Continued Increase in State Regulation
State regulation of telehealth reached an all-time high in 2017, with 34 states and the District of Columbia passing a total of 62 legislative bills, representing a 22 percent increase from 2016. A summary of all state-approved legislation is available here. Such significant legislative activity continues to fuel concerns that telehealth is overly regulated and that the diversity of approaches has created a daunting “patchwork quilt” of state telehealth-specific regulations.
The substance and the underlying spirit and intent of much of the 2017 legislation, however, are different than in prior years. A material portion of the legislation actually included a component of deregulation of telehealth. For example, Texas, the state with the strictest telehealth laws that was embroiled in a multi-year lawsuit with direct-to-consumer telehealth company Teladoc, eliminated its requirement that a face-to-face encounter take place at an “established medical site”—a site with licensed or certified health care professionals, with sufficient technology and medical equipment to allow for physical evaluation, and of sufficient size to accommodate patient privacy and presentation of the patient to the provider—prior to delivering care via telehealth, unless a very limited exception applied. This change enabled a new chapter of home-based telehealth programs in Texas and ended a very public (and expensive) lawsuit.
The continued success of professional licensure compacts, such as the interstate medical licensure compact and the enhanced nurse licensure compact, is another example of states adopting solutions to reduce barriers to telehealth, as the compacts ease professional licensure requirements for health care professionals by allowing multi-state licensure through a streamlined process. The compacts have received support from federal agencies, such as the FTC and US Department of Justice, which view them as a way to increase competition and enhance access to patient care. The federal government has taken a similar approach with the passing of the Veterans in E-Health and Telemedicine Support Act of 2017 earlier in January 2018; the legislation is designed to expand the telehealth programs of the US Department of Veterans Affairs (VA) by enabling VA-licensed health care professionals to deliver care to veterans across state lines.
The focus of state legislation in 2017 also continued to move away from regulating the delivery of care (e.g., practice standards for securing informed consent and remote prescribing) and toward regulating the coverage and payment of telehealth services by private payors. Today, 34 states and the District of Columbia have a telehealth coverage parity law that requires a payor to cover a service delivered via telehealth if the payor covers such service when it is delivered in person (subject to any in-network limitations). The vast majority of states with these parity laws do not require that payors pay the same amount for telehealth services as for the same type of in-person services. Therefore, payors may pay less for the telehealth service (in some cases, as little as half as much), and many of these laws have other limitations that undercut their effectiveness by providing payors with an “out,” such as subjecting coverage to compliance with a payor’s existing policies. For example, Arkansas only requires coverage of a telehealth service when there is an in-person examination of the patient, which was a requirement of some state professional boards in the past that has since been retired (except in the context of remote prescribing in certain cases).
Going beyond parity laws, the coverage and payment policies of commercial and government payors continued to expand in 2017. Medicaid regulations were revised in almost 20 states to lessen the telehealth coverage requirements or expand the types of telehealth covered services.
At the federal level, the US Drug Enforcement Agency (DEA) announced plans to ease the restriction on the prescription of controlled substances via telehealth as set forth in the Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which requires a telehealth provider to examine a patient in-person before prescribing a controlled substance. One change may be the implementation of the long-awaited “special registration” pathway for telehealth providers found at 12 USC § 802(54)(E). The DEA announced plans to develop and implement this telemedicine registration provision to enable practitioners to use telehealth to prescribe controlled substances without performing an in-person examination in the spring of 2018. These changes may occur as the result of the DEA’s own initiative to implement a “special registration” process for telehealth prescribers, which has been announced on more than one occasion over the past few years, and/or the recent White House declaration of the opioid addiction epidemic as a national emergency. Either way, telehealth providers should continue to monitor the federal remote prescribing requirements, as their ability to prescribe controlled substances via telehealth may soon change.
