The State of Telehealth - Policy and Reimbursement Q&A

11 July 2016 Health Care Law Today Blog
Authors: Nathaniel M. Lacktman

Foley Partner Nathaniel Lacktman, head of the firm’s telemedicine and virtual care practice, participated in a comprehensive Q&A discussing the challenges and opportunities facing the telehealth market with Healthcare Informatics – providing an in-depth look at key trends in the industry, including the variations in state laws, reimbursement issues and opportunities.

The discussion begins with insights on insurance barriers that are affecting the telehealth industry. According to Lacktman, there is a much more robust and meaningful utilization and enjoyment of telehealth services in states that have passed telehealth insurance coverage laws. In the second half of the discussion, Lacktman continues to talk about the challenges the telehealth industry faces, providers’ thoughts on virtual care services, and how the future might play out.

Healthcare Informatics: Just by how much are differences in state laws and insurance barriers affecting the telehealth industry?

Nathaniel Lacktman: A recent report from the Center for Connected Health Policy (CCHP), a program of the Public Health Institute, an Oakland, Calif.-based organization dedicated to promoting health through research and training, found that when it comes to telehealth laws and reimbursement policies, legislators and policy makers across the country seem to be taking one step forward and then one step back. For instance, while many states are beginning to expand telehealth reimbursement, others continue to restrict and place limitations on telehealth delivered services, according to the report, which was covered by Healthcare Informatics Assistant Editor Heather Landi in April.

As such, there is no shortage of legal issues that healthcare providers, hospitals, and startup companies should be aware of regarding telemedicine services. Nathaniel Lacktman, head of law firm Foley & Lardner’s telemedicine and virtual care practice, has been at the practice for 12 years. With a firm of nearly 1,000 lawyers, a dozen of whom specifically handle telemedicine arrangements across U.S., he surmises the firm has had more opportunities to handle cutting-edge telemedicine work than any other in the country, if not the world.

As Healthcare Informatics Senior Contributing Editor David Raths noted in his telemedicine policy feature last fall, “For almost 20 years, telehealth advocates have faced the Sisyphean task of trying to get the U.S. Congress to expand Medicare coverage for telehealth beyond traditional rural settings. Meanwhile, they continue to hammer away at the uneven and confusing landscape of state laws and regulations.” Lacktman recently discussed these barriers as well as how the telemedicine landscape could play out in the future with Healthcare Informatics Managing Editor Rajiv Leventhal. Part of that interview is below, edited for format purposes.

HI: What are you currently locked into now regarding telemedicine policy?

NL: Right now, the most interesting stuff circulates around payment for telemedicine services and the so-called telehealth coverage statutes. These laws require a health insurance plan to cover a service delivered via telehealth the same as if the service was delivered in person. I consider telehealth coverage statutes important consumer rights laws. You have no choice as to what insurance company your employer selects to administer your benefits, no choice as to what specific health plan is offered to you, and no choice as to which providers are actually in that plan’s network. So you feel this sense of overwhelming disenfranchisement as an individual in the health insurance industry. And this one of the most important insurance coverages you would have during your life. You have far more ability to flex your spending power when buying life insurance, disability insurance, or car insurance. Yet, health insurance is a totally different process, and the individual really cannot speak with his or her dollars.

In a nutshell, you pay a premium to your health plan under a contract. In exchange, the plan agrees to cover services when you need it. Fair enough. But many plans require you to get those services in-person, meaning you have to take time out of your day and sit in a double-booked waiting room for an all-too-short appointment with your in-network doctor. Yet, there is an available technology for you to receive many of those same services while you are at home or your job—on your own convenient schedule. Telemedicine is well-established and utilized by patients and doctors in all 50 states. But, by and large, unless the state passes a telehealth coverage law requiring health plans to cover these services, they don’t. So you can have an insurance plan, say XYZ insurance, and it might have operations in all 50 states, with a variety of different health plans underneath it. In states with telehealth coverage laws, XYZ’s health plans will cover the services as a benefit, but in states without these laws, XYZ’s health plans do not cover telehealth services. I find this disappointing and frustrating, as do many healthcare providers. We see a much more robust and meaningful utilization and enjoyment of telehealth services in those states that have passed telehealth insurance coverage laws.

HI: Just by how much are differences in state laws and insurance barriers affecting the telehealth industry?

NL: It’s definitely a barrier. Much of the traditional healthcare delivery system relies on Medicare payments, and it shows how a large amount of our overall health costs are paid by that program. I think the Centers for Medicare & Medicaid Services (CMS) sometimes is unfairly criticized because people “demand” CMS change the Medicare telehealth coverage rules and allow reimbursement for patients in urban areas as well as rural. But, these restrictions we imposed by Congress, contained in the Social Security Act, and CMS cannot override federal statutes. In fact, CMS has made many outreach efforts to eliminate artificial restrictions and promote the meaningful use of telemedicine in health care delivery, and they should be recognized for that vision and those efforts. A number of bipartisan bills have been proposed over the years, but they will need federal action. And by April 2017, the U.S. Government Accountability Office (GAO) will issue two reports on telehealth studies and the Medicare program to see if eliminating the restrictions would represent a big financial burden or not. Those reports were required to be created as part of the “doc fix” bill last April and could be a catalyst for legislative movement by Congress.

