Hospital Privileging by Proxy for Telehealth Locum Tenens in 2025

The $50,000 Paperwork Trap

Your facility is short-staffed. You find a brilliant locum tenens neurologist available for remote stroke coverage starting next Monday. You think, "Great, we'll just use privileging by proxy to speed things up." Then the Medicare Administrative Contractor (MAC) rejects the billing because the provider's 855R isn't linked correctly to the distant site's group, or your medical staff office realizes the distant site's credentialing file is missing a 10-year work history. Suddenly, your "speedy" solution is a three-month revenue leak.

Hospital privileging by proxy for telehealth locum tenens 2025 cms compliance requirements isn't just about checking boxes. It’s about understanding who owns the risk when a doctor is 1,000 miles away. If you get the written agreement wrong or fail to vet the "distant site" properly, you aren't just out of compliance—you're practicing without a net.

We’re going to walk through how to keep these files clean, what CMS actually expects in 2025, and why most proxy agreements fail during a survey.

Why Proxy Privileging Often Stalls Locum Placements

CMS allows an "originating site" (where the patient is) to rely on the credentialing and privileging of a "distant site" (where the doc is) under 42 CFR § 482.22. It sounds simple. It rarely is.

For locum tenens, the complication is often the middleman. You have the hospital, the locum agency, and the provider. If the locum agency isn't a CMS-participating "telehealth entity," you can't just proxy through them. You have to proxy through the hospital where the locum holds primary privileges.

We see this fail most often when the medical staff office assumes the locum agency’s internal vetting counts as the proxy. It doesn't. CMS requires a written agreement with a distant site hospital. If the locum isn’t active and in good standing at that specific distant site hospital, your proxy is worth zero.

The 2025 CMS Compliance Checklist for Proxy Agreements

To pass a survey, your written agreement needs to be more than a one-page handshake. Here are the non-negotiables for 2025:

• The Distant Site is a Medicare-Participating Hospital: You cannot proxy through a standalone private practice unless they meet the specific "telehealth entity" definitions.
• Evidence of Internal Review: The distant site must provide a list of the provider’s current privileges. Don't take their word for it; get the actual privilege sheet from their MSOW or equivalent system.
• The Periodic Review Clause: You must ensure the distant site performs a periodic internal review of the practitioner's performance. This includes at least some version of OPPE (Ongoing Professional Practice Evaluation).
• The Feedback Loop: If your patients complain about the telehealth locum, you are legally obligated to send that feedback to the distant site. If your agreement doesn't outline this process, CMS will flag it.

Form CMS-855R and the Billing Headache

Even if the medical staff office is happy, the RCM team is usually screaming. For telehealth locums, you’re likely filing a CMS-855R to reassign benefits.

In PECOS, you must ensure the provider’s home address or the distant site office is listed as a "practice location." We see denials constantly because the MAC sees a billing address in Ohio and a patient in Florida but no telehealth-specific location flag on the provider’s 10-year enrollment history.

Distant Site vs. Originating Site: Who Does What?

Think of the originating site (the hospital with the patient) as the buyer and the distant site (the hospital where the locum works) as the seller.

The Originating Site (You) must:

1. Verify the distant site is a CMS-enrolled provider.
2. Maintain a file for the locum that includes the signed proxy agreement.
3. Verify the locum is licensed in the state where the patient is located. This is the big one. Proxying the privileges does not proxy the license. If the doctor isn't licensed in your state (or covered by a compact like the IMLC), the proxy is irrelevant.

The Distant Site must:

1. Provide the credentialing packet upon request.
2. Notify the originating site if the locum’s privileges are suspended or revoked.
3. Run the NPDB (National Practitioner Data Bank) queries and share the results if the agreement specifies it.

Avoiding the CAQH ProView Sync Issues

Most locum tenens providers have messy CAQH profiles. They have 15 different state licenses and 20 past work locations. When you’re trying to move fast with a proxy, a "stale" CAQH profile will kill your timeline.

Before you even sign the proxy agreement, demand that the provider (or their agency) authorizes your facility to view their CAQH ProView. Check the "Global Disclosures" section. If they have a pending malpractice suit or a license board investigation, the proxy agreement might put your hospital at risk for negligent credentialing. Proxying doesn't mean you ignore the red flags; it just means you don't do the primary source verification (PSV) yourself.

Real-World Timelines: What’s Realistic?

Don't believe an agency that says they can have a telehealth locum proxied and billing in 48 hours.

• Days 1-3: Legal review of the proxy agreement between the two hospitals.
• Days 4-7: Exchange of credentialing files and the "Current Privileges" list.
• Days 8-14: Processing the 855R via PECOS for Medicare billing.
• Day 15+: Payer enrollment for commercial carriers (many of whom do not recognize proxy privileging and want a full application via Availity).

If you aren't factoring in the 30-60 days it takes for commercial payers like UnitedHealthcare or Aetna to link a new provider to your group, you're going to be holding claims for a long time.

Why Locum Agencies Aren't Always Your Friend Here

Locum agencies want the placement. They might tell you, "We have a standard proxy form." Be careful. Your hospital bylaws dictate how you accept privileges. If your bylaws don't explicitly allow for privileging by proxy for telehealth, you need to amend them before you start signing these deals.

We recently saw a facility get tagged by The Joint Commission because their bylaws required a "department chair interview" for all new staff, but they hadn't performed them for the telehealth locums. The proxy agreement doesn't magically override your own bylaws unless the bylaws say it does.

Summary Checklist for 2025 Compliance

1. Bylaw Check: Do your medical staff bylaws explicitly allow for proxy privileging under CMS § 482.22?
2. License Verification: Is the locum licensed in your state? (Check the state board directly; don't rely on the agency's PDF).
3. The Agreement: Is there a signed, dated agreement between your hospital and the distant site hospital?
4. The List: Do you have a copy of the locum's current privileges from the distant site?
5. Quality Data: Does the agreement outline how you will send performance data back to the distant site?
6. PECOS Check: Is the 855R submitted and does the provider’s 855I include the correct telehealth practice locations?

Stop treating telehealth locums like temporary visitors. For the duration of their contract, they are members of your medical staff. If you treat the paperwork as a formality, the first audit you hit will be a painful lesson in why the details matter.

Get the primary source verification for the license, sign a tight agreement with the distant hospital, and keep your PECOS entries updated. That's how you actually speed up the process without ending up on a CMS corrective action plan.