Part IV - Reimbursement Considerations for Digital Home Health

Introduction

Health care reimbursement is complex. At its core, reimbursement requires defining both the unit that is the basis of payment and the amount. However, health care reimbursement layers on top of this adjustments for varied factors, such as the setting of care, differences in local labor costs, severity of the patient population, the degree of technology involved, and myriad others. Further, in the USA, payers are fragmented, with each defining their own approach to these decisions. The COVID-19 pandemic ushered in a new era in which digitally enabled home-based care is a mainstream modality. However, the approach to reimbursement for this care remains a work-in-progress, with significant unanswered questions that will determine whether this modality expands or disappears if it is determined to be financially unsustainable.

It is important to acknowledge that reimbursement is only a challenge because of the continued reliance on a fee-for-service approach. Under a fully capitated approach, the risk-bearing entity would deploy the mix of care modalities most optimally suited to care for their population within the per member per year fee they receive. Indeed, a key opportunity for ongoing work is to understand the relationships between the payment model and level of use of digitally enabled home-based care. However, under today’s system that uses a mix of payment models, whether and how digitally enabled home-based care is reimbursed is an open question and one that will shape future offerings.

Zawada and colleagues describe their efforts at Mayo Clinic to build (and then expand under pandemic-relaxed regulations) a home hospital program that allows patients to shift to home-based care for lower-acuity conditions. Beyond the value from understanding in detail how the model works, and which specific regulatory relaxations allowed its expansion, the authors emphasize the critical need to maintain current levels of payment parity – in other words, patients in the hospital at home are reimbursed at the same level as if they were in the inpatient setting. While this makes sense at a high level (i.e., lower reimbursement would naturally create incentives to decrease use in favor of keeping people in the hospital), more deeply it raises the question of whether the cost structure of the hospital at home is fundamentally different from the inpatient cost structure. While hospital at home does not need to maintain the same level of physical infrastructure, the technology and staffing needs are arguably greater (e.g., home health visits by nurses, telemedicine consultations by physicians, remote monitoring technologies). Ultimately, given the many benefits of the hospital-at-home model described by Zawada and colleagues (including increased access, lower utilization, better understanding of the home environment and social determinants of health, and smoother transitions to post-acute care), they make a strong case for maintaining payment parity (as well as continuing to waive regulatory barriers) – at least until it becomes clear whether there are major differences in terms of cost structure.

Huber and Sklar’s chapter offers a similar assessment but in the broader context of home and community-based services (HCBS) that allow older adults to reside at home as opposed to in an institutional setting, such as a skilled nursing facility. It has long been known that the demand for HCBS far outpaces supply. Huber and Sklar make the argument that digitally enabled HCBS could alleviate this imbalance by allowing models of HCBS that more readily scale. Unlike the hospital-at-home model that is in current use, digitally enabled HCBSs are still largely conceptual. The technologies exist but the organizations delivering HCBS – many of which focus on custodial care – have not yet widely embraced them. Therefore, in their chapter, Huber and Sklar suggest the need to use reimbursement as a motivator, coupled with regulatory accommodations, better evidence on benefits, and an approach to ensure consent and the security of the data that would be shared under digital approaches. Ultimately, it seems unclear whether reimbursement is the key lever, as the technologies (with their associated costs) are highly varied. If digitally enabled HCBS could be delivered to more individuals at a lower cost, then today’s reimbursement environment should accommodate this. Given that this is not happening, it suggests instead that the costs are too high and/or that the benefits are too uncertain. Nonetheless, with such an urgent need to expand HCBS capacity, there is an argument for experimentation with payment models that would specifically incentivize digitally enabled HCBS alongside an assessment of the costs and benefits to inform future reimbursement policy.

Van Delm’s chapter takes the topic of reimbursement for digitally enabled care – specifically telemedicine – to the European Union (EU) context. With frequent instances of individuals living in (or traveling to) an EU country that is not their home and, vice versa, the opportunity for telemedicine to be delivered by a person or entity based outside the home country, there are myriad situations in which payment parity must be considered. As stated by Van Delm, “To safeguard the national social security systems, the EU legal framework strictly coordinates the reimbursement options for cross-border care, without touching upon the question of which type of health care falls within patients’ basket of health care. It clarifies which member state bears the financial burden for the cross-border care, and when the patient must request prior authorisation to qualify for reimbursement.” Unfortunately, two different legal bases for claiming reimbursement for cross-border care have emerged within the EU and they are not in sync. Van Delm explains these differences, including the many conditions under which cross-border care may be delivered. For some dimensions one is more favorable and for other dimensions, it is flipped. Most concerning is her argument that these differences create disincentives for the development and use of telemedicine across EU borders, despite it being a lower-cost option. Taken together, her chapter makes a strong case for a single, harmonized EU policy to secure the ongoing use of cross-border telemedicine in the EU.

12 A Pathway for High-Value Home Hospital Care in the United States Statutory, Reimbursement, and Cybersecurity Strategies in the Age of Hybrid Care

Stephanie Zawada , Nels Paulson , Margaret Paulson , Michael Maniaci , and Bart Demaerschalk

I Introduction

Prior to the emergence of modern health insurance programs after World War I, house calls were standard practice for physicians in the United States.¹ The end of the twentieth century saw a resurgence of interest in health care at home, partly fueled by the expansion of home health services by Medicare.² By the 1990s, pilot hospital-at-home (H@H) programs demonstrated the potential to provide similar levels of inpatient care at home while decreasing costs.³

Although before 2020 most payers offered plans covering home health services for older adults, a population that experiences a disproportionate share of hospitalizations, only a handful of hospitals around the country offered H@H programs.⁴ Among those were world-renowned health systems, like Brigham and Women’s Hospital and the Johns Hopkins Hospital, capable of securing pilot study funding to demonstrate the safety and effectiveness of their individual H@H models. In turn, these studies allowed the programs to receive reimbursement for H@H services from the Centers for Medicare & Medicaid Services (CMS), the federal entity responsible for setting health care service costs and coverage under the nation’s insurance program for adults ages 65 and older.⁵ Since 2005, the majority of H@H programs have demonstrated noninferior or superior outcomes to in-hospital care;⁶ however, the widescale implementation of H@H by community and regional hospitals remained elusive, chiefly due to a lack of coverage and guaranteed reimbursement under the Medicare fee-for-service (FFS) program.⁷ It is estimated that only a few thousand patients had received care through the limited number of H@H programs in the USA before 2020.⁸

According to the CMS’s Conditions of Participation, Medicare-certified hospitals must staff nurses 24/7 and on-site to be eligible for the reimbursement of services provided to hospitalized patients. During the COVID-19 Public Health Emergency (PHE), the CMS solicited applications from hospitals to deliver inpatient-level care at home under its temporary Acute Hospital Care at Home (AHCaH) waiver, which lifts the on-premises requirement for nurses providing acute care.⁹ From its launch in November 2020 through October 2021, the waiver enabled H@H programs to care for 1,878 patients in thirty-three states.¹⁰ As of March 2023, the program has expanded to thirty-seven states at 123 health systems and 277 hospitals.¹¹ This waiver allowed hospitals to partner with software platforms and vendors to develop care pathways that blended in-person, telehealth, and remote patient monitoring (RPM) services and were adjusted to reflect the local and geographic constraints associated with a hospital’s location.

