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April 2015

Wolters Kluwer Law & Business White Paper

Telemedicine: State and Provider Challenges to Expansion

By Jenny M. Burke, JD, MS Health Law Senior Writer Analyst

Inside

Executive Summary ..................................................1

Introduction .............................................................1

What is telemedicine and who is using it? ................1

State by State Coverage and Reimbursement Issues ....2

One Provider’s Experience ........................................4

Payment Issues .........................................................5

Health Quality and Services .....................................5

Planning ahead .........................................................6

Conclusion ...............................................................7

Executive SummaryNew technologies enhance our lives on a daily basis, and using those technologies to enhance our health is not a new idea. Telemedicine is one of those enhance-ments, and although it has been around for approximately 40 years, today, the speed at which it is growing and integrating itself into the ongoing operations of hospitals, specialty departments, home health agencies, private physician offices as well as consumer’s homes and workplaces is astonishing. Telemedicine provides a unique opportunity to save money, manage patient care, and reach patients when staff might not otherwise to reach them.

Although we have this unique opportunity, it comes with a price of confusion and uncertainty as to how the pieces of telemedicine may fit into the traditional rules for patient visits and billing. Further, telemedicine is largely governed by state rules, and the changes to regulations governing telemedicine are creating a patchwork, which makes it difficult for providers to follow. There is no one clear path to providing a successful telemedicine program.

Introduction

This white paper will provide a glimpse into the world of a telemedicine provider. It will review state coverage and reimbursement laws, revealing just how different the states are in terms of parity laws and Medicaid service coverage and conditions of payment. The white paper will then reveal how one successful telemedicine provider is making it work and provide a picture of the daily concerns that similar providers are facing.

What is telemedicine and who is using it?Telemedicine is “the use of medical information exchanged from one site to another via electronic communications to improve a patient’s clinical health status,” as explained by the American Telemedicine Association (ATA). CMS describes telemedicine as “a cost-effective alternative to traditional face-to-face consultations or examinations between provider and patient.” This definition is modeled on Medicare’s definition of telehealth services at 42 CFR 410.78. The federal Medicaid statute does not recognize telemedicine as a distinct service.

It includes a variety of applications and services using two-way video, e-mail, smart phones, wireless tools, and other forms of telecommunications technol-ogy. Patient consultations via video conferencing, transmission of still images, e-health including patient portals, remote monitoring of vital signs, continuing

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2 Telemedicine: State and Provider Challenges to Expansion

medical education, consumer-focused wireless applica-tions, and nursing call centers, among other applications, are all considered part of telemedicine. Consumers and physicians are even downloading and using health and wellness applications for use on their smart phones.

According to the ATA, there are approximately 200 telemedicine networks providing health care services to 3,500 service sites in the U.S. There are close to 1 million Americans currently using remote cardiac monitors. In 2011, the Veterans Health Administration delivered over 300,000 remote consultations using telemedicine. Currently, more than half of all hospitals in the U.S. use some form of telemedicine. Even around the world, the ATA points out that millions of patients are using telemedicine to monitor their vital signs and remain healthy and out of hospitals and emergency rooms.

Terminology. The terms “telehealth” and “telemedi-cine” are often used interchangeably. To clarify, the ATA notes that, “the term telehealth is sometimes used to refer to a broader definition of remote healthcare that does not always involve clinical services.” ATA further explains that telemedicine is sometimes more closely allied with the term “health information technology (HIT);” however, “HIT more commonly refers to electronic medical records and related information systems while telemedicine refers to the actual delivery of remote clinical services using technology.”

State by State Coverage and Reimbursement Issues

Many states are turning to telemedicine to provide a cost-effective alternative to traditional face-to-face consultations or physical examinations between provider and patient. States have the flexibility to determine whether telemedicine is covered; what types of telemedi-cine are covered; where in the state it can be covered; how it is provided; what types of telemedicine practitio-ners or providers may be covered and reimbursed, and how much they should be reimbursed for telemedicine services, as long as the payments do not exceed Federal Upper Limits.

Many states have found that the best way to save money and provide coverage for telemedicine is via their Medicaid program. There are currently 43 states and the District of Columbia that provide some form of Medicaid reimbursement for telehealth services. Another way telehealth is covered in each state is via private insurance plans, which include coverage for telehealth services. Twenty states and the District of Columbia require private insurance plans in the state to cover telehealth services. The National Council of State Legislatures provides a map of telehealth coverage that shows just how popular this form of coverage has become:

Despite the widespread popularity of telemedi-cine, states still face many challenges. The ATA found that patients and health care providers often encounter various insur-ance requirements and disparate payment streams that do not allow them to fully take advantage of telemedicine. Coverage and reimbursement seem to be the two biggest issues that states face as they look to expand their telemedicine coverage and programs, according to the ATA.

