This article previously appeared in Law360 on December 20, 2017.

As the U.S. shifts from a fee-for-service (FFS) system to a value-based system, healthcare IT will become an increasingly important component in fostering patient engagement, coordinating care, increasing access to services, and decreasing overall costs. Telemedicine, in particular, is viewed by many as the solution for achieving access to care and cost-efficiency. Concluding 2017, this article looks back on some of the legal and regulatory changes that occurred with respect to telemedicine as well as areas of interest to watch in 2018.

I. State-Level Changes

On December 15, 2016, the Federation of State Medical Boards (FSMB) released their “2016 State Medical Board Survey” which was completed by 57 of the 70 state medical licensing boards in the U.S. and its territories, identifying their most pressing issues.[i] The FSMB reported that 75% of boards chose telemedicine as one of the most important regulatory topics of 2017, securing the top spot in the survey. This report rang true this year as many licensing boards reconsidered existing telemedicine rules or created new telemedicine licensing frameworks altogether.

In-Person Examination Requirements (Texas[ii], Oklahoma[iii], Indiana[iv] and Michigan[v])

Indiana and Michigan each passed laws removing requirements for an in-person examination prior to prescribing via telemedicine. The Michigan law is more expansive and applies to all prescriptions. To prescribe controlled substances via telemedicine in Indiana, however, the patient must have been examined in-person by a licensed Indiana healthcare provider and the prescriber must have reviewed that provider’s treatment plan and issued a prescription pursuant to that plan.

Up until recently, Texas remained the last holdout state requiring an in-person visit before delivering healthcare services via telemedicine.[vi] In May, SB 1107 was signed into law, eliminating the requirement for a “face-to-face” consultation to initiate a physician-patient relationship. In November, the Texas Medical Board issued new regulations implementing the statutory changes.

Originating Sites (Arkansas[vii], Hawaii[viii], Texas[ix], Vermont[x])

Several states relaxed restrictions on eligible originating sites for telemedicine, permitting services in locations such as patient homes and schools. Arkansas revised its definition of an “originating site” to “anywhere a patient is located”, while Texas removed its requirement that telemedicine services only be provided at “established medical sites.” Hawaii and Vermont each added patient homes and other non-medical sites to the definition of “originating sites.” Louisiana removed its requirement that physicians practicing telemedicine maintain an office in the state or contract with in-state providers[xi].

Adoption of Telemedicine Practice Acts (New Jersey[xii], Illinois[xiii], Wisconsin[xiv])

Three states that previously did not formally address the provision of telemedicine services adopted new frameworks. New Jersey enacted SB 291 explicitly authorizing healthcare providers to provide telemedicine services so long as a provider-patient relationship has been established. An initial in-person examination is not required; however, the provider must review the patient’s medical history and available medical records prior to the initial telemedicine encounter. Illinois’s Public Act 100-0317 created the Telehealth Act which permits the provision of telemedicine by Illinois-licensed health care professionals. Previously silent with regard to telemedicine practice, new Wisconsin Board rules now define telemedicine, explain how a valid physician-patient relationship can be established in a telemedicine setting, and identify technology requirements for physicians who use telemedicine.

Reimbursement Expansion (Arkansas, Hawaii, Indiana, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Jersey, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee, Utah, Vermont, West Virginia, and Wyoming)

Many states revised their Medicaid regulations to expand reimbursement for telemedicine services. In addition, several states enacted parity laws with respect to commercial payors or their Medicaid Programs, or both, requiring coverage and/or reimbursement of telemedicine services to the same extent as services delivered in-person.

