Telehealth Payment Parity and Outpatient Service Utilization: Evidence from Privately Insured Workers

Introduction Telehealth was catalyzed by the COVID-19 pandemic and has become a new norm in healthcare. In response to the pandemic, some states passed telehealth payment parity legislation, mandating equal payment rates for telehealth and in-person services. We evaluated the relationship between telehealth payment parity and health service utilization, focusing on insured workers in commercial insurance plans. Method Using the Merative Commercial Claims and Encounters database from 2019 to 2021, we leverage variation in the timing of policy changes across states using a Difference-in-Difference approach. Results Payment parity was significantly associated with increased telehealth visits and total outpatient visits, but without a notable rise in in-person visits. Furthermore, payment parity was pronounced in increasing telehealth utilization within self-funded large employer plans, while not significantly associated with telehealth visits among fully insured small employer plans. Conclusion Our findings underscore the important role of the payment parity in increasing telehealth service utilization by incentivizing providers. Future policies should support the sustainable integration of telehealth services, shifting from solely focusing on equal payment rates to adopting value-based reimbursement models that improve equitable healthcare access for all employees in commercial insurance.