Today, hospitals are negotiating with private payers to develop H@H models beyond the scope of the CMS’s H@H definition, which exclusively focuses on acute care.¹² However, there are many concerns about the future viability of H@H programs. Notably, the effectiveness of these models and their patient eligibility criteria are tied to the technology-enabled services they deliver, including telehealth and RPM.¹³ While numerous federal flexibilities for telehealth remain temporarily waived and all fifty states have expanded access to telehealth services, it is unclear which services will secure permanent reimbursement in the future. Though patient satisfaction with H@H and telehealth services remains uniquely high, questions about the long-term effectiveness of these pandemic-era initiatives in the context of value-based care, defined as care that improves patient health outcomes, remain.¹⁴

Based on our experiences at Mayo Clinic, we recommend that H@H care be integrated into the continuum of care, rather than delivered as a separate instance of care, after which patients are traditionally discharged to primary care. Beyond the AHCaH waiver, a flexible telehealth policy framework that allows providers to tailor care plans balancing patient need and convenience is vital to ensuring H@H programs yield high-value outcomes. This approach allows at-home patients recovering from an acute episode to receive post-acute care linked to improved patient outcomes, including rehabilitation, medication management, and patient education, via telehealth. Facilitating a gradual transition to primary care, the H@H model with subsequent hybrid services allows clinicians to monitor and intervene with timelier services during the post-acute period, thereby preventing adverse events and avoidable readmissions.

II How the AHCaH Waiver and Related Flexibilities Facilitated the Continuum of Care

Although the delivery of care at home had grown increasingly popular in the years before the pandemic, reimbursement uncertainty and low patient and provider willingness to use such services limited their adoption.¹⁵ Restrictive regulations, such as the CMS’s explicit categorization of telephones as a non-eligible tool for telehealth, also limited patient options.¹⁶ Furthermore, while numerous studies found that RPM of real-time vital signs and symptoms could reduce costs and improve outcomes, its implementation was limited and complicated by the need to integrate device data with electronic health records.¹⁷ Recognizing the technical difficulties associated with delivering care remotely, the Secretary of Health and Human Services (HHS) temporarily waived Health Insurance Portability and Accountability Act (HIPAA) sanctions and penalties for the PHE, allowing providers to use any software available to offer telehealth services, including those delivered in H@H.¹⁸

With the 2020 establishment of the AHCaH waiver, a hospital could launch an H@H program with guaranteed reimbursement equal to traditional in-hospital payment for acute care services delivered at a patient’s home, provided that 24/7 monitoring by nurses was completed using telehealth and RPM.¹⁹ To be eligible for enrolment in a hospital’s H@H program under this waiver, patients first need to be admitted to a hospital and assessed by an on-site physician. The inclusion criteria for admission consider a range of chronic conditions presenting in an acute episode, that is, one that qualifies for inpatient-level care, to ensure a patient’s status is sufficiently stable for at-home care (Table 12.1).²⁰

Table 12.1 Frequent H@H program condition inclusion criteria

Common acute phase conditions treated in H@H programs (Levine et al., 2020)
Chronic kidney disease with volume overflow	Atrial fibrillation with rapid ventricular response
Urinary tract infection	Hypertension urgency
Pneumonia	Anticoagulation needs
Heart failure	Diabetes complications
Asthma	Gout flare
COPD	Cellulitis

Additional personal mobility, environmental, and social screening measures are implemented on a site-by-site basis. After a carefully evaluated patient enrols in H@H, hospitals must provide twice daily in-person visits from a registered nurse or paramedic at the patient’s home and deliver daily telehealth evaluations by a clinician.²¹ With the AHCaH waiver, all Medicaid and Medicare patients, as well as dually eligible beneficiaries, qualified for consideration of H@H care during the PHE.²²

Patients in the prehospitalized, restorative (postacute) or ambulatory phases of care are not eligible for H@H care reimbursed under the AHCaH waiver; however, H@H models negotiated for reimbursement with private payers, like Presbyterian Health’s program under Medicare Advantage, are not restricted to acute care.²³ Likewise, some individual hospitals using the AHCaH waiver to cover H@H acute services have designed postacute models of care that combine hybrid services, like at-home rehabilitation therapy and telehealth medication management visits, for different insurance populations, subject to state regulations governing home health and telehealth services.²⁴

Before the pandemic, multiple regulatory barriers restricted access to telehealth services for Medicare beneficiaries at home. Among these were CMS requirements that patients reside in rural areas and be physically present at a designated site to receive telehealth services eligible for reimbursement. For the PHE, the CMS waived these requirements, allowed payment parity for telehealth, and expanded its list of services eligible for telehealth.²⁵ Policies regulating telehealth and H@H programs also vary by state, insurance coverage, and program. In some states, policies apply to both public and private payers delivering care to patients in-state, while in other states there are separate regulatory frameworks for telehealth delivered to public versus private beneficiaries.²⁶ During the pandemic, all fifty states and the District of Columbia introduced reforms to expand access to telehealth at home.²⁷ For instance, states introduced statutory flexibilities to incorporate a broader range of devices eligible for telehealth (Table 12.2). The nation’s leading private payer plans also expanded telehealth access by offering payment parity or cost-sharing waivers.²⁸

Table 12.2 Example telehealth use cases

Telehealth modality	Technology example
Asynchronous/Store-and-forward	Sharing patient images via a HIPAA-secure patient portal
Synchronous	Videoconference with provider and patient
Remote patient monitoring (RPM)	Wireless ECG streams patient data to provider
Autonomous	Smartphone app AI chatbot classifies patient symptoms for triage

AI, artificial intelligence; ECG, electrocardiogram.

Combined with the AHCaH waiver, these telehealth flexibilities freed clinical care teams to identify optimal software and monitoring devices to integrate into care pathways for H@H patients in the acute as well as postacute phases. The design of hybrid care models that deliver H@H as a part of the continuum of care, providing services beyond the scope of acute care, was guided by relevant state and federal telehealth and RPM flexibilities (Table 12.3).

Table 12.3 Scope of current H@H models

AHCaH waiver only (no state or federal telehealth flexibilities)	AHCaH waiver paired with state and federal telehealth flexibilities
Covers acute phase care	Covers acute phase care and can include pre-hospital, post-acute, and ambulatory care
Allows for the use of telehealth and remote monitoring services as necessary for acute phase management only	Allows for the use of telehealth and remote monitoring services before or after an acute episode of care
Daily in-person visits by nurses	Daily in-person visits by nurses
Daily physician evaluation by telehealth	Daily physician evaluation by telehealth
Daily vitals monitoring at multiple timepoints	Daily vitals monitoring at multiple timepoints
Delivery of point-of-care testing, mobile imaging, and IV therapies, as needed	Delivery of point-of-care testing, mobile imaging, and IV therapies, as needed
Skilled nursing services, as needed	Skilled nursing services, as needed

III Characteristics of High-Value H@H Programs that Span the Care Continuum

The characteristics listed below emerged from evidence generated before and during the pandemic, corroborating our experiences at Mayo Clinic, and can be used to evaluate the design of value-based H@H and other hybrid care models as regulatory and reimbursement frameworks evolve.

A Increased Access to Care

H@H programs allow providers to scale hospital capacity beyond the facility walls and reserve inpatient beds for the most critical patients.²⁹ In areas with inpatient capacity shortages, driven particularly by patients waiting to be discharged to restorative care, H@H programs with hybrid postacute services can more efficiently transition patients to postacute services at home, ensuring that they receive timelier rehabilitative care.³⁰ These postacute hybrid services also can expand access to patients residing in rural locations by substituting in-person visits with telehealth and, thereby, reducing travel requirements for follow-up services.³¹ Integrating telehealth into H@H and postacute services also connects patients to specialists they might otherwise be unable to access in their local community hospital.³²

B Enhanced Quality of Care

Patient and family member satisfaction rates are often higher with H@H programs.³³ Moreover, patients in H@H are less sedentary compared to those treated in brick-and-mortar hospitals, a finding associated with faster recovery times, and multiple H@H programs have demonstrated lower mortality rates compared to in-hospital care, partially attributed to the increased physical activity that naturally occurs at home.³⁴ Timelier and preventative care is also a potential benefit for H@H, as RPM technology evolves and can alert providers to early signs of patient health deterioration.³⁵

Notably, when H@H programs are offered with hybrid models of postacute or other transitional care, reduced readmission rates and improved patient outcomes are possible.³⁶ While limited data about H@H patient outcomes during the pandemic has been published, a single-site analysis found no difference in readmission rates for H@H or in-hospital patients. Although H@H patients experienced shorter inpatient lengths of stay (LOS), they also experienced longer total LOS, suggesting that H@H care may reduce inpatient-level care costs but require longer recovery times, a percentage of which might be appropriately delivered by postacute hybrid models focusing on telehealth and monitoring, a strategy employed by Mayo Clinic H@H.

