Telehealth reimbursement under the microscope

In this commentary, attorney Nathaniel Lacktman shares why, in the era of payment reform, it is critical for health plans to provide telemedicine reimbursement.

LacktmanHealth plans must embrace telehealth services. This is true whether you run a Medicare Advantage plan, a Medicaid managed care organization, a commercial health plan, or an employer-sponsored plan.

Not only is telehealth currently the best vehicle to promote care management by increasing patient "touches" and enhancing the doctor-patient relationship, it is a paved pathway for providers and payers to develop viable risk-sharing payment models, whether through value-based purchasing, shared savings, full subcapitation or otherwise.

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Yet, commercial health plans have historically not covered telehealth-based services as a member benefit. As a result, many of the early telehealth programs were built around cost-savings models, patient self-pay, or employer-sponsored payments. The current telehealth technical infrastructure and professional expertise makes these providers perfectly-suited partners for health plans seeking a turnkey solution to improving access and quality in the plan’s member population. Put another way, there are hospitals and providers out there with “telehealth Ferraris” just waiting for a health plan to bring the gasoline.

Due to this historical unwillingness to cover telehealth, states have enacted laws requiring commercial health plans to cover services provided via telehealth to the same extent the plan covers services provided in-person. These laws are designed to promote private sector innovation by catalyzing providers and plans to use the powerful telehealth technologies available in the marketplace.


NEXT: Where states stand


Twenty-nine states plus Washington, D.C., have telehealth commercial payment statutes, with bills under development in several states. Examples of enacted laws in the first half of 2015 include Arkansas, Connecticut, Delaware, Indiana, Minnesota, Nevada, and Washington.

And yet, even in some states with a coverage law (particularly ones with vaguely-drawn statutes), health plans impose policies restricting telehealth coverage in ways that do not benefit their own members, such as only offering coverage for members in rural areas or at certain “originating sites.”

Health plans can significantly benefit from increasing care management access to all their members, including those in urban areas. Moreover, some plans cover telehealth services at only a fraction of the equivalent in-person rate. In so doing, the plan actually creates a disincentive for their network providers to invest in (or even offer) telehealth services to the members. These policies do nothing to help a plan manage the care of its member population or its long-term costs.

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Health plans need to be smart about telehealth benefits. They should proactively engage providers and develop meaningful contract arrangements, payment models, and coverage policies with the goal of promoting cost-effective utilization to harness the benefits (both short-term and long-term) of telehealth as a component of population health management.

Viable models exist out in the market, and we continue to work on provider telehealth and virtual care contracts using a variety of alternative payment methodologies, leaving fee-for-service reimbursement behind.

For those health plans that choose to sit on the sidelines, the likely result will be one or both of the following: their state lawmakers enact a telehealth payment parity law requiring the plan to cover telehealth and pay for telehealth services at the same or equivalent rate as in-person services; or the plan’s competitors will proactively incorporate telehealth networks, be hailed as visionaries for population health, and consume market share.


Nathaniel Lacktman is a partner at Foley & Lardner. He is a healthcare regulatory, compliance and business lawyer with a focus on telemedicine and innovative healthcare arrangements. Follow him on Twitter @Lacktman or email him at

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