What’s Preventing the Telehealth Market from Booming? One Lawyer Weighs In (Part 1) | Healthcare Informatics Magazine | Health IT | Information Technology Skip to content Skip to navigation

What’s Preventing the Telehealth Market from Booming? One Lawyer Weighs In (Part 1)

June 15, 2016
by Rajiv Leventhal
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Just by how much are differences in state laws and insurance barriers affecting the telehealth industry?

A recent report from the Center for Connected Health Policy (CCHP), a program of the Public Health Institute, an Oakland, Calif.-based organization dedicated to promoting health through research and training, found that when it comes to telehealth laws and reimbursement policies, legislators and policy makers across the country seem to be taking one step forward and then one step back. For instance, while many states are beginning to expand telehealth reimbursement, others continue to restrict and place limitations on telehealth delivered services, according to the report, which was covered by Healthcare Informatics Assistant Editor Heather Landi in April.

As such, there is no shortage of legal issues that healthcare providers, hospitals, and startup companies should be aware of regarding telemedicine services. Nathaniel Lacktman, head of law firm Foley & Lardner’s telemedicine and virtual care practice, has been at the practice for 12 years.  With a firm of nearly 1,000 lawyers, a dozen of whom specifically handle telemedicine arrangements across U.S., he surmises the firm has had more opportunities to handle cutting-edge telemedicine work than any other in the country, if not the world.

As Healthcare Informatics Senior Contributing Editor David Raths noted in his telemedicine policy feature last fall, “For almost 20 years, telehealth advocates have faced the Sisyphean task of trying to get the U.S. Congress to expand Medicare coverage for telehealth beyond traditional rural settings. Meanwhile, they continue to hammer away at the uneven and confusing landscape of state laws and regulations.” Lacktman recently discussed these barriers as well as how the telemedicine landscape could play out in the future with Healthcare Informatics Managing Editor Rajiv Leventhal. Part one of that interview is below, edited for format purposes.

What are you currently locked into now regarding telemedicine policy?

Right now, the most interesting stuff circulates around payment for telemedicine services and the so-called telehealth coverage statutes. These laws require a health insurance plan to cover a service delivered via telehealth the same as if the service was delivered in person. I consider telehealth coverage statutes important consumer rights laws.  You have no choice as to what insurance company your employer selects to administer your benefits, no choice as to what specific health plan is offered to you, and no choice as to which providers are actually in that plan’s network. So you feel this sense of overwhelming disenfranchisement as an individual in the health insurance industry. And this one of the most important insurance coverages you would have during your life. You have far more ability to flex your spending power when buying life insurance, disability insurance, or car insurance. Yet, health insurance is a totally different process, and the individual really cannot speak with his or her dollars.

In a nutshell, you pay a premium to your health plan under a contract. In exchange, the plan agrees to cover services when you need it. Fair enough. But many plans require you to get those services in-person, meaning you have to take time out of your day and sit in a double-booked waiting room for an all-too-short appointment with your in-network doctor. Yet, there is an available technology for you to receive many of those same services while you are at home or your job—on your own convenient schedule. Telemedicine is well-established and utilized by patients and doctors in all 50 states. But, by and large, unless the state passes a telehealth coverage law requiring health plans to cover these services, they don’t. So you can have an insurance plan, say XYZ insurance, and it might have operations in all 50 states, with a variety of different health plans underneath it. In states with telehealth coverage laws, XYZ’s health plans will cover the services as a benefit, but in states without these laws, XYZ’s health plans do not cover telehealth services. I find this disappointing and frustrating, as do many healthcare providers. We see a much more robust and meaningful utilization and enjoyment of telehealth services in those states that have passed telehealth insurance coverage laws.

Nathaniel Lacktman

Medicare coverage for telehealth only applies to rural patients. How big a barrier is that?

It’s definitely a barrier. Much of the traditional healthcare delivery system relies on Medicare payments, and it shows how a large amount of our overall health costs are paid by that program. I think the Centers for Medicare & Medicaid Services (CMS) sometimes is unfairly criticized because people “demand” CMS change the Medicare telehealth coverage rules and allow reimbursement for patients in urban areas as well as rural. But, these restrictions we imposed by Congress, contained in the Social Security Act, and CMS cannot override federal statutes. In fact, CMS has made many outreach efforts to eliminate artificial restrictions and promote the meaningful use of telemedicine in health care delivery, and they should be recognized for that vision and those efforts. A number of bipartisan bills have been proposed over the years, but they will need federal action. And by April 2017, the U.S. Government Accountability Office (GAO) will issue two reports on telehealth studies and the Medicare program to see if eliminating the restrictions would represent a big financial burden or not. Those reports were required to be created as part of the “doc fix” bill last April and could be a catalyst for legislative movement by Congress.

How are state variances affecting the telemedicine market?

I believe we will eventually get to a point where health plans are meaningfully paying for telehealth services, whether that’s through legislative efforts or sheer enrollee demand. Until then, we do need these coverage statutes because a) so many providers rely on, and participate in, managed care programs; and b) because of the Affordable Care Act, many people have health insurance or are legally required to obtain it. Some of these will conclude that, since they are already spending money on insurance premiums, while they would love to have the convenience of telemedicine-based services, they don’t want to pay out-of-pocket for them. Changing that environment will catalyze utilization, adoption, and people’s enjoyment of these services.

How are the variances in state telemedicine laws creating issues when it comes to interstate medical licensing?

A doctor can be located in New York, you can be on vacation in Miami, and you can receive a consult, diagnosis, and a prescription from that doctor via telemedicine. The default rule is that the New York physician would need to have a license to practice medicine in Florida because that person is delivering care into the state of Florida. There are exceptions to this rule as well. It is not show-stopper burden; it’s much more of an operational or administrative burden. But there are a multitude of solutions and ways to approach it and scale up to have regional and national coverage of a telehealth-based medical group.


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