On October 13, 2019, California Governor Gavin Newsom signed into law Assembly Bill 744 (AB 744), marking the latest of many state legislative efforts to modernize health care by ensuring that telehealth services are paid and covered, similar to their face-to-face counterparts. Effective January 1, 2021, the statutory language added by AB 744 requires newly created, amended, or renewed commercial payer contracts to reimburse telehealth services at the same levels as when those services are delivered in-person.

Previously existing California law addressed commercial telehealth coverage, namely by prohibiting payors from requiring in-person contact between a provider and patient before reimbursing for telehealth. But until AB 744’s passing, California law did not require reimbursement “parity” between services delivered through telehealth and those furnished in-person.

States have demonstrated two general approaches to payment parity. Whereas some reserve the right for payors and providers to negotiate differences between telehealth and in-person services (for example, see Florida, Kentucky), California chose to follow the more restrictive path of other states (for example, see Delaware, Hawaii) that mandate payment parity. Specifically, the new California law amends the state’s Insurance and Health and Safety Codes to now require a commercial payor to reimburse health care services “on the same basis and to the same extent” that the payor reimburses in-person services. The law does not set or limit actual prices, aiming only to establish price consistency across in-person and telehealth services.

AB 744 also amends the California Welfare and Institutions Code to remove certain Medi-Cal (the state’s Medicaid program) beneficiary notification requirements for asynchronous “store-and-forward” technology, which is an alternative to real-time telehealth that involves the intake and storage of clinical information that is forwarded to another location for evaluation. The law also clarifies that face-to-face contact between a health care provider and patient is not required for any Medi-Cal services furnished using such store-and-forward technology.

With AB 744’s passing, California becomes the latest member of a growing chorus of states to enact “payment parity” laws aimed at expanding telehealth coverage through commercial insurance market regulation. Payment parity laws represent just one of many developing telehealth legislation categories, each of which may be viewed as a step toward bolstering telehealth’s status as a viable and accepted delivery model. As states continue to view telehealth as an opportunity to improve health care outcomes, to reduce costs, and to increase access, industry stakeholders should expect to see similar legislative activity elsewhere in the future.