Telehealth expanded rapidly during the pandemic. Many practices started seeing patients across state lines for the first time. But the billing infrastructure for multi-state telehealth has not caught up to the clinical demand.

The core rule is straightforward: in most cases, a provider must be licensed in the state where the patient is physically located at the time of the virtual visit. This applies to Medicare, Medicaid, and commercial payers. Practicing without the correct license risks disciplinary action, malpractice coverage gaps, and claim denials.

For independent practices that want to offer telehealth to patients in other states, the licensing requirement is not just a legal issue. It is a billing issue. Every state license creates a new set of payer enrollment requirements, claim submission rules, and reimbursement variables. This article covers what that means for the billing workflow.

The licensing requirement

HHS explains that licensing across state lines for telehealth requires the provider to hold a license in the state where the patient is located. The provider’s home state license is not sufficient. This is true even if the provider is in their home office and the patient is traveling or has relocated.

The practical implication: if a practice wants to see patients in five states via telehealth, the provider needs to be licensed in all five states. Each license has its own application process, fees, CME requirements, and renewal timeline.

Interstate licensure compacts

Several compacts exist to streamline multi-state licensing.

The Interstate Medical Licensure Compact (IMLC) provides an expedited pathway for physicians to obtain licenses in participating states. As of 2025, 42 states plus the District of Columbia and Guam participate in the IMLC. The compact does not create a single multi-state license. Each state still issues its own license. But the application process is faster than applying to each state individually.

Other compacts serve specific disciplines. The Psychology Interjurisdictional Compact (PSYPACT) supports cross-state telepsychology. The Nurse Licensure Compact (NLC) allows nurses in compact states to practice across state lines under a multi-state license.

These compacts reduce the licensing burden. They do not eliminate the billing complexity that comes with multi-state practice.

Why multi-state licensing creates billing problems

Each state license creates a chain of billing dependencies.

Provider enrollment per state

Having a license in a state does not automatically mean the provider is enrolled with that state’s payers. Medicare, Medicaid, and commercial plans in each state require their own provider enrollment and credentialing. A provider who is licensed in a new state but not enrolled with payers in that state cannot bill for services furnished to patients there.

If the provider sees a telehealth patient before payer enrollment is complete, the claim may be denied. Retroactive enrollment may not be available for all payers.

Medicaid varies by state

If the practice sees Medicaid patients across state lines, each state’s Medicaid program is a separate system with its own managed care organizations, authorization rules, telehealth coverage policies, and claim submission requirements. A practice enrolled in one state’s Medicaid program is not automatically enrolled in another’s.

Some states have expanded telehealth coverage for Medicaid. Others have restrictions on which services are covered, what modalities are allowed, and whether the patient must be at an originating site.

Commercial payer rules vary

Commercial payers may have different telehealth coverage policies, reimbursement rates, and place-of-service coding requirements in different states. Some states have parity laws requiring insurers to reimburse telehealth at the same rate as in-person care. Others do not. The practice needs to know each state’s rules for each payer.

Medicare telehealth rules

CMS has reinstated several pre-pandemic limitations on Medicare telehealth services. The updated guidelines reintroduce geographic and location-based requirements for some services. Practices billing Medicare for telehealth should confirm which services are covered, which location requirements apply, and whether temporary flexibilities have expired.

The billing workflow for multi-state telehealth

A practice that furnishes telehealth across state lines needs a billing workflow that accounts for:

  • Which state the patient is in. This determines which license applies, which payer rules govern, and how the claim should be submitted.
  • Whether the provider is enrolled with payers in that state. If enrollment is not complete, claims cannot be billed.
  • Which Medicaid program applies. If the patient has Medicaid, the claim goes to the patient’s state Medicaid program, not the provider’s home state.
  • Place-of-service coding. Telehealth claims use specific place-of-service codes, and the correct code may depend on the payer, the state, and whether the patient is at home or at a healthcare facility.
  • State-specific telehealth parity rules. Whether the claim is reimbursed at the same rate as an in-person visit depends on the state and the payer.

If the billing team treats all telehealth claims identically regardless of the patient’s state, the practice will see avoidable denials.

What to track

For each state where the practice furnishes telehealth:

  • Is the provider’s license current and in good standing?
  • Is the provider enrolled with Medicare, Medicaid, and major commercial payers in that state?
  • What are the telehealth coverage rules for each payer in that state?
  • What place-of-service codes apply?
  • Does the state have a telehealth parity law?
  • What are the Medicaid telehealth coverage and authorization rules?
  • Is malpractice coverage in place for that state?

If the practice cannot answer those questions for each state, the billing workflow has gaps that will show up as denials, delayed enrollment, or uncollectible claims. For related guidance on how licensing compacts work at the billing level, see The Interstate Medical Licensure Compact, Explained for Billing.

How Neobill can help

Neobill works with practices offering telehealth across state lines that need clearer billing visibility for multi-state claims. The free audit reviews provider enrollment status, payer-specific telehealth rules, claim submission workflows, and denial patterns across states so the practice can see where the multi-state billing workflow needs attention.