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Telehealth Pay Gaps Loom After Virus When State Orders Expire

June 4, 2020, 9:31 AM

Virtual doctor visits won’t go away after the pandemic as states like Illinois and Arkansas try to ensure telehealth remains a viable alternative.

Chatting with physicians online surged during Covid-19 via video-conferencing apps such as Google Meet, Zoom, Skype, and Apple FaceTime to keep patients and doctors from potentially exposing themselves and others to the coronavirus.

Major health-care commercial insurers like Aetna, Cigna, Blue Cross Blue Shield, Humana, and United Healthcare typically cover telehealth, but these virtual services don’t always pay providers at the same rate as in-person care.

While approximately 60% of states like California and Virginia already have laws on the books leveling payments for virtual and in-person treatment, many others rushed to fill the gap with emergency orders during the outbreak. Demand for telehealth shows no signs of slowing as states slowly start reopening, but those temporary payment measures will expire with the national emergency unless states take additional steps.

“With the Covid-19 pandemic, we’ve seen an overnight switch from in-person to telehealth services, and I think this is a dress rehearsal for telehealth as a mainstream modality of providing health care,” Jake Harper, a health-care attorney at Morgan, Lewis & Bockius LLP in Washington who focuses on telehealth and medical reimbursement issues.

“These forces are going to push on insurers and legislators to start reimbursing telehealth services or revising telehealth legislation in a more meaningful way,” Harper said.

Financial Incentive Needed

Without state action, doctors will have more incentives to in-person treatment that pays better, according to Carrie Nixon, a managing partner at the Nixon Law Group LLC.

“This means that either both state legislators and policymakers need to see the value in telehealth for improving patient outcomes and lowering the overall cost of care and legislate permanent changes accordingly, or commercial payers need to come to the same conclusion on their own,” she said.

Prior to the coronavirus, doctors and hospitals had a hard time getting reimbursed when providing virtual treatment unless their patients live in rural areas. But federal regulators and insurers allowed Medicare, Medicaid, and major health plans to pay telehealth costs for office, hospital, and other visits.

This could spur states to follow suit, according to Lisa Mazur, a partner at McDermott Will & Emery in Chicago and president of the Partnership for Connected Illinois. The expiring executive orders give those states another chance to address the pay gap between in-person and virtual doctor visits, she said.

State Moves

The boom in virtual communication from Covid-19 forced states to swiftly change their positions on how doctors get paid for performing telehealth services.

Arkansas, for example, requires equal payment for telehealth services during the public health emergency, according to Amy Webb, a spokeswoman for the Arkansas Department of Human Services.

“We are reviewing best practices to determine longer-term plans and approaches to this issue,” Webb said.

Illinois was another state with a change of heart.

Before the pandemic, Illinois had the “if, then” law, which means if a health plan covers telehealth services, then it won’t place certain barriers like higher deductibles on those services, Mazur said.

Gov. J.B. Pritzker issued an executive order in March requiring insurers to reimburse telehealth services at the same rate as in-person office visits. Illinois’ House passed a bill May 23 that would have extended this order until the end of the year, but the provision didn’t come up for a Senate vote before lawmakers adjourned.

The Illinois Telehealth Initiative, a Partnership for Connected Illinois project, will be studying telehealth’s benefits as advocates lobby lawmakers on its benefits.

“We’re doing a study with a Harvard-trained population health specialist on collecting the evidence on telehealth effectiveness during the pandemic,” Nancy L. Kaszak, a former state House representative and director of the initiative, said.

Although telehealth payment parity is a state issue, there are ways that federal regulators can help. The Centers for Medicare & Medicaid Services, for example, has previously said it’s considering what recent telehealth changes to keep once the public health emergency ends.

“Since payment parity is one of the keys to increased adoption of telehealth, I would expect to see more telehealth guidance and initiatives on both the state and federal level as both state and federal governments look for ways to encourage the increased use of telehealth,” Ryan Blaney, a health-care partner at Proskauer Rose LLP in Washington, said.

To contact the reporter on this story: Ayanna Alexander in Washington at aalexander@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Andrew Childers at achilders@bloomberglaw.com

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