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Removing Regulatory Barriers to Telehealth Before and After COVID-19

A combination of escalating costs, an aging population, and rising chronic health-care conditions that account for 75% of the nation’s health-care costs paint a bleak picture of the current state of American health care.[1] In 2018, national health expenditures grew to $3.6 trillion and accounted for 17.7% of GDP.[2] Under current laws, national health spending is projected to grow at a rate of 5.5% per year between 2018-2027.[3] Time, another cornerstone of cost and quality, is yet another category where American health care falls short; it typically takes two hours to see a doctor for 20 minutes in most communities.[4] While the Affordable Care Act (ACA) sought to close the uninsured gap, immediate and affordable access to health care was not always available, especially for certain populations. Among people of color, health disparities have been extensively documented, largely due to pre-existing medical or chronic conditions, including those affecting the more aged in this population.[5] Rural communities are also impacted by the lack of proximity to local medical facilities and providers.[6]

In March 2020, the entire health-care system—from hospitals to medical practitioners to first responders—was further challenged by the rapid and mass spread of the novel coronavirus and its associated disease, COVID-19. Medical institutions and providers were impacted by the lack of personal protective equipment (PPE), insufficient patient testing, and institutional stresses in the care of infected persons. Beyond the U.S., negative health outcomes of COVID-19 have debilitated entire countries from China to Italy and more, bringing devastating mortality rates.

Nicol Turner Lee
Fellow – Governance Studies, Center for Technology Innovation
Jack Karsten, RA
Jack Karsten
Senior Research Analyst – Center for Technology Innovation
Jordan Roberts
Health Care Policy Analyst – John Locke Foundation
While the search for a global vaccination to cure the disease is in process, the stress on medical providers and hospitals prompted a historic move toward the authorization and adoption of telehealth services. Embroiled in decades-old debates over its effectiveness in providing patient care, telehealth has also faced other obstacles to its adoption and use, including licensure, reimbursement, and eligible services. Yet, in response to the coronavirus outbreak, the Trump administration and the U.S. Department of Health and Human Services (HHS) sweepingly approved the use of telehealth services as part of the Coronavirus Preparedness and Response Supplemental Appropriations Act.[7] As part of this newly granted permission, most Medicare payment requirements were waived and recipients were able to access remote care, regardless of where they live. During the pandemic, telehealth services were also charged at the same rate of in-person medical services, or at parity. The move to accelerate the use of telehealth services also included other exemptions, including some HIPAA exceptions for providers when Facetime or Skype was used by doctors to communicate with patients.

Before COVID-19, telehealth initiatives provided a platform to combat the shortcomings of cost, quality, and access ingrained in American health care. The breadth of telehealth services includes remote clinical health care, patient and professional health-related education, public health, and health administration via electronic information and telecommunication technologies.[8] Health-care delivery services are also integrating artificial intelligence (AI) systems into the suite of telehealth services, as both doctors and patients move from solely remote patient monitoring for continuous recording of vital signs to real-time alerts from a patient sensor when there is a deteriorating change in condition. Further, AI is assisting in the management of chronic conditions, including diabetes and heart disease, and when patients require care from multiple specialists working at different times and locations. In these instances, existing applications, AI, and other emerging technologies are coordinated under the guise of telemedicine for complex treatments, like virtual assistants to help patients carry out treatment plans by sending reminders to take medications and providing relevant health information.[9]

“State and federal barriers in the use of telehealth and AI have served as hindrances to the launch of its full capabilities.”

Prior to the coronavirus outbreak, telehealth and integrated AI were somewhat familiar though not common in practice. But the increasing use of technology has not necessarily been embraced by the long-standing rules and regulations governing the full body of the health-care system. Until recently, telehealth use has largely been limited, stifled by the ambiguous and often changing regulations on the reimbursement of doctors and licensure, especially across state lines. State and federal barriers in the use of telehealth and AI have served as hindrances to the launch of its full capabilities, particularly those laws that present a patchwork of accepted and non-eligible costs and services. Given that telehealth now has a critical role in the mitigation of COVID-19, how well will the U.S. take guidance from its rapid adoption and use? More specifically, how can telehealth be more visibly positioned as an important aspect of health-care delivery in a post COVID-19 health-care ecosystem? And, will telehealth practices be continued without the previously applied restrictions of state and federal laws, especially those around service reimbursement or parity agreements?

