October 24, 2019
Health Care Alert
Health Care Alert
Last week, Governor Newsom signed into law a slew of bills that could drive digital health innovation forward, including new telehealth reimbursement “parity” provisions. The legislation further clarifies parameters for the use and proliferation of information and communication technologies in health care.
Last week, Governor Gavin Newsom ended the current legislative session by signing a slew of bills, including several that could drive digital health innovation forward in the Golden State. Among them was Assembly Bill 744 (AB 744), Chapter 867 that continues to pave the way for telehealth technology adaptation in the state by:
The passage of this bill presents opportunities for stakeholders in the industry to identify efficiencies, increase engagement, and allow patients to be active participants in managing their health. The legislation removes key reimbursement barriers and relaxes existing restrictions that may have hampered digital disruption in health care.
Despite staunch opposition from the health plan and health insurance community, California joined a small minority of jurisdictions to require “telehealth parity.” The new law applies to health plans and insurers regulated by both the Department of Managed Health Care and the California Department of Insurance. Under the legislation, all payor-provider agreements must specify that the plan will reimburse diagnosis, consultation, or treatment through telehealth “on the same basis and to the same extent” as services that the plan covers through in-person visits. The parity provisions mandate that same services, as determined by the provider’s description of the service on a claim, be reimbursed at the same rate whether provided in-person or through telehealth. If no in-person equivalent exists, then a health plan’s reimbursement rate for telehealth must be fair and reasonable.
Health plans may require copayments or coinsurance for services delivered by telehealth, but such copayment or coinsurance cannot exceed amounts applicable if the same services were delivered through in-person diagnosis, consultation, or treatment. Services rendered by telecommunication tools can be subject to the same deductible and annual/lifetime maximums as applicable to similar in-person services.
Importantly, the new “parity” provisions do not apply to California’s Medi-Cal managed care plans or Medicare plans. The statutes do not require telehealth to be unbundled from other capitation or bundled risk-based arrangements. Health plans are also not required to cover out-of-network telehealth services. These new requirements are effective for payor-provider contracts issued, amended, or renewed after January 1, 2021. A willful violation of these requirements would be a crime under the existing legal framework.
AB 744 incorporates the broad framework of “telehealth” into the new parity requirements. The bill also makes changes to the definition of “telehealth,” to give additional flexibilities to stakeholders, and addresses both “synchronous” and “asynchronous” communications. The statutory definition of “telehealth” includes any modes that “deliver health care services and public health via information and communication technologies to facilitate the diagnosis, consultation, treatment, education, care management, and self-management of a patient’s health care.” Notably, the statutory definition is agnostic as to the particular methodology of communication.
For synchronous communications, historically, the California Board of Medicine appeared to take a more narrow view, suggesting that telehealth should involve videoconferencing, and not include instant messaging and live chat. AB 744 does not make any such distinction.
Similarly, asynchronous or “store-and-forward” technologies are also being more widely adopted. Through mobile phone platforms, website monitoring applications, and wearable accessories, “store-and-forward” devices gather and transmit health data to distant providers for analysis, diagnosis, and treatment planning. The information transmitted through asynchronous interaction is not reviewed in “real time.” Several telehealth guidelines, including those by the California Department of Health Care Services that we covered here, placed restrictions on consultations via asynchronous transmission. These restrictions limited patient-initiated asynchronous consultations. AB 744 confirms that telehealth under state law broadly includes both synchronous interaction and asynchronous “store and forward” transfers and effectively did away with a number of restrictions.
The changes clarify the parameters for delivering telehealth services, including the following:
While statutory revisions embrace real-time (synchronous interactions) and store-and-forward (asynchronous) telemedicine technologies, it stops short of embracing all modalities of telemedicine. Most notably, the changes do not address remote patient monitoring (RPM) programs that focus on continuous monitoring and collection of patient-generated health data from the patient’s home. The changes also do not establish specific policies for the use of mobile devices to access health services or content, other than within the context of existing rules (mHealth). Nonetheless, the new law provides additional clarity around telehealth modalities and removes key reimbursement-related barriers. It represents yet another step forward for California’s burgeoning digital health economy.
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.
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