To gain a better understanding of these issues, the ATA reviewed state statutes, regulations, National Council of State Legislatures – State Telehealth Coverage

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Patients and health care providers often encounter various insurance requirements and disparate payment streams that do not allow them to fully take advantage of telemedicine.

Medicaid program manuals and fee schedules, state employee handbooks, and other federal and state policy resources. The ATA developed 13 indicators related to coverage and reimbursement to research each state based on health plan parity and Medicaid conditions of payment. Medicaid fee-for-service and managed care plans were analyzed. Physician, mental and behavioral health, and home health and rehabilitation services were used as benchmarks for the ATA’s analysis. The indicators were:

Parityprivate insuranceMedicaidstate employee health plans

Medicaid Service Coverage & Conditions of Paymentpatient settingeligible technologiesdistance or geography restrictionseligible providersphysician-provided telemedicine servicesmental and behavioral health servicesrehabilitation serviceshome health servicesinformed consenttelepresenter

Parity. Parity laws are laws that require private insurers to cover telemedicine-provided services com-parable to that of in-person services. The ATA classifies full parity as comparable coverage and reimbursement for telemedicine-provided services to that of in-person services. Over the past three years, the number of states with parity laws has doubled.

According to a 50 state gap analysis study on telemedicine coverage and reimbursement by the ATA, of the 21 states that have telemedicine parity laws for private insurance, 19 states and the District of Columbia have enacted full parity laws. Arizona and Colorado have enacted partial parity laws that require coverage and reimbursement, but they limit coverage to a certain geographic area (e.g., rural) or a predefined list of health care services. Of these 21 states, ATA found that only 15 of them and the District of Columbia scored the highest grades indicating policies that authorize state-wide coverage, without any provider or technology restric-tions. Over half of the country, 29 states (57 percent), ranked the lowest with failing scores for having no parity law in place.

Medicaid. There are various standards by which state Medicaid programs will reimburse for telehealth expenses. The ATA assessed each state’s Medicaid plan and analyzed their service limits and patient setting

restrictions. It reviewed the components of state policies that enable or impede parity for telemedicine-provided services under Medicaid state-employee health plans.

The ATA found that 47 state Medicaid programs have some type of coverage for telemedicine. Only five states and D.C. scored the highest grades because they offered more comprehensive coverage, with fewer bar-riers for telemedicine-provided services. Connecticut, Hawaii, Idaho, Iowa, Nevada, Rhode Island, Utah and West Virginia ranked the lowest with failing scores in this area.

Upon review of each of the states in its study, the ATA found that telemedicine utilization has been met with a mix of “strides and stagnation in state-based policy.” When considering the numerous payment and service delivery options that enable telemedicine adoption, seven states averaged the highest composite score sug-gesting a supportive policy landscape that accommodates telemedicine adoption. Three states did not measure up and averaged the lowest composite score, suggesting many barriers and little opportunity for telemedicine advancement (see Figure 1 and Table 1, page 4).

Despite the barriers facing the expansion of telehealth, HHS understands that telehealth services can make it more efficient to manage ongoing care. There are clear, beneficial outcomes that result from regular phone contact with a nurse, especially when managing chronic conditions such as diabetes, depression, and hypertension. According to HHS’ Health Resources and Services Administration (HRSA), “by integrating health care into daily life, instead of limiting contact with the medical system to a few office visits, the dynamic of

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4 Telemedicine: State and Provider Challenges to Expansion

treatment changes to emphasize self-management.” Self-management via support from telehealth has proven positive outcomes. To obtain these positive outcomes, it is crucial that providers have the support they need.

One Provider’s Experience

Cherokee Health System (Cherokee) is a self-identified “unique” health care provider based in Tennessee. Cherokee’s mission is “to improve the quality of life

StateComposite

Grade StateComposite

Grade StateComposite

Grade StateComposite

Grade

AK B ID C MT B RI F

AL B IL C NC C SC B

AR C IN C ND C SD B

AZ B KS B NE B TN A

CA B KY B NH A TX B

CO B LA B NJ C UT C

CT F MA B NM A VA A

DC B MD A NV C VT B

DE B ME A NY C WA C

FL C MI C OH C WI C

GA B MN B OK C WV C

HI C MO B OR B WY C

IA F MS A PA B

Figure 1. American Telemedicine Association, State Policy Landscape Analysis

Table 1. American Telemedicine Association, State Composite Score Breakdown

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for our patients through the blending of primary care, behavioral health, and prevention services,” and part of that vision includes providing telemedicine services. Cherokee, a federally qualified health center and com-munity mental health center, has been a pioneer in the use of telemedicine in East Tennessee for a number of years. Cherokee’s system allows patients in underserved areas to access specialists without having to travel long distances. The current system uses teleconferencing equipment and high-speed telephone lines to allow the clinician and patient to see and speak to each other as if they were in the same room. This service has been extremely successful with a very high patient satisfaction and return rate. To explain the benefits and setbacks with telemedicine, staff members at Cherokee offered some of their experiences and knowledge with patient care and reimbursement structure. This provides insight into what areas might create growth and where potential setbacks may lie.

