Overcoming Payment Challenges to Realize the Promise of Telehealth


Telehealth– using telecommunications to improve patient care – has the potential to improve health care access and quality, especially in rural and medically-underserved areas. But inconsistent public and private insurance coverage and other challenges have hindered implementation of this promising health care tool.

The National Academy for State Health Policy’s (NASHP) Patient-Centered Outcomes Research Workgroup met recently to explore how these telehealth services can be effectively deployed, and discuss what new state policies and funding are needed to implement this health care resource.

The Patient Centered Outcome Research Institute’s (PCORI) portfolio of research into telehealth includes 70 PCORI-funded studies that focus on a variety of populations and telehealth intervention strategies. The workgroup reviewed two of the recently completed studies:

  • One study compared the effectiveness of using telehealth to monitor African-American and Latino patients from disparity communities who had been hospitalized for chronic heart failure with patients from the same community who received usual care, without the telehealth intervention. The patients in the study group used telehealth self-management (TSM), which included weekly video-visits with a provider (accessed from the patient’s home) and daily patient self-monitoring, combined with usual care. The study found that TSM patients used the emergency department four-times less and had two-times fewer hospitalizations than the “usual care” group. Although the number of participants was small (104), the study showed potential for improving patient care and lowering costs.
  • Another study tested the impact of video house calls on the quality of life and care of people with Parkinson’s disease. The study compared patients who received usual care with patients who received usual care and up to four video house calls with specialists over a 12-month period. Patients who received the virtual house calls found them convenient, however, they reported no differences in quality of life and their quality of care measures were similar to patients who received only usual care.

Insurance Coverage Impacts Telehealth Implementation

According to the Center for
Connected Health Policy, Medicaid
programs in 49 states and
Washington, DC provide
reimbursement for some form of live
video and 20 state provide
reimbursement for remote patient

While most state Medicaid programs cover telehealth, policymakers in the workgroup reported limited usage of telehealth by providers, citing inconsistent coverage as a potential reason for the lag in implementation. State officials attributed the limited uptake to providers’ hesitance to integrate telehealth when there is not uniform insurance coverage of telehealth across payers. Clinicians, not wanting to provide different types of care based on a patient’s insurance, may avoid telehealth because of the coverage disparity. Additionally, large hospital systems that operate in multiple states grapple with varying insurance coverage between states.

Many states have passed laws to better coordinate telehealth coverage in an effort to increase its utilization. For example, Washington State recently passed SB 5175 that requires all private insurers to cover telehealth services, creating better alignment across public and private payers. Currently, 34 states and Washington, DC require private insurers to cover some degree of telemedicine, such as e-visits, when a patient in one location virtually connects with a provider in another location. While Medicaid and some private insurers cover telehealth services, coverage varies greatly depending on the insurance plan, state requirements, local community resources, and patient circumstances. As a result, providers must navigate a patchwork of telehealth coverage.

Facility Fees and Telehealth

Workgroup members noted that hospitals and health systems may delay telehealth due to a lack of coverage for transmission or facility fees. Currently, health care organizations charge facility fees for patients’ use of hospital facilities and equipment. For telehealth services, some states allow coverage of transmission fees, which is the amount paid to the originating site for providing real-time communication.

“It’s a little risky to think of telemedicine as a solution to rural health access if you don’t think about the payment for it.”
– PCOR workgroup member

One state official cited providers’ reluctance to use telehealth if they do not receive a facility fee or compensation for the use of equipment during telehealth services. As of 2018, 32 state Medicaid programs allowed payment of a transmission or facility fee when telehealth is used, while other states may not cover these fees due to budget concerns. Many states that don’t currently reimburse transmission or facility fees have large rural populations (e.g., Alabama, Alaska, Arizona, Arkansas, Idaho, Kentucky, and Wyoming). As a result, the inability to charge facility fees may pose an obstacle to enabling telehealth to expand access in rural areas. Some states have begun to troubleshoot this issue by creating carve-outs for Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs), which may serve as potential access points for rural communities to obtain telehealth services. Georgia’s Medicaid program allows RHCs, FQHCs, and Local Education Agencies to collect a facility fee when telehealth services are used. Similarly, Missouri’s Medicaid program allows FQHCs and RHCs to be reimbursed for facility fees when telehealth services are delivered.

Sustaining Pilot Projects

Many states have actively integrated telehealth through pilot projects. For example, the Alabama Department of Public Health Telehealth Program established telehealth clinics in most of the state’s county health departments by distributing telehealth “carts,” or mobile medical kiosks with video conferencing, and digital medical tools, such as a digital stethoscope, that allow patients to connect with remote specialists from local clinics. Alabama plans to install telehealth capacity in all 67 of its county health departments, and it has entered into partnerships for specific telehealth services, such as pre-colonoscopy counseling and monthly consultations with neurologists for children with special health needs. Other states, including Oregon, have supported telehealth pilots through delivery reform grants such as State Innovation Model Initiatives. While pilot projects help states advance their understanding of telehealth, including implementation challenges, time-limited grants or short-term demonstration projects are often not financially sustainable. Outside of sustained funding mechanisms, pilots often have only a limited impact on care delivery.

More research and work continues on telehealth initiatives, and NASHP will continue reporting updates in the months ahead.

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