C Reduced Costs

Reducing costs remains of interest as payers and health systems continue to shift from fee-for-service (FFS) to value-based care.³⁷ Evidence supporting H@H’s potential to decrease costs without compromising care quality includes a randomized clinical trial that showed H@H patients required fewer laboratory orders and imaging studies.³⁸ Compared to traditional acute care, multiple H@H programs have shown the potential to decrease costs per patient by nineteen or more percent.³⁹ Reduced hospital lengths of stay, fewer readmissions, and decreased skilled nursing facility utilization are also associated with H@H programs.⁴⁰ The chief method of cost containment proffered by H@H with hybrid postacute services is the more comprehensive management of chronic diseases during the transition period from hospital to primary care.⁴¹

D Robust Understanding of Social Determinants of Health (SDoH)

H@H programs afford providers the chance to observe patients in their homes. Although a telehealth visit is limited by the lack of a hands-on physical examination, video telehealth is valuable in assisting with physical exams, especially when augmented by connected devices, such as a stethoscope to assess lung and heart sounds. Pairing in-home and virtual clinicians can help providers gain new insights into a patient’s daily life, observing family interactions, domestic environments, and information about food and medication availability.⁴² Such information can help providers design more effective treatment plans tailored to a patient’s unique circumstances, such as balancing patient need with convenience by substituting routine follow-up visits with telehealth and RPM for patients who cannot take time off work.⁴³

IV How Policymakers Can Remove Barriers to High-Value H@H Programs

While the reforms related to H@H, telehealth, and RPM created a regulatory climate that encouraged innovation in hybrid model design, they were implemented temporarily. In May 2023, the federal PHE expired. By June 2023, no state-level PHEs were in effect. While some reforms have been made permanent, the future of H@H, and hybrid care in general, remains uncertain. Yet hundreds of millions of dollars in private capital has been raised to support H@H platforms.⁴⁴ Based on our experiences, we encourage policymakers to remove barriers to developing high-value H@H care by considering the points below.

A Reimbursement and Payment Model Uncertainty

Current reimbursement uncertainty primarily affects publicly insured beneficiaries, many of whom are from marginalized populations, as patients covered by private insurance and managed care programs can receive telehealth, RPM, and H@H services that are negotiated between providers and payers and only subject to state regulations. Regarding the AHCaH waiver, which increases access to care for Medicare and Medicaid beneficiaries, Congress permitted the CMS to extend the waiver, guaranteeing payment parity for inpatient-level care provided at home with 24/7 remote clinical oversight through December 2024.⁴⁵ Congress also instructed HHS to publish a study on the outcomes and costs associated with AHCaH programs before the waiver’s expiration date to evaluate the program’s sustainability. While making this waiver permanent would remove one barrier to accessing H@H programs, individual state hospital licensure laws may restrict hospital participation for eligible patients residing in-state.⁴⁶ To determine what role H@H programs should play in terms of care for publicly insured patients, federal and state policymakers should consider the findings of the HHS report to determine appropriate inclusion criteria for H@H programs and patients moving forward.

Equally important to the development of high-value H@H programs, as well as postacute hybrid care models, is the temporary CMS waiver listing a patient’s home as an eligible site for telehealth. During the pandemic, patients who transitioned from acute to postacute status during H@H care benefitted from continued access to covered telehealth services when their eligibility for H@H ended. As such, state and federal policymakers should make permanent or expand coverage for telehealth services associated with postacute care that have demonstrated improved patient outcomes, enabling clinicians to identify which services are most appropriate for their patient populations. Expanding access to these services can help H@H patients complete routine medication management and therapy, leading to better outcomes and fewer readmissions.

B Access to Digital Health Tools

Recent findings from the pandemic suggest that patients of all ages who are less comfortable with technology prefer using smartphones over personal computers to connect with health providers;⁴⁷ however, 29 percent of US adults aged over 65 do not have a smartphone, and patients with a lower socioeconomic status are also less likely to own a smartphone.⁴⁸ Thus, although Medicare permanently updated its definition of telehealth-eligible devices to include smartphones, barriers to telehealth services delivered as part of H@H and hybrid care models still remain.

No uniform definition for telehealth or RPM exists across states. Some states narrowly define the types of technologies eligible for use in telehealth visits or limit RPM to patients with specific diagnoses. Restricting telehealth to specific device requirements and deploying H@H programs with limited flexibility in terms of device options can potentially exacerbate health disparities for underserved populations. For example, Alaska’s Medicaid program only reimburses for self-monitoring RPM services at home, a limitation potentially restricting eligible devices to those that have a patient interface and thereby excluding patients with visual disabilities or limited English proficiency.⁴⁹ These statutory definitions complicate the design of H@H and other hybrid care models by restricting telehealth and RPM offerings covered by different payers to specific devices.

After considering the findings published by the HHS report on the AHCaH waiver, policymakers should ensure their hospital licensure laws and statutory definitions accommodate the 24/7 virtual presence made possible by clinically validated emerging technologies. Since the rate of technological development outpaces the regulatory review and rulemaking process, policymakers should aim to enhance flexibility for patients and providers by taking a technology-neutral approach to defining eligible telehealth devices. Such an approach is inclusive of the digital comfort level and device availability of underserved patients by allowing providers to select software and devices able to be used by their populations, which vary by geographic location and socioeconomic status.

C Emerging Cybersecurity Issues

While permitting a patient’s home to be an eligible site for telehealth is critical to high-value care in the digital age, deploying a H@H or hybrid care program is a resource-intensive endeavor for hospital IT departments. Both IT and clinical personnel require training in new systems and workflows; patients and family caregivers also need orientation to learn their roles in receiving care at home. Hospital IT systems must integrate security and privacy protocols for data aggregated, transmitted, and stored by RPM devices, mobile lab and imaging systems, video telehealth visits, text-based communication, and ancillary services. While HIPAA outlines privacy regulations for provider compliance, individual hospital cybersecurity protocols vary.⁵⁰

As the HIPAA waiver, which expired at the end of the PHE, enabled providers to select platforms to deliver remote care that were not HIPAA-compliant, some providers are now transitioning to HIPAA-compliant software and RPM devices. Simultaneously, the Food and Drug Administration (FDA) offered a temporary expedited review process for digital health apps, software, and RPM devices.⁵¹ Together, these regulatory flexibilities created a perfect storm for the adoption of insecure software products and human error related to mishandling data in remote care delivery.