Payment IssuesTelemedicine is covered by Medicare and in many cases, Medicaid, but in either situation, it’s only covered under certain circumstances. Insurance providers and state Medicaid plans vary greatly in what services they cover.

Medicare and Medicaid. Many “telehealth” services, such as remote radiology, pathology and some cardiology, are covered simply as “physician services.” For traditional fee-for-service beneficiaries living in rural areas, Medicare covers physician services using videoconferencing. Fourteen million beneficiaries in Medicare Advantage plans have complete flexibility in using telehealth as long as their provider offers the service. Almost every state Medicaid plan specifically covers at least some telehealth services; however, states vary greatly in their coverage.

Payment changes. With growth comes change and reimbursement structures for telemedicine are certainly no different. Joel Hornberger, the Chief Officer for Strategic Planning at Cherokee, noted that Cherokee is seeing an increase from traditional fee-for-service contracts to value-based contracts. According to Hornberger, these value-based contracts often include the following provisions:1. Base reimbursement – this is a fee-for-service

compensation rate, usually a percent of Medicare. The base reimbursement includes payment for telemedicine visits.

2. Coordination of care administrative capitation – in addition to the base reimbursement, Cherokee obtains additional monthly coordination of care ad-

ministrative capitation. This is a mutually agreeable per member per month rate for all members assigned to a Cherokee primary care provider. This capita-tion amount allows it to invest in the infrastructure needed to manage a population of individuals. Tele-medicine/telehealth strategies are important pieces of managing the administrative capitation rate.

3. Capitation rate adjustment provisions – the capita-tion rate may be adjusted depending on how well Cherokee is managing the population assigned to it.

4. Quality performance standards – Eight to 10 spe-cific quality measures/indicators are negotiated for

the population assigned to Cherokee’s primary care providers. These are Healthcare Effectiveness Data and Information Set (HEDIS) measures. HEDIS is a tool used by more than 90 percent of America’s health plans to measure performance on important dimensions of care and service. Altogether, HEDIS consists of 81 measures across 5 domains of care. Bonus monies are paid if the predetermined quality measures are met and telehealth technologies can be used to improve these measures.

5. Shared surplus tied to medical loss ratio – the value-based contracts also include a provision whereby surplus dollars (i.e., less than 85 percent of medical loss ratio (MLR) are shared and deficit dollars (greater than 90 percent of MLR) are shared in some predetermined ratio. Population health strategies depend on a variety of outreach and engagement activities, including telehealth.

“Telehealth allows us to provide school health services and de-crease absenteeism at schools. Patients that would not go to a mental health clinic can see therapists and psychiatrists at their primary care office.”

– Dr. Febe Wallace, Director of Primary Care, Cherokee Health System

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6 Telemedicine: State and Provider Challenges to Expansion

These provisions make it obvious that value-based contracts involve a great deal of day-to-day manage-ment of a population of patients assigned to Cherokee. Hornberger noted that with patient care management via telemedicine, “the rewards are greater, but so are the risks. We plan to expand our telehealth/telemedicine capabilities to undertake more patient management/population health strategies.”

Health Quality and ServicesTelemedicine provides a unique way to monitor patients and improve health outcomes. According to the ATA, “studies have consistently shown that the quality of healthcare services delivered via telemedicine is as good those given in traditional in-person consultations.” Some specialties are particularly adaptable to telemedicine, such as mental health and intensive care unit (ICU) care, and in some cases, the ATA noted, it results in greater outcomes and patient satisfaction.

Improving patient care. Dr. Febe Wallace, Director of Primary Care at Cherokee, sees patients nearly every day via telehealth technologies. She believes that telehealth permits increased access to care. Because in many areas there is a shortage of primary care provid-ers and psychiatrists, “telehealth allows us to use this scarce resource more effectively. We can provide school health services and decrease absenteeism at schools. Patients that would not go to a mental health clinic can see therapists and psychiatrists at their primary care office.”

