National Telehealth Survey Sees Surge in Commercial Payer Coverage
Foley & Lardner’s third state-by-state survey of telehealth coverage reports a ‘sea change’ in legislative activity to require commercial payers to reimburse providers for connected health services.
December 03, 2019 – Commercial payers are jumping – or being pulled – aboard the telehealth bandwagon, according to a new analysis of state telehealth reimbursement laws.
With California recently passing legislation to mandate payment to providers for use of connected health technology, 42 states and the District of Columbia now have reimbursement guidelines on the books for commercial payers, according to a state-by-state analysis from the law firm of Foley & Lardner.
“This is a good thing and represents real progress over the past five years,” Nathaniel Lacktman, a partner and chair of the firm’s Telemedicine & Digital Health Industry Team and one of the report’s authors, says in the report. But it doesn’t mean that those states are covering telehealth as much as they could. And there are still eight states – Idaho, Wyoming, Wisconsin, Pennsylvania, West Virginia, North and South Carolina and Alabama – that have nothing on the books.
“Unfortunately, the quality and efficacy of these laws varies significantly from state to state,” Lacktman and his co-authors, Jacqueline Acosta and Sunny Levine, point out. “For example, four states have telehealth coverage laws on the books that do not actually mandate health plans to cover services delivered via telehealth (Florida, Illinois, Massachusetts, and Michigan).”
“And while telehealth coverage has widely expanded, the same cannot be said for reimbursement/payment parity,” they add. “Currently, 16 states maintain laws expressly addressing reimbursement of telehealth services, but only 10 of them offer true ‘payment parity,’ meaning that providers outside those states may still have an uphill battle when seeking similar reimbursement rates for in-person and telehealth services.”
The survey represents a step forward – Lacktman called it a “sea change” – in telehealth and telemedicine coverage, as charted by the law firm in its initial survey in 2014 and a follow-up survey in 2017. Reimbursement constraints are still hindering telehealth adoption across the country, he and his colleagues note, but the landscape has improved.
Among the bright notes, some 34 states now mandate coverage for asynchronous (store-and-forward) telehealth services, an up-and-coming platform that enables patients and providers to connect online at the time and place of their choice, free of the challenges of real-time audio-video. And 13 states are now requiring commercial payers to cover remote patient monitoring, yet another service gaining popularity with payers and providers as the mHealth industry turns out better wearable devices and remote monitoring platforms.
“These laws benefit patients by increasing access and availability to health care services, and catalyze the growth of telehealth technologies throughout the country,” the report notes.
While the first two surveys gauged the nation’s interest in telehealth adoption, this latest report zeroed in on commercial insurance coverage and parity – two separate concepts. Coverage laws typically require a payer to cover telehealth services to the same extent that they cover in-person services, but do not mandate that payers cover new service lines or specialties or even that they provide identical coverage.
Parity laws, meanwhile, require the payer to reimburse providers at the same or equivalent rate as in-person services. These laws are less prevalent and more controversial.
“Payment parity laws were created in response to health plans paying for telehealth services at only a fraction of the rate the health plan pays for the identical service when delivered in-person,” Lacktman and his colleagues note in the report. “This can occur when a state enacts a broad telehealth coverage law, but fails to include any language regarding the reimbursement or payment of telehealth services.”
In that instance, they note, a health plan could opt to reimburse providers for telehealth at, say 50 percent of what it reimburses for in-person care – as some health plans in New York have done in the past.
“If the health plan’s payment rate is too low, it can create a disincentive for providers to offer telehealth services, undermining the very policy purposes the coverage law was intended to achieve,” the report continues. “When this happens, in-network providers have no recourse other than to 1) offer telehealth services at a loss or 2) simply no longer offer telehealth as an option. And because the telehealth service is covered under the patient’s benefit plan, the provider cannot give the patient the option to pay out-of-pocket, as doing so could be a breach of contract under the provider’s participation agreement with the health plan.”
While some payers have fought against parity laws with the argument that they should be able to set their own rates for coverage, Lacktman and his colleagues say a well-drafted parity law can set the stage for payers and providers to negotiate reimbursement rates.
“Well-drafted payment parity laws can level the field for providers to enter into meaningful negotiations with health plans as to how telehealth services are covered and paid,” the report concludes. “Model payment parity laws should not eliminate opportunities for cost savings, and should allow health plans and providers to contract for alternative payment models and compensation methodologies for telehealth services, so long as those negotiations are voluntary.”
“Nor are payment parity laws intended to prohibit health plans and providers from the freedom to develop and enter into at-risk, capitated or shared savings contracts, all of which are conducive to the benefits offered by telehealth,” it adds. “Keep in mind, payment parity laws do not change the health plan’s existing utilization review processes. The doctor’s services (whether in-person or via telehealth) must still be of high quality, appropriately documented, delivered in accordance with state medical practice standards, and medically necessary in order to be paid.”