The Status of Telemedicine Reimbursement: States’ Efforts to Incentivize Providers to Utilize Telehealth Technologies

Telemedicine — the provision of remote clinical services through information and telecommunication technologies — has been one of the most promising healthcare trends of the 21^st century. The story above is just one example of how telemedicine can save time, money and lives. When telehealth² technologies first emerged, many states enacted some form of laws or regulations to govern its use, but as technology continues to develop, states have been making greater efforts in recent years to amend and expand such laws and regulations. Yet it has also become evident that the most integral type of legislation that is necessary to incentivize providers to expand the use of telehealth technologies is that which governs reimbursement for such services. While the operative legislation is evolving quickly, there continue to be vast discrepancies across state lines in regard to when and how telemedicine services may be reimbursed.

Limited Use of Telemedicine

Telemedicine holds potential to save billions of dollars in healthcare costs while increasing patient access to quality care.³ It allows healthcare providers to provide services more rapidly and to better accommodate the individual needs of each patient. For example, for chronic conditions, like diabetes, telemedicine can be used to improve case management by allowing patients to communicate with providers in real time as their conditions and symptoms change. Similarly, in rural areas telemedicine can increase patient access to specialists who are located several miles away, yet, with the use of certain technology, can treat a patient right from their homes.

However, despite the apparent benefits of telemedicine, it remains under-utilized by many healthcare providers. Providers appear to not be submitting many insurance claims for telemedicine services as compared to non-telemedicine services. One study indicated that, from 2009 to 2013, providers throughout the United States only submitted 6,506 claims for telemedicine services, a very small number compared to the 95.9 million claims submitted for non-telemedicine services.⁴

The 2013 study provides the most recent and comprehensive analysis of telemedicine insurance claims submissions. While it remains unclear whether the lack of submitted insurance claims is a result of providers not utilizing telemedicine or providers simply not seeking reimbursement for it, since the study was completed many state legislatures have made efforts to combat both problems by enacting and/or amending their reimbursement laws and regulations to encourage the use of telemedicine. Some states simply require insurers, including their state Medicaid program, to cover telemedicine services. The few states that have enacted true parity laws go one step further to require equal reimbursement rates for telemedicine and non-telemedicine services.

Reimbursement Laws and Regulations for Telemedicine Services

Almost every state has enacted some form of reimbursement law or regulation for telemedicine, yet the laws and regulations vary significantly as to the type of technology that can be used, the type of services that can be provided, where the services can be provided, the type of provider that can provide the services, the type of payor that must offer reimbursement for such services, and the amount of reimbursement that must be offered.⁵

Technologies Approved for Telemedicine

Many states require telemedicine to occur in real time, using live audio, video or similar teleconference technology. Currently, 13 states⁶ offer some form of reimbursement for telemedicine rendered through non-live technology, often referred to as “store and forward” technology. However, even those states that permit “store and forward” technology generally require telemedicine services to be provided through a channel that has some level of security, at least more than a standard telephone, fax or email. Connecticut, for example, allows telehealth services to be provided through “real-time, interactive, two-way communication technology or store and forward technology,” but the definition of telehealth specifically excludes the “use of facsimile, audio-only telephone, texting or electronic email.”⁷

It is also important to note that state and federal legislation governing privacy and security of patient information may impose additional restrictions on the type of technology that may be used for telemedicine services that would otherwise be permissible under state reimbursement laws. Most significantly, the Health Insurance Portability and Accountability Act (HIPAA) and the regulations promulgated thereunder recommend the use of encrypted communication channels when sharing patient information.⁸ The most common example of an unencrypted communication channel is Skype, which does not offer any protection against HIPAA breaches and, therefore, is discouraged for the provision of telemedicine services.⁹ It is generally recommended that providers establish a secure web portal for patients to access protected information and communicate with the provider and that such web portal require two-factor authorization, which requires more than a simple password to gain access and, therefore, reduces vulnerabilities of telehealth technologies.¹⁰

Services and Providers Eligible for Telemedicine Reimbursement

Most reimbursement laws also limit the type of clinical services that can be provided through telemedicine or the type of providers that can receive reimbursement for telemedicine, which consequently limits the type of services that may be provided to such services that fall within the scope of the eligible providers’ licenses. Florida is one of the few remaining states that strictly limits the practice of telemedicine to only physicians and physician assistants.¹¹ Other states have adopted more expansive approaches, permitting a wider variety of specialists to provide telemedicine services. New Jersey, for example, defines a “health care provider” that is authorized to provide telemedicine services as “a licensed physician, nurse, nurse practitioner, psychologist, psychiatrist, psychoanalyst, clinical social worker, physician assistant, professional counselor, respiratory therapist, speech pathologist, audiologist, optometrist, or any other health care professional.”¹² New Jersey also permits non-clinical services to be provided through telehealth technologies, such as patient education services and administrative tasks that facilitate the provision of healthcare services.¹³