Despite this expansion trend, both North Carolina[xv] and South Carolina[xvi] clarified that their Medicaid programs will not reimburse for store-and-forward and placed further limitations based on the location of services. New Hampshire’s Medicaid reimbursement for telemedicine also has significant limitations, adopting Medicare’s coverage policies with respect to modalities, originating sites, eligible services, and distant sites.[xvii]

Expansion of Telemental Health

There were many state-level advancements in telemental health relating to the provision of services, reimbursement, and prescribing. In particular, licensing boards across the country have noted a lack of access to mental health services by certain populations and a desire to reach those individuals through the use of technology. For example, in New York, telehealth regulations were relaxed to enable mental health providers to treat some patients online in certain patient care settings. Under the new Texas telemedicine regulations, restrictions on the provision of mental health services via telemedicine were relaxed and the list of eligible service providers was expanded.

Public Safety

Other states made slight changes to their telemedicine requirements to balance public safety concerns: (1) Alaska implemented regulations requiring businesses to register with the Telemedicine Business Registry prior to providing telemedicine services to patients located in the state[xviii]; (2) Connecticut passed a law prohibiting prescribing of ocular lenses without an in-person eye examination[xix]; and (3) Texas regulations include both a requirement to provide a Notice of Privacy Practices as well as a limitation on the issuance of prescriptions via telemedicine for the treatment of chronic pain[xx].

II. Status of Interstate Medical Licensure Compact (IMCL)

The IMLC is an agreement between participating states and their licensing boards to qualify physicians to practice medicine across state lines, if they meet the agreed upon eligibility requirements. The licensure application process is expedited by leveraging the physicians’ existing information submitted in their state of principal license. Once qualified, the physician may select any number of compact states where they desire to practice. Four states passed laws to join the IMLC in 2017 (Washington, Nebraska, Tennessee[xxi], and Maine. IMLC’s application process officially went live on April 6, 2017, and its first license was issued on April 20, 2017.[xxii] Compact legislation has also been introduced in Michigan, Rhode Island, Texas, the District of Columbia, and Guam.

III. Status of Parity Laws[xxiii]

Additional states enacted parity laws in 2017 (Nebraska, New Jersey, North Dakota, and Vermont) and others amended their parity laws to remove originating site restrictions (e.g., Arkansas and Washington).

Currently, 34 states and D.C. have some form of parity law for telemedicine and another 8 states have proposed parity legislation (Idaho, Kansas, Iowa, Ohio, West Virginia, Pennsylvania, North Carolina, Massachusetts.)

IV. Reimbursement Changes

Medicare

No changes were made to Medicare’s statutory coverage of telemedicine or its implementing regulations. However, the annual updates to the Medicare Physician Fee Schedule included the new codes for ESRD services, advanced care planning services, and critical care consultations, that are now eligible for reimbursement if other Medicare coverage criteria are met.

Medicaid

Currently, 48 states and D.C. provide some coverage for telemedicine in their Medicaid FFS.[xxiv] Despite this seemingly widespread coverage, however, the states widely differ in terms of the telemedicine services covered, the provider types covered, location of the patient, form of telemedicine delivery, and overall geography. New Hampshire, for example, only offers telemedicine services to Medicaid beneficiaries within rural areas as defined by Medicare guidelines.

Nevada and Hawaii joined the ranks of state Medicaid programs that reimburse for store-and-forward services and Kentucky and Hawaii now reimburse for remote patient monitoring. As noted above, Arkansas, Hawaii, Indiana, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Jersey, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee, Utah, Vermont, West Virginia, and Wyoming amended their Medicaid reimbursement policies for telemedicine to offer expanded coverage.

Employer-Sponsored Health Plans

Commercial plans have expanded their coverage of telemedicine services under employer-sponsored health plans, particularly with respect to behavioral health services. Healthcare represents an enormous expense to U.S. employers — averaging $12,229 per employee, or 14% of total payroll, according to the 2017 Mercer National Survey of Employer-Sponsored Health Plans.[xxv] The Mercer survey further noted that 71% of employers with 500 or more employees offered coverage for telemedicine services, up sharply from 59% last year, and this number is expected rise as employers seek to control healthcare costs.

