Chapter 22: The State Policy Framework of Telehealth

In Federalist Papers No. 45, President James Madison stated that “[t]he powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite.” ¹ Neither he, nor other visionaries of our founding government, could have foreseen the impact this position would have on the health and well-being of a technologically advanced society 200 years later.

Innovations in health care, such as telehealth, have elevated the influence of state-level policies in the larger health ecosystem. States are playing a significant role to ensure that nontraditional health care delivery models such as telehealth are accessible, secure, equitable, and worth merit. For example, agencies with regulatory oversight of health professionals, health facilities, utilities, public health and welfare services, insurance, commerce, and business can all shape regulatory policies that affect telehealth adoption and utilization.

Lawmakers also look beyond their own state borders to align policies that facilitate interstate collaboration. Health care workforce shortages coupled with more mobile societal lifestyles find patients, providers, and caregivers seeking advice, treatment, and consultations in another state. The concepts of where health care is rendered and received when telehealth intervenes challenge the ethical and regulatory boundaries of states’ rights and state borders.

Although policies related to telehealth are varied and nuanced, they provide a necessary framework to enable existing and new manners for which telehealth is permitted, delivered, and financed. However, the nature of these policies is sometimes caught between competing interests and technological evolution. How does a state entity allow room for innovation and mobility while defining standards for telehealth development, adoption, and utilization that protect business and public interest?

Telehealth providers who rely on the health insurance market for a revenue stream and sustainability must navigate a system that is not always clear on eligibility, coverage, and payment. Traditionally, lack of coverage and payment for telehealth has been a barrier to adoption by providers and patients across the health care spectrum. The enforcement of billing practices by some insurers would indiscriminately permit coverage and payment for telehealth-provided services such as radiology but deny payment for other covered health care services provided remotely.

Over the past few decades states have tried to correct this loophole by developing and promoting statutory and regulatory insurance frameworks that encourage telehealth adoption and utilization statewide. The progress in states’ acceptance of telehealth has been incremental yet significant. In 2005, 24 state Medicaid programs covered telehealth-provided services and only two reimbursed for telehealth in the home. ² Twelve years later, 50 state Medicaid programs and the District of Columbia cover telehealth-provided services and 39 reimburse for telehealth in the home. ³

Whereas the states are incubators of innovations with decades of experience embracing telehealth, conversely, federal programs like Medicare have found very little adoption of telehealth. This is largely due to statutory restrictions that prohibit telehealth coverage to approximately 80% of Medicare beneficiaries because they live in nonrural communities. ⁴ Other policy areas that stifle telehealth growth for Medicare include limits on designated patient settings, eligible provider types, and restraints on permissible modalities (eg, remote patient monitoring). ⁵

On the other hand, Medicaid, which is another federal program that covers 20% of the U.S. population, administers insurance coverage to eligible low-income beneficiaries and is not bound by the same federal restrictions as Medicare. In fact, the Centers for Medicare & Medicaid Services (CMS) encourages states to use telemedicine to satisfy federal requirements for efficiency, economy, and quality of scale. ⁶ CMS also does not require states to submit a state plan amendment (SPA) to cover telehealth for the delivery of services already agreed to by the state and federal entity.

Although states have latitude to comprehensibly cover services regardless of the delivery method, no two states are alike in their approach to use telehealth as a means of addressing public health concerns. The Pennsylvania Department of Public Welfare initiated Medicaid coverage of telehealth in 2007 to enhance access to mental health services and improve the quality of care for expectant mothers due to the shortage of specialists. ⁷ This included reducing neonatal intensive care unit (ICU) stays, unnecessary hospital stays, and avoidable patient medical transportation. During an office visit, enrolled beneficiaries were provided remote access to maternal-fetal specialists and psychiatrists using interactive audio-video equipment or telephone. Studies have shown the value of using telehealth to reduce costs and alleviate the complications of high-risk pregnancy. ^8–10 The effectiveness of Pennsylvania's program led to the expansion of telehealth to include home-based telecare activity, sensor, health status, and medication monitoring for the elderly or adults with disabilities, as well as other specialty services. ^11–13

The approach to regulate telehealth coverage varies by state and may require approval or action by more than one agency. Some states have chosen to enforce changes in their health plan terms and conditions of coverage through regulation or bulletin/notice, whereas others enact legislation. Guidance may include a new section on telehealth comprehensively, or may include a subtle mention in each benefit design. For example, coverage and payment conditions for telehealth may vary depending on the type of health professional providing services, place of service/location of the patient, types of services, and modality used.

Twenty-three states and the District of Columbia allow Medicaid coverage of telehealth in schools. States have many options to improve school-based telehealth, which include enacting legislation, proposing changes in administrative regulations, or applying for a federal block grant under Title V of the Social Security Act to improve maternal and child health. Another federal funding opportunity includes a formula grant under the Individuals with Disabilities Education Act to enhance services for children with special needs.

