Massachusetts should not mandate telehealth prices

Fixed rates will hurt vulnerable and small companies

The COVID-19 pandemic has highlighted the many positive benefits of telehealth. Virtual visits with a medical provider can save patients time and help them avoid germy waiting rooms. Providers cut down on their risk of exposure, and can see more patients from an office or from home. Even Massachusetts seniors have embraced telehealth, as roughly half of Medicare fee-for-service visits since the start of the pandemic were electronic, one of the highest rates in the country. In response to its popularity, Beacon Hill has taken up proposals to put more telehealth options into law, but if they don’t get the details right, they might drive up costs and hurt the people they hope to help.

Back in March, in a series of executive orders and agency actions, Gov. Baker started the discussion by removing barriers and allowing more providers to utilize telehealth in the state, and even across state lines. Unfortunately, those orders also included mandates for telehealth that required the same rate of pay as an in-office visit, and mandated most services to be covered.

Proponents of mandates suggest they are the only way to help some providers make the switch to telehealth, and justify them as a way to prop up the expensive infrastructure of our large medical systems in the state. Yet these proponents seem to ignore the many unintended consequences of such mandates.

Mandates fly in the face of research that has shown uneven outcomes for telehealth for certain services. Mandates cement inequality in reimbursement rates to different facilities that benefit the “wealthy” systems, as they receive higher rates—a contentious evergreen issue in the state. Mandates eliminate cost savings for patients, as rates must be the same as in office visits. Mandates slow innovation in care delivery, as insurers default to paying the same way they do for in-office visits, which is rarely team based.

The Legislature continued the conversation with dueling bills in June and July, that are now in a conference committee to work out a final bill. One of the primary areas of disagreement is over payment and coverage mandates.

The Legislature should avoid mandates as higher prices are especially harmful for people with disabilities, those with chronic conditions, seniors, and lower middle-class patients. For these populations, transportation is often a barrier to accessing care, but telehealth can help overcome that barrier. But if the Legislature mandates a higher price for a telehealth visit it may price vulnerable patients out of accessing care from the start as many are paying out-of-pocket until their insurance kicks in.

Some have argued that telehealth mandates are needed to help hospitals that have lost money under COVID, or help them transition away from their current models. If the Legislature wants to give more assistance or transitional money to hospitals over and above the hundreds of billions coming from Washington, that is their decision as part of the budget process. But they should not force patients to bear the brunt of higher prices as they pay more out-of-pocket for telehealth visits. The outcome will be patients avoiding care due to the higher cost, as about 30 percent did before COVID.

Finally, telehealth has a real potential to save money for patients and small companies. Since 2000, general price inflation has gone up 50 percent, yet Massachusetts employees are paying 276 percent more toward their health insurance premiums. For those at small companies that are struggling now, telehealth is one of only a few opportunities to lower health care spending — so the Legislature must avoid increasing the cost, even for a few years.

It is worth noting that large companies in Massachusetts will not be subject to any mandates as they are regulated by federal law, and can decide on their own rates to pay for telehealth. In other words, mandates help big businesses by adding to the long list of competitive disadvantages that small businesses face when they try to compete. We should not forget that Massachusetts’s small companies already pay some of the highest family insurance premiums in the nation.

Any final telehealth bill should be mandate-free but still adopt a robust framework for providers to use telehealth without barriers for care across state lines, while avoiding being overly prescriptive. Getting too far into the weeds like the Senate bill that mandated that quick e-mails by a provider would be paid the same rate as an in-office visit is highly problematic. Such provisions would result in a spending tsunami, and even higher costs, leaving less money available for groceries, mortgage payments, or other, everyday bills.

Meet the Author

Josh Archambault

Guest Contributor, Pioneer Institute
Massachusetts has spent more than 20 years talking about how to lower health care costs as the state has expanded health care access. It would be counterproductive to pass a new law that allows more telehealth but results in higher costs for all. Policymakers should embrace telehealth, but abandon provisions that remove flexibility for what is covered and how much it must cost. Patients and small business need them to get it right.

Josh Archambault is a senior fellow at Pioneer Institute.