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The Virtual Care Reimbursement Parity Puzzle: What Everyone Should Know

In a 2015 survey of family physicians conducted by the AAFP’s Graham Center, family physicians cited education and reimbursement as the two leading barriers to telemedicine adoption by family physicians. Since that survey, not much has changed – particularly in the area of reimbursement parity.  

Telemedicine reimbursement regulations remain complicated, complex and fragmented. And the notion of parity has been variably defined and interpreted within and across states. Today, reimbursement is often a key issue in pending telemedicine bills across the country.

One concerning trend is language included in telemedicine legislation that explicitly prohibits the state from requiring reimbursement parity. If this sort of “carve out” language becomes commonplace, we risk diminishing the ability to use virtual care to address the quadruple aim—improve cost, quality and access, and reduce physician burden.

The Current State of Reimbursement

Currently, 29 states offer coverage parity, which requires insurers to cover telemedicine/virtual care services the way they do in-person care, some with exceptions or restrictions. Only 3 states have legislation mandating both patient coverage parity and provider reimbursement parity, though several states offer provider reimbursement for specific specialties or circumstances. To date, 18 states either do not have legislative language or explicitly exclude parity for coverage and/or reimbursement.

The Trouble with the Current State

The current state of reimbursement parity is largely payer-centric. What I mean by that, is that individual payers determine reimbursement for virtual care and telemedicine services based on their contracts with healthcare organizations and telemedicine service companies. In my experience, this model isn’t in the best interests of patients and providers. Often, primary care providers get cut out of the care delivery process, limiting their ability to use virtual care and other innovative technologies to care for patients at the lowest cost, most appropriate point of care.

What Payer-Centric Reimbursement Looks Like

Payer-centric model; no reimbursement parity

    1. Employer / health plan contract with telemedicine service company for online care delivery.
    1. Member is routed to telemedicine service company provider for care.
    1. Telemedicine service company receives any co-pay and is paid contract rates by employer/health plan.
    1. The visit record remains with the telemedicine service provider.
  1. The primary care provider is left out, and the patient record is often incomplete.

How Reimbursement Parity Should Work

In an ideal world, reimbursement will be fair and equal across all providers, giving primary care physicians and healthcare organizations the ability to effectively compensate providers who care for their patients online.

What Patient and Provider-Centric Reimbursement Looks Like

Patient/Provider Centric Virtual Care; Reimbursement Parity

    1. Patient connects with provider’s virtual care service.
    1. Provider makes diagnosis & treatment.
    1. Provider submits for and receives reimbursement beyond co-pay.
  1. Information is retained in patient’s EHR.

The Virtual Care Reimbursement Conundrum: Overcoming the Final Obstacle to Provider Adoption

Excerpted from remarks by Dr. Hafner-Fogarty at the C-Tel conference, December 1, 2017

Telemedicine reimbursement puzzle

Virtual care holds enormous potential to transform the healthcare landscape. Since you are here, you most likely agree that virtual care (and telemedicine) can be of great benefit for patients, providers, and health systems. In today’s digitally focused landscape, virtual care is truly on the cusp of having a dramatic, positive impact. But – and of course there’s always a but – there’s a big obstacle standing in the way: provider adoption, fueled by inconsistent virtual care reimbursement .

I’ve noticed huge disparity in statistics associated with provider adoption of “telemedicine”. For example, a KPMG survey earlier this year found that about 30% of clinician respondents were using some form of telemedicine. However, a 2016 AAFP survey showed only 15% of respondents had used telemedicine tools in the previous 12 months. Maybe most telling is that the KPMG survey listed provider reluctance as a top barrier to health systems implementing a telemedicine solution.

So with all the benefits that we know telemedicine brings to the market, why are providers balking? Market research is more consistent on this point. Among others, the AAFP survey listed the top reasons providers hesitate to embrace telemedicine is lack of education and lack of reimbursement.

Clinician education is important and worth discussing, but let’s focus today on the elephant in the room, which is reimbursement. This is where I personally believe strategic policy work can make difference.

