Brief Telehealth Private Insurance Laws

While many aspects of the telehealth policy landscape have evolved over the last decade, one of the most significant trends has been the proliferation of state laws affecting private insurance coverage for telehealth. Currently, 43 states and the District of Columbia have telehealth private insurance laws-up from 16 states in 2012, according to the Center for Connected Health Policy. These state laws, however, vary greatly in scope-including what exactly private health insurers are required to cover and, in some cases, reimburse for telehealth.

Many providers and policy experts argue guaranteeing coverage and payment for telehealth, especially coverage and payment equal to in-person care, provides a financial incentive for health professionals to use telehealth. Additionally, private insurance coverage increases access to virtual care and reduces out-of-pocket costs for patients receiving care through telehealth.

However, some payers and providers maintain telehealth is not always equivalent to in-person care, especially as it relates to establishing a provider-patient relationship. And, while many view telehealth as a cost-effective alternative to in-person services, some policy experts believe requiring equal payment may negate these cost-savings.

Given these considerations, policymakers continue to evaluate the appropriate approach to improve access to virtual care through telehealth private insurance laws. This explainer provides an overview of these state laws, including coverage parity, payment parity and other private insurance requirements affecting telehealth.

Source: NCSL and CCHP 

Coverage Requirements

Forty-one states and the District of Columbia mandate coverage parity, which requires private insurers to cover telehealth similarly to in-person care. These state laws often specify insurers cover telehealth “in the same manner” or “to the same extent” as in-person services and prohibit insurers from denying coverage solely because a service is delivered through telehealth. Additionally, coverage parity laws typically clarify insurers are not required to cover virtual health services they do not cover in-person, and that they can apply the same level of cost-sharing to telehealth as they would for in-person care. 

Some states set limits on what private insurers are required to cover. For example:

Washington applies telehealth coverage requirements only to services recognized as an essential health benefit under the Affordable Care Act.

South Dakota authorizes private insurers to establish criteria a provider must meet to demonstrate a certain service or treatment can be safely and effectively delivered via telehealth.

Two states with private insurance laws—Florida and Michigan—do not explicitly require coverage parity. Rather, these states give insurers more authority over the extent of coverage they provide for telehealth.

Reimbursement Requirements

While most private insurance laws require coverage parity, fewer state laws stipulate what insurers must pay for telehealth. Twenty-four states mandate payment parity, which requires private insurance reimbursements for telehealth to reflect what the insurer would pay for in-person services. Some state laws require reimbursements for telehealth to be "the same amount" or "at the same rate" as in-person services. Certain policy experts maintain this statutory language provides a stricter standard for private insurers and ensures reimbursement rates are truly equivalent to in-person care.

Other payment parity laws specify private insurers must reimburse "on the same basis" as in-person care, which some argue may better account for potential cost savings achieved through telehealth-such as lower facility and administrative fees.

Some states—including California, Georgia and Washington—require payment parity, but also authorize insurers and providers to voluntarily differentiate reimbursements via contract negotiations.

Several other states have established requirements for private insurance reimbursements, but they do not constitute full payment parity for all services delivered through telehealth. For example:

Some states limit payment parity to certain types of services and specialties. Louisiana established payment parity for occupational and physical therapies, unless the provider and insurance plan agree to an alternative payment rate. Massachusetts established payment parity for mental health or behavioral health services.

At least six states—Florida, Kansas, Nebraska, North Dakota, Tennessee and West Virginia—have statutory language fully deferring to reimbursement rates determined through provider-insurer contract negotiations rather than requiring payment parity.