Your Telemedicine Cost-Sharing Requires Congressional Action

Telehealth boomed during the pandemic. But Congress must act promptly if the service is to remain free at the point of service.

The Covid-19 pandemic changed the way we work, socialize, view government, and interact with each other. And it altered the way we receive medical care, leading to dramatic growth in virtual visits with providers at a time when telemedicine was the only option to connect medical providers with patients who faced less-than-life-altering injuries, illnesses, and conditions. In response, federal lawmakers eliminated financial barriers to virtual care. But those barriers will crumble at the end of 2022 without further legislative action.

A Less Costly Care Alternative

Telemedicine isn't a new benefit. Since the early 2000s, companies have been offering virtual office visits. Telemedicine services were marketed as a stand-alone benefit to employers as a means of reducing claims costs. The pitch: For a fixed cost per-employee per-month (say, $4 PEPM), the telemedicine company would make physicians available to receive calls from all employees and their dependents for a fixed copay (say, $25 per visit).

These arrangements often had a negative effect on employees who wanted to fund a Health Savings Account. A telemedicine visit that offered below-market prices for access to a physician disqualified employees and their dependents from opening or funding a Health Savings Account (although there were undoubtedly many disqualified people who weren't aware of this compliance issue and funded their accounts). Because the telemedicine benefit was considered medical coverage (in effect, a second medical plan), a design that charged below-market prices (including no cost-sharing) disqualified all employees, not only those who accessed the telemedicine benefit.

More recently, many medical insurers have integrated telemedicine into their benefits package. This integration solves the Health Savings Account compliance issue, since telemedicine is covered with the same financial arrangements as other physician visits. Thus, the same visit may take a $25 copay on a non-HSA-qualified plan but cost $59 for an enrolled employee or dependent on an HSA-qualified plan. Assuming the $59 price reflects the market price for this service, the telemedicine visit isn't disqualifying. And the insurer applies the payment to the deductible, a benefit to the employee.

These telemedicine companies enjoy a cost advantage over traditional ("brick-and-mortar") doctors. They hire physicians who work from home or from low-cost real estate far from hospitals and other medical sites. They don't need the staff that a traditional medical office requires to process and test patients. They've built information systems to schedule visits, bill insurers, process payments, and allow physicians to conduct research in real time to assist patients. As a result, they can price their services substantially below the market rate for a traditional physician visit.

The Pandemic Changed Everything

In the early months of the pandemic, physician practices and hospitals cancelled all non-essential services, both to focus on patients with Covid-19 and suffering from life-threatening conditions and to limit the reach of the coronavirus as scientists tried to determine how the disease spread. In this vacuum, telemedicine became a lifeline for patients. Congress responded by allowing insurers to cover telemedicine visits at no cost to patients - including those enrolled on an HSA-qualified plan.

During the pandemic, telemedicine took a different form. Many traditional doctors began to consult with their patients telephonically as their only means of contacting patients and earning a living. In response, many state legislators and regulators passed statues and regulations requiring payment parity, that is, compelling insurers to reimburse those virtual visits at the same rate as an in-person visit. These rules allowed physician practices to maintain their revenue model without seeing patients in the office and permitted them some flexibility to invest in technology to make telemedicine visits more effective and efficient. Some states have since rescinded parity to help employers (who pay most of the cost of care when they sponsor group coverage) and patients manage medical costs more effectively. After all, if a telemedicine company can offer a virtual visit for, say $59, does it make sense for a traditional physician to receive $200 or more for the same service?

With the return to in-person medicine, we see that some traditional insurers and physician practices are incorporating virtual medicine into their business model. They can offer benefits that a telemedicine company can't or haven't - such as a dedicated primary-care physician and medical team or the option of a combination of in-person (for example, to diagnose an injury, illness, or condition, or to conduct periodic testing) and telephonic visits (for example, to monitor a condition). This evolution leaves patients with most cost-effective options.

Telemedicine and Health Savings Account Eligibility Now

As noted above, Congress acted to allow insurers to cover telemedicine visits with no patient cost-sharing without disqualifying anyone enrolled in those plans from funding a Health Savings Account. This provision expired for plans beginning on or after Jan. 1, 2022. Plans that renewed prior to that date, say Oct. 1, 2021, could continue to cover telemedicine at no patient cost-sharing until the plan renewed Oct. 1, 2022.

After an onslaught from the industry and patient-advocacy groups, Congress extended this provision earlier this year. But the extension took a different form. Instead of reauthorizing the no-cost-sharing provision through the end of plan years, the new extension allowed telemedicine without cost-sharing from April 1, 2022, through Dec. 31, 2022. Under current law, telemedicine visits on HSA-qualified plans must include patient cost-sharing (at a justifiable "market price") effective Jan. 1, 2023 - regardless of when the plan renews. Thus, Congress must act promptly to maintain this cost-sharing arrangement.

To Extend or Not to Extend?

There isn't unanimity within the Health Savings Account world around whether telemedicine services should or shouldn't be subject to patient cost-sharing. The argument is favor of making this change permanent is that it would reduce financial barriers to care for patients to access virtual care. The benefits? Patients in provider deserts - rural residents, people living in inner cities with no in-person providers nearby - and people who need regular care - such as weekly counseling visits for adolescents and working adults - can access necessary care easily. Prompt diagnosis and regular follow-up reduces the likelihood that an illness or condition becomes more acute and either requires more expensive medical intervention or compromises the patient's long-term quality of life.

The counterargument is that telemedicine was becoming widespread prior to the pandemic. Its value proposition was that the price of care is less than the price of an in-person visit. That advantage remains, even if telemedicine providers must impost patient cost-sharing Also, covering any service at no cost to the patient doesn't change the price of the visit. It merely shifts it from the person who receives care to the parties (employer and employee) who pay premiums.

There is no right or wrong answer. But with the expiration of the current rules in less than five weeks, it's important that insurers, employers, medical providers, and patients have some idea of what will happen with virtual-visit cost-sharing beginning Jan. 1.

The Bottom Line

Congress doesn't have to act. If it does nothing, we'll revert to the old rules under which virtual visits must reflect a market price paid by the patient if the medical plan is to remain HSA-qualified. That may ultimately be the right decision. But it would feel better if our elected representatives discussed the issue objectively and made that decision, rather than defaulting to a policy without considering the benefits and drawbacks.

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