Telehealth Update: CMS Eliminates “4 Walls” Rule

Removes Barriers to Delivering Telehealth Outside the Clinics

On Friday, November 1, the US Centers for Medicare and Medicaid Services (CMS) released a final rule for calendar year 2025 that will give states the option to cover Medicaid telehealth behavioral health clinic services delivered outside the “four walls.” Previously, under 42 CFR § 440.90, the “Four Walls Rule,” it was required that during Medicaid outpatient behavioral health clinic telehealth services, either the patient or the clinician had to be physically onsite at the clinic.

CMS waived this requirement during the Public Health Emergency (PHE). Now that the PHE has ended, CMS has released this final rule to allow states to cover behavioral health outpatient clinic services outside the four walls. The final rule should take effect on January 1, 2025. In the meantime, it is the expectation that telehealth services will continue to be delivered as per current operating standards to ensure service access to individuals.

CMS amended the Medicaid clinic services’ regulation to authorize Medicaid coverage for clinic services furnished by IHS/Tribal clinics outside the “four walls” of their facility. In addition, states implementing the Medicaid clinic services’ benefit can opt to cover clinic services furnished outside the “four walls” of behavioral health clinics or clinics located in rural areas. For clinics located in rural areas, based on comments received, CMS is finalizing an approach to defining “rural area” where states will select either a definition used by a federal agency for programmatic purposes, or a definition adopted by a state agency with a role in setting state rural health policy.

For more information, view the CY 2025 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Final Rule (CMS 1809-FC) Fact Sheet and the full Final Rule.

RCPA will be reviewing the implications of this final form ruling for Pennsylvania and our ongoing efforts to expand telehealth services through legislative action. RCPA offers thanks to our members, as well as DHS/OMHSAS, County Primary Contractors, BH-MCOs, the National Council on Mental Wellbeing, and our stakeholder groups and associations for their collaborative advocacy to remove the “4 Walls” barriers to equity and access through telehealth.

If you have any additional questions, please contact RCPA COO and Mental Health Division Director Jim Sharp.