Reimbursement and Regulatory Complexity

The first step toward eliminating reimbursement barriers is to understand why reimbursement is  a barrier in the first place. One factor getting in the way of eliminating regulatory barriers is the federal and state regulatory environment is amazingly complex and extremely fragmented.

Currently, CMS offers little coverage for telemedicine and has been sluggish to respond to innovative telemedicine technologies, leaving it up to the states to address an evolving regulatory landscape as best they can. A majority of states have attempted to advance telemedicine-specific legislation in recent years; however, key elements, like the definition of telemedicine, establishment of a provider-patient relationship, allowable modalities, and e-prescribing differ from state to state. Even within the same state, one regulatory office’s telemedicine definitions may differ from another regulatory office. CMS’s Medicare reimbursement rules for telemedicine care can add yet another layer of complexity, and to further complicate matters, many states have a different set of Medicaid rules.

The hodge-podge of modality and site-based restrictions for reimbursement has only added to the complexity of the regulatory environment. According to the Center for Connected Health Policy, 48 states and the District of Columbia currently require reimbursement for video-based telemedicine visits, while only 15 states require reimbursement for telemedicine services provided on a store-and-forward basis. Not surprisingly, reimbursement is less clear for other modes of telemedicine.

Site-based restrictions on reimbursement offer even greater challenges. Such restrictions, designed in the days of telemedicine’s infancy and no doubt with the best of intentions, focus reimbursement on rural areas, leaving physicians and patients in cities and suburbs without a reimbursement mechanism for healthcare provided virtually. Furthermore, in a prime example of legislation that’s been outpaced by technology, some states have language requiring a healthcare professional be present on both sides of a virtual visit. These requirements create roadblocks because they fail to account for the explosion in use of personal mobile devices that allow patients to connect directly to their providers regardless of location.  

Providers, quite understandably, look at the complexities of the regulatory environment and the likelihood of being reimbursed for virtual visits and say, “no thanks.” Fortunately or unfortunately, that’s not really an option anymore. Telemedicine and virtual visits are growing exponentially. According to the Advisory Board, more than 70% of patients are interested in receiving services by telemedicine. As patient expectations are increasingly set by other industries and online experiences – think Amazon, Facebook, or meal delivery services like our local Bite Squad – demand for online care delivery is only going to grow.

Policy Fixes for Virtual Care Reimbursement

Now, for some good news. There are several reasonable, non-controversial measures we can take on at the policy level that can reshape the regulatory landscape.

First and foremost, I want to note that there are policy makers at the federal level who are taking what I hope are the first steps toward addressing some of the challenges, specifically around CMS coverage and guidance. The good work Senator Brian Schatz of Hawaii has done on the CONNECT Act will hopefully signal a move to a more provider-friendly Medicare regulatory environment.

At the state level, boards of medicine and state legislatures still have a phenomenal opportunity to open the door to telemedicine and bring its benefits to their constituencies. Going forward, healthcare policy needs to reflect the eventuality that all providers will need to use telemedicine in patient care, the same way they use other tools of modern medical practice. Here are a few simple steps to developing policies that can help overcome the reimbursement barrier to provider adoption:

Appropriately Define “Telemedicine”

Policy that defines telemedicine should not limit it to specific modes of care; telemedicine definitions need to be inclusive and forward-looking. Technology moves quickly, and creating rules and legislation that stand the test of time is paramount to ensuring patients and providers receive the benefit of new technologies when they become available. Providers need to be free to choose the mode of care that best suits their practice and their patients, while maintaining the standard of care.

Allow Online Doctor-Patient Relationship Establishment

Regulations and policy around establishment of the doctor-patient relationship should focus on the care and service provided and not the technology. Again, the goal here is not to facilitate shoddy care, but to give providers the flexibility to meet individual patient needs within the standard of care.

Specifically Address Reimbursement

Legislation should explicitly include language addressing both coverage and reimbursement parity for all modes of care. It should also prevent insurers from requiring patients to receive online care from the insurer’s contracted telemedicine company in order to qualify for reimbursement.

Promote Continuity of Care

Policy makers and regulators can help drive physician adoption of telemedicine by supporting policies that promote telemedicine models that foster continuity of care, without impacting health systems’ ability to choose from innovative care delivery technologies.