October 21, 2019 – A slew of telehealth bills signed this month by Governor Gavin Newsom positions California at the forefront of the connected health movement – including making the state the latest to require payment parity.
With Newsom’s signature on AB 744, which mandates that payers reimburse healthcare providers for telehealth services “on the same basis and to the same extent” as they cover in-person services, California becomes one of roughly a dozen states to require payment parity. The concept has in the past been contested by payers who would prefer the freedom to negotiate specific coverage rates with healthcare providers.
Nathaniel Lacktman, an attorney with the law firm of Foley & Lardner and chair of its Telemedicine and Digital Health Industry Team, said the bill does allow health plans some leeway in negotiating rates, but mandates that any services provided via telehealth that are the same as in-person services – “as determined by the provider’s description of the service on the claim” – must be reimbursed at the same rate.
Jeremy D. Sherer, an attorney with the firm of Hooper, Lundy & Bookman, said the bill also won’t affect some coverage agreements already in place.
“Stakeholders should note that California’s coverage parity law requires coverage parity subject to the terms of any agreements in place between the parties,” he says. “This means that when a managed care agreement says that telehealth services are not covered, that agreement will prevail over state law, which is important to the state’s payment parity discussion because many telehealth services are not covered by commercial payers through language in their standard agreements. In such situations, the question of payment parity is irrelevant, as non-covered services aren’t impacted by this payment parity law.”