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Examining the Rocky Road to Telehealth Parity

Telehealth parity advocates say remote care should be no different than in-person services. Opponents say its value hasn't been proven. Here's a rundown of the efforts to make it a standard of care.

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Telehealth advocates have long argued that online and digital healthcare should be treated the same as in-person healthcare. But the call for parity isn’t so simple.

Parity in telehealth is approached on two levels: Service and payment. If a telehealth service exists that can match an in-person service – say, primary care, specialty care or emergency care – it should be made available to consumers. Thus, people who can’t easily access healthcare in person can get the care they need via telehealth.

But for providers, that new service has to have a return on value, and it’s usually found in reimbursements. If a doctor or health system can’t get paid for providing the service, they probably won’t use it. So it’s up to the payers – government and private – to place a value on telehealth that gives healthcare providers a compelling reason (for now, at least) to adopt it.

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The push to make telehealth an acceptable standard of healthcare hasn’t been easy.

Opponents focus on the idea that telemedicine and telehealth are relatively new concepts, and often unproven – hence the call for more pilots and outcomes-based research. In an August 2016 analysis in Health Affairs, Tony Yang, an associate research professor in health administration and policy for George Mason University, characterizes the five main points of contention:

  • “First, opponents suggest that new technology should be approached with caution, as it sometimes proves unreliable and might lead to improper diagnosis and treatment, absent the physical examination. For example, the American Optometric Association opposed online eye exams (and parity in their reimbursement) and called such methods ‘substandard model[s] of care.’
  • Second, many express concerns about the overall quality of care that can be provided using telehealth and worry that instead of correcting issues of access, telehealth might actually create greater inequity in the quality of care available in rural areas.
  • Third, there are also concerns that many telehealth appointments might be one-time engagements, which creates problems when the health data from that appointment might not be added to a patient's primary care physician. This creates gaps in records, which ultimately could have major effects on diagnosis and treatment at later times. Some telehealth services might place the burden of communicating telehealth appointments and results on the patient.
  • Fourth, many are concerned about patient privacy, an area of growing concern in traditional services. The move toward telehealth programs means moving toward more digitalization of medical records, which then could leave records vulnerable to hacking and infiltration.
  • Fifth, some argue that telehealth simply should not be reimbursed the same amount as in-person care precisely because of the cost savings associated with it. If telehealth services save money and are more efficient, the opponents argue, reimbursement for services should mirror those savings. Because of the high risks, possible lower quality of care, and cost savings of telehealth, many physicians believe that telemedicine should not be reimbursed on the same levels as in-person care.”

“In response, many point to the need to develop and support telehealth services to improve the quality of care provided and create incentives for patients and doctors to use telehealth,” Yang adds.

Telehealth proponents say payment parity is crucial at this stage because healthcare providers are still on the fence about the technology. If payers reimburse them at the same rate that they’d be reimbursed for in-person care, providers would be more inclined to try the technology and figure out how it might improve their workflows.

“Parity will work in the short term to drive acceptance,” says Ralph Derrickson, president and CEO of Carena, a Seattle-based telehealth provider. “There’s a whole bunch of the [healthcare] market that hasn’t figured out there’s a new game in town.”

But Derrickson also says parity’s days are numbered – because healthcare providers and their patients will work out the value of the services offered and set their own rates. That’s when telehealth will have truly reached its “tipping point.”

“As we move from a fee-for-service model to a fee-for-value model to a fee-for-consumer-value model … health systems are going to think more like health plans and health plans are going to have to think more like health systems,” he says.

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The struggle for parity can best be seen in how states mandate private payer coverage. According to the American Telemedicine Association, some 31 states and the District of Columbia have telemedicine parity laws for private payers, which basically prohibit them from denying coverage because a certain service is provided by telemedicine. Five more states are debating legislation this year (including New Jersey, which has carried the debate over from last year).

Among those not promoting parity at this point is Massachusetts. Proposed legislation introduced last year met with stiff resistance from the insurance industry.

“Clearly, the costs are lower when it's telemedicine, so the reimbursements should be lower,” Jon Hurst, president of the Retailers Association of Massachusetts, told Mass Live during last year’s debate.

“It's mostly a vehicle for making sure that people who want to do telemedicine on whatever terms they make up and charge what they want will get away with it,” added Jim Kessler, general counsel for Health New England, based in Springfield. “If you mandate certain services and reimbursements, you're taking away the whole negotiating ability of health insurers to benefit consumers.”