Cybersecurity for clinical services enabled by RPM and telehealth software is an evolving research and operations area. As institutional cybersecurity policies are confidential, a robust analysis of the set of cybersecurity strategies employed by providers remains elusive. The lack of clarity surrounding telehealth and RPM cybersecurity affects its long-term sustainability. For instance, many patients express a reluctance to participate in remote care due to privacy and security concerns regarding third-party telehealth platforms and RPM devices, rather than about hospitals directly. Patients of low socioeconomic status, like those who lack tech savviness and English fluency, are most at risk from cyber-related exploitation via the most accessible (free or inexpensive) telehealth options. This is because low-barrier applications are the least likely to offer comprehensive data privacy and security policies, disproportionately putting underserved patients most at risk of a data breach.⁵² Moreover, cybersecurity standards specific to telehealth, both in H@H and hybrid care models, are yet to be determined. A 2021 study in the British Medical Journal assessing digital health app privacy policies and risks found that no consistent privacy practices exist in digital health software design. Also, the privacy policies of many leading telehealth platforms, which may be used in home hospital models, are unclear about which associated services access what patient data.⁵³

Current best practices in H@H and hybrid care cybersecurity include infrastructure audit checks and risk assessments during at-home visits. To mitigate emerging cybersecurity issues, institutional policymakers should identify concerns across administrative, physical, and technical domains for their H@H program. The expiration of the HIPAA waiver is critical to advancing a cybersecurity-conscious healthcare data ecosystem. As some reforms are made permanent post PHE, HHS should offer clarity regarding data privacy expectations and gold-standard cybersecurity guidelines for telehealth and hybrid care models like H@H, considering lessons learned during the PHE. Such an approach can assuage patient anxieties and help small-group providers, who face a shortage of skilled IT personnel, transition to HIPAA-compliant hybrid care models.

V Conclusion

The CMS’s AHCaH waiver, combined with state and federal telehealth and RPM regulatory flexibilities, unleashed innovation in hybrid care models that can improve patient outcomes and decrease costs. To chart a path forward for H@H programs, state and federal policymakers should immediately address statutory and reimbursement issues as top priority issues, developing a framework flexible enough to deliver care during an acute episode at a distance that can help patients transition safely to outpatient status with telehealth and RPM. However, it will also be important for policymakers and those implementing H@H models to ensure a cybersecurity-conscious infrastructure. High-value home hospital programs can increase access to care, reduce costs, and enhance the quality of care, helping clinicians deliver more personalized care through a new understanding of SDoH. To overcome barriers to high-value home hospital care, we encourage government and institutional policymakers to better align statutory and reimbursement policies with updated cybersecurity guidance, facilitating the design of high-value H@H models that span the care continuum.

13 Digitally Enabled Medicaid Home and Community-Based Services^*

Kathryn Huber and Tara Sklar

I Introduction

Older Americans are increasingly able to receive long-term care in the home through the emergence of digital health tools, including mobile health applications, remote monitors, and video calling software for medical appointments. These digital health tools can further support older adults’ preference to age in place. The demand for this type of care in the home is exemplified by the over 820,000 Medicaid-eligible Americans who sit on waiting lists – many for years – hoping to receive long-term supports and services (LTSS) through state Medicaid home and community-based services (HCBS), rather than institutional care.¹

Medicaid HCBS includes services delivered to persons who wish to remain in their homes by providing for the full spectrum of LTSS, such as bathing, feeding, personal care, medication administration and management, and more.² Under Medicaid, state programs must cover LTSS in institutional settings, but HCBS are provided under section 1915(c) of the Social Security Act as a waiver program,³ which effectively leaves hundreds of thousands without care if they wish to remain in their homes.⁴ Digitally enabled HCBS could expand LTSS in the home by utilizing the digital health tools described above combined with data-driven analytics to reduce reliance on home health care aides, an already strained workforce, and unpaid caregivers.

To illustrate this escalating demand to receive LTSS in the home, meet Cora. Cora is a 92-year-old woman who sits in her hospital bed watching plants on her windowsill collect dust, wishing she were in her home. A recent stroke has left her with moderate cognitive impairment and reduced mobility. She has been hospitalized for months while staff and family members work to identify a safe discharge plan. The new cognitive and functional impairments place her at risk for medication adherence errors and falls, precluding her from caring for herself alone at home.

The discharge dilemma that Cora, her family, and the medical team face is common for older adults when greater care at home is needed but unavailable. These distressingly difficult scenarios have been exacerbated by the insufficient home health workforce, which was decimated by the COVID-19 pandemic and continues to shrink.⁵ Home health care is the largest long-term care (LTC) modality for older adults, assisting with daily living, preventing falls, and administering medication.⁶ Over 1.8 million older adults in the United States are partially or completely homebound,⁷ a number that will likely continue to rise with an aging population. As the homebound population increases, the need for at-home services will follow suit.

A technological response through digital health tools could enable many older adults to be safely discharged home after a hospital stay or, ideally, avoid hospitalization in the first place.⁸ Cora could possibly be discharged home with a variety of new in-home devices. For example, to reduce the risk of falls, a home health agency could fit her with wearable devices and install home motion sensors and remote monitoring bed alarms. This digitally enabled approach would allow the agency to centrally monitor a larger number of patients than they could if they solely relied on in-person visits.

This chapter delineates the ethical, social, legal, and regulatory issues of implementing digital home care for a Medicaid-eligible, older adult population. The second section of this chapter describes efforts to modernize and expand HCBS by applying digital health tools and services. Ethical considerations for digitally enabled HCBS are discussed in the third section, recognizing an older population’s heightened vulnerability to abuse, social isolation, and frailty in the face of concerns regarding safety, efficacy, privacy, and equitable access. The fourth section proposes recommendations for how to approach expanding digitally enabled HCBS in ways that address individual and system-level issues. Recommendations for individual-level issues focus on user consent practices and the acceptable use of collecting, sharing, and storing health data. System-level recommendations include policies to support reimbursement for remote monitoring and permanently lifting geographic restrictions around the use of telehealth so that older adults can access care from their homes. The scrutiny that follows could not be timelier, as older adults struggle to gain access to LTSS delivered in the home to safely age in place, and state Medicaid programs struggle with mounting costs, workforce shortages, and a growing aging population.

II Integration of Digital Health Tools with Medicaid HCBS

To meet the growing demand for LTC in the home, the Centers for Medicare and Medicaid (CMS) must play a prominent role in equitably expanding access to older adults. Medicaid is the primary payer for LTC in the United States, paying for about two-thirds of all LTC stays.⁹ HCBS waivers are optional, but the majority of states implement them to address high-use populations with the most intensive needs, such as those aged 65 and over, because LTSS in the home is less expensive than institutionalized care and supports older adults’ preference to receive care in the home.¹⁰ States are under increasing financial pressure to meet the needs of a growing aging population and have accordingly raised Medicaid budgets to fund LTSS.¹¹ While the existing government policies still favor institutional care over optional HCBS for low-income older Americans, notable shifts are underway.

In April 2020, the CMS approved Appendix K in 1915(c) state waivers,¹² which expanded LTSS in HCBS waivers to include reimbursement for virtual assessments with providers, electronic service delivery, and other technology-related benefits to better serve beneficiaries during the COVID-19 pandemic. Furthermore, the American Rescue Plan Act, signed by President Biden in March 2021, boosted federal matching in Medicaid for HCBS, and the Infrastructure Investment and Jobs Act of 2022 provided funding to address digital health equity.¹³ Highlighting the increasing value of HCBS services, the Agency for Healthcare Research and Quality recently studied the health and welfare of HCBS recipients and found significant benefits from applying emerging technologies during care.¹⁴ The agency identified durable medical supplies and technologies, such as personal care robots, wearable fall detection devices, automated medication administrators, and assistive devices, as tools of the future that would soon be commonly used.

Yet, most Medicaid HCBS cover only assistive devices and emergency alert systems¹⁵ and do not cover the aforementioned digital health tools. Currently, reimbursement for equipment and technology accounts for only a small portion of overall HCBS expenditures despite high usage.¹⁶ This is partially attributable to the lengthy and uncertain process for CMS coverage of new technologies. For a new technology to be granted reimbursement, it must demonstrate significant benefit for the Medicare population beyond existing technologies or services.¹⁷ The rate at which technologies arrive on the market often outpaces the rate of validated studies providing results to meet this high standard, thus, often limiting their use. Even if a technology is approved for reimbursement, it is up to individual states to determine which services will be covered based on needs,¹⁸ making implementation and access to digitally enabled services heterogenous and difficult to track.

