Patient talking to doctor on cell phone video call

Long-Term Growth of Telemedicine Requires Payment Parity, Regulations

November 30, 2020 | Purdue Global Law School

The use of telemedicine services has skyrocketed amid the COVID-19 pandemic. Medicare claims data show that telemedicine visits increased from 14,000 per week before the pandemic to more than 630,000 per week since mid-March 2020. In April 2020, telemedicine accounted for 43.5% of Medicare primary care visits, up from just 0.1% before the pandemic.

The Centers for Medicare and Medicaid Services (CMS) have facilitated the growth in telemedicine by paying the same rates for virtual visits as for in-person appointments. The lack of so-called payment parity had been a major stumbling block for telemedicine adoption, particularly among smaller practices providing services to Medicare recipients.

But while Medicare is regulated exclusively by the federal government, Medicaid is governed by state regulations as well. Fully insured employer-sponsored health plans must also comply with both federal and state requirements. The result is a patchwork of laws and regulations governing how, where, and by whom telemedicine services can be delivered—and how those services will be reimbursed. If telemedicine is to continue to grow, health care providers will need to be assured of payment parity for all virtual services to offset technology costs and complex regulatory requirements.

Evolving State Requirements

State and territorial governments have considerable say in telemedicine policy. Each state controls the licensure of health care professionals within its boundaries, and clinicians generally may not practice across state lines.

However, as of October 2, 2020, 44 states, Puerto Rico, Guam, and the Northern Mariana Islands have waived out-of-state licensing requirements, enabling clinicians to provide equivalent telemedicine services in other jurisdictions during the public health emergency.

Fewer states have taken action to facilitate prescribing medications via telemedicine. Most states require a health care provider to establish a relationship with a patient before electronically prescribing medications. In at least 15 states, that requirement can only be met through an in-person visit, live video examination, or physician referral. Telemedicine providers may therefore have regulatory hurdles to writing prescriptions for new patients.

Most states require telemedicine providers to obtain informed consent from patients before treatment, which includes explaining the benefits and risks of telemedicine services. A few states require written consent for Medicaid patients, although AlabamaGeorgia, and Maine have waived that mandate in response to the pandemic. Providers are expected to obtain and document consent during the telemedicine visit and make it part of the patient’s medical record.

Health Plan Reimbursement Lacks Incentive

Health care providers have little incentive to navigate these rules if they aren’t reimbursed. Most states require that fully insured health plans cover telemedicine services that are medically necessary and meet the same standards of care as in-person services. This is called service parity. It is not the same as payment parity, which requires plans to reimburse providers for telemedicine services at the same rate as comparable in-person services.

States have been slow to implement payment parity rules, despite the benefits of telemedicine. In the Center for Connected Health Policy’s fall 2019 “State Telemedicine Laws and Reimbursement Policies” report, just six states had payment parity laws on the books, and two of those laws were not yet effective.

The number of payment parity laws has surged since the COVID-19 pandemic. As of October 2020, twenty-nine states and the District of Columbia had enacted payment parity laws for telemedicine services, and eight more had proposed legislation. Some of these laws have exclusions and restrictions, however. For example, Arizona law only covers certain telemedicine services delivered in rural areas, Delaware law only covers live video visits, and Louisiana law only covers services provided by doctors.

Where state law is silent about coverage, insurers can choose how they will reimburse providers for telemedicine services. Many insurers have opted to expand coverage and increase reimbursement rates. Some have also waived copayments, coinsurance, and deductibles for telemedicine services through the end of 2020. In some cases, the rules apply only to the diagnosis and treatment of COVID-19 and related complications, while others apply to any medical condition.

Other Cost Considerations Delay Growth

Even if providers receive reimbursement, there are cost barriers to telemedicine adoption. Before the public health emergency, providers would have to invest in video conferencing hardware and a telemedicine application that ensured patient privacy under the Health Insurance Portability and Accountability Act (HIPAA). The Department of Health and Human Services Office for Civil Rights (OCR) has relaxed some HIPAA privacy requirements, enabling providers to deliver telemedicine services by phone and video calls. However, the OCR still recommends that providers use more secure technologies.

If the prepandemic regulations are reinstated, providers who have been delivering telemedicine services under the relaxed rules will have to decide whether to invest in the technology needed to continue providing those services. A high-bandwidth internet connection and IT support staff might also be necessary, adding to overhead costs.

Health care practices would also need to ensure that their malpractice and professional liability insurance policies cover telemedicine services. So far, Hawaii is the only state that requires insurers to include equivalent malpractice coverage for telemedicine and in-person care.

Learn More About Health Care Law at Purdue Global Law School

Purdue Global Law School offers the Executive Juris Doctor (EJD), a degree for those who wish to develop the knowledge and skills of a lawyer without becoming one. The EJD can be specialized by choosing one of four curriculum tracks, including health law, education law, law and technology, or business law.

You can also take single courses applicable to the health care industry, including:

  • Administrative Law

  • Administrative Advocacy

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  • Health Law

  • Medical Malpractice/Professional Liability

  • Medical Products Liability

  • Risk Management in Health Care

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About The Author

Purdue Global Law School

Established in 1998, Purdue Global Law School (formerly Concord Law School) is Purdue University's fully online law school for working adults.