This paper explores these questions to extrapolate what state and federal policies will need to be adopted to potentially prepare for more ubiquitous adoption and use of telehealth services in an expanded set of use cases than those recorded by law. The authors also explore the application of existing and emerging state parity laws, which could serve as an obstacle to telehealth delivery in the future. Despite their application as a framework for reimbursement of COVID-19 expenses during the current application, the paper will provide guidance on these and other state and federal laws that will run counter to the long-term promotion and patient access of digital technologies, particularly those that aid in the management of primary care, chronic health conditions, and prevention. The paper concludes with a set of policy and pragmatic proposals that combine the recent lessons learned by the health-care community and patients, along with larger issues, including broadband access, that set the stage for future use. These recommendations were compiled after a structured focus group with medical practitioners, associations, and health policymakers working on the matters described in this paper.


The U.S. is the only developed country in the world without a universal health-care system. Instead, the nation has a hybrid public-private system where individuals get their health insurance from their employer, through a public program such as Medicaid or Medicare, purchase it directly on the market, or do not have health coverage at all. While a detailed description of the entire U.S. health-care system is far beyond the scope of this paper, the context offers the reasons why telehealth initiatives must be available to mitigate the absence of universal access, disparate patient costs, and quality care.

Cost is perhaps the leading concern regarding the health-care system in the U.S. The country not only spends more on a per-capita basis than any other country,[10] but also typical prices for normal procedures are often far higher than comparable procedures in other countries.[11] Studies have also estimated that roughly 30% of medical spending does not necessarily lead to an increase in the quality of patient care or is wasted.[12]

“Compared to many other countries, the U.S. lags in terms of health outcomes, despite the massive amount spent and far more advanced facilities.”

Compared to many other countries, the U.S. lags in terms of health outcomes, despite the massive amount spent and far more advanced facilities. According to the latest data available, the U.S. ranks below the average measures of life expectancy and infant mortality among OECD countries.[13]

Adopted under the former Obama administration, the ACA drastically changed the conversation on health-insurance coverage in the U.S. in 2010. The ACA had three primary goals: create marketplaces for affordable insurance to be purchased, expand the Medicaid program to cover those who make too little to buy health insurance in the market, and to innovate health-care delivery in general to lower the overall rise in annual health-care costs.[14] Modeled after a Massachusetts state health-care plan, the ACA attempted to extend coverage to as many people as possible through a regulated, competitive individual market. Over 44 million people were without insurance before the ACA went into full effect in 2013.[15] By 2017, the number of uninsured Americans dropped to 28.5 million.[16]

Outside of the ACA, the most common types of health-insurance coverage for those that are insured include: employer-sponsored plans, non-group individual market plans, Medicaid, and Medicare. According to 2017 data compiled by the Kaiser Family Foundation, roughly half of Americans got their coverage through their employer. Seven percent purchased health insurance directly in the non-group market, 21% of Americans had coverage under Medicaid, 14% of Americans had coverage under Medicare, and 1% had other public insurance.[17]

In recent years, partisan gridlock at the federal level has made state-level regulation and oversight more attractive alternatives for the health-care sector. For example, Senate Democrats required a supermajority of 60 votes to avoid a filibuster and pass the ACA in 2009.[18] Since that time, Republicans in the House of Representatives have made numerous attempts to repeal the law in part or in whole, and court battles have also challenged the legality of various provisions from 2010 to 2017.[19] The current White House has even attempted to repeal the ACA as individuals manage the health effects of the coronavirus. In the beginning of the ACA’s rollout, technical difficulties also hampered the rollout of online health-insurance exchanges in 2013.[20] Technical malfunctions slowed the roll out, forcing some states to do more around general health-care access and telehealth usage for the under- and un-insured.