Expanding reimbursement coverage for, and therefore access to, new types of devices under HCBS waivers, therefore, may reduce overall costs by supporting a shift away from labor-intensive institutional settings into the home, where more efficient LTSS care can be delivered with reduced administrative and staffing costs.¹⁹ For example, digital tools for organizing and dispensing medications could reduce the high proportion of a home health care aide’s time devoted to that task. In the scenario with Cora, rather than relying on an aide, Cora could receive reminders on her smartphone or a wearable device to take her medications, which could be dispensed through an automated cabinet. This digitally enabled approach would improve Cora’s compliance and reduce medication errors.²⁰ Other examples of digital health tools that could reduce demand on the LTC workforce include the strategic placement of Amazon’s Ring and Echo Show devices around Cora’s home to help her connect via video calls to the home health care agency, when needed, and have 24/7 access to an urgent response service.²¹

Digital health tools could also benefit via the collection of data-driven analytics around the variety of services provided. Currently, state waivers for HCBS differ across the country in terms of eligibility, scope of benefits, and delivery systems.²² It is estimated that by 2028, there will be 8.2 million HCBS job openings,²³ many of them directly impacting older adult needs. In the face of staffing shortages for personal and nursing care, many of these technologies offer low-cost solutions with reduced labor needs. States are also required to establish a quality assurance, monitoring, and improvement strategy for the HCBS benefit, yet there are no standards for this.²⁴ Digital health home tools could improve states’ ability to monitor their LTSS delivered via HCBS through centralized data collection and analysis and through on-site monitoring of the services delivered by agencies or providers.

There are also lessons for digitally enabled HCBS to be gleaned from the recent expansion of Hospital-at-Home (H@H) practices, which use technology to provide real-time information pertinent to the monitored patient’s health and needs. Examples include at-home vital signs checks and alarms for gait changes predicting falls,²⁵ which could be equally useful as part of HCBS. Another emerging area includes Addison, an artificial intelligence care management tool that synchronizes across devices in a patient’s home and interacts with a caregiver avatar.²⁶ Such technologies could be expanded to focus on core HCBS priorities, such as maintaining function by targeting the activities of daily living to help older adults eat, dress, and bathe themselves.²⁷ In turn, these systems can prevent the hospital admissions that lead to preventable nursing home admissions and resource inefficiencies.²⁸ Ideally, clinical or behavioral information from these technologies, which continuously collect data, would be available to primary care providers and other medical specialists to further support individualized care plans or chronic disease monitoring.

Despite the potential widespread benefits of integrating digital health tools into HCBS, there is a lack of federal- or state-level guidance on how to adapt digital health tools into medical and custodial care, alongside the corresponding reimbursement.²⁹ To date, there is little to assure quality or applicability for many digital home technologies – such as devices that monitor medication adherence and changes in the sleep-wake cycle – that will play an increasingly integral part in the care of older adults. For example, early research on automated medication cabinets and care robots is promising, but large randomized clinical trials are lacking to guide their acceptability for use among a diverse HCBS-eligible population.

As Medicaid programs increasingly look to adopt these technologies to provide LTSS in the home, beneficiaries should be engaged to determine if these proposed digital solutions are accessible and understandable. A suggested incremental approach would be for CMS to launch pilot sites with a range of state Medicaid programs to measure efficacy and to inform acceptable-use guidelines for integrating these technologies into daily care routines. Additionally, metrics around communications with digital health tools should be included to address beneficiaries’ preferences, audio or visual difficulties, limited English proficiency, and lower digital-health literacy.

III Ethical Considerations with Digitally Enabled HCBS in an Older Population

Ensuring the safe, effective, and clearly regulated use of new digital health tools for the routine care of older adults requires close ethical analysis. An overarching framework to promote autonomy, safety, privacy, and equity is paramount, especially when stakeholders with such potentially differing interests are involved. In this context, stakeholders include patients and caregivers as end-users, agencies delivering HCBS, the organizations developing digital health tools, regulators, and policy makers. Below are three key considerations that consider the unique vulnerabilities of an HCBS-eligible older adult population, the autonomy and privacy concerns with continuous monitoring, and the required steps to help ensure equitable access to digital models of HCBS.

While older adults prefer to age in place and receive LTSS in the home, they are more prone to frailty, cognitive and sensory impairments, and social isolation.³⁰ In addition, issues of abuse and neglect are a concern among older adults and need to be taken into consideration as care moves further into the home,³¹ where there may be less oversight than in institutional settings, particularly when care is provided digitally. However, if HCBS integrate more digital health tools, then the daily tracking of vital signs and other metrics could vastly improve the current oversight of Medicaid beneficiaries, which sometimes amounts to as little as quarterly phone calls from the state Medicaid office.³²

To help illustrate the additional possible benefits from appropriate oversight, we turn back to the fictional Cora, who carries a diagnosis of chronic obstructive pulmonary disease, commonly known as COPD, and is discharged home with HCBS. Upon returning home, the home health care agency links an urgent response service to Cora’s home pulse oximeter to monitor her remotely. This is a widely available monitoring device, but is not subject to standardization, safety requirements, or proof of diagnostic accuracy, and has received substantial racial and ethnic discrepancy criticism.³³ Currently, these devices are neither reimbursable by CMS nor routinely integrated into HCBS.

Yet, in the near future, this device could play a pivotal role in Cora receiving immediate care or in preventing an unnecessary hospital visit. Remote monitoring through HCBS could detect a drop in Cora’s blood oxygen level and prompt her to use oxygen or an inhaler, avoiding a call to emergency medical services or hospitalization. But these interventions are only as good as the accuracy and reliability of the technology used. Currently, diagnostic error among older adults in clinical care is pervasive due to the limits around lack of data, complex conditions requiring consistent monitoring, and barriers to communication due to impairments associated with older age.³⁴ The above is an example of how digital health tools could diagnose in the home to intervene early, but they are only effective if the technology itself can be consistently and reliably used by this population.

In expanding access to new technologies through HCBS waivers, issues of digital health equity may be addressed. Many Medicaid-eligible older adults lack the internet or data services needed to support digitally enabled tools in the home and related access to home telehealth to manage their medical needs.³⁵ Federal and state government investments in broadband infrastructure and continued reimbursement for home telehealth are essential for this group.

IV Individual and System-Level Considerations for Modernizing HCBS

For digitally enabled HCBS to become a reality, stronger regulatory oversight is needed to ensure the safe and effective deployment of the enabling technologies. The promise of such an approach aligns with the goals of HCBS waivers to reduce LTC costs and ensure high-quality care in the home, particularly for older adults with unique needs, preferences, and vulnerabilities. To support the integration of digital health tools in HCBS, we make the following practice and policy recommendations. These recommendations include focusing on individual user consent practices, as well as system-level advocacy for policies that support payment parity for remote patient monitoring and telehealth.

To date, there are two key issues with digitally enabled services: (1) Inconsistent, difficult-to-interpret consent practices that do little to empower users and (2) ambiguity around device company practices with respect to device monitoring, data collection, use, and security. Both of these are controlled at the company level but could be subject to change when utilized for HCBS care. In studies examining the acceptability of home monitoring and surveillance among caregivers and persons with dementia, many users (or future users) hoped for technologies that would provide peace of mind, safety, and support in the home, with the primary goal of promoting safe aging in place.³⁶ Yet, the digital health tools used today in the care of older adults, such as wearables, in-home cameras and care robots, often use a one-off, click-through process with dense, hard-to-understand terms to obtain consent, if any. These consents are typically presented during initial use or when new users access app-based technologies and fail to account for changes in user preferences over time or, in the case of older adults, changes in cognition and capacity to consent to their use.

