Iowa Legislature should lay off telehealth price setting

The demand for virtual care and remote access to doctors skyrocketed last year. Telehealth visits in Iowa increased by 4,800 percent for all services, and by 6,000 percent for mental health services, according to the Iowa Legislative Services Agency.

With this explosive demand for telehealth, renewed pressure has been placed on the state to meddle with reimbursement rates in the healthcare industry.

Reimbursing physicians for telehealth services at the same rate as in-person services is called “payment parity,” and bills introduced this session seek to apply the same payment parity policy to private insurers. These bills are a major concern for Iowa insurance providers, who are already required by law to offer telehealth services. In a recent Des Moines Register guest column, the director of the Federation of Iowa Insurers warned that if the state engages in payment parity price setting, consumer costs are going to increase.

There are areas of Iowa’s telemedicine policy the Legislature could improve on that would increase the value of telehealth services without explicitly setting the price. Specifically, Gov. Kim Reynolds suspended a variety of regulations during the pandemic that if permanently deleted from Iowa code would benefit Iowans.

For example, if a doctor doesn’t have an existing in-person relationship with a patient, they are prohibited from writing any prescriptions. Iowa has been a member of the Interstate Medical Licensing Compact since 2015, meaning out-of-state doctors licensed in compact member states can practice in Iowa virtually or in-person, but if a Kansas doctor on a telehealth visit wants to prescribe ointment for a burn or an inhaler during allergy season, they wouldn’t be allowed to.

Forty states, including Iowa, have passed laws requiring private insurers to provide comparable telehealth alternatives to in-person visits. This type of service parity law is usually attached to some type of reimbursement provision that prevents an insurer from charging a higher rate for virtual visits. This type of provision is often seen as unnecessary because the average cost for a telehealth visit is less expensive than an in-person visit.

In 2017 a Health Affairs study found the average cost of a telehealth visit for an acute respiratory infection, the types of infections that typically occur during the cold winter months or allergy season, was $79 compared to $146 for an in-person visit.

The pandemic has drastically changed the healthcare market across the country, and Iowa isn’t exempt from this wave of change. The average amount paid in 2019 for mental health-related services provided via telehealth was approximately $80 per visit and in 2020 there was an increase to around $138 per visit. On the surface, this significant increase seems to support the idea that telehealth should be reimbursed at the same rate as in-person services because the cost to consumers jumped during the pandemic.

However the 2021 report by the nonpartisan Iowa Legislative Services Agency found that this increase is likely because commercial insurance companies and the State of Iowa Plan agreed to reimburse telehealth services at parity with in-person visits during the pandemic. Considering the 6,000 percent increase in demand, there was significant financial opportunity for health care providers to reap the benefits of the changed reimbursement policies.

There is plenty of room within the Iowa code to improve telehealth access without adding price setting provisions that will increase costs for everyone.

Patricia Patnode is a Waterloo native and works in Arlington, Virginia. She can be found on Twitter @IdealPatricia.