This crude summary of the U.S. health-care system will obviously raise additional questions, but it is pertinent to the argument of the paper that new advances in telehealth be available to extend health-care access to more people and improve upon patient outcomes. Moreover, with cost often the highest concern for the millions of uninsured, innovation in the delivery of services may decrease cost while reducing opportunities for waste and duplication of services. As seen during the coronavirus outbreak, appropriate public policies are more likely to drive adoption of telehealth practices, which is why Congress and federal agencies, like the Federal Communications Commission (FCC), must continue to promote remote access in the future.


Telemedicine case studies
In 2016, the Chronic Care Management Program at Frederick Memorial Hospital in Maryland launched a remote patient monitoring telehealth platform to improve care management for patients with chronic conditions who aren’t in home health care. The program has seen great success; cutting ER visits in half, reducing hospitalizations by nearly 90%, and cutting the cost of care by more than 50%.[21] Enrolled patients are given a tablet loaded with mHealth software and connected to Bluetooth-enabled digital health devices. Hospital care providers can also collect biometric data and regularly monitor and communicate with patients via various platforms including video, phone, or text. These data-driven platforms enable providers to pre-emptively identify health issues before they become more serious and require emergency care.[22]

In Philadelphia, the JeffConnect telemedicine platform at Jefferson Health Hospital successfully diverted close to 650 patients away from infamously expensive care settings, such as emergency departments, garnering cost savings ranging from $300 to more than $1,500. The program found that most health concerns could be resolved in a single consultation and that new utilization was infrequent. With each JeffConnect visit at a $49 flat fee, about 16% of the surveyed patients admitted that they would have “done nothing” as an alternative to a telemedicine visit, which suggests an incorporation of a subset of patients into the health-care system who may have not previously participated, serving as a cost preventing measure down the line.[23]

In a third case study, the state of New Jersey has placed an emphasis on utilizing telehealth platforms to enhance primary, behavioral, and mental health care for children and adolescents. Pediatricians are using telehealth to connect with psychiatrists, alcohol and drug counselors, social workers, and case managers to identify and treat behavioral health issues, substance abuse, and trauma.[24]

Defining telemedicine and telehealth

Each of these case studies demonstrate that telehealth and telemedicine are used interchangeably in most contexts, but they may not always mean the same thing. Specific definitions are important because an examination of policies and regulations, including state laws, can be useful in understanding differences in provider use and reimbursement, especially in how state rules defines the scope of services for telehealth.[25]

In 2010, the World Health Organization (WHO) published a global report on telemedicine, which settled on this broad definition of telemedicine after an evaluation of numerous peer-reviewed studies:

“The delivery of health care services, where distance is a critical factor, by all health care professionals using information and communication technologies for the exchange of valid information for diagnosis, treatment and prevention of disease and injuries, research and evaluation, and for the continuing education of health care providers, all in the interests of advancing the health of individuals and their communities.”[26]

The WHO also goes on to differentiate between telemedicine and telehealth by saying the former describes services administered by physicians only, while the latter describes services provided by a wide range of health-care professionals, “such as nurses, pharmacists, and others.” According to the WHO, four elements are specific to telemedicine:

The practices are used to provide clinical support

It is intended to overcome geographic barriers by connecting users, not in the same area
It involves the use of various forms of information and communication technologies (e.g., computers, internet, cell phones)
Its goal is to improve health outcomes.[27]
Different from the WHO, the American Telemedicine Association (ATA) views the terms as more compatible. According to their website, “ATA largely views telemedicine and telehealth to be interchangeable terms, encompassing a wide definition of remote healthcare, although telehealth may not always involve clinical care.”[28]