Secondly, there is a lack of transparency around how device companies will use and provide security around the data collected from these digital health tools. The proposed recommendations aim to simplify instructions to promote improved understanding among users and delineate privacy and security risks about how health data will be collected, used, shared, and stored to encourage the trust and, ultimately, utilization of these tools.³⁷ If digitally enabled HCBS are to become widely adopted, then stricter standards around data use and maintenance by device companies must protect patient’s privacy by not sharing identifiable health information that would be required by covered entities, namely providers and insurers, under the Health Insurance Portability and Accountability Act (HIPAA).³⁸

Currently, many of the device companies who have access to health data are considered non-covered entities (NCEs) under HIPAA, meaning patients or residents have little access to and control over how their health information is handled and shared with unauthorized users, including marketers. Expanding the reach of HIPAA to include these companies as covered entities could encourage more older adults to view digitally enabled HCBS as secure and trustworthy. NCEs could also voluntarily comply with HIPAA to encourage uptake, which would encompass establishing safeguards, such as a firewall, encryption, and two-step authentication, among other steps to protect user privacy.

In addition, a more transparent, formalized process of disclosure and consent can be implemented so that older Medicaid beneficiaries may better understand to what extent their personal data is being collected and how it may be used. Discussions about home surveillance and monitoring devices provide patients and their families with opportunities to make informed decisions about whether to use these technologies given all the factors involved – from data risks to the benefits of continuous monitoring. Requiring transparency and disclosure by device manufacturers provides another step in the right direction. For example, model privacy notices (MPN), akin to FDA nutrition facts labels,³⁹ allow for clear communication around data use and security practices that cater to a broad range of user understanding and health literacy. Transparency and disclosure requirements for digitally enabled technologies at the same level of oversight as covered entities (CEs) under HIPAA offer two salient options for improvement on existing practices.

Taking the case of Cora, shared decision-making – around her comfort with in-home surveillance, with cameras or a wearable continuously monitoring her activity – may reveal preferences for sharing information or, alternatively, restricting its use to only certain times or circumstances. Using information readily accessible and understandable through the devices’ MPN, Cora and her family could make informed decisions about which devices to use and how. They use a redesigned consent form that explains how companies may use her data when employed through HCBS to keep her safe and independent at home. Under existing HCBS Community Transition Services, for example, Cora would be given some agency in determining which services align with her values, activities-of-daily-living (ADL) needs, and environmental adaptations at the time of her transition to home. Folding digitally enabled services into these decision points would offer greater opportunities for more tailored and personalized care, as well as a seamless integration of custodial-type services with her medical care. Expanding control over how, when, and where these technologies and their derivative data are used may allow older adults to meaningfully drive individually tailored care under their HCBS that better aligns with their specific values around privacy or confidentiality.

System-level tactics that support policies providing access to remote patient monitoring and home telehealth through payment parity would provide another driver for digitally enabled HCBS to become a reality. These broader access issues connect with HCBS to support the ability of Medicaid-beneficiaries to safely age in place by receiving remote management of their chronic or acute conditions. The Consolidated Appropriations Act of 2023 continues to lift telehealth geographic restrictions and allow for payment parity of home telehealth so that those visits are reimbursed by Medicare until December 31, 2024, at the same rate as in-person visits.⁴⁰ Medicare also provides reimbursement for remote monitoring so that providers can review data and manage treatment plans for patients without in-person visits. These national trends speak to the rising attention to and support for patient preference and need to remain in place, as well as the value of expanded access to care via in-home technology.

V Conclusion

The greater personal capacity for older adults to maintain function and autonomy in their daily routines via digital health tools with less in-person human assistance would allow for more older adults to safely age in place. Combining these technologies with Medicaid HCBS also serves to advance digital health equity for an older population group with limited resources. Under a person-centered care model, such as the one that HCBS strives to deliver, regulators can align user values and preferences with the models used by agencies delivering these services.

Ensuring equitable access, the mitigation of risks, and supported decision-making around digitally enabled HCBS is central to the success of these new models in the care of older adults. The heightened physical and social risks many older adults face when left to struggle at home without support can be significantly reduced for all older adults with these technology-assisted options. State Medicaid programs are in an unsustainable fiscal situation, struggling with an increasing aging population and shrinking long-term care workforce. Through the recommendations posed here, digitally enabled HCBS pose one avenue forward to address the older population’s needs and preferences as well as to expand access in a forward-looking health technology supported world.

14 EU In-Home Digital Diagnostics – Cross-Border Patient Reimbursement under Threat?

Kaat Van Delm

I Introduction

Telemedicine has boomed over the last ten years thanks to new digital technologies, such as the extended use of the Internet and the availability of increasing amounts of data.¹ The virtual offering of new data-driven health care increases its accessibility to physically distant patients, including patients from other countries. In the European Union (“EU”), cross-border healthcare triggers specific reimbursement queries. A legal framework was developed over time to coordinate the various national reimbursement schemes in cases of cross-border care, which also explicitly regulates the reimbursement of cross-border telemedicine. This chapter assesses whether, in an EU cross-border context, patients have the same cross-border reimbursement rights for one form of telemedicine – digital diagnostics – as for receiving such health care in person, and the consequences thereof.²

This introduction describes the EU context, the applicable EU reimbursement legislation, and the limitations in scope. The second section compares the situation of a patient receiving cross-border care in person, and a patient receiving cross-border telemedicine services while residing in their home country, highlighting the resulting reimbursement opportunities and limitations. The third section assesses the consequences of the described legal framework from the point of view of the patient, the telemedicine solutions providers, and the EU member states.

A EU Context

Digital diagnostics qualify as “telemedicine” under the EU legal framework applicable to cross-border reimbursement. Even though no official definition is available under EU health law, the European Commission provides the following indicative definition: “The provision of healthcare services at a distance through the use of ICT, e.g., teleconsultations, telemonitoring, telesurgery, … .”³ Digital diagnostics constitute, depending on the circumstances, teleconsultations or telemonitoring, and, therefore, qualify as telemedicine. A 2018 market study on telemedicine of the European Commission stated that in almost all member states, reimbursement for telemedicine remained vague or even non-existent.⁴ At the cross-border level, the report notes that the reimbursement issue is even more problematic.

The reimbursement struggles stem from the fact that public benefits still vary significantly among the member states.⁵ The EU member states have parallel public and private health coverage. Most member states provide near-universal health coverage for a core selection of health care.⁶ However, the amount of coverage varies.⁷ These disparities in coverage make it impossible to grant EU citizens an unconditional right for receiving reimbursable health care in another member state. Therefore, it remains up to the member states to decide on both the “basket of health care” to which patients are entitled, specifically, the health care which is reimbursed, and the related financing mechanisms.⁸ To safeguard the national social security systems, the EU legal framework strictly coordinates the reimbursement options for cross-border care, without touching upon the question of which type of health care falls within patients’ basket of health care. It clarifies which member state bears the financial burden for the cross-border care, and when the patient must request prior authorization to qualify for reimbursement. One aim for the codification of the current legislative framework was “modernising and simplifying” the “complex and lengthy” preceding rules.⁹ Initially, the establishment of this framework, both via case law and via legislation, created a convergence among the national social security systems. However, among other reasons, the aging of the EU population, costly technology, and the economic crisis put this convergence under pressure.¹⁰

B Cross-Border Health Care Law

Where a patient receives EU cross-border health care, the patient can choose between two legal bases for claiming reimbursement from the EU member state concerned. Regulation 883/2004 “on the coordination of social security systems”¹¹ (the “Regulation”)¹² provides the first reimbursement basis. The Regulation stems from the free movement of persons, one of the four fundamental freedoms of the EU.¹³ Its aim is to ensure equality between citizens of the providing member state and EU patients receiving care in that member state, by treating EU patients as if they were insured under the providing member state’s public health care system.¹⁴ The reimbursement right embedded in the Regulation co-exists with another reimbursement right, based on the free movement of goods and services, two other fundamental freedoms of the EU.¹⁵ The European Court of Justice (ECJ) established this second reimbursement route via case law which has eventually been codified in Directive 2011/24/EU “on the application of patients’ rights in cross-border healthcare” (the “Directive”).¹⁶ The aim of the Directive is to ensure that patients are entitled to treatment and reimbursement in other EU member states as if they were receiving the treatment in their own competent member state.¹⁷ If both reimbursement routes are available, by default, the Regulation applies over the Directive.¹⁸ However, patients may request otherwise if they prefer to receive reimbursement based on the Directive, if they deem this basis to be more advantageous for their situation.

