Your Guide to Virtual Reality Reimbursement in the U.S. Healthcare Market
This post was updated in April 2024.
As a law firm focused specifically on healthcare innovation, we get really excited about developing areas of the healthcare industry. One area we are particularly excited about? Virtual Reality.
Providers are already integrating Virtual Reality (VR) into patient care in a variety of ways. For example, using VR to gamify physical therapy exercises for pediatric patients to keep them engaged in their treatment, or to provide targeted exposure therapy in a controlled environment for patients with extreme phobias or post-traumatic stress disorder.
The catch? VR headsets are expensive—costing hundreds of dollars each—and most public and commercial payors don’t cover them yet.
So, how do patients get access to this technology, and how do providers get paid for using it?
Digital health companies building VR solutions often ask us this question, and if you are a founder or executive looking for ways to commercialize your VR platform for healthcare providers in the U.S., you might be asking it too.
Our answer often begins with an overview of available reimbursement pathways. Unfortunately, reimbursement specific to virtual reality is scarce in the U.S., so founders selling to healthcare provider organizations may need to look to broader reimbursement categories until more VR-specific pathways become widely available.
To help you get started, below is a reimbursement toolkit to help you understand why reimbursement for your VR technology is important, how it works, and the types of reimbursement available for healthcare services involving VR in the U.S.
We’ll start with why reimbursement is important, review VR-specific codes that will impact future reimbursement opportunities, and finally dig into current reimbursement opportunities that payors will pay for today.
How Reimbursement Impacts Patient Access, Business and Revenue Models, Investment Potential, and Product Development
First and foremost, it is important to understand why reimbursement matters in the U.S. It’s because identifying a reimbursement pathway can have a big impact on your virtual reality business:
Reimbursement impacts patient access. Without insurance coverage, many patients that could benefit from care involving your VR platform likely won’t be able to afford the technology they need to access it.
Reimbursement impacts provider adoption. Highlighting reimbursement options helps your customers understand the potential return on investment they can achieve by using your technology.
Reimbursement impacts your business and revenue model. Assessing available reimbursement will help you better understand what your customers can afford and how to talk about your fees in a way that is familiar to them.
Available reimbursement may increase your opportunities to secure investment. Investors will look for a viable revenue stream as an important part of assessing your business’s market fit and long-term potential for success, and reimbursement is one way to demonstrate that.
Second, it is important that you understand your reimbursement options when building your product. You may be able to integrate features into your software that make it easier for your customers to track relevant reimbursement requirements, like time trackers to help provider users measure time spent on certain activities. Failure to integrate product features that align with existing reimbursement requirements could mean the difference between success or failure of your VR Company.
So, what are the reimbursement options for healthcare VR? And how can you leverage them to improve your value proposition for potential customers?
Virtual Reality Reimbursement Codes
Unfortunately, the Centers for Medicare and Medicaid Services (CMS) and most other insurance payors do not currently pay for very many VR-specific healthcare services (but they pay for some!). Due to the emerging nature of most VR technology used in the healthcare industry, CPT codes associated with VR are currently classified as Category III codes, which means they are temporary codes primarily intended for data collection purposes. More on that later.
Let’s start with the VR code that CMS does pay for.
HCPCS code E1905
CMS currently pays for exactly one VR-specific billing code. On March 21, 2023, CMS, in response to an application from AppliedVR, Inc., established HCPCS code E1905, described as follows:
HCPCS code E1905: Virtual reality cognitive behavioral therapy device (CBT), including pre-programmed therapy software
HCPCS code E1905 was established to provide payment for a combination VR device and software platform used in the context of cognitive behavioral therapy. Notably, CMS classified this code as “durable medical equipment” (DME), a category typically reserved for hardware devices only, and stated in its payment determination summary that the “[RelieVRx] medical software and the device on which it is housed are so integral to each other that we consider them to be one whole device, not software and a separate device.”
Though AppliedVR, Inc. submitted the application to CMS that led to CMS creating HCPCS code E1905 with the intention of obtaining coverage for the RelieVRx platform, the code can be used for other platforms that meet its general requirements.
Importantly, the quoted language from the CMS above indicates that software alone is not sufficient and that a VR platform must combine both hardware and pre-programmed software to be eligible for reimbursement under this code. As of April 2024, CMS pays between $549 and $646 for E1905.
It is also important to note that HCPCS code E1905 was not established and is not maintained by the American Medical Association (AMA). Because CMS created the code, CMS maintains the code. This means that commercial payors that rely on the AMA to create and maintain the billing codes they pay for may not cover E1905. See below for the CPT codes maintained by AMA.
Temporary VR CPT Codes
AMA has established several VR CPT codes on a Category III basis. “Category III” refers to certain CPT codes representing emerging technology that are intended to help providers, payors, and other stakeholders collect and analyze utilization, efficacy, and outcomes data associated with the relevant technology.
AMA does not value Category III codes, making it difficult to determine if insurance payors cover them and, if so, how much they will pay. CMS has not set a national rate for these codes, but commercial payors may cover them. In any case, as AMA notes in the CPT codebook, reporting Category III codes “is critically important in the evaluation of health care delivery and the formation of public and private policy.” In other words, providers using VR should continue to report applicable Category III codes regardless of coverage to drive more reimbursement opportunities for VR in the future.
