Parity Explained

Telemedicine is no longer a tertiary modality or the feared technology disruptor of the early years. Now it is an expectation that medical practices incorporate some form of telemedicine.  The significance of virtual care is expanding as it maintains the unparalleled capacity to address underserved populations, including elderly, chronic care, and rural demographics. Payment and reimbursement regulations for telemedicine are not keeping pace, with many states drafting vague or limiting legislation and many private payors refusing reimbursement.

“Parity in telehealth is the notion that health services provided via telehealth technology should be treated equally as health services provided face-to-face”.  Telemedicine parity laws are the legal statutes that require healthcare plans to provide equal consideration for telehealth services as they would for in-person services. These statutes are not applied universally across state and federal laws, resulting in various restrictions and limitations depending on the state and payor.

Types of Parity

Service/coverage parity – requires insurers to provide the same level of insurance coverage patients for telemedicine.  These laws do not require payment parity, but insurance is required to cover services for the patient, meaning that telehealth services cannot cost patients more than in-person services.  Each insurer maintains different policies on how they reimburse for it, but the provider may obtain a degree of reimbursement.

  • Arizona
  • California
  • Connecticut
  • Hawaii
  • Indiana
  • Iowa
  • Kansas
  • Louisiana
  • Maine
  • Michigan
  • Minnesota
  • Mississippi
  • Montana
  • Nebraska
  • Nevada
  • New Hampshire
  • New York
  • North Dakota
  • Oklahoma
  • Oregon
  • Rhode Island
  • Texas
  • Vermont
  • Washington

Payment parity – requires insurers to reimburse or pay for telemedicine at the same rate as in-person care.  States that have payment parity also have coverage/service parity.

  • Arkansas
  • Colorado
  • Delaware
  • Georgia
  • Kentucky
  • Maryland
  • Missouri
  • New Jersey
  • New Mexico
  • Tennessee
  • Virginia
  • Washington, D.C.

The differences between the types of parity are meaningful because these laws greatly influence provider adoption and patient access.  Below we compare three states with varying levels of parity: Georgia with complete payment parity, Texas maintaining service parity, and North Carolina without any telemedicine legislation.

State Reimbursement Comparison
Speculation/Limitations

Critics claim parity negatively impacts the health insurance market by allowing federal/state governments, not insurance providers, to set service rates which disrupt the free market.   Without parity, reimbursement rates are questionable, curtailing adoption and limiting access points. The bulk of telemedicine costs occur upon initial implementation of devices and equipment.  Venturing into these larger expenditures requires the reassurance of reimbursement and if providers aren’t getting paid, they won’t offer services.

Innovation

Critics have suggested that parity stifles innovation and advancement opportunities.  In fact, parity is actually a form of legal innovation that incentivizes technology and telemedicine adoption while improving patient access.  When establishing equal reimbursement rates or coverage options, a standard is set for how all telemedicine services operate. From there, further advancements to telemedicine delivery, legislation, and a procedure can be adopted.  Alone, parity doesn’t have the capacity to drive utilization and adoption but combined alongside increased education, thoughtful planning, and technological understanding, telemedicine can flourish.

Want more information on reimbursement and parity laws in your state?  Click here.