Efficiencies. Telehealth creates many opportunities to find efficiencies. Dr. Wallace finds that she is more ef-ficient with her documentation when seeing patients via telehealth. According to Dr. Wallace, she can be looking at the screen, but then behind the scene, type in the his-tory, conduct a physical exam, and put in orders. Even small efficiencies with each patient make a great impact. Dr. Wallace commented that she and her telehealth nurse work together to put in orders and patient plans. For a provider, telehealth also makes it easier to keep up with the burden of the electronic health record because it is easier to input patient data immediately.

Staffing. Dr. Wallace praised the advantages of physician staffing and telemedicine. Telemedicine plays an important role in staff retention. Dr. Wallace stated, “For a mission oriented community health center, our biggest resource is our staff, and retention is vital.” For example, Dr. Wallace noted that Cherokee has “been able to keep valuable staff even with changes in location due to family reasons.” Physicians do not need to live

in the same location as the patients, making it easier to serve rural populations and homebound patients and protect and extend the physician-patient relationship. Dr. Wallace pointed out that she has continued to “provide valuable primary care services despite moves related to [her] husband’s job,” and Cherokee has been able to “retain the services of a bilingual therapist upon her move to Miami.”

Service expansion. With respect to service expansion, Hornberger believes that Cherokee will be seeing greater use of telemedicine in rural areas, especially with respect to psychiatric treatment. He added that “we also think that school-based therapists (therapists providing services in the schools) will do more in terms of telehealth and [spend] less time traveling between schools.”

Telehealth in schools. Cherokee currently is involved with telehealth in schools, specifically, an innovative project called S.M.A.R.T (Student Medical Assistance Response Team), Hornberger said. The project is “a school-based medical clinic equipped with the latest remote technology that lets an on-site nurse assist in a health examination administered by a medical profes-sional — typically a pediatric or family nurse practitio-ner — at another location miles away. “It doesn’t make sense to pull a child out of the school setting so they could see a physician, when in many cases, the problem could be resolved through technology,” Hornberger explained. “Telemedicine seemed to be the obvious alternative to help keep students in school and parents at work.”

Barriers to care. There are setbacks, of course. When using telemedicine, Dr. Wallace noted, “the primary bar-rier for our patients is access to the technology. We have low income patients, homeless patients, and migrant patients. Many have basic cell phones, but many do not have easy access to internet or smart phones.” Because of this limitation, health systems such as Cherokee could use programs that allow the health system to take technology to patients, which would result in greater success. Dr. Wallace further noted that “funding to develop these programs continues to be a challenge.”

Planning aheadWhen looking to the future, Hornberger noted that “we see a strategy of ‘fewer bricks’ and ‘more clicks’”; but the major challenges of this approach are compliance with the telemedicine rules of the Tennessee Board of Licensure, Internet access by patients in outlying areas, and costs. This is something that can be learned by trial and error, measuring quality, and outreach, according to

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Hornberger. As telehealth programs expand, Dr. Wallace suggested that the programs “should be a component of a comprehensive plan for a ‘medical home,’ … and without a consistent team to guide a patient, care can be fragmented.”

As telemedicine expands, Dr. Wallace still feels it is important to connect with patients in person when possible. “Telehealth provides a “face-to-face” element that is vital to appropriate medical care,” Dr. Wallace said. “The technologies can engage patients, but when I do have the opportunity to see a patient in person, they are always excited. Telehealth can never replace the value of human interaction and caring.”

ConclusionAs telecommunications technologies continue to evolve, telehealth will become even more integral to health care delivery and education, but only as far as state and federal laws support that growth. With the passage of the Patient Protection and Affordability Act (ACA) (P.L. 111-148) and other important health care reform laws, there is momentum to fit telemedicine into the U.S. health care system as a means to improve care and reduce costs.

For example, the Health Information Technology for Economic Health Act (HITECH) (P.L. 111-5)

amended the Health Information Portability and Accountability Act (HIPAA) (P.L. 104-191) to reinforce the privacy and security requirements that apply to the use and disclosure of health information, including through telemedicine. Additionally, the ACA embedded telemedicine and health technology in general into some of its initiatives. Section 3021(b) of the ACA directed the newly-created Center for Medicare and Medicaid Innovation (CMI) to test new care models that rely on “electronic monitoring” of inpatients by remote means or that utilize patient-based monitoring systems, among others. Section 3022(b)(2)(G) of the ACA also requires accountable care organizations (ACOs) to define processes to coordinate care “through the use of telehealth, remote patient monitoring, and such other enabling technologies.”

But these federal laws provide only the most basic support system for states to expand telehealth. States must continue on their own to drive the momentum for telemedicine adoption by creating new laws that enhance access to care via telemedicine and amending existing policies. By doing so, patients and health care providers such as Cherokee Health System will benefit from policy improvements to existing parity laws, expanded service coverage, and removed statutory and regulatory barriers.