The Situation: The spread of the novel coronavirus (COVID-19) pandemic has significantly impacted the delivery of health care services and increased demand for telehealth services.
The Result: The pandemic has encouraged payers to contract for telehealth services, but many health care providers have little experience with telehealth or other remote care services and do not have adequate strategies in place for negotiating with payers.
Looking Ahead: Telehealth providers should carefully develop their contracting strategies by defining the service offering, determining payer reimbursement opportunities, ensuring regular compliance, and crafting appropriate contractual terms.
The spread of the novel coronavirus (COVID-19) pandemic has significantly impacted the delivery of health care services. In particular, it has significantly increased the demand for telehealth services and pushed both health care providers and commercial payers to enter into contracts for telehealth services. Many health care providers traditionally have little experience with telehealth or other remote care services, or lack properly trained personnel and the proper tools to provide and bill for such services. At the same time, many telehealth companies that have traditionally operated on a cash-only, direct-to-consumer (DTC) model find themselves in a need to contract with payers. While payers are generally now more willing to cover telehealth services, providers do not necessarily have adequate strategies for negotiating coverage and reimbursement with payers for telehealth services. This Commentary highlights some of the key contracting considerations for telehealth providers to consider for successfully negotiating payer contracts.
Strategies to Prepare for Payer Contracting
Prior to engaging payers in contract negotiations for telehealth services, providers should carefully develop their payer contracting strategies by taking steps such as the following:
Define the service offering. Providers should endeavor to understand the types of telehealth services for which coverage is available under health plans. Health care services must meet the definition of "covered services" in order to be paid. Additionally, many payers see telehealth as a special service, while others view telehealth as a way to deliver covered services. Regardless of a particular payer's approach, providers should consider how to define and package its particular telehealth offering and present it to payers to receive or expand coverage for its services. Both providers expanding their existing contracts to cover telehealth services and telehealth providers seeking to contract with payers for the first time should consider attributes such as the patient population served, the types of licensed medical professionals or other non-licensed personnel involved, and the telehealth modalities and technology used. These attributes will drive how the offering is promoted to payers and what reimbursement options are available, as discussed further below. If the providers already have contracts with payers for its other services, providers should also confirm that its telehealth services will be eligible for payment under the terms of the existing payer contracts.
Determine payer rate and reimbursement. While the most straight-forward payment model to consider might be fee-for-service reimbursement, some payers do not provide payment parity by paying telehealth services at the same rate as in-person visits. Providers should assess the type of reimbursement that works best for their telehealth service offering and keep an open mind on alternative payment models, such as payment on a per member per month basis for a defined scope of health care services, or other value-based or risk arrangements like full or partial capitation. Payers will likely vary regarding the reimbursement types and rates that they are willing to offer and may impose different conditions for payment.
Ensure regulatory compliance. Payer contracts commonly include representations and warranties requiring compliance with applicable federal and state laws. In the case of telehealth, such requirements would extend to laws such as state telehealth laws, corporate practice of medicine prohibitions, state medical practice licensure, and other similar requirements. Providers must ensure that their operations and services comply with all such applicable requirements.
Understand status under HIPAA. Certain telehealth providers, especially those operating on a cash-only, DTC model, currently may not be subject to the Health Insurance Portability and Accountability Act ("HIPAA"). However, by obtaining reimbursement from payers, these providers will likely become subject to HIPAA as a covered entity and will need to ensure that their privacy and security programs are HIPAA-compliant.
Strategies for Successfully Negotiating Payer Contracts
Once negotiations with payers have begun, telehealth providers should define and prioritize their "make-or-break" issues, keeping in mind the following considerations:
Pay attention to key defined terms. Definitions, such as "medical necessity" and "clean claim," could significantly impact the coverage and payment amounts under the payer contracts.
Negotiate key contractual provisions. Providers should pay special attention to provisions impacting reimbursement, such as claim payment, coverage, utilization review, and payers' right to claw back. Other material non-pricing terms could also create legal and financial risk and should be carefully reviewed and negotiated by providers. Examples of such provisions include indemnification and limitations on damages, intellectual property, confidentiality and information security standards, audit and reporting obligations, force majeure, and term and termination rights. Unfortunately, payers are not always flexible in customizing language in their standard non-pricing terms. Additionally, almost all payers require providers to comply with payers' policies and procedures, which often contain provisions that conflict with the terms of the payer contracts, establish hurdles for services to have coverage (e.g., prior authorization), or adversely impact reimbursement. Providers should request and carefully review payers' policies and procedures prior to entering into a payer contract and, if necessary, negotiate specific treatment of certain material provisions or designate the payer contract as the governing document in the event of conflict.
Include telehealth-specific provisions. Because payers have generally not designed their contracts for telehealth services, providers will likely need to negotiate telehealth-specific terms to adequately address their telehealth service offering, compensation methodology, applicable service level standards, and mutual reporting and data access obligations necessary to support the telehealth services. Providers may also need to negotiate to remove certain typical contract terms that are not relevant to a telehealth offering, such as requirements only relevant to brick-and-mortar medical practices.
Three Key Takeaways
- Particularly in the case of providers with little or no payer contracting experience, providers must take steps to develop adequate strategies before negotiating with payers for coverage of their telehealth services.
- Contracting strategies should carefully define the providers' service offerings, assess reimbursement opportunities, and identify "make-or-break" deal terms to make payer contract negotiations productive while protecting the provider both legally and financially.
- Along with payers' increasing openness to exploring ways to cover telehealth services, a well-defined contracting strategy will further increase providers' likelihood of success in negotiating payer contract terms that are appropriate and equitable for telehealth services.
Originally published by Jones Day, July 2020
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