Telemedicine Coverage Mandatory in California

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California Governor Signs New Telehealth Insurance Law

On October 11, 2019, California Governor Gavin Newsom signed a new law requiring commercial health insurance coverage and payment parity for telehealth services, unfortunately the law won’t take effect until 2021. However, in consideration of the State of Emergency declared by the Governor and the Secretary for Health and Human Services, an industry trade group, America’s Health Insurance Plans, issued its own statement last week(www.ahip.org).  The statement calls for insurance plans to provide coverage for telemedicine during the State of Emergency.

Changes to California’s Telehealth Insurance Coverage Law

California’s prior telehealth coverage law did not include a requirement that health plans pay for telemedicine at the same or equivalent rate providers are paid for identical in-person services. The new bill creates two new statutes – Health & Safety Code section 1374.14 and Insurance Code section 10123.855.  The key changes in the new law are:

  • In health plan agreements with those with insurance coverage, the plan “shall reimburse the treating or consulting health care provider for the diagnosis, consultation, or treatment of an enrollee or subscriber appropriately delivered through telehealth services on the same basis and to the same extent that the health care service plan is responsible for reimbursement for the same service through in-person diagnosis, consultation, or treatment.”
  • Health plans and providers can continue to negotiate reimbursement rates. However, services that the same, as determined by the provider’s description of the service on the claim, must be reimbursed at the same rate whether provided in-person or through telehealth.
  • Insurance companies are not allowed to have exclusive contracts for telehealth companies (“coverage shall not be limited only to services delivered by select third-party corporate telehealth providers”).While exclusive arrangements are not allowed, the law does not require a health plan to cover telehealth services if provided by an out-of-network provider, unless coverage is required under other provisions of law.
  • A health plan may charge a deductible, copayment or coinsurance for a health care service delivered via telemedicine if it does not exceed the deductible, copayment or coinsurance applicable to a service delivered via in-person consultation or contact.
  • The law applies to contracts starting or renewed on or after January 1, 2021.

These changes were intended to fix statutory shortcomings that confused practitioners and ultimately prevented patients from enjoying meaningful insurance coverage of services delivered via telehealth. A number of other state legislatures are considering similar amendments to their current telehealth coverage laws in order to close these perceived loopholes and give patients and healthcare providers clarity on what medical services are (and are not) covered when delivered via telehealth.

With the enactment of the new California law, approximately 36 states plus D.C. have laws requiring commercial health insurance plans to cover telehealth services, and approximately eleven of those states have payment parity language. We will continue to monitor for any legislative changes that affect or improve telemedicine opportunities.© 2020 Foley & Lardner LLP

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