V. Federal Expansion of Telemedicine

Federal Bills

Several telemedicine bills were advanced in Congress this year; however, none have been enacted.[xxvi] The Senate unanimously passed the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017 (S.870) in September and it now sits in the House Subcommittee on Health.[xxvii] The CHRONIC Care Act includes four important telemedicine provisions: (i) MA plans may include additional telemedicine services in their bids, (ii) certain ACOs have additional flexibility to provide telehealth, (iii) beneficiaries receiving dialysis treatments at home may do their monthly check-in visit via telemedicine; and (iv) removes Medicare’s originating site coverage restriction for evaluations of an acute stroke. For its part, the House advanced three separate bills this year with provisions similar to those included in the CHRONIC Care Act: expanding telemedicine services under Medicare Advantage (HR 3727), expanding telemedicine for stroke patients (HR 1148), and expanding the use of telemedicine to facilitate the use of home dialysis (HR 3178). Given the bipartisan support for these bills in each chamber, telemedicine advocates are hopeful for legislation in the near future.

Federal Communications Commission (FCC) – Repeal of Net Neutrality and Increased Funding for Rural Broadband

Net neutrality rules provide that internet service providers cannot speed up, slow down, or block any content, applications, or websites. On December 14, 2017, the FCC voted to repeal the net neutrality rules resulting in considerable uncertainty about how this change will affect the healthcare industry, particularly related to telemedicine. FCC Chairman Ajit Pai has argued that the government’s light touch approach to high-speed internet will be a net benefit for telemedicine. Industry experts, however, worry that the FCC’s reforms will be problematic for healthcare providers, telemedicine vendors, and patients, all of whom require robust connectivity to meet the demands of video consultations that could come at a higher cost. Continued attention should be paid to this heading into 2018.

The FCC has issued a request for public comment to its proposal to increase the $400 million annual cap on the Rural Health Care Program (RHCP).[xxviii] The purpose of the RHCP is to subsidize the difference in rates between rural and urban areas for telecommunication services and as of 2012, to also provide a flat 65 percent discount on certain communications services “to promote the use of broadband services and facilitate the formation of healthcare provider consortia.” The increased funding for broadband expansion to rural areas could dramatically improve telemedicine delivery in areas where access to care is most limited.

Food and Drug Administration (FDA) – New Digital Health Policies

The FDA released four new digital health policies aimed at encouraging digital health innovation[xxix]: (i) The Digital Health Innovation Action Plan[xxx]; (ii) The Clinical and Patient Decision Support Software[xxxi]; (iii) The Changes to Existing Medical Software Policies Resulting from Section 3060 of the 21st Century Cures Act;[xxxii] and (iv) The Software as a Medical Device: Clinical Evaluation.[xxxiii]

Opioid Epidemic

Individuals suffering from substance abuse often encounter extreme difficulties maintaining sobriety after their discharge from inpatient detoxification facilities. Telemedicine has been successful in engaging this population in continuous monitoring and preventing relapse. When President Trump declared the opioid epidemic a national public health emergency, the declaration provided “for expanded access to telemedicine services, including services involving remote prescribing of medicine commonly used for substance abuse or mental health treatment.” Updates to various state and federal laws, including the Ryan Haight Act[xxxiv], will be needed to reflect the President’s new opioid order.

VI. Conclusion and Predictions for 2018

The telemedicine landscape experienced significant changes over the past year, primarily at the state level. We expect additional changes in the near future as the healthcare marketplace incorporates telehealth into population health strategies, making it critical for businesses in this space to stay abreast of evolving regulations. As we look ahead to 2018, here are a few things that we expect to see evolving on the telehealth front: (i) continued IMLC involvement by states; (ii) continued expansion of telemedicine reimbursement in state Medicaid and commercial plans; (iii) phasing out of telemedicine pilot programs by health systems and transitioning into comprehensive telemedicine strategies system-wide; (iv) increased adoption of remote monitoring services; and (v) integration of mhealth apps into patient care and gamification of health and wellness through mobile apps.