HI: How are state variances affecting the telemedicine market?

NL: I believe we will eventually get to a point where health plans are meaningfully paying for telehealth services, whether that’s through legislative efforts or sheer enrollee demand. Until then, we do need these coverage statutes because a) so many providers rely on, and participate in, managed care programs; and b) because of the Affordable Care Act, many people have health insurance or are legally required to obtain it. Some of these will conclude that, since they are already spending money on insurance premiums, while they would love to have the convenience of telemedicine-based services, they don’t want to pay out-of-pocket for them. Changing that environment will catalyze utilization, adoption, and people’s enjoyment of these services.

HI: How are the variances in state telemedicine laws creating issues when it comes to interstate medical licensing?

NL: A doctor can be located in New York, you can be on vacation in Miami, and you can receive a consult, diagnosis, and a prescription from that doctor via telemedicine. The default rule is that the New York physician would need to have a license to practice medicine in Florida because that person is delivering care into the state of Florida. There are exceptions to this rule as well. It is not show-stopper burden; it’s much more of an operational or administrative burden. But there are a multitude of solutions and ways to approach it and scale up to have regional and national coverage of a telehealth-based medical group.

HI: What other challenges do you see in the industry that might be preventing telemedicine to take that next “leap?”

NL: Like anything new, it takes a while for buzz to build and people to get comfortable. Historically, telemedicine has been focused in the academic medical center and university environment, if only because that’s traditionally the domain of pilot programs and research studies to prove clinical efficacy. But the clinical efficacy and safety has been established. Now, we have been seeing studies trying to prove telemedicine’s ROI. People are looking to scalability and sustainability: how to structure service offerings with operational homogeneity so there aren’t variances on a state-by-state basis. And I think there’s a better understanding of why providers are using telemedicine, how they plan to use it, and a desire to build a model that does not rely solely on cost savings or shoestring grant-funded budgets. Rather, the service itself should generate revenue and improve quality. That’s the next level of sophistication in telehealth business arrangements. In our practice, we aren’t just papering the legal documents, but we frequently advise clients on the business models and structures that will offer these benefits. Some people appreciate the flashy and exciting technology, but have no idea about how to turn it into a viable service line.

HI: Are doctors more on board with providing these services compared to years past?

NL: Yes, they’re more on board and it’s continuing to grow. The AMA [American Medical Association] just approved their ethical guidelines on telemedicine use after three years of back-and-forth. At this point, it’s pretty irrefutable. Once you get into the thick of it, you will see people doing amazing things with telehealth and doing it with confidence. As with anything, you need education and exposure though before doing it with comfort.

HI: Given the recent Teladoc situation, what are your thoughts on a patient-provider visit having to be established before a telemedicine service takes place?

NL: You’re touching on an important and sensitive issue in the industry right now. Fundamentally, I think part of what telehealth startups themselves represent is a disruptive change to the way healthcare is provided, as well as who can provide it. Historically, hospitals and doctors have considered themselves the gatekeepers for who can deliver healthcare and how it should be delivered. Some people see the changes associated with telehealth as frightening or a threat. Advocates for telehealth, starting about 10 to 15 years ago, would push boards of medicine to give them guidance on telehealth practice standards. They wanted the board to issue a rule stating they are allowed to practice via telemedicine without an in-person exam. That’s a permissive rule; some states prefer to pass only prohibitive rules, and only when necessary. The silent or gray areas, to some people, represent a risk they are not comfortable with. So we now have states with telemedicine practice standards.  These standards are often artificial requirements boards have imposed on doctors only for telehealth services. This includes things such as informed consent for telehealth services. Informed consent for telehealth is not necessarily a bad thing, but a doctor is not required to get one from a patient every time he or she walks into the in-person clinic. Some of these rules have resulted in more burdens and restrictions on innovation. In fact, some states are revisiting those rules and electing to remove the requirements.

And then you also have the overarching notion of standard of care. The question is: is the examination you are conducting sufficient to give the doctor all the information he or she needs to assess the patient’s clinical condition, and render an accurate diagnosis and treatment? Sometimes a doctor can do that via a real-time audio/video interactive [feed], and sometimes the doctor can’t. A lot of this defers to the independent medical decision making of the practitioner, and if he or she is delivering substandard of care, there will be disciplinary action by the medical board. And that’s how it should be.

HI: When put all together, what will it take for telemedicine programs to integrate themselves more fully into health systems? 

NL: The biggest driver that will fuel overall growth is the move toward population health. That’s a concept a lot of hospitals are driving for as providers will be paid more on a risk-based system with quality of care implications and penalties or risk if the cost of care gets out of control. Already, the smart health systems are looking for ways to reach out to patients to make care more accessible and convenient. The second part is the increasing amount of information available to the doctors by using tools such as remote patient monitoring and patient-centered apps where the goal is to get more information coming from the patient to the doctor. That’s the idea: make care more accessible to the patient and get more (and better) information to the caregivers. If that’s achieved, providers will be in a much better position to be successful under these risk-based models, which is the future of healthcare.

This Q&A appears with permission from Healthcare Informatics and the original article can be accessed here.

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