State adoption of telehealth payment parity has grown but still varies

More than half of American states now have laws addressing telehealth payment parity or reimbursement rates; however, a new report reveals that these laws vary across state lines and, in some cases, do not constitute true payment parity.

Released by the law firm Foley & Lardner LLP, the report details each state’s telehealth commercial insurance coverage and payment/reimbursement laws, noting how the laws changed after the public health emergency (PHE) was declared. This is the third edition of the report, with the first two being published in 2019 and 2021, respectively.

The report shows 33 states had telehealth payment parity laws as of 2024, up from 16 states in 2019. Telehealth payment parity generally refers to health plans paying healthcare providers at the same or equivalent reimbursement rate for telehealth services as it would pay for in-person care services.

However, ten states and Washington, D.C., still do not have a state law that expressly addresses payment and reimbursement rates for telehealth services.

Additionally, some states have laws that only set a reimbursement range or give instructions on how the parties must negotiate rates for telehealth services. Others have enacted telehealth payment parity only for mental health services.

In some cases, payment parity laws have expired. The report noted that New York’s statute expired on April 1, 2024, and was not renewed.

Further, the report shows that 18 states have adopted laws that make coverage of audio-only telehealth permanent for health plans. However, there is variation here as well. Some states, like Georgia, Hawaii, and Nebraska, require coverage and/or separate reimbursement for audio-only telehealth services, predominantly for mental healthcare. Others, like Kentucky and Tennessee, require audio-only telehealth coverage where other modalities are not feasible due to a lack of adequate broadband access or other reasons.

Mental and behavioral healthcare has generally benefited from expansions in telehealth coverage and payment parity. The report reveals 11 states passed laws requiring coverage and payment parity for mental and behavioral health services delivered via telehealth.

“In the wake of the COVID-19 Public Health Emergency, we have seen significant progress in telehealth insurance coverage laws, concurrent with digital health’s journey to broad adoption among patients and health care professionals alike,” said Nathaniel Lacktman, partner and chair of Foley & Lardner’s national Telemedicine & Digital Health Industry Team, in a press release. “Five years ago, one of the most substantial barriers to growth was the limited and uncertain insurance coverage for digital health services. Today, with improvements in telehealth practice standards and insurance coverage laws, far more organizations are implementing and expanding robust digital health services, particularly attractive when woven into traditional in-person services.”

The report comes as federal telehealth policy takes a significant step forward. Last week, the United States House Ways and Means Committee advanced a bill extending several pandemic-era telehealth flexibilities through 2026.

The bill would extend waivers that eliminate geographic requirements and expand originating sites for telehealth services, enable rural health centers and federally qualified health centers to provide telehealth, and support coverage of audio-only telehealth under the Medicare program.

It would also extend the Acute Hospital Care at Home (AHCAH) waiver through 2029. The waiver allows hospitals to forgo certain Medicare Hospital Conditions of Participation and provide hospital-level care to Medicare beneficiaries in their homes. As of May 6, more than 300 hospitals had been approved for the waiver.

The committee markup moves the bill to the floor of the House for a vote.