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Telehealth Payment Parity Laws Rising Rapidly Across States

By Vera Gruessner

- As the nationwide telehealth movement continues to make progress across the states, it is important to understand the many regulations and policies being adopted to properly reimburse physicians for offering telemedicine services. Telehealth commercial insurance coverage laws (including payment parity laws) are one key area of legal battles taking place between insurers and providers today, as states continue to pass varying and sometimes controversial legislation with regard to physician telemedicine reimbursement.

Telehealth Payment Parity Laws

“There will always be differences among state laws on telehealth coverage,” Nathaniel Lacktman, attorney and expert in telemedicine law at Foley & Lardner, told during an interview. “But what is remarkable is the rapidly increasing pace at which states have been adopting these statutes in the last few years, with currently 29 states plus Washington D.C. having enacted coverage laws.”

What segments of the telehealth market gain greater usage when payment parity laws are passed?

“All telehealth market segments can benefit, if the statutory language is well-crafted,” Lacktman explained. “Companies experience growth whether they are a healthcare providerareas in the industry when payment parity laws are passed are among providers who are offering the services and offering services, or developers of equipment and software platforms used in telehealth.

How do differences in these state telehealth coverage laws affect the market?

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“For a state to realize meaningful adoption of telehealth using these laws, much depends on the language of the statute,” he continued. “A narrowly drawn statute may provide coverage only for telemedicine and define it as licensed physician services. If that’s the case, the market will see growth primarily in consults and other types of physician-driven services.”

“If, instead, a statute is drafted more broadly to include telehealth, virtual care, or remote patient monitoring, the market will see growth in these areas, including equipment, software, and technology associated with these services. This could also trigger growth in companies that offer  mHealth, patient health apps, or data-driven interfaces, all of which are part of the virtual care enterprise.”

“From a statutory standpoint, the biggest coverage decision point is: coverage telehealth-based services to the same extent the service is covered when provided in-person; or cover additional telehealth-based services such as remote patient monitoring and mHealth apps. The latter are types of telehealth services that, by definition, do not really exist in the in-person setting.”

“For example, if a state legislature wants 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 would create an unintended gap and remote patient monitoring will be left out because many health plans do not have coverage of any in-person equivalent of remote patient monitoring. Some states have enacted follow-up legislation to expressly expand the scope of covered services even after enacting a first telehealth coverage statute.”

How do multi-state trends and the pace at which states are adopting telehealth coverage affect payment parity laws and the telemedicine field?

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“There might be at least a half dozen bills currently pending in different state legislatures under discussion. We will see more states passing these laws,” Lacktman clarified. “We may also see those states with existing telehealth coverage laws revisiting these statutes to so they more accurately reflect the current state of telehealth in this country.”

What are the biggest challenges healthcare providers encounter when managing reimbursement in states without telehealth payment parity laws?

When telehealth companies call to ask me about reimbursement, I answer their questions, but also advise them how to change their terminology,” Lacktman stated. “I prefer they not look at the healthcare industry in terms of reimbursement. To me, the word ‘reimbursement’ connotes fee-for-service payments from government programs.”

“That means ‘reimbursement’ is narrow and limited when compared to all the ‘revenue’ and ‘payment’ and other financial opportunities available to hospitals, health systems, providers, and innovative companies in the telehealth and virtual care space.  Shift the worldview from ‘reimbursement’ to ‘payment’ and telehealth providers can see many more financial sources.  We know Medicare covers a limited set of telehealth services. The Medicare statutory coverage conditions 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’ a lot for 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, patients self-pay, retail, hospital-to-hospital arrangements, institution-to-provider arrangements, etc. Providers can understand and explore these opportunities and we build robust models looking beyond ‘reimbursement.’”  

READ MORE: Payers, Providers Seek Common Ground on New Telehealth Services

“In terms of traditional reimbursement compliance issues, I believe the coding rules are fairly well-described and Medicare has done a good job of making that information available in the regulations, Manuals, sub-regulatory guidance and associated materials. Providers can learn the modifiers and the conditions for coverage for Medicare telehealth services or services covered under a state Medicaid fee for service program.”

“Regarding government programs, I believe better opportunities for telehealth providers currently reside in contracting with Medicaid managed care organizations and Medicare Advantage plans. Both plans and providers can benefit if these arrangements are thoughtfully drafted and we are seeing a good deal of activity and interest in this space.”

What should providers do if payment parity does not exist in their home 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 truly equal coverage. 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,” Lacktman concluded.

“In states that lack payment parity, many hospitals or providers receive less than the in-person payment rate. That actually creates a disincentive for providers to utilize telehealth services and does nothing to promote adoption or stimulate growth in that state.”

“I prefer to see plans and providers come to the table with a shared vision and negotiate telehealth coverage at an equivalent rate or develop alternate compensation methodologies for telehealth services. That said, if a provider is operating in a state without any telehealth law (coverage or payment parity), there still are opportunities out there. The provider needs to be proactive, have a vision, and offer a meaningful solution that will benefit the provider, the health plan, and most importantly, the patients.”


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