Latoya Thomas, director of the ATA’s State Policy Resource Center, says states are taking many different approaches to parity.  Four – Texas, Oklahoma, Louisiana and California – have had some form of parity for 20 years, while others, like Alaska and Arizona, have experimented with different rules and guidelines, like providing coverage for telepsychiatry services or in rural areas.

“We realize there’s no one-size-fits-all plan,” says Thomas.

Not all of these experiments are popular, though. Thomas says private payers in New York are sparring with state officials after announcing plans to reimburse for telehealth at half the rate of an in-person service. Texas and Arkansas still require physicians to meet with patients in person before moving to a telehealth platform for such services as prescriptions. And while legislators are moving to change the law, Arkansas’ telehealth guidelines still require a patient to be in a healthcare setting, thereby preventing home- and business-based telehealth programs.

Thomas feels that the payer industry is sometimes wrongly tarred with the anti-telemedicine brush.

“Payers actually do get telemedicine – they really do,” she says. “They know it makes sense.”

But they don’t always agree on what services should be offered through telemedicine – specialty care, for example, or physical therapy or preventative care. In many cases, these telehealth services are so new that they haven’t been proven to improve on or even replicate in-person care, so private payers will shy away from covering them.

As with private payers, states exercise significant control over what telemedicine services can be covered by Medicaid. In all, 49 states offer some coverage, primarily for video consults, and most do not reimburse e-mail, phone, or fax communications. Beyond that, the differences are stark. According to a Health Affairs survey:

  • Nine states reimburse for store-and-forward services.
  • Sixteen states have some sort of reimbursement for remote patient monitoring.
  • Two additional states, Pennsylvania and South Dakota, reimburse for remote patient monitoring through their departments of aging, instead of Medicaid.
  • Four states only allow reimbursement for telehealth from physicians, while 19 states restrict provider types to a list of nine.
  • Fifteen states and the District of Columbia do not restrict reimbursement based on provider types. 

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At the federal level, the Centers for Medicare and Medicaid Services (CMS) reimburses telehealth programs through Medicare, but there are many restrictions.

For instance, Medicare only reimburses for certain real-time encounters – consults, office visits, psychiatry services and some services covered in the physician fee schedule. Medicare does not reimburse for asynchronous or store-and-forward services, and remote patient monitoring services are limited to Alaska and Hawaii.

Second, patients receiving telehealth services must be in so-called originating sites, which are defined by Medicare as certain healthcare sites (a doctor’s office, hospital, clinic, skilled nursing facility, certain health centers and renal dialysis centers). In other words, the patient can’t be at home, or in some non-healthcare-related location.

Finally, those originating sites must be located in one of three areas: a county that isn’t part of a metropolitan area, an area designed as a rural health profession shortage area, or an area previously approved by the Health and Humans Services Department for telehealth reimbursement. Also, the healthcare provider must be licensed to practice telehealth in that specific area.

Dave Skibinski, president and CEO of SnapMD, a Los Angeles-based telehealth provider, says CMS “is being cautious” in embracing telemedicine. The agency is gradually rolling out bundled payment programs and accountable care concepts, he says, but they’re running into a wall of opposition from healthcare providers who haven’t yet found value in using telemedicine.

“It takes time for value-based care” to take hold, Skibinski says.

That said, CMS is coming under fire from organizations like the ATA, the American Academy of Family Physicians and the American Heart Association to reimburse more telemedicine services. And Congress hasn’t yet acted on the Medicare Telehealth Parity Act, a bill introduced in 2015 that would, if approved, expand the number of services covered and the number of qualifying geographic locations.

The ATA’s Thomas, meanwhile, sees more states expanding their telemedicine parity laws to improve reimbursement rates and make more services available to patients.

Writing in Health Affairs, Yang agrees.

“To reap the benefits of telehealth services, states are likely to move toward full parity laws for telehealth services,” he says. “Without parity, there are limited incentives for the development of telehealth or for providers to move toward telehealth services. If there are no incentives to use telehealth, then providers will continue to focus on in-person care, which will keep health care costs high, continue to create access issues, and possibly provide lesser standards of care for chronic disease patients who benefit from remote monitoring.”

“In addition, states are likely to gradually remove restrictions from their parity laws that limit providers, locations, and services, and focus on integrating telehealth into regular health care coverage,” he adds. “It is possible that reimbursement will eventually cover store-and-forward services and remote monitoring, while leaving open the likelihood of covering services that fall outside of these categories, such as mobile applications and devices.”

Dig Deeper:

WEDI Brief Outlines Challenges to Telehealth Reimbursement

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This article was originally published on February 10, 2017.


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