On April 17, Washington Governor Jay Inslee signed Substitute Senate Bill 5175 (the “Parity Law”), which expands coverage for telemedicine services paid by health plans in the state of Washington. With the new law, Washington is the 24th state to adopt a full or partial telemedicine parity law. Generally, these laws require health care payors to cover services furnished electronically to the same extent such services would be covered if furnished in person. Though earlier attempts to pass such legislation were unsuccessful, the Parity Law garnered near unanimous support in both state houses this session and appears to have widespread industry support from providers and payors alike.

The expansion of coverage is a clear step forward for telemedicine in Washington but the new law has its shortcomings. For example, the new law requires parity in coverage, but does not mandate parity in payment. In other words, the payment for the same covered service may vary when furnished virtually versus in-person. Additionally, the Parity Law defines telemedicine narrowly, excluding telephone, email or other modes of communication that do not include a video component.  Other key components of the Parity Law are summarized below.

Q & A: Telemedicine Parity Law

How does the Parity Law define “telemedicine?”

The law defines “telemedicine” as health care services provided via “interactive audio and video technology, permitting real-time communication” for purposes of diagnosis, consultation or treatment. “Telemedicine” does not include health care services delivered without a video component. Therefore, telephone, facsimile, email, text or other health care related communications that do not include a video component will not trigger the new law’s parity of coverage provisions.

Which “payors” are subject to the Parity Law?

The breadth of Washington’s Parity Law is impressive. The parity provisions of the new law will apply to entities offering the following types of health care benefit plans in Washington: (1) entities licensed as Health Care Service Contractors (i.e., health plans offering PPO, POS and indemnity insurance); (2) entities licensed as Health Maintenance Organizations or HMOs; (3) entities contracted with the Washington State Health Care Authority to administer Medicaid managed care plans; (4) entities offering disability insurance; and (5) entities offering health plans to state employees and their dependents.

What coverage and payment rules does the Parity Law create?

The Parity Law requires payors covered by the law to include health care services furnished by providers for their patients through “telemedicine” as a covered service if the following conditions are met:

  1. The payor would cover the health care service if it was provided to the patient in an in-person setting;
  2. The health care service is medically necessary; and
  3. The health care service is recognized as an essential health benefit under the federal Patient Protection and Affordable Care Act.

At first glance, these coverage standards appear fairly simple and easy to apply. However, application to real life scenarios is not so straightforward.

For example, the first factor states that any health care service covered when furnished in-person must be covered if furnished through telemedicine. Many diagnostic and therapeutic health care services, by their very nature, require providers to be in the physical presence of their patients. Surgery, blood draws, and physical therapy, to name a few, cannot be provided virtually even though they may be “covered” when “provided to the patient in an in-person setting.” Thus, it seems obvious that the Parity Law wouldn’t apply in these cases.

However, it is less obvious whether the Parity Law applies to other services when it is unclear if they should be performed only in the physical presence of a patient. For example, a physician could hypothetically write a medically necessary prescription for morphine without conducting an in-person evaluation of the patient. The Medical Quality Assurance Commission might consider the prescription to breach the standard of care under its “Appropriate Use of Telemedicine Policy.” If morphine is a covered benefit, but the physician did not meet the standard of care in writing the prescription, would the Parity Law still require the payor to cover the morphine?

Second, the health care service must be “medically necessary” for the Parity Law to apply. Arguably, payors could deny the “medical necessity” of a specific service furnished via telemedicine. For example, a Medicaid managed care plan could argue that some medical necessity standards expressed in a Local Coverage Determination or LCD cannot be performed over the internet and therefore the service itself when furnished virtually is not medically necessary.

The Parity Law also provides for payment to an “originating site” (i.e., a health care clinic or facility setting in which a patients is located when receiving the telemedicine service). The Parity Law indicates that originating sites “may charge a facility fee for infrastructure and preparation of the patient” subject to a negotiated agreement between the originating site provider and the payor. Examples of common originating sites provided in the law include hospitals, rural health clinics, FQHCs, physician offices, community mental health centers, skilled nursing facilities and dialysis centers.

Does the Parity Law contain any limitations?

Yes. Most notably, the Parity Law does not require telemedicine payment rates to be equivalent to rates for the same services provided in-person. Although an earlier version of a proposed legislation would have expressly required parity in the rates, the Parity Law as adopted is silent regarding the amount of payment. Other state telemedicine parity laws require coverage that “must be equivalent to the coverage for services that are provided in person by a health care provider or health care facility.”1 

Additionally, health plans are not required to reimburse an originating site for professional fees for a health care provider that is not contracted under the plan, or for a health care service that is not a covered benefit under the plan. A health plan may also subject coverage of a telemedicine health service to all the terms and conditions of a patient’s enrolled plan. This includes a utilization review, prior authorization, deductible, copayment, or a coinsurance requirements if they would apply to coverage of the health care service provided in-person.

Lastly, if a telemedicine service is provided through store and forward technology, there must be an associated office visit between the covered person and the referring health care provider, however, nothing in the Parity Law prohibits the use of telemedicine for the associated office visit. The law defines store and forward technology as the “use of an asynchronous transmission of a covered person’s medical information from an originating site to the health care provider at a distant site and results in medical diagnosis and management of the covered person, and does not include the use of audio-only telephone, facsimile, or email.”

When will the Parity Law become effective?

The Parity Law will take effect on Jan. 1, 2017.  Therefore, any health plans issued or renewed on or after Jan. 1, 2017 will be subject to the requirements of the Parity Law. 

Conclusion

The Parity Law represents a positive step in support of telemedicine expansion and innovation. Although other states have reported that the adoption of a telemedicine parity law did not open the flood gates to full scale telemedicine payment and coverage, such legislation has encouraged the expansion of  telemedicine services. Supporters of telemedicine should carefully monitor the implementation of the Parity Law and continue to advocate for more equitable reimbursement rates and clearer coverage parity standards. As it stands, the Parity Law should encourage innovative business models and the use of new technologies as a part of the industry’s ongoing efforts to improve both the quality of care and the patient experience.