Most states require providers who engage in telemedicine services within the state to be licensed by such state.¹⁴ Thus, generally speaking, a provider licensed in one state cannot use telecommunication technologies to engage with a patient located in another state, unless the provider is also licensed in that other state or the state’s laws or regulations offer a special telemedicine exception to licensure requirements.¹⁵

Locations Approved for Telemedicine

Some states also impose restrictions on where the provider and/or patient may be located at the time telemedicine services are provided. Generally, the operative laws and regulations require patients to be located at an “originating site” while receiving telemedicine services from a provider located at a “distant site.”

At the early onset of telemedicine regulations, many states only permitted telemedicine services to be provided in rural areas, where it was most difficult for providers and patients to travel and hold traditional in-person consultations. However, in order to promote the use of telemedicine services, almost every state has made strides to expand their definitions of originating and distant sites. Several states have completely done away with geographic limitations. The law in Nebraska, for example, explicitly states that reimbursement for telemedicine services cannot depend on the distance between the provider and patient.¹⁶ Utah similarly does not restrict the location of telemedicine services by simply defining “originating site” as “the physical location of a patient receiving telemedicine services” and “distant site” as “the physical location of a provider delivering telemedicine services.”¹⁷

Other states, rather than imposing geographic limitations, instead limit the type of healthcare facilities that qualify as originating sites. In such states, facilities that qualify as originating sites are generally those that are already authorized by the state to engage in healthcare services and, therefore, already have certain precautions and safety measures in place, including procedures to protect the confidentiality of patient information and to ensure proper standards of care. Maryland, for instance, permits the following sites to register as originating sites under its telehealth program: school or university with a supported nursing, counseling or medical office; local health department; federally qualified health center; hospital; nursing facility; office of a physician, nurse practitioner or nurse midwife; opioid treatment center; outpatient mental health center; and renal dialysis center.¹⁸

Payors Required to Offer Telemedicine Reimbursement

There are also differences among states as to what type of payor is required to reimburse providers for telemedicine services. Some states only require telemedicine reimbursement in their Medicaid programs — in such states, commercial insurers may also offer telemedicine reimbursement, using the reimbursement rates and procedures established for the Medicaid program as a guide, but they are not legally obligated to so do. Currently, about 32 states have passed laws or regulations that obligate commercial insurers to reimburse providers for telemedicine services.¹⁹

Yet even in those states that require telemedicine reimbursement for all types of payors, discrepancies remain as to how telemedicine may be reimbursed with respect to each payor. For example, in California commercial insurers are permitted to reimburse providers for all services provided through “store and forward” technologies,²⁰ but in the Medicaid program “store and forward” technologies are only permissible for teleophthalmology, teledermatology and teledentistry.²¹ Similarly, in New York permissible locations for the provision of telemedicine services vary depending on the payor. Under New York’s commercial insurance law, there is no limitation on where a provider or patient must be located during the provision of telemedicine services.²² Yet under New York Medicaid a patient receiving telemedicine services must be located at an “originating site,” which is limited to certain medical facilities licensed by the state and private physician offices located in the state.²³

Such discrepancies can be confusing to providers and increase the likelihood that a certain requirement for reimbursement will be overlooked, resulting in erroneous billing and denial of claims. Therefore, rather than spending the time to identify the type of telemedicine services and reimbursement that might be available for a particular patient, providers avoid telemedicine altogether.²⁴

Unequal Reimbursement and Promotion of Telemedicine through Parity Laws

Perhaps the largest barrier to the expansion of telemedicine is the difference in the amount of reimbursement that payors are required to offer. Although many states require some form of telemedicine reimbursement, it does not mean that the reimbursement rate is always equal to the rate a provider could receive if the same service is provided in a traditional in-person setting. Only a handful of states have enacted true telemedicine parity laws that require equal payment for telemedicine and non-telemedicine services. As way of example, Minnesota’s parity law states that insurers must reimburse providers for covered services delivered via telemedicine “on the same basis and at the same rate as the [insurer] would apply to those services if the services had been delivered in person.”²⁵

Unlike Minnesota, however, the majority of states that require commercial insurers to cover telemedicine services do not specify the reimbursement rate for such services.²⁶ Thus, insurers often use their own discretion to establish lower rates — sometimes up to 40 percent lower than rates for in-person service — as a way of reducing their own expenses.²⁷ Such ambiguity in the law, coupled with insurers’ discretion to implement their own policies and restrictions on telemedicine reimbursement, make it difficult for providers and patients to navigate the telemedicine landscape. Uncertainty as to the amount a provider can expect to receive for his or her services is a significant deterrent to the use of telemedicine in everyday practice.

