Page 5 ATA State Telehealth Policy Toolkit Coverage and Reimbursement

important to identify and monitor the affect that telehealth has on these indicators--e.g. infant mortality, stroke
related disability, hospital and emergency room readmissions, medication adherence.

Innovative payment and service model design -- Each state, as the regulator of insurance policies offered to its
citizens, has a strong and vital interest in taking advantage of health care delivery innovations, especially to
improve quality, reduce costs, improve timely access to needed care, and improve citizen satisfaction.
Complementing telehealth delivery with innovative payment models like value-based purchasing or medical
homes will foster a modern and collaborative healthcare environment.

REBUTTING COMMON ARGUMENTS OPPOSING TELEHEALTH COVERAGE

Increased Costs – Cost is a key consideration for legislators. Any state action will involve a thorough analysis
of state budget impact.

Some opponents of telemedicine have made claims that there is not enough evidence related to cost and
utilization for telehealth, and have argued that it would result in increased insurance premiums. However, the
actual cost analyses rarely show a significant impact. For example, in 2012, Vermont legislators were
considering a parity bill that would cover private insurance and Medicaid. One of the state’s third party
administrators for the state employee health insurance plan claimed that if passed, the bill would cause an
increase in provider consultations and ultimately a .1-.2 percent increase in premiums. Alternatively, Maine,
which considered a parity bill in 2009, reported that parity would have no direct fiscal impact on State agencies
and programs. Legislators in both states successfully enacted their parity bills into law. Other states like
Mississippi and Montana recently passed their respective parity bills with overwhelming bipartisan support and
without issuing fiscal notes.

Regarding private insurance parity:

 Parity legislation does not increase covered services, but explicitly recognizes telehealth as a way to deliver
existing covered services. This is unlike other common insurance mandates, such as vision services.

 Many private insurers already include telehealth-provided services under their benefit coverage. For
example, if a policy covers “physician services” then there is no basis to deny a covered physician service
via telehealth. If politically important, legislators could include a provision, as did Oregon, which states:
“This section does not require a health benefit plan to reimburse a provider for a health service that is not a
covered benefit under the plan or to reimburse a health professional who is not a covered provider under
the plan.”

 There has also been expressed concern that, if barriers to access are removed, policyholders will excessively
use their benefit. There is no evidence to support this claim.

Regarding Medicaid parity:

Telehealth coverage in most states is still relatively small, so it is hard to predict budget impact or growth in
usage as telehealth services become more robust and visible. It can also be difficult since each state program
varies in its reimbursement policy. In addition, a rapidly growing number of Medicaid recipients are covered
under managed care plans that involve competitive bidding and capitated payments instead of fee-for-service.

States like California, Colorado, Kentucky, Texas, and Vermont have all conducted fiscal analyses for their
enacted telemedicine expansion legislation which reported minimal or no fiscal impact on the state or Medicaid
programs. In 2013, Maryland legislators considered bills that would have expanded the coverage of

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American Telemedicine Association
www.americantelemed.org