By Sandy Ahn, Sabrina Corlette and Kevin Lucia
Telemedicine has long been touted as the next big thing in healthcare. And its use is rapidly increasing among hospitals and health systems to increase their visibility among patients and enhance access to their services. But while telemedicine has been embraced by many hospitals and health systems, health insurers have been much slower to embrace this alternative care method. And few, if any, are using it as a tool to help meet state or federal network adequacy standards. Although the newly updated network adequacy model law adopted by the National Association of Insurance Commissioners recognizes telemedicine as an alternative health care delivery option, no state to date has enacted it.
To find out some of the opportunities and challenges to the use of telemedicine as a network adequacy tool, Georgetown researchers, in partnership with the Urban Institute and with funding from the Robert Wood Johnson Foundation, reviewed regulations and spoke with key stakeholders – insurance companies, state insurance regulators, and medical providers in six states: Arkansas, Colorado, Illinois, Maine, Texas and Washington. Researchers found that while stakeholders generally praised telemedicine as a way to increase access to services, it is unlikely to be used as tool to meet network adequacy standards any time soon. The full report can be found here.
First, insurers face regulatory uncertainty about whether and how telemedicine would be an acceptable way to meet network adequacy standards. No state has published guidance for insurers on this question. In part this is because regulators tend to react to problems in the market. They are less likely to issue guidance that proactively helps shape a market trend. Among our study states, Texas was the only one in which regulators report seeing insurers use telemedicine providers as part of their network adequacy plans, but they have seen it only rarely. Across all of our study states, insurers report a lack of clarity about how regulators will view attempts to use telemedicine providers to replace or supplement local providers, and interviews with regulators suggest that they themselves have not fully thought through the risks and benefits for consumers.
Second, many health care interactions require a face-to-face interaction with the patient. For example, telemedicine will never be a viable care delivery option in specialty areas such as anesthesiology and emergency. Yet these are the very same specialties that insurers often report as having contracting challenges. Insurers are thus limited in using telemedicine to increase their negotiating leverage with local specialty groups that may be reluctant to join their networks at prices offered by insurers.
Even in specialty areas like psychiatry and dermatology where telemedicine can work effectively, medical practice standards and operational barriers make its use and acceptance limited among insurers, providers, and consumers. In some states, medical boards place restrictions on telemedicine practice, such as limits on prescribing medications or requiring an initial encounter to be face-to-face. Many stakeholders believe these restrictions have impeded its growth.
In addition, varying state approaches to private insurance coverage of telemedicine services also limit providers’ willingness to invest in and use the technology. Roughly half of states require parity of reimbursement with face-to-face encounters for some services provides through telemedicine, but in many states the decision to cover telemedicine services and at what level is left to the insurer. Insurer stakeholders with whom we spoke did not identify increased utilization of services or fraud as reasons not to cover telemedicine – or invest in its expansion – but presumably their failure to do so suggests uncertainty about whether the potential benefits would ever outweigh costs.
However, as networks have narrowed, state and federal regulators are under increasing pressure to hold insurers to quantifiable network adequacy standards, such as a maximum travel time or distance, provider-to-enrollee ratios, or maximum wait times. The more regulators do so, the more incentives there may be for insurers to look to telemedicine to help meet those standards. State regulators will need to provide clearer guidance about the use of telemedicine than they have to date, to ensure that consumers have medically appropriate access – whether in person or through technology – to the care promised under their health benefit plan.