Telehealth Commercial Coverage and Parity Laws: Trends, Challenges and Opportunities

There will always be differences among state laws on telehealth coverage, but what is remarkable is the rapidly increasing pace at which states have been adopting coverage statutes in the last few years, with currently 29 states plus Washington D.C. having enacted coverage laws. Here’s what telehealth providers and companies might expect to see from these laws.

Market Segments That Will See Growth

All telehealth market segments can benefit from these laws, depending on how the statutory language is drafted. Healthcare providers offering telehealth-based services can experience growth when these laws are passed, as do software platform developers and manufacturers of telehealth equipment.

How Do Differences in State Laws Affect the Telehealth Market?

For a state to promote meaningful adoption of telehealth, much depends on the language of the statute. A narrowly drawn statute may provide coverage only for telemedicine and define it as licensed physician services. In that event, the telehealth market will see growth primarily in physician consults and other physician-driven healthcare services.

If, instead, a statute is drafted more broadly to include telehealth, virtual care, or remote patient monitoring, the state will see growth in those areas, including equipment manufacturing, software development, and other technologies associated with virtual care services. This could also trigger growth in companies that create patient health apps or data-driven interfaces, all of which are part of the virtual care services enterprise.

From a legislative statutory standpoint, the biggest decision point is this:

1. Cover telehealth-based services to the same extent that service is covered when provided in-person; or
2. Cover additional telehealth-based services, such as remote patient monitoring and mHealth apps even if they are not covered in the in-person setting.

Depending on the legislature’s goal, different and specific statutory language is required because the latter telehealth services, by definition, do not typically exist in the in-person setting. Therefore, they will not typically be covered as an in-person benefit.

For example, if a state legislature intends to cover the broader spectrum of telehealth services, but the proposed bill reads ‘health plans must cover services provided via telehealth to the same extent those services are covered if provided in-person,’ that bill could create an unintended coverage gap omitting remote patient monitoring because many health plans do not have coverage of an in-person equivalent to remote patient monitoring. Some states have enacted follow-up legislation to expressly expand the scope of covered telehealth services, even after enacting a first telehealth coverage statute.

How Multi-State Trends and Pace of Adoption of Telehealth Coverage Affect Payment Parity Laws

There may be at least a half dozen bills pending in different state legislatures currently under discussion. We will see more states passing these laws. We may also see those states with existing telehealth coverage laws going back to the table to consider statutory language that more accurately reflects the current state of telehealth in this country.

Biggest Challenges Providers Encounter in States without Telehealth Coverage or Payment Parity Laws

Providers of telehealth services always have questions about reimbursement. There are answers out there, but telehealth providers should also consider changing their terminology. Viewing the health care industry in terms of ‘reimbursement’ often means fee-for-service payments from government programs. That renders ‘reimbursement’ narrow and limited when compared to the ‘revenue’ and ‘payment’ opportunities available to hospitals, health systems, providers, and innovative companies in the telehealth and virtual care space. Shift the concept from ‘reimbursement’ to ‘payment’ and telehealth providers can embrace more financial sources.

Providers know Medicare covers a limited set of telehealth services. The Medicare statutory coverage conditions and definitions are restrictive, requiring qualifying originating sites and rural patient locations, and other requirements. In 2014, Medicare paid only $14 million for telehealth services. Medicare is not ‘reimbursing’ for many telehealth services.

Compare that to the payments being made for telehealth services across the country by employer-sponsored plans, employers out of pocket, commercial health plans, patient self-pay, retail market, hospital-to-hospital arrangements, institution-to-provider arrangements, ICU arrangements, platform licensing, etc. Providers can learn to understand and explore these opportunities, and build robust models that look beyond ‘reimbursement’ for their revenue needs.

That said, when advising on traditional reimbursement compliance issues, the Medicare coding rules are fairly well-described and CMS has made the information available in the regulations, Manuals, sub-regulatory guidance and associated materials. Hospitals and other providers can learn the modifiers and the conditions for coverage for Medicare telehealth services. The same hold true for services covered under state Medicaid fee for service programs.

At this time, better opportunities for telehealth providers can be seen among Medicaid managed care organizations and Medicare Advantage plans. Both plans and providers can benefit if these arrangements are thoughtfully drafted and mutually-beneficial.

What Providers Should Do If Payment Parity Doesn’t Exist in Their State

First, understand the difference between telehealth coverage and telehealth payment parity. Many, but not all, of the 29 states with telehealth commercial insurance laws have equal coverage (some impose restrictions and limits resulting in less than coverage parity). Payment parity exists in a smaller subset of those states, which means that not only must the services be covered, but the rate the health plan pays the provider for telehealth services must be equal or equivalent to the rate the health plan pays that same provider for the in-person service. Examples include Delaware, New Mexico and Virginia, among others.

In states that lack payment parity, many hospitals and providers receive less than the in-person payment rate for the same service. That creates a disincentive for providers to utilize telehealth services and, from a policy standpoint, does less to promote adoption or stimulate growth in that state. These elements should be considered and discussed when a state’s legislature evaluates its own telehealth coverage bills.

Even in the absence of any telehealth coverage or payment laws, health plans and providers with a shared vision of patient care can come together and negotiate telehealth coverage and payment rates or contract for alternate compensation methodologies designed specifically for telehealth services. Providers and plans should be proactive, have a shared vision, and create a meaningful solution that will benefit the provider, the health plan, and most importantly, the patients.

This post originally appeared as an interview on mHealth News and appears here with permission.