The following Category III CPT codes specifically relate to immersive technology. They will expire in 2028 unless AMA modifies them to extend their expiration date or establish permanent payment. The AMA CPT Codebook describes these codes as follows:
CPT code 0770T: Virtual reality technology to assist therapy (List separately in addition to code for primary procedure)
CPT code 0771T: VRPD services provided by the same physician or other qualified health care professional performing the diagnostic or therapeutic service that the VRPD supports, requiring the presence of an independent, trained observer to assist in the monitoring of the patient’s level of dissociation or consciousness and physiological status; initial 15 minutes of intraservice time, patient age 5 years or older
CPT code 0772T: Each additional 15 minutes intraservice time (List separately in addition to code for primary service) (Billed in conjunction with 0771T)
CPT code 0773T: Virtual reality (VR) procedural dissociation services provided by a physician or other qualified health care professional other than the physician or other qualified health care professional performing the diagnostic or therapeutic service that the VRPD supports; initial 15 minutes of intraservice time, patient age 5 years or older
CPT code 0774T: Each additional 15 minutes intraservice time (List separately in addition to code for primary service) (Billed in conjunction with 0773T)
0791T– Motor-cognitive, semi-immersive virtual reality–facilitated gait training, each 15 minutes (List separately in addition to code for primary procedure)
How to Use the VR CPT Codes
Therapists, physicians, and other practitioners can use the Category III CPT codes to demonstrate effective uses of VR. Doing so helps persuade AMA to establish permanent codes and payors to cover them. Here are some things to be aware of if you or your customers plan to report these codes to payors:
CPT codes 0770T and 0791T are add-on codes that capture the use of VR software to augment a patient visit or procedure.
Code 0770T should be billed in conjunction with a base behavioral health service code that is not specific to VR, such as CPT code 90832 for psychotherapy services.
Code 0791T should be billed only in conjunction with CPT code 97116 for therapeutic gait training.
CPT codes 0771T-0774T represent virtual reality procedural dissociation, or VRPD, which refers to a temporary state of altered consciousness that improves patient comfort by increasing pain tolerance and/or decreasing pain sensation during a given procedure. VRPD requires an independent, trained provider to oversee and adjust the immersive environment as needed.
You might be thinking, “The majority of these codes aren’t actually covered. Now, what?” Don’t stop here! The next section lays out some categories of services providers can use today to get paid for using VR technology.
Services Involving VR That Payors Actually Pay For
The following reimbursement options involve existing codes that do not explicitly refer to VR, but represent services that are commonly provided using VR technology. Though this article primarily focuses on VR, the following codes may also offer relevant reimbursement opportunities for augmented reality and other mixed reality solutions.
Telehealth. “Telehealth” refers most often to a service provided via live interactive audiovisual technology that otherwise would have been furnished in person.
EXAMPLE VR USE CASE: Live visit between provider and patient during which patient participates in immersive activity while on camera.
Remote Physiologic Monitoring (RPM). RPM refers to the use of medical devices to gather physiologic data from patients in one location (e.g., their home) and transmit that information to the patient’s healthcare provider in another location (e.g., their doctor’s office) for analysis. Physiologic data often includes blood pressure, heart rate, electrocardiograms, pulse oximetry, and/or blood glucose levels, among others. Providers use this data to monitor patients’ health conditions, provide recommendations, and/or make changes to a patient’s care plan. For an in-depth review of the CPT codes available for RPM, click HERE.
EXAMPLE VR USE CASE: VR headset with BP or HR monitor that transmits those metrics to the patient’s physician while the patient is engaged in an immersive therapy exercise.
Remote Therapeutic Monitoring (RTM). RTM is similar to RPM but refers to the use of a medical device or devices to collect non-physiologic data from patients in one location and transmit that information to the patients’ healthcare providers in another location for purposes of analysis and care management. RTM devices typically collect data related to a patient’s respiratory system status, musculoskeletal system status, therapy or medication adherence, and therapy or medication response. For an in-depth review of the CPT codes available for RTM, click HERE.
EXAMPLE VR USE CASE: VR platform that extracts data (e.g., range of motion) while a patient participates in an immersive PT exercise game and transmits that data to the patient’s physical therapist (e.g., PT, behavioral health).
Digital Therapeutics. “Digital therapeutics” (DTx) describes a category of digital solutions that often replace or augment traditional therapies like oral medication or in-person therapy services. This pathway may allow VR companies to engage directly with insurance payors to be added to a formulary or get reimbursed directly for their product. DTx reimbursement has yet to reach widespread adoption in the United States, but there are some available codes that payors are already paying for, though none are specific to VR at this time (e.g., HCPCS code A9291 for FDA-cleared, prescription digital behavioral therapy). For information on how Nixon Gwilt helps DTx companies, click here.
EXAMPLE VR USE CASE: A prescription VR platform that provides mental stimulation to reduce a patient’s pain sensation to help manage chronic pain.
Each of these categories of reimbursement carries its own set of codes and billing requirements that will likely continue to evolve. Founders should pay close attention to changes that may come and monitor how any such changes might impact their business model.
Now That You Understand Reimbursement for Virtual Reality in Healthcare, What’s Next?
Understanding reimbursement pathways will be a huge advantage for innovators in the VR healthcare space, helping enthusiastic founders build compliant platforms, address their provider customers’ and their patients’ treatment challenges, and provide comfort to investors that healthcare VR is built for longevity.
If you are a VR founder working to identify a revenue pathway, let’s connect. We’re here to help and we can’t wait to see how VR catapults healthcare into a new age of care delivery!