Conclusion

Although state legislatures have made efforts to promote telemedicine through the enactment of certain laws and regulations, the enactment of parity laws that require equal reimbursement for telemedicine services would go a long way in facilitating a real expansion in such services and realizing their full benefit on public health. In addition, education programs to help providers and patients understand what is permissible under the laws and regulations, and how to properly provide and bill for telemedicine services, would also be beneficial in realizing this goal. There is no doubt that this area of law will continue to evolve and, more likely than not, such parity laws and education programs for the promotion of telemedicine services may be on the horizon in the near future throughout all states. 

1.  Wayne Clark, M.D., Time is Brain: How Telemedicine Improves Stroke Care, Oregon Health & Science University (Dec. 19, 2012), http://www.ohsu.edu/blogs/96kmiles/2012/12/19/stroke-treatment-via-telemedicine/.
2.  The terms “telemedicine” and “telehealth” are often used interchangeably, but generally speaking, “telemedicine” refers to the provision of medical services through telecommunication technologies while “telehealth” is used more broadly to refer to the technology being used as well as the provision of non-medical services, such as educational and administrative services that are related to the provision of healthcare services.
3.  One study indicated that telemedicine can save more than $100 per patient visit — virtual visits utilizing telehealth cost approximately $50 per visit, compared to an average cost of $136 to $176 for traditional office visits. See Dale H. Yamamoto, Assessment of the Feasibility and Cost of Replacing In-Person Care with Acute Care Telehealth Services, Red Quill Consulting, Inc. (Dec. 2014), http://www.connectwithcare.org/wp-content/uploads/2014/12/Medicare-Acute-Care-Telehealth-Feasibility.pdf Telemedicine can also significantly reduce costs in emergency departments. Approximately 2.2 million patients are transported each year between emergency departments, yielding a transportation cost of $1.39 billion — technology that allows for virtual consultations can avoid up to 850,000 transports and save $537 million per year. Research Outcomes: Telemedicine’s Impact on Healthcare Cost and Quality, American Telemedicine Association (April 2013), http://www.amdtelemedicine.com/telemedicine-resources/documents/ATATelemedicineResearchPaper_impact-on-healthcare-cost-and-quality_April2013.pdf.
4.  Fernando A. Wilson et al., An Examination of Private Payor Reimbursements to Primary Care Providers for Healthcare Services Using Telehealth, United States 2009-2013, Health Care Cost Inst., http://www.healthcostinstitute.org/files/HCCI-Issue-Brief-Examination-of-Private-Payer-Reimbursements.pdf. 
5.  See generally, State Telehealth Laws and Reimbursement Policies Report, Center for Connected Health Policy, the National Telehealth Policy Resource Center (April 2017), http://www.cchpca.org/sites/default/files/resources/50%20STATE%20PDF%20FILE%20APRIL%202017%20FINAL%20PASSWORD%20PROTECT.pdf.
   