Expansion in Medicare Coverage and Reimbursement
One of the biggest victories for telehealth came toward the end of 2017 with CMS’s release of a final rule for the 2018 Medicare Physician Fee Schedule. CMS added new telehealth codes covering health risk assessments, psychotherapy, chronic care management and interactive complexity, and expressed its commitment to “transforming access to Medicare telehealth services by paying for more services and making it easier for providers to bill for these services.” CMS’s recognition that improving access to telehealth services will modernize Medicare payments to promote patient-centered innovations will lead to further investment in telehealth’s potential by the private payor community.
In addition, the Senate’s unanimous passage of the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017 (S.870) in the fall was an encouraging step toward modernizing telehealth access and reimbursement, as the bill aims to improve health outcomes for Medicare beneficiaries living with chronic conditions and includes key provisions expanding access to telehealth. While many in the telehealth industry had high hopes for the passing of the House CHRONIC Care Act (HR 4579), the lack of progress and Republican support for the House bill has led commentators to question its future.
Telehealth providers should continue monitoring the ongoing changes in state laws and regulations addressing the coverage and payment of telehealth services, and the practice standards that apply to the delivery of care via telehealth.
HHS OIG Work Plan – Audits of Claims for Telehealth Services
The OIG 2018 Work Plan provided that Medicare Part B payments for telehealth services for claims where no corresponding claim was submitted by the originating site (which indicates that the originating site might not have met Medicare’s telehealth coverage requirements) will be the focus of a planned audit. Medicaid payments for telehealth services were recently added to the audit to ensure compliance with Medicaid reimbursement requirements.
This increased risk of audit is a reminder to telehealth companies that they are subject to the same compliance standards as other types of health care providers. Therefore, they need to develop, implement and monitor compliance with corporate compliance programs that reflect the Compliance Program Guidance (Essential Elements) adopted by the OIG for various types of health care entities. The Essential Elements offer valuable guidance to telehealth companies on how to create a robust and effective voluntary compliance program, including performing internal monitoring and auditing, implementing compliance and practice standards, designating a compliance officer or contact, conducting appropriate training and education, responding appropriately to detected offenses and developing open lines of communication.
Repeal of Net Neutrality
As 2017 came to a close, the telehealth industry turned its attention to a new challenge: the potential consequences of the FCC’s move to repeal the Open Internet Order, which restricted internet service providers (ISPs) from interfering with the capabilities of content providers to disseminate their content utilizing the internet, and its replacement with the Restoring Internet Freedom Order. The Open Internet Order (1) prohibited blocking access to websites, throttling (or slowing down) website download speeds and requiring payment for prioritization of internet traffic, and (2) required public disclosure regarding network management practices, performance and commercial terms of broadband access services sufficient for consumers to make informed choices regarding use of such services and for content, application, service and device providers to develop, market and maintain offerings.
While the net neutrality rules were in place, the connectivity of each of these services and devices could not be restricted by the ISP operating the broadband networking to which they connected. For example, one telehealth provider could not pay to have faster connectivity speeds than another telehealth provider. Now, ISPs could (within the confines of the antitrust and trade laws) create tiered pricing structures that favor certain content providers over others. This structure could raise the barrier to entry for new health care technologies and new telehealth companies, causing rural providers or hospitals with less favorable revenues to cut innovative programs to increase access. The FCC’s expressed motivation for removing restrictions on ISPs is to fuel the telehealth industry by facilitating greater investment in infrastructure, including that within rural communities, and thereby increase the ability of rural communities to gain access to high-speed internet connections. Additionally, the FCC promised that, by deregulating, ISPs will innovate and compete, providing improved options for consumers. What these new options may look like in terms of digital health tools, however, remains to be seen.
If the repeal of the net neutrality regulations creates additional costs for telehealth providers, it will be more important than ever for telehealth providers to maximize potential revenue sources, including payor reimbursement, to offset potential cost increases and to continue to financially support telehealth programs. At the same time, however, telehealth providers are facing increased OIG scrutiny of telehealth claims, requiring providers to take all necessary steps to develop and implement legally compliant billing practices as part of their overall compliance program.