School-based telehealth programs have demonstrated value and been shown to be effective. Ohio and Virginia Medicaid programs have covered school-based speech-language therapy delivered via telehealth since 2011. ¹⁴ Students receive remote therapy services in their schools from a licensed speech-language pathologist via an interactive audio-video connection. Hawaii Medicaid updated their telehealth coverage under Medicaid Fee-For-Service and Managed Care in 2016. Enacted legislation removed geographic and patient setting barriers and now permits access in both university- and school-based health centers.

Research shows that patients who receive care in their home are more likely to have better health outcomes and are less likely to be admitted, or readmitted, to the hospital, resulting in significant cost savings. ¹⁵ States may enact legislation or leverage waiver authority to offer telehealth to address specific populations or health conditions such as home-based remote patient monitoring for those with chronic conditions. Like school-based telehealth, states have numerous options to include Medicaid coverage of home-based remote patient monitoring. States may seek a federal waiver, such as a home- and community-based service waiver under Social Security Act section 1915(c), or health home option for chronic care under the Affordable Care Act section 1945. States may also apply for federal demonstration programs such as “Money Follows the Person” (MFP), authorized by the American Recovery and Reinvestment Act, which allocates federal funding for transitioning Medicaid beneficiaries from institutions to the community.

Kansas Medicaid covers home-based remote patient monitoring through a “Money Follows the Person” waiver to manage chronic illnesses of beneficiaries 65 years or older. ¹⁶ Louisiana and Pennsylvania have CMS-approved 1915(c), which allows Medicaid coverage of home-based telecare activity, sensor, health status, and medication monitoring for the elderly or adults with disabilities. ¹⁷

Impressively, state telehealth private insurance parity laws have included provisions ensuring comprehensive service coverage and statewide access. In 1995, Louisiana was the first state to pass a telehealth parity law thereby prohibiting their private insurers from denying coverage or payment for services provided via telehealth compared to those provided in-person. ¹⁸ The state with the largest land mass in the country, Alaska, and those with the smallest land mass—Connecticut, Delaware, Rhode Island—have all enacted telehealth private insurance parity laws. Over the course of two decades 33 states and the District of Columbia have enacted similar laws.

Colorado enacted a parity law in 2001 that included rural restrictions. At the time, Colorado was the only state in the nation with statutorily enforced geographic restrictions for telehealth coverage under private insurance. In 2015, lawmakers amended the parity law to remove the rural-only restrictions and promote statewide access to telehealth. ¹⁹

There are other opportunities to enhance telehealth coverage for state-regulated plans. Modernized network adequacy standards for managed care plans is another vehicle to promote access and availability to telehealth. Revised in 2015, the network adequacy model now includes a definition for telemedicine and telehealth and advises plans to describe ways in which they will use telehealth in their network access plans. Telehealth coverage under self-funded state employee health plans are affected by telehealth parity laws. These health plans purchase insurance through a state-regulated third party. Twenty-six states with telehealth parity laws also include coverage for state employee health plans. ²⁰

Issuing and determining criteria for health professional licensure is the right of each state. Within their capacity, a state determines and enforces clinical standards, qualifications, and parameters for each health professional practicing within the state border. Telehealth enables a licensed health care provider to remotely assess, diagnose, or treat a patient without needing to physically be in the same state, more less the same room, as the patient. However, if the provider is lacking a license in the state where the patient is located at the time of the health care encounter, then they risk violating state law and receiving sanctions imposed by the state licensing board. As such, state licensure policies that impede or encourage interstate collaboration greatly affect telehealth utilization and health care access overall.

The impact of state-by-state licensure laws goes beyond the health care professions. Patients and caregivers lead mobile lives. They travel out of state for personal reasons, including work, leisure, and education and to make purchases. Therefore, they may receive services from more than one health professional, including providers across state lines. Large health care systems have responded to this need for more accessible care by establishing provider networks across multiple states. Alternatively, health professional groups have created numerous licensure and exemption models to facilitate interstate practice and collaboration, alleviate workforce shortages, and accommodate patient choice.

Nine states offer a special telehealth license or registration process to enable out-of-state providers to use telehealth in their states.²¹ The conditions of this special telehealth credential grant permission to the provider to only practice remotely and typically prohibit the out-of-state provider from physically practicing in the state. Maine and New Mexico require out-of-state providers to apply for a telehealth registration in addition to their respective board licensure requirements.

Some states have created policies that allow reciprocal agreement like a driver's license. Licensing boards in the District of Columbia, Maryland, and Virginia may establish standards for reciprocity for providers working in adjoining states. The nursing profession uses a model based on mutual recognition, which requires an agreement to join a compact by more than one state. In order for the compact to go into effect, a threshold must be met. The Nurse Licensure Compact (NLC) has existed for 15 years and has 25 participating states. The NLC promotes interstate practice for registered nurses, licensed practical nurses, and licensed vocational nurses. The NLC was enhanced in 2015 to include requirements for criminal background checks and is referred to as the Enhanced Nurse Licensure Compact. Arizona, Arkansas, Florida, Georgia, Idaho, Iowa, Kentucky, Mississippi, Missouri, Nebraksa, New Hampshire, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, Virginia, West Virginia, and Wyoming joined the Enhanced NLC. The National Council of State Boards of Nursing also approved the creation of a new interstate compact for advance practice nurses (APRNs). Idaho and Wyoming are the first states to join the APRN Compact.

