CMS is loosening regulations on telehealth services offered in Medicare Advantage plans

This is an excerpt from a story delivered exclusively to Business Insider Intelligence Digital Health Briefing subscribers. To receive the full story plus other insights each morning, click here.

The Centers for Medicare and Medicaid Services (CMS) finalized a rule proposed in October 2018 that loosens regulations on telehealth services offered in Medicare Advantage (MA) plans.

For context, MA is a type of health insurance offered by private insurers to consumers 65 and up as an alternative to the government's traditional Medicare program. Membership in the private Medicare market grew around 6% year-over-year (YoY) in 2018 and is projected to tick up 12% YoY to reach an all-time high of 23 million members in 2019, making it an attractive market for private payers.

Here's what it means: The new rule extends telehealth benefits previously offered by MA plans, making them cheaper and more accessible.

• The policy lifts geographic restrictions that were likely limiting telehealth adoption. Previously, regulation only allowed MA plans to receive reimbursement for offering telehealth services with a caveat: Beneficiaries were required to travel to designated healthcare facilities in order to access them. Now, MA members can access telehealth services regardless of their location.
• And it broadens telehealth reimbursement for payers. Before, insurers could only offer telehealth as a supplemental benefit paid for with rebates or beneficiary premiums, per Modern Healthcare. MA plans can now include telehealth as a generic government-funded benefit.

The bigger picture: The CMS' move to augment telehealth services could help spur rapid growth in telemedicine adoption.

• Payers will likely beef up their private Medicare plans with telehealth offerings. A clearer path to reimbursement should prompt more insurers to cover telehealth services, especially given the potential for savings: Health system Spectrum Health's uptick in telehealth offerings saved payers $1.5 million in the first half of 2018 alone, for example.
• Growth in MA membership should further boost telehealth adoption. MA enrollees will account for 42% of total Medicare membership by 2028 - up from 34% in 2018 and 22% in 2008, per the Kaiser Family Foundation. Over the same period, Medicare enrollment will grow steadily as the US population ages rapidly.
• And this latest CMS policy could be a precursor to increased legislation favoring telehealth. Stringent government policies have historically been a primary barrier to broader telehealth adoption. This CMS policy - alongside laws recently laid out by Congress - signal a government mandate to increase telehealth adoption. If the CMS and other government agencies continue to relax telehealth regulation, healthcare players will be better positioned to fuel a telehealth boom.

Interested in getting the full story? Here are two ways to get access:

1. Sign up for the Digital Health Briefing to get it delivered to your inbox 4x a week. >> Get Started

2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to the Digital Health Briefing, plus more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now