by Katherine Restrepo
Director of Health Care Policy, John Locke Foundation
This week, the Joint Legislative Oversight Committee on Health and Human Services met to discuss a variety of policy issues, including telemedicine. Defined as “delivering health care at a distance,” telemedicine has proven to expedite access to health care for many, especially for people who reside in rural areas where health care providers are in short supply.
In efforts to expand telemedicine’s reach, North Carolina lawmakers requested that the N.C. Department of Health and Human Services (DHHS) produce a report that assesses the telemedicine landscape in North Carolina and offers policy recommendations. That report was submitted to the legislature on October 1, and its findings were presented on November 14 by Maggie Sauer, Director of the Office of Rural Health at DHHS. (You can access the full report here.)
One policy consideration that captured the attention of some committee members is whether North Carolina should pass a “telemedicine parity law.” A telemedicine parity law would force private insurance companies to pay for telemedicine services. In the DHHS report, there is no definitive policy recommendation on this issue. In fact, the report specifically asks for the N.C. Department of Insurance to weigh in with its own comments.
Private insurers certainly won’t be enthusiastic another law that further erases their authority in designing health plans. Enacting telemedicine parity only adds to the pile of health benefit mandates insurers must include in their small group and individual consumer policies.
Proponents, however, will argue that this legislation shouldn’t be interpreted as such. Telemedicine parity laws don’t require insurers to incorporate more health services. They only request that insurers reimburse providers when using telemedicine to treat patients for services that are otherwise covered during an in-office visit.
Nathaniel Lacktman, health care lawyer and telemedicine parity law guru, explains:
“The laws do not mandate the health plan provide entirely new service lines or specialties. The scope of services in the plan’s member benefit package remains unchanged. The only difference is that the patient can elect to see his or her doctor via telehealth rather than driving to the doctor’s waiting room.”
When presented in this manner, telemedicine parity laws seem harmless. But after examining surrounding states’ parity laws, it’s important for legislators to be fully informed and mindful of their unintended consequences.
Thirty-two states have thus far enacted private payer parity laws, all of which are different. Some limit telemedicine reimbursement to certain types of providers and site locations. This is because payment must be consistent with a state’s definition of telehealth and how the practice of telemedicine is regulated under state medical licensing boards. Georgia’s occupational licensing boards, for example, define physicians, advanced nurse practitioners, and physician assistants as eligible telemedicine providers. Meanwhile, Tennessee permits private insurers to pay for telemedicine if it’s delivered in “qualified sites,” such as hospitals, federally qualified health centers, rural health clinics, medical offices, or any other location deemed acceptable by the insurer.
It is also possible for private health insurers to have some flexibility in determining which telemedicine services they choose to cover. If the statute says that an insurer shall pay for telemedicine benefits based on its “terms and conditions,” then the insurer arguably has more discretion over its telemedicine policy.
That’s not to say that coverage parity laws aren’t coercive. While they may not initially require health insurers to change the structure of their health plans, some states have amended their parity laws so that insurers must cover telemedicine services beyond what’s covered in the exam room.
In 2014, Mississippi made its parity law more comprehensive by mandating that private insurers pay for Remote Patient Monitoring (RPM), a form of telemedicine that allows health care providers to monitor chronically ill patients who are homebound. Since its passage, health systems like the Mississippi Medical Center extended its telehealth program to establish a RPM network for diabetes patients. Early reporting stages on health outcomes among 100 patients found a 96 percent medication adherence rate and fewer hospitalizations. Program advocates claim that, because of RPM services such as health coaching and continuous wireless glucose monitoring, payers saved over $300,000.
While the program produces positive results, it’s important to emphasize that payers, not the government, should have the freedom to choose which telemedicine services to invest in. Mississippi, a state with the most progressive telemedicine laws, has set a precedent for other state governments to further intervene in insurance companies’ payment policies.
Just as coverage parity creates a pathway for lawmakers to impose additional telemedicine mandates on private insurers, it has also triggered payment parity. Payment parity forces insurers to pay providers for services treated via telemedicine at the same rate those services are billed for in an office setting. Equal payment certainly acts as a strong incentive for more physicians to adopt telemedicine platforms. However, enforcing such a rule undermines telemedicine’s cost-effective capabilities. Compared to an average $146 office visit, a patient can connect with a physician virtually for $79.
Lastly, telemedicine parity laws diverge from the trend in which third-party payers are increasingly paying providers based on health outcomes rather than the volume of services rendered. Providers who are paid capitated rates or a defined amount per month are more likely to adopt telemedicine as an additional tool for patient care since they don’t need to concern themselves with getting paid separately for these services. Under a payment model that rewards value over volume, providers have more of an incentive to be creative in how they care for their patients. Telemedicine is one benefit that fits in nicely within this payment arrangement.
It’s admirable that the General Assembly wants to advance legislation so patients can access health care without having to travel long distances. However, instead of imposing more regulations to expand telemedicine, lawmakers should instead remove regulations that inhibit telemedicine’s growth.