As the Regulation and the Directive are based on different free movement rights, and as they consequently have different aims, it should be of no surprise that their scope, conditions for admissibility, and procedure also differ. For example, whereas the Regulation only concerns treatment covered by public health care, the Directive can also cover private health care. Hence, the potential interest for patients to opt for one or the other reimbursement basis. The following Table 14.1 provides a general overview of the differences relevant for cross-border telemedicine, which Section II analyses further in detail.

Table 14.1 Regulation versus directive: Differences relevant for telemedicine

	Regulation 883/2004	Directive 2011/24/EU
Scope	Free movement of persons	Free movement of goods and services
Reimbursement tariff	From providing member state	From competent member state
Upfront payment by patient	Generally not, only co-payment	Often
Prior authorization request by patient	Always	Depending on (1) care and (2) choice of competent member state
Recoursea	83.5 percent	16.5 percent
Success ratea	86 percent	75 percent

a European Commission, Directorate-General for Health and Food Safety et al., Data on Cross-Border Patient Healthcare Following Directive 2011/24/EU – Reference Year 2020 (December 2021), https://bit.ly/Directive-data-2020; European Commission, Directorate-General for Employment, Social Affairs and Inclusion et al., Cross-Border Healthcare in the EU under Social Security Coordination: Reference Year 2020 (October 2022), https://data.europa.eu/doi/10.2767/714637; see also infra Sections II.B to II.D.

Overall, the number of patients receiving cross-border care under the Regulation or the Directive, although rising every year, remains low. In 2016, a report estimated that cross-border health care under the Directive and the Regulation cost, respectively, 0.004 percent and 0.1 percent of the EU-wide annual health care budget.¹⁹ In 2019, this increased slightly to 0.01 percent and 0.3–0.4 percent, respectively.²⁰ Although increasing patient mobility as such is not a goal in itself in the EU, the fostering of cross-border eHealth solutions is.²¹ This includes telemedicine. Where these cross-border telemedicine solutions increase, implicitly patient mobility also increases. Despite the low market percentages, it is therefore very relevant to assess a patient’s virtual cross-border reimbursement rights.

C Limitations

The EU cross-border reimbursement framework solely concerns insured patients receiving health care crossing an internal EU border. The EU framework does not concern care provided outside of the EU, as the EU has no competence thereto.²² As for physical health care, care providers using in-home digital diagnostics not established in the EU therefore depend on the reimbursement legislation of the member states individually.²³

The legal framework applies differently to unplanned health care – for example, falling ill during a holiday abroad – and planned health care – for example, going abroad for more qualitative dental care. Under EU law, the more interesting comparator is the situation of planned care, as the outcome in reimbursement options vis-à-vis in-person care is more divergent. Therefore, this contribution focuses on the rules concerning planned cross-border health care, such as a situation where a care provider monitors a patient who is located abroad for potential arrhythmias, using wearables to transfer the relevant heart rate data.

II Regulation v. Directive: Reimbursement Implications for Digital Diagnostics

A Various Situations

In the context of in-home digital diagnostics, there are two main EU cross-border health care situations: Patients residing in the member state where they are insured (situation 1, stagnant patient), and patients residing in a different member state from where they are insured (situation 2, patient insured abroad). In both situations, the patients stay at home to receive virtual diagnostic services from a health care provider established in another member state. To understand the legal consequences thereof, one should distinguish between the “competent member state,”²⁴ the “member state of residence” and the “member state of treatment” (see Table 14.2).

Table 14.2 Member state functions

Concept	Definition
Competent member state	Where the patient is insured.
Member state of residence = Home member state	Where the patient habitually resides.
Member state of treatment = Providing member state	Where the patient receives treatment (for in-person care) OR where the care provider is established (for telemedicine).a

^a Directive 2011/24/EU, art. 3(c) and (d).

Table 14.3 demonstrates what these concepts imply for both situations.

Table 14.3 Stagnant patient versus patient insured abroad

	Competent member state	Home member state	Providing member state	Example
Situation 1 (stagnant patient, receiving telemedicine)	– Competent member state = home member state: Patients have insurance in the member state where they habitually reside. – Patients do not travel to another EU country to receive diagnostic services.		Where the digital diagnostics provider is established.	Patient living and insured in France, monitored for arrhythmias by a care provider established in Italy.
Situation 2 (patient insured abroad, receiving telemedicine)	Where the patients are insured.	– Patients reside in another member state than where they are insured. – Therefore, a cross-border component is in place, even though the patient does not travel to another EU country for receiving diagnostic services.	Where the digital diagnostics provider is established.	Patient living in France but insured in Germany, monitored for arrythmias by a care provider established in Italy.

The different scopes of the Regulation and the Directive have direct consequences for telemedicine. Whereas the Directive explicitly includes telemedicine in its scope,²⁵ guidance published on the website of the European Commission states that the Regulation does not apply to telemedicine, which directly limits the reimbursement opportunities for patients.²⁶ However, considering both the situations of stagnant patients and patients insured abroad, this conclusion should be nuanced to fully reflect all possible scenarios. For situation 1, concerning stagnant patients, the Regulation indeed does not apply, as the patients did not exercise their free movement of persons. Stagnant patients can therefore only rely on the Directive for receiving potential cross-border reimbursement. However, in situation 2, patients do exercise their free movement of persons as they took up insurance in one member state and residence in another member state. This triggers the application of the Regulation. Consequently, contrary to stagnant patients, a patient insured abroad receiving digital diagnostics may qualify for reimbursement both under the Regulation and the Directive. This outcome is similar for physical cross-border health care, where patients can enjoy both legal bases for reimbursement (see Table 14.4).

Table 14.4 Situations triggering application of regulation and/or directive

	Regulation	Directive
Understanding of “cross-border” health care	Free movement of persons	Free movement of services: “healthcare provided or prescribed in a Member state other than the [competent] Member State.”
Situation 1 (stagnant patient)	Does not apply	Applies
Situation 2 (patient insured abroad)	Applies	Applies
Patient receiving physical cross-border care	Applies	Applies

As situation 2 triggers the same legal outcome as for patients receiving physical cross-border health care, this chapter hereafter does not discuss situation 2 separately. The following subsections therefore focus on the comparison between the reimbursement options for in-home digital diagnostics for stagnant patients and for similar in-person diagnostics services, by analyzing the differences in scope and procedure of the Regulation and the Directive. This comparison allows for an assessment as to whether there are potential barriers to cross-border digital diagnostics.

B Price

The Directive generally requires a patient to pay all costs concerning the health care upfront, whereas, under the Regulation, the competent member state generally pays the providing member state directly.²⁷ Consequently, a patient receiving in-person care may solely be required to pay the co-payment, while a stagnant patient is more at risk of having to pay for the full treatment at the outset. The latter may be problematic concerning expensive treatments.

Depending on the type of health care sought, patients may have an advantage relying on the Regulation or the Directive, as both legal instruments calculate reimbursement rates on another basis. Under the Regulation, the tariff of the providing member state applies, whereas under the Directive, the tariff of the competent member state applies. As stagnant patients cannot receive reimbursement for telemedicine based on the Regulation, stagnant patients cannot benefit from potentially preferential reimbursement rates available in the providing member state, whereas patients having recourse to the exact same diagnostic services in person do have access to such rates. Where a patient receiving in-person treatment can perform forum shopping based on the Regulation, a stagnant patient cannot.