6.  The 13 states that permit the use of store and forward technology for the provision of telemedicine services are Alaska, Arizona, Connecticut, California, Hawaii, Illinois, Minnesota, Mississippi, Missouri, New Mexico, Nevada, Virginia and Washington. Id.
7.  Conn. Gen. Stat. § 19a-906.
8.  45 C.F.R. § 164.312.
9.  Although the U.S. Department of Health and Human Services has not directly opined on whether Skype is HIPAA compliant, several commentators have discouraged its use based on the assertion that it lacks encryption technology. See Is Skype HIPAA Compliant, HIPAA Journal (Oct. 13, 2017), https://www.hipaajournal.com/skype-hipaa-compliant/; see also A Doctor’s Guide to HIPAA Compliance in 2017, Live Clinic (Jan. 23, 2017), https://liveclinic.com/blog/hippa-compliance-2017/ (“While [Skype or Facetime] are great platforms for video chat, the reality is they weren’t designated to be HIPAA-compliant. The challenge is that even though a doctor can ensure their [sic] internet connection is secure, there is very little they [sic] can do to make sure everything is secure on the patient’s receiving end.”).
10.  See Ayana P.B. Spangnuelo et al., Multi-Factor Authentication in Telemedicine Systems, eTeleMed (2013), https://www.thinkmind.org/download.php?articleid=etelemed_2013_6_40_40318 (“[I]f the authentication process is weak and allow[s] the use of short passwords, the chances of [] an attack increase[]. Therefore, the adoption of a more efficient and stronger authentication system is a simple way to increase overall security.”); see also HIPAA Security Series, Security Standards: Technical Safeguards, U.S. Dep’t of Health and Human Services (2007), www.hhs.gov/sites/default/files/ocr/privacy/hipaa/administrative/securityrule/techsafeguards.pdf?language=es (explaining that “[a]ltough the password is the most common way to obtain authentication to an information system and the easiest to establish, covered entities may want to explore other authentication methods”).
11.  Fl. Admin. Code § 64B8-9.0141(1).
12.  N. J. Stat. § 45:1-61.
13.  Id.
14.  See e.g., id.
15.  All states require providers who render any type of clinical care to be fully licensed by the state in which the care is provided, regardless of whether it is provided through traditional in-person visits or remotely through telemedicine technologies. However, a few states have enacted special or conditional licenses for the limited use of telemedicine. These states include Alabama, Louisiana, New Mexico, Nevada, Ohio, Oklahoma, Oregon, Tennessee and Texas. See Telehealth Policy Trends and Considerations, Nat’l Conf. of State Legislatures (2015), http://www.ncsl.org/documents/health/telehealth2015.pdf. New Mexico, for example, offers a limited special license that allows physicians located outside of New Mexico to practice medicine on patients located in the state. New Mexico Admin. Code § 16.10.2.8(B). Similarly, Maine allows out-of-state physicians to provide consultations through telemedicine to a patient located within the state, even if the physician is not licensed in Maine, so long as they register with the state’s Board of Licensure in Medicine. 32 Maine Rev. Stat. Ann. § 33300-D(2).
16.  Rev. Stat. Nebraska § 71-8506(2).
17.  Utah Code Ann. § 26-59-102.
18.  Code of Maryland Reg. § 10.09.49.07(C).
19.  The jurisdictions that have passed laws or regulations that require private payors to provide some form of telemedicine reimbursement include Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, Nevada, Oklahoma, Oregon, Tennessee, Texas, Virginia, Vermont, Washington and Washington, DC. See State Coverage for Telehealth Services, Nat’l Conf. of State Legislatures (2016), http://www.ncsl.org/research/health/state-coverage-for-telehealth-services.aspx.
20.  Cal. Code Ann. § 2290.5(a) (emphasis added).
21.  Cal. Code Ann. § 14132.725(a).
22.  N.Y. Ins. Law § 3217-h(b). The New York commercial insurance law broadly defines telehealth as “the use of electronic information and communication technologies by a health care provider to deliver health care services to an insured individual while such individual is located at a site that is different from the site where the health care provider is located.” Id. (emphasis added). Based on this language, there is no limitation on where a provider or patient must be located during the provision of telemedicine services.
23.  N.Y. Pub. Health Law § 2999-cc. Recently, the New York legislature passed a bill that will expand the definition of “originating sites” under its Medicaid program to also include adult care facilities. See N.Y. Senate Bill No. S4285. This bill is currently pending the Governor’s signature to be enacted into law.
24.  It is also important to note that it is often expensive for providers to purchase telemedicine equipment and providers are unlikely to invest in such technology if they do not expect to recoup the costs through reimbursements for each use of the technology.
25.  Minn. Ann. Stat. § 62A.672(3)(a). 
26.  One report indicates that out of the 32 states that have enacted telemedicine reimbursement laws for commercial insurers, 28 do not require equal reimbursement for telemedicine and non-telemedicine services. Report: Telehealth Private Payer Laws: Impact and Issues, The Center for Connected Health Policy (August 2017), https://www.milbank.org/wp-content/uploads/2017/08/MMF-Telehealth-Report-FINAL.pdf.
27.  Insurers Paying Less for Telemedicine Services, CTel Center for Telehealth & e-Health Law (March 4, 2016)., http://ctel.org/2016/03/insurers-paying-less-for-telemedicine-services/.