While ATA’s definition allows for some ambiguity related to the definitions of these related terms, the federal government’s health information technology website defines telehealth and telemedicine quite distinctly. Telehealth is “the use of electronic information and telecommunications technologies to support long-distance clinical health care, patient and professional health-related education, public health and health administration.” Telehealth is different from the more specific definition of telemedicine because “it refers to a broader scope of remote healthcare services than telemedicine. While telemedicine refers specifically to remote clinical services, telehealth can refer to remote non-clinical services, such as provider training, administrative meetings, and continuing medical education, in addition to clinical services.”[29]

Similarly, an in-depth article in the New England Journal of Medicine also distinguishes between telehealth and telemedicine. Telehealth is described as a broader term referring to “the delivery and facilitation of health and health related services including medical care, provider and patient education, health information services, and self-care via telecommunications and digital communication technologies.”[30] The article further defines telemedicine as “the remote diagnosis and treatment of patients by means of telecommunications technology.”

“Discerning the differences between telehealth and telemedicine is critical due to the public policy implications and their imposed guidance on the provision of such services.”

Discerning the differences between telehealth and telemedicine is critical due to the public policy implications and their imposed guidance on the provision of such services. The use of telehealth is more commonly used in this paper as we also recognize the distinctions between the two activities.

The future of digital health

It is important to note that focus group participants also inserted a new definition into the debate around remote patient care—digital health. Digital health refers to the plethora of software applications and consumer-facing hardware, such as Fitbits. It also includes categories such as mobile health, information technology, wearable devices, and personalized medicine.[31] As discussed by focus group participants, reframing the discussion away from telehealth and toward digital health broadens the scope and impact of the conversation. The actualization of the goals for digital health also brings together a wide array of stakeholders, including health-care providers, researchers, medical-device firms, and mobile-application developers. Compared to both telehealth and telemedicine services, digital health platforms may offer the next generation of greater access to information and platforms for communication, as well as present patients with more innovative ways to self-monitor their well-being, including via fitness apps, glucose monitors, among other things. The American Medical Association has most recently explored digital technology in health care as an emerging and growing market. Their playbook for digital health implementation offers a repository of best practices and questions for medical providers.[32]

Despite a leaning toward broader conversations on digital health, the authors have chosen to use the term “telehealth” as a way to describe the broad use of telecommunications for health-related services. That terminology will be used throughout the paper, although it is still acknowledged that the term telemedicine refers to specific uses of telecommunications for clinical treatment and diagnoses.


Prior to the coronavirus outbreak, several major barriers existed for those who wanted to embrace telehealth alternatives. The list of hurdles expressed by both urban and rural health centers involved cost and reimbursement policies, licensure, equipment issues, incompatible electronic health records, and gaps in rural broadband.[33] Below, some of these barriers are outlined before describing, in some detail, the federal and state policies that either support or attempt to bypass these limitations.


Because federal reimbursement policies are centered on Medicare, they are narrowly construed and have imposed limitations on where telehealth services may take place, both geographically and by facility, and what services are covered. Moreover, each state dictates separate Medicaid policies, creating a patchwork of telehealth laws and regulations across the nation. Over the last few years, states have begun to pass legislation to encourage private payers to reimburse telehealth-delivered services.[34]

However, telehealth laws have been written in such a way where they may be a parity in coverage services, in payment, or both. While payment parity acts as a strong incentive for more physicians to adopt telemedicine platforms, enforcing equal payment could also undermine telemedicine’s cost-effectiveness.[35] Legislative directives have long impacted the delivery of telehealth initiatives, largely because the meaningful adoption of telehealth often rests on statutory language.

“While fully embracing telehealth under existing state and federal policies should be priority, new policies must address evolving concerns related to reimbursement policies and licensing laws.”

