Even though the majority of states now have telemedicine and telehealth laws, the reality is the road to telemedicine reimbursement from private payers is still long and hard. Let’s take a deeper look how telehealth parity laws affect how much providers are getting paid.
Telehealth Parity Laws
(Telemedicine laws are getting passed all the time. See the most recent updates on ATA’s telemedicine coverage map.)
As of now, there are 33 states plus the District of Columbia with telehealth commercial insurance coverage laws. Those laws mean that a health plan is required to cover telehealth-based services to the same extent as if they were delivered in person.
If we take a US map and color in all of the states with telemedicine reimbursement laws (see map #1), it looks great. However, it doesn’t necessarily mean that everybody in that state is happy and gets full coverage of their telehealth services. The question is why?
Practical Experience Shows Telehealth Regulations Vary Widely
Telehealth lawyer Nathan Lacktman remarks that his review of telehealth statutes for all the states and experience working with different provider plans and negotiating agreements, paints a very different picture of the reimbursement landscape.
- 17 grey states have no telehealth coverage (Nebraska and North Dakota which are still in grey just passed laws in 2017). This may not always be a bad thing as you’ll see later.
- 12 green states (and DC) have pretty broad, consumer-friendly telehealth coverage laws.
- 10 states in yellow have limited telehealth coverage. This means they have soft language or language that includes “originating site” or offers a lot of outs, that is, escape hatches for health plans to say, “You know what? I’m actually only going to cover five codes of services.”
- 9 states in blue have broad coverage and also payment parity.
So what does all this mean?
Telehealth Reimbursement Coverage Doesn’t Equal Payment Parity
Payment parity is another important insurance concept. It doesn’t relate to whether or not a service is covered, but rather how much the health plan will pay for the covered service.
If a state has payment parity, it largely means that the health plan must pay the provider the same rates for telehealth service that it pays for an in-person service.
That could differ from provider to provider depending upon what they actually contract for with the plan in their participation agreement. A large provider with effective negotiation might get higher payment rates than a small provider that just takes whatever is offered to them.
Bad Things Can Happen When You Have Telehealth Coverage without Telehealth Parity: Example from New York State
The biggest problem with state telehealth laws is if you pass a telehealth coverage law that’s broad but doesn’t have a payment parity provision with it. Some plans may say, “I’m only going to pay you 50% of your contracted rate.” That’s exactly what happened in New York around spring 2016.
It meant that providers who were in-network had to accept the payments that the plan paid as the full rate. Furthermore, they could no longer bill patients for the balance, or even give the patients an opportunity to pay cash out-of-pocket.
This environment made it even worse for those providers who had the foresight and interest to offer telemedicine services. Before there were telemedicine coverage laws, they could at least give their patients the option to pay out-of-pocket. After the coverage rule went into effect and the reimbursement was only 50%, they were losing money every time they provided the service. On top of that, they couldn’t charge the patients any more.
So a number of them said, “I’m just not gonna offer telemedicine services anymore until I’m actually gonna get paid a fair rate.” So this is the dark side of having these coverage laws.