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CMS is loosening regulations on telehealth services offered in Medicare Advantage plans

The Centers for Medicare and Medicaid Services (CMS) finalized a rule proposed in October 2018 that loosens regulations on telehealth services offered in Medicare Advantage (MA) plans.

For context, MA is a type of health insurance offered by private insurers to consumers 65 and up as an alternative to the government’s traditional Medicare program. Membership in the private Medicare market grew around 6% year-over-year (YoY) in 2018 and is projected to tick up 12% YoY to reach an all-time high of 23 million members in 2019, making it an attractive market for private payers.

Here’s what it means: The new rule extends telehealth benefits previously offered by MA plans, making them cheaper and more accessible.

  • The policy lifts geographic restrictions that were likely limiting telehealth adoption. Previously, regulation only allowed MA plans to receive reimbursement for offering telehealth services with a caveat: Beneficiaries were required to travel to designated healthcare facilities in order to access them. Now, MA members can access telehealth services regardless of their location.
  • And it broadens telehealth reimbursement for payers. Before, insurers could only offer telehealth as a supplemental benefit paid for with rebates or beneficiary premiums, per Modern Healthcare. MA plans can now include telehealth as a generic government-funded benefit.

The bigger picture: The CMS’ move to augment telehealth services could help spur rapid growth in telemedicine adoption.

  • Payers will likely beef up their private Medicare plans with telehealth offerings. A clearer path to reimbursement should prompt more insurers to cover telehealth services, especially given the potential for savings: Health system Spectrum Health’s uptick in telehealth offerings saved payers $1.5 million in the first half of 2018 alone, for example.
  • Growth in MA membership should further boost telehealth adoption. MA enrollees will account for 42% of total Medicare membership by 2028 — up from 34% in 2018 and 22% in 2008, per the Kaiser Family Foundation. Over the same period, Medicare enrollment will grow steadily as the US population ages rapidly.
  • And this latest CMS policy could be a precursor to increased legislation favoring telehealth. Stringent government policies have historically been a primary barrier to broader telehealth adoption. This CMS policy — alongside laws recently laid out by Congress — signal a government mandate to increase telehealth adoption. If the CMS and other government agencies continue to relax telehealth regulation, healthcare players will be better positioned to fuel a telehealth boom.