When the national healthcare system was pushed to its limits by the pandemic, telehealth emerged as a solution to maintain healthcare access and improve patient and practitioner experience. Though the benefits of telehealth in value-based care ecosystems are clear, telehealth payment parity has become an area of contention in the expansion of digital health services.
What is Telehealth Payment Parity?
Telehealth payment parity requires insurers to reimburse the same payment rate for telehealth services as in-person care.
The crux of the ongoing debate can be summarized as: is the value of telehealth on par with face-to-face services?
During the height of the pandemic, Congress said yes. With a public health emergency (PHE) declared, Medicare paid out the same rates for telehealth and in-person care, including audio-only telehealth. Many state governments also mandated telehealth payment parity in Medicaid programs and for private payers.
However, these policies were meant to be temporary measures in response to the COVID-19 crisis and are set to expire after the lifting of the PHE.
Payment Parity Laws by State
Stateside, telehealth legislation and regulation vary greatly. As of February 2022, although all states and the District of Columbia reimburse for live video services under Medicaid, only 19 state policies require private insurers to implement payment parity, four states have payment parity policies with caveats, and 27 states have no payment parity.
Even when payment parity is enforced, the wording of the mandates range from “not more than” the same service provided in-person, “not less than,” to “the same as” face-to-face service charges. The differences affect the enforcement of mandates, and some become price ceilings whereas others become price floors—with very different economic implications.
The Advantages and Disadvantages of Telehealth Payment Parity
Many stakeholders across the board have been urging the federal and state governments to make telehealth payment parity permanent even after the PHE. However, naysayers advocate for negotiated reimbursement rates instead, following the current industry practice for newly approved treatments.
|Benefits of Telehealth Payment Parity||Drawbacks of Telehealth Payment Parity|
|Better compensation for healthcare providers
Pre-pandemic, Medicare telehealth rates started at $15 per call, which researchers believe do not even cover billing/documentation costs.
|Impacts telehealth’s advantage as a cost-saver
Telehealth services are usually priced lower without payment parity mandates, so price matching pulls the base upwards. This contradicts telehealth’s cost-efficiency benefits.
|Allows for the acceleration and adoption of home-based and remote patient monitoring (RPM) products
Payment parity provides more access to underserved communities and encourages the adoption of innovative RPM tech, which enables a broader range of telehealth care capabilities.
|Slows down telehealth adoption
If telehealth coverage is mandated, private insurers and healthcare providers will need to navigate new regulations when designing benefit and care plans. This may restrict their ability to quickly turn on telehealth technology.
|Encourages value-based payment for health services over costs based on how the service is delivered
Patients have access to the same expertise and potentially can connect to even more qualified practitioners.
|Dampens telehealth innovation
Telehealth solutions are rapidly advancing, and the reality is, parity laws will lag behind the speed of this innovation. As a result, healthcare providers may not be keen to incorporate these new advances as and when it happens.
The Future of Telehealth Payment Parity
A 2020 study by Commonwealth Fund concluded that telehealth payment and regulatory policy must balance the dual goals of increasing access to care while limiting overuse and fraud.
With many telehealth payment parity mandates still active due to the PHE, now’s the best time for all stakeholders to pay close attention to its long-term implications. Much of the initial setup cost and infrastructure for the basics of telehealth treatments have been put in place, so the data collected can become part of ongoing research to effectively determine rates to match the actual costs of telehealth care and allow for the continuity of telehealth treatments.
There are high stakes on the line to get it right, with the important role that telehealth plays now and will continue to play post-pandemic—the modernization of the US healthcare system, coverage parity, improving the patient/practitioner experience, and more are on the line.