New York introduced a new bill designed to ensure commercial health plans pay for telehealth services at the same rate the plans pay for in-person services. The legislation, SB 7953, comes on the heels of New York’s long-awaited telehealth coverage law and seeks to add payment parity language to the State’s existing telehealth coverage statute. See our prior article on New York’s telehealth coverage law for details on that statute.

Effective January 1, 2016, the New York telehealth coverage law prohibited commercial insurers from “exclude[ing] from coverage a service that is otherwise covered under a policy that provides comprehensive coverage for hospital, medical or surgical care because the service is delivered via telehealth […].” While the intent and purpose of the telehealth coverage law was to ensure patients in New York could enjoy the choice to receive their covered services in-person or via telehealth technologies, the statute contains no payment parity language. In other words, unlike several states (e.g., Delaware, Minnesota), the New York law did not state that health plans must pay providers at the same or equivalent reimbursement rate for identical in-person and telehealth-based services.

Payment parity is an important issue when drafting and considering proposed telehealth coverage bills. We have discussed this extensively in the past, and tackled these matters in connection our policy and legislative drafting efforts. Because of the lack of payment parity language in the New York Statute, some commercial insurers decided they would pay providers only a fraction (some plans only 50%) of the reimbursement rate the provider would receive for identical in-person services. This decision created an even greater disincentive for providers (particularly in-network providers) to offer patients telehealth services compared to if telehealth were simply a noncovered service the patient would pay for out-of-pocket.

The disappointment among the provider community was palpable and they quickly mobilized to seek a remedy, which came in the form of the proposed legislation. SB 7953, introduced May 31, 2016, aims to resolve this issue and implement payment parity for telehealth services. The bill seeks to amend the New York Insurance Code governing private health insurers to require insurers to “reimburse a telehealth provider for covered services delivered via telehealth on the same basis and at the same rate as established for the same service when not delivered via telehealth.” The bill also extends payment parity for telehealth services to New York Medicaid.

Payment parity is important for providers because it protects providers against arbitrary cuts in reimbursement for telehealth services as compared to services provided in-person. What occurred in New York should serve as lesson to providers in other states advocating for telehealth coverage legislation. While coverage parity is important, legislation that fails to address payment will open one door, only to leave another closed.

Currently, 29 states plus the District of Columbia have telehealth commercial insurance laws requiring commercial health insurance companies cover services provided via telehealth to the same extent those services are covered if provided in-person. Continued expansions in reimbursement mean providers can enhance telehealth offerings, both for the immediate cost savings and growing opportunities for revenue generation, to say nothing of patient quality and satisfaction. Commercial insurance reimbursement is among the five telemedicine trends driving health care transformation in 2016 and beyond.