient location details

• Audio-only visits without documented justification

• Absent or outdated BAAs

• No evidence of monitoring or corrective action

• Make the telehealth header mandatory

• Standardize audio-only justification language

• Choose vendors that provide session logs and BAAs

• Publish audit results internally to reinforce compliance

• Train staff in short, focused sessions on audit-critical items

Assign a telehealth compliance lead, integrate telehealth documentation into onboarding and annual training, and conduct periodic mock audits. A culture that values consistent documentation reduces audit exposure and operational stress.

Section 410.78(c) removes the telepresenter requirement in most cases, but CMS audits continue to evaluate the full telehealth framework. Small practices can survive audits by focusing on a small set of high-impact controls: mandatory documentation templates, accurate coding logic, vendor governance, routine monitoring, and organized records. These measures are affordable, feasible, and directly aligned with the standards auditors apply.

For added assurance, invest in a compliance management tool. These solutions centralize regulatory tracking, provide continuous risk evaluation, and ensure your practice is prepared for audits by addressing weak points before they escalate, reflecting a proactive commitment to compliance.

• 42 CFR § 410.78 ,  Telehealth Services (eCFR)

• CMS Medicare Telehealth Services List and Guidance

• CMS Telehealth Overview

• HHS Office for Civil Rights ,  Telehealth and HIPAA Guidance