A significant yet little-noticed trend is underway. And its effects could be far-reaching.  A growing number of states are enacting so-called telehealth parity statutes. These laws generally require health insurers to pay for services provided via telehealth the same way they would for services provided in-person. Almost a third of all states have enacted these statutes, and I predict more states will be jumping on the bandwagon. Telehealth is indeed going mainstream.

Maryland became one of the latest states to jump on the bandwagon when the state’s governor signed a telehealth parity statute in May. California’s Telehealth Advancement of Act of 2011 became effective on January 1, 2012, and breaks down many of the barriers that prevented wider use of telehealth.  Other states, such as Virginia, Georgia, Kentucky, Hawaii, and Oregon have also enacted similar laws. Indeed, last week, the Michigan legislature passed a law that prohibits insurers from requiring face-to-face contact between providers and patients in lieu of a telehealth encounter.

Given the nature of this forum, I will not analyze the particulars of all these statutes—but I will briefly look at the Maryland and California statutes to give you a flavor of how state legislators are approaching telehealth coverage and reimbursement issues.

The Maryland statute has several key provisions, including:

  • Telehealth is defined as “interactive audio, video or other telecommunications or electronic technology by a licensed health care provider to deliver a health care service”
  • Does not apply to audio-only phone conversations, e-mail messages or faxes between providers and patients
  • Insurers are required to provide coverage for health care services provided appropriately using telehealth
  • Coverage cannot be denied because services are  provided via telehealth rather than in-person
  • Insurers can require deductibles, copayments or coinsurance for telehealth services as they would for in-person services
  • Insurers may not differentiate  between rural and urban patients to determine coverage for telehealth services

The California statute is more comprehensive than other state laws, and is based on a report and model statute developed by the Center for Connected Health Policy.  Among other things, the California law:

  • Defines telehealth broadly to including any mode of delivering health care services using  information and communication technologies for diagnosis, consultation, treatment, education, care management, and self-management of patients at a distance from health care providers
  • Modifies the existing requirement for an additional written patient consent specifically for telehealth services to a verbal patient consent
  • Eliminates restrictions on reimbursement of services provided via email or telephone
  • Eliminates restrictions on the location where telehealth services may be provided (i.e., hospitals, physician offices)
  • Allows California hospitals to use new federal rules to more easily establish medical credentials of telehealth providers
  • Broadens the types of health care practitioners covered to include all medical professionals licensed by the state

For hospitals, providers, vendors, and investors looking to broaden their telehealth footprint, I think it makes sense to first look at the approximately 15 states with these telehealth parity laws.  In addition to breaking down barriers that stifle greater use of telehealth, operating in these states at least assures that telehealth services will be reimbursed by insurers. I believe that such an approach is all the more important since public payers lag far behind. Medicare telehealth coverage is very limited while Medicaid coverage varies by state, and often relies on the old model in which a patient has to present at a certain facility and be treated by a physician or midlevel practitioner.  The bad news is that only a third of the states have these laws.  The good news is that I see a trend developing and I predict that in a few years, the majority of states will have telehealth parity laws.