While fully embracing telehealth under existing state and federal policies should be priority, new policies must address evolving concerns related to reimbursement policies and licensing laws. Payment models that reward value in the remote delivery of services, rather than paying providers at capped rates (regardless of the service) may encourage providers to utilize telehealth as a service, particularly in a redefined approach.[36] Further, streamlining the credentialing process with standard requirements would also allow physicians to apply for credentials at multiple hospitals at once, which leads into the next barrier to adoption.[37]


Federal and state licensing laws have inhibited the adoption of telehealth since its inception. Policies vary across states, and these often require providers to obtain some form of licensure in each state that they wish to practice in. One of telehealth’s most impactful benefits is to connect patients and doctors at a distance. Licensure laws may limit the geographic footprints of physicians, while giving patients access only to doctors who have a current license in the state where they reside. Some states have tried to knock down the artificial barriers erected at the state boundary lines by joining the Interstate Medical Licensure Compact. In 2019, the Florida legislature passed a new law to authorize out-of-state health-care professionals to deliver telehealth services to local patients.[38]

Rural broadband gaps

Successful implementation of telehealth among rural communities requires the expansion of broadband internet access. Almost all forms of telehealth initiatives require an internet connection. While the lack of broadband access disproportionately affects rural areas, urban and suburban areas may also have subscribers who experience challenges getting online, like the cost of service. Without access to high-speed broadband networks, a large portion of rural populations will be challenged to partake in virtual medical care.

Existing health disparities

Along the same line, health disparities, especially among low-income populations and communities of color, may make it more difficult to access telehealth services. These phenomena often correlate with poverty, geographic isolation, and the likelihood of far less healthy alternatives for food and diet. Health disparities are also emboldened by disproportionate access to quality health-care facilities or the fragility of household economic resources, which deters vulnerable populations from seeking initial and follow-up care. Among medically marginalized communities, the hospital emergency room or urgent care centers tend to be the first options for treatment, resulting in exorbitant patient expenses which are reasons not to see a doctor in the future.

Removing barriers to telehealth adoption and use may be effective for members of vulnerable populations who also have exponential access to smartphones. Moreover, by waiving copayments for telehealth visits or implementing waivers to purchase the necessary prerequisites to support telehealth use (i.e., data plans, smartphones, or internet access), quality care would be available to an entire population who may have previously not considered telehealth as a viable platform to receive medical care.[39] Enhancing consumer education of telehealth platforms among these groups also plays a role in reducing the distrust often associated with these modes of service.

“While health centers can motivate providers to adopt telehealth by providing financial incentives, organizational culture shifts are fundamental in embracing telehealth.”

Generally, states have attempted to provide relief to all or some of these barriers, but the efforts of their regulators alone are not enough to persuade providers and health systems to invest the time, energy, and money to offer telehealth services. Consequently, state or federal public policies must incentivize providers and health-care systems to be more favorable to telehealth adoption. For example, offering financial incentives for providers to adopt telehealth may increase usage—much like the recent waivers granted under COVID-19. While health centers can motivate providers to adopt telehealth by providing financial incentives, organizational culture shifts are fundamental in embracing telehealth.


The exertion of authority at the various levels of government can exacerbate some or all these barriers. While the federal and state governments have their hands in regulating the use of telehealth in some capacity, a lack of uniformity between these entities can create hesitation among patients, providers, or insurers to adopt telehealth. Moreover, within branches of government, the absence of consensus further stalls implementation.

Generally, federal laws have either been permissive or dismissive of telehealth provisions. Historically, the federal government has been involved in regulating telehealth initiatives within the Medicare program. But Medicare has been slow to change restrictive standards for the use of telemedicine. For example, following outdated standards created before the rise of telehealth, Medicare restricts reimbursement of this practice to those in rural areas and only to be performed at authorized “originating sites,” which excludes a patient’s home.[40] More recent guidance from the federal government attempted to extend the use of telemedicine to more patients by expanding services that could be reimbursed within Medicare to include kidney care and acute stroke. Furthermore, accountable care organizations were provided with more flexibility to pay for telehealth services in additional locations such as one’s home. But overall, restrictions on what Medicare can pay for continues to hinder the usage telehealth practices.