State Medicaid agencies and their Offices of Inspector General are auditing telehealth claims against modality, place of service, and originating site rules that differ from one state program to the next. A compliance officer who bills a Medicaid telehealth visit under Medicare's convention, or a neighboring state's, can trigger a recoupment even when the care itself was appropriate. The Texas Health and Human Services Commission's Office of Inspector General has ordered two providers to return $3,736 and $45,412 over telehealth billing errors, and Ohio Medicaid applies a place of service rule keyed to the practitioner's location, not the patient's. For providers paid under Medicaid managed care or fee for service, this exposure is not hypothetical.
Federal Flexibility, State-By-State Rules
Federal Medicaid law leaves the specifics to the states. Without federal approval, a state decides which telehealth services, modalities, and providers it covers, a flexibility the Medicaid and CHIP Payment and Access Commission has documented state by state. States also decide how to use the national place of service code set, where POS 02 marks telehealth delivered somewhere other than the patient's home and POS 10 marks telehealth delivered in the patient's home. The same two digit code can describe a clean claim in one state's program and a billing error in another's.
Ohio and Texas Code the Same Visit Differently
Ohio Medicaid's telehealth billing guidelines, effective for dates of service on or after January 1, 2026, require the place of service code on a claim to reflect the practitioner's physical location, not the patient's, and bar POS 02 and 10 on claims where Medicaid is the primary payer unless program specific guidance says otherwise. Texas Medicaid runs the opposite logic. The Texas Medicaid Provider Procedures Manual identifies telehealth claims with modifier 95, and sets separate rules for the patient site facility fee, procedure code Q3014. A biller who carries Ohio's practitioner-location rule onto a Texas claim builds the same error into every claim that follows the template.
A place of service code that is correct under one state's Medicaid program can be a documented billing error under another's.
What Texas's Own Audits Found
Texas's Office of Inspector General has converted that coding gap into recovered dollars. A February 2025 audit found that the Harris Center for Mental Health and Intellectual and Developmental Disabilities billed telehealth visits with incorrect procedure codes, missing time documentation, and services unsupported by the record, and ordered the center to return $3,736 to the state. A separate OIG audit found that Baylor Scott & White Health double billed professional and institutional claims for 470 telehealth visits, charged the patient site facility fee for 183 visits where the patient was not physically present, and used incorrect procedure codes on 30 of 95 claims reviewed, for $45,412 in overbilling. Both audits cited coding choices that did not match the state's own billing rules, without alleging the underlying care was unnecessary.
The Exposure Extends Beyond One State's Program
Texas and Ohio are not outliers. Illinois Medicaid Audits and HFS-OIG Review documents a parallel claims review inside that state's inspector general program, and a managed care organization can layer its own investigation atop the state's audit, the subject of Managed Care SIU Investigations: What Providers Face. A single claim can be flagged twice under two rule sets, and a coding error can escalate: billing that repeatedly does not match the service rendered can support a civil false claims act theory, and a fraud finding can carry an OIG exclusion into every other federal healthcare program the provider bills. Disputing an unfavorable finding runs through that state's own audit appeal process and deadlines.
Why Early Legal Counsel Is Critical
Many practices answer the audit letter with a billing consultant. Medicaid Audit Consultants and Attorneys: Who Does What explains where that work ends and legal representation becomes necessary. It is critical that healthcare providers promptly retain experienced healthcare defense counsel upon receiving a Medicaid telehealth audit notice, a managed care special investigations unit inquiry, or any other government inquiry into telehealth billing. Early legal intervention can protect the provider's rights, ensure the response to the state's rules is accurate, avoid inadvertent admissions, preserve relevant defenses, and allow counsel to communicate with the state agency on the provider's behalf. Delaying legal representation can affect the outcome of a matter and expose the provider to recoupment, exclusion, and referral for further investigation.
How Health Law Alliance Can Help. Health Law Alliance defends providers against Medicaid telehealth audits brought by state agencies and their inspectors general nationwide, including the coding and place of service findings described above. Health Law Alliance's attorneys have overseen 2,000+ audits and handled 5,000+ matters, with 25+ years of experience. If your practice has received a Medicaid telehealth audit notice or a request tied to place of service or modality coding, contact us for a free, confidential consultation.