The Association of State and Provincial Psychology Boards (ASPPB) created their own interstate licensure compact called PSYPACT in 2016. Licensed psychologists can navigate numerous licensure alternatives to use telehealth, including ASPPB reciprocity agreements, other reciprocity agreements with jurisdictions, Certificate of Professional Qualification (CPQ) to expedite licensure, and full unrestricted licenses. States who join the PSYPACT will enable psychologists to practice telepsychology without the need for multiple licenses. Seven states are required to join for the compact to become active. Arizona, Nevada, and Utah are the first states to join the PSYPACT.

In 2015, the Federation of State Boards of Physical Therapy created a licensure compact to enable a licensure process to promote interstate physical therapy practice in-person and using telehealth. Ten states are required to join for the compact to become active. Arizona, Colorado, Kentucky, Mississippi, Missouri, Montana. North Dakota, Oregon, Tennessee, Utah, and Washington are the first states to join the now activated compact.

The Federation of State Medical Boards created the Interstate Medical Licensure Compact to enable an expedited licensure process to promote interstate practice, including telehealth. Physicians are still expected to have a full and unrestricted license in every state where they intend to practice. Eighteen states have joined the compact, and it is now active having reached its membership threshold.

Other conditions may be considered when formulating exemptions for out-of-state practice. Some states will waive the licensure process if one of the following conditions are met: the governor declares a state of emergency or natural disaster, the health professional is a military spouse, the health professional is an employee of a federal government agency or correctional facility, the health professional is engaging in temporary and infrequent consultation with a patient, or the health professional is consulting with another peer.

Telehealth is a tool to facilitate the delivery of care. Just like health care delivered in person, the range of service needs and care circumstances for telehealth varies too widely for a “one size fits all” model. Some states have established different clinical practice rules for telehealth compared to in-person practice. Examples of some areas that yield dissimilar policies include patient setting, established patient–provider relationship and/or in-person examination, provider type, applicable technology, and patient consent. These rules may be prescriptive and provide no consideration for professional clinical discretion, provider shortages, or patient limitations.

The nature of any clinical encounter can differ between episodic urgent care, ongoing primary care, infrequent biometric monitoring, or medical emergencies requiring a specialist. As such, some uses of telehealth are very short term in nature, such as the involvement of a specialist or multidisciplinary care team, whereas other uses involve repeated remote engagement between mental health professionals and patients.

Given the array of different state regulatory bodies and the broad applications of telehealth affecting different health professions, states may choose to review and adapt their policies and procedures to address the needs of patients wishing to access care from an array of health care professionals providing services via telehealth.

Medical boards in Massachusetts and Minnesota have demonstrated the importance of streamlining medical practice standards for telemedicine providers. The boards broadly define telemedicine and provide no distinct rules, protocols, or standards for telemedicine providers to follow. In contrast, licensed physicians in Texas were formerly required to follow a separate standard of practice when using telemedicine, oddly practicing under two different standards of care for patients in the same state. As a result of 2017 legislation, physicians in this state are no longer required to consider scheduled in-person follow-up visits, patient locations, unique patient informed consents, or the presence of another health care provider; thereby holding physicians to the same standard of care. State policies in Arkansas and Colorado, however, recommend an in-person visit for licensed psychologists practicing using telehealth in their states.

Regarding Internet prescribing, some states have specific telehealth clinical practice proposals that require a health professional to obtain a medical or drug history, perform a physical exam, or see the patient in person to fulfill the provider–patient relationship. Other states simply require that the provider “personally know” the patient. A physician may also use a video connection to remotely supervise another health professional, such as a nurse practitioner or physician assistant, while they dispense a medication per physician's orders. Seventeen states have developed policies that prevent a health professional from remotely prescribing or dispensing abortion-inducing medication via telehealth.

Telehealth, when used appropriately, can be an appropriate method of prescribing and dispensing medication to patients. Some boards allow those health professionals with prescriptive authority to, at a minimum, use interactive audio-video encounters as a means of gathering clinical information and establishing a provider–patient relationship necessary to prescribe certain pharmaceuticals. In these instances, some states authorize a physician, nurse practitioner, or psychologist to use a video connection to properly assess a patient and prescribe medication per their treatment plan.

State legislative and regulatory entities are working within their capacity to integrate innovative health care delivery models into the health care, professional, and business fibers of their states. Health care innovation encourages states to think creatively and strategically about the permeability of state borders and, as a result, leverage federal resources and regional and national partnerships to foster a broader and more collaborative health ecosystem. Thus, their willingness to review and amend key state policies has allowed telehealth to grow and spread nationwide.