C Procedure

Both under the Regulation and the Directive, the competent member state may require a patient to seek prior authorization to receive reimbursement for cross-border care. At first sight, the prior authorization scheme under the Regulation seems stricter than the one under the Directive. Specifically, under the Regulation a patient must always request prior authorization, whereas under the Directive a member state can only require a patient to ask for prior authorization regarding specific types of health care. Currently, twenty of the EU member states have such a limited prior authorization scheme in place under the Directive.²⁸ Regarding telemedicine, some of these prior authorization bases of the Directive may apply more easily: For example, a member state could argue that, because of the distance, telemedicine presents “a particular risk for the patient” or gives rise “to serious and specific concerns [regarding] the quality or safety of the care.”²⁹ Also, a third category of justifications for requesting prior authorization may be relevant. The Directive allows a member state to require prior authorization to control costs and avoid waste of resources for care requiring “highly specialized and cost-intensive medical infrastructure or medical equipment.” A member state may, therefore, refuse the reimbursement of digital diagnostics to ensure the valorization of its national health care investments. At EU or member state level, there is no uniform approach regarding the definition of “highly specialized and cost-intensive medical infrastructure or medical equipment.”³⁰ However, a 2022 study indicated that, half of the time, member states harness this justification for requiring prior authorization regarding expensive imaging techniques, such as CT and PET scans, MRI, angiographies, or gamma knife.³¹ Although such imaging techniques currently cannot be replaced by digital alternatives, they could serve as inspiration for the protection of other cost-intensive traditional imaging techniques. Therefore, where digital diagnostics are introduced to replace imaging techniques, the probability increases that other member states will require prior authorization, trying to limit the financial risk of stagnant patients seeking recourse to these virtual diagnostic services over traditional imaging techniques. The protection of the health care system, indeed, is the main reason for member states to implement a prior authorization scheme. In conclusion, telemedicine seems to fulfill the justifications under the Directive more easily, rendering it easier for member states to request prior authorization for such health care. Specifically, regarding digital diagnostics that would replace traditional imaging techniques, member states may fear for the waste of their national health care resources as cross-border health care increases in the EU. They may, therefore, increasingly try to request prior authorization for digital diagnostics under the Directive, as a barrier against such financial risk.

The Regulation and the Directive also have different procedures for refusing such prior authorization. Under the Regulation, the competent member state cannot refuse authorization if the national public health care of the home member state includes the health care requested, and if that care “cannot be given […] within a time limit which is medically justifiable.”³² Under the Directive, the potential grounds for refusal are similar and formulated the other way around: A member state is only allowed to refuse authorization for specific, limited reasons. In a telemedicine context, a member state could again argue that the provision of health care at a distance raises concerns regarding the quality thereof, relying on the justification that the patient may be exposed to a “patient-safety risk that cannot be regarded as acceptable” or that the health care raises serious and specific concerns regarding national standards and guidelines on quality of care and patient safety. Furthermore, as for the Regulation, a member state can rely on the fact that it can provide the health care “within a time limit which is medically justifiable.” For the latter ground for refusal, reimbursement depends on the interpretation of the concept of a “medically justifiable time limit” for providing diagnostic services. Both the Directive and Regulation stipulate, in line with the case law of the ECJ, that such assessment should focus on the individual situation of the patient, considering the patient’s current state of health and the probable course of the illness, and the Directive specifies that restrictions should be limited to what is necessary and proportionate.³³ The proportionality test will include the availability of digital diagnostics, and the outcome of such an assessment will determine how far a member state is allowed to protect its investments when they are surpassed by more innovative techniques in other member states.

Even though, at first sight, the Regulation’s prior authorization scheme may seem stricter, as it is mandatory for all cross-border care, eventually, everything depends on the approach of the competent member state. First, although the reimbursement route via the Directive may seem more accessible as, contrary to the Regulation, it does not always require prior authorization, member states may impose prior authorization under the Directive more swiftly for telemedicine – for example, where digital diagnostics would replace traditional imaging techniques – to protect their national health care investments. Second, member states can refuse authorization on similar grounds under the Regulation and the Directive, namely that the competent member state can offer the treatment within a time limit that is medically justifiable. Third, although the Directive does also list other potentially relevant refusal grounds (namely, where digital diagnostics qualify as an unacceptable patient-safety risk or as raising serious and specific concerns regarding respecting national standards and guidelines on the quality of care and patient safety), member states may take such refusal grounds into account under the Regulation too, even though the Regulation does not explicitly refer to them. In conclusion, the criteria adopted by the member states determine whether the prior authorization scheme of the Regulation or Directive is more lenient for patients requesting cross-border care. Where the criteria under the Regulation would be more lenient than those of the Directive, the reimbursement disparity between stagnant patients and patients receiving in-person diagnostics becomes bigger.

D In Practice

Analyses of the recourse made to the Regulation and the Directive in the past years consistently demonstrate that patients submit far more prior authorization requests under the Regulation than under the Directive.³⁴ For example, two reports from the European Commission describing the EU cross-border health care landscape under the Directive and Regulation in 2020 specify that member states reported 5,409 requests under the Directive,³⁵ compared to 27,386 requests under the Regulation.³⁶ Consequently, only around 16.5 percent of the reported prior authorization requests are based on the Directive. This discrepancy stems partially from the fact that the Directive does not always require prior authorization. However, an analysis of the EU-wide annual health care budget shows that in 2016, the EU spent twenty-five times more budget under the Regulation than under the Directive,³⁷ figures unrelated to whether patients have to ask for prior authorization or not. As discussed, a priority rule is in place favoring the application of the Regulation over the Directive.³⁸ This default application of the Regulation may partially explain the discrepancy in recourse toward the different reimbursement routes. However, such a priority rule also implies that the advantages of the Regulation set out in this section apply automatically to patients receiving in-person treatment, anchoring their added value even more compared to cross-border health care for stagnant patients excluded from the scope of the Regulation.

The success rate for prior authorization requests for the two reimbursement routes is more comparable: In 2020, 75 percent of the requests were authorized under the Directive,³⁹ while under the Regulation, 86 percent of the requests were authorized.⁴⁰ Still, there is an 11 percent higher success rate in favor of the Regulation procedures, which in absolute numbers is considerable, given the Regulation’s wider applicability.

Finally, it is worth comparing the reasons for refusal of authorization, even though the reports state that not many member states were able to provide such details. Both under the Regulation (53 percent) and the Directive (71.4 percent) the main reason for which member states refused authorization was that the cross-border treatment applied for could be provided in the home or competent member state, respectively, within a medically justifiable time limit.⁴¹ Further, member states only rarely refuse because of quality and safety concerns: They only reported one such case in 2022 under the Directive, and the report covering the Regulation does not even mention this refusal ground. Time will tell whether the member states will attempt to rely on such refusal grounds when telemedicine becomes more prominently available.

For stagnant patients, this implies that they have no access to the most frequented reimbursement route. The remaining reimbursement route is also less successful. Furthermore, member states refuse more frequently on the basis that they can provide treatment within a medically justifiable time limit, which is of importance for the example of cross-border digital diagnostics competing with traditional imaging techniques.

III Practical Implications

This section describes the potential consequences of the rules set out in Section II for the various stakeholders involved: The patients, the telemedicine providers, and the EU member states.

A Patient Perspective

The EU health framework takes a different approach toward stagnant patients and patients receiving cross-border care in person. Stagnant patients cannot select the most favorable rate among all potential providing member states, while patients crossing a border for the same care in-person can, even if it