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Are State Laws Holding Back Telehealth?

June 11, 2015
by Rajiv Leventhal
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Health law expert breaks down the variances in telehealth policy and looks at what the future holds

When it comes to telemedicine—a market that stood at $17.8 billion globally in 2014, and is anticipated to grow at a compound annual growth rate of 18.4 percent through 2020, according to recent research—one of the segment’s most critical issues is that there is so much variance in its regulatory policy. While there has been evidence showing the benefits of telemedicine in the healthcare industry, the realization of those benefits may come to an abrupt stop at the state border.

In fact, the American Telemedicine Association (ATA) recently analyzed how all 50 U.S. states grade out on telemedicine policy, finding a supportive landscape for physician practice standards and licensure in slightly less than half of them. The widespread differences in state law that prevent the seamless use of telemedicine across state borders include diverse state medical practice rules, restrictions on the interstate practice of medicine, the complex state insurance landscape, state privacy laws, and conflicting rules and guidance across state agencies.

“Telehealth has the ability to breakdown geographic barriers to care, but the lack of uniformity in state law makes it very challenging to operate in a multi-state environment,” says Dale Van Demark, partner in the health law group at the Chicago-based McDermott Will & Emery, a full service law firm with an active healthcare practice representing provider organizations that are interacting with telemedicine companies, and the companies themselves. Van Demark recently spoke with HCI Associate Editor Rajiv Leventhal about these telehealth variances, possible ways to break regulatory barriers, and what the future holds. Below are excerpts from that interview.

How big of a barrier is it to the telehealth industry that states have varying laws?

Healthcare is a highly regulated industry; any business has to think about the regulatory environment, as they have to act in within the confines of the legal and regulatory structure. Insurance companies are regulated by each state and they have to comply with the state law. Telemedicine companies are no different. In addition to that, states are not consistent from a policy perspective in how they view telemedicine. While there has been a general and rapid acceptance of this form of care in many states over the years, it’s not a universal truth. Some states have taken a much more restrictive approach, be it via a legislative body or board of medicine. There is more acceptance generally, but plenty of states are not marching down that path in the same way. As a national business in some instances, there are vastly different requirements via telemedicine, and in some instances, these variances are impractical.

Dale Van Demark

What are some examples of the variances you’re seeing?

When you talk about the delivery of care in any situation, you’re thinking about in a basic sense, someone needing a license to practice medicine. One issue is the practice of medicine itself—What does it mean and require? In Texas, you’re seeing a rulemaking body taking a conservative approach to telemedicine. They have accepted that certain kinds of care can be delivered by telemedicine, but they believe it’s important for a patient to first see a doctor physically prior to any services being delivered via telemedicine. That falls into the category of “What is a telemedicine encounter and what’s required?” In Texas, an initial first visit is required.

Separately, each state has its own licensing rules. A New York license doesn’t permit me to practice in Colorado.  If I wanted to start a telemedicine company in South Carolina and treat patients across the country somewhere, you have to ask that if I am a doctor in South Carolina and I’M seeking video conferencing with a patient in Arizona, am I appropriately licensed to do that? As a general matter, states take the view that if you’re going to do that, you need a license in that state to engage in the state where the patient is. The multi-state licensure issue is another big one. Some states are more open to accepting “foreign” doctors and will be more liberal in the recognition of an out-of-state license. You can get a telemedicine license specifically in some cases too. There are different ways, but it’s another variation.

Other variances are with reimbursement and privacy. On the reimbursement side, some telemedicine services are reimbursed by Medicare or Medicaid. That is fairly restrictive, especially on the Medicare side where a number of circumstances have to be met. The structure of Medicare telemedicine reimbursement has been geared towards communities with a lack of healthcare resources. That element is often necessary, though it has been expanding slowly. Individual states have mandated that insurance companies to reimburse for telemedicine services, but again, it’s not uniform.

There is also a whole array of state privacy laws that come into play when dealing with healthcare that need to be addressed for any sort of healthcare company. This is another layer of complexity, as laws could be stricter than the Health Insurance Portability and Accountability Act (HIPAA).

With so many variances, are there ways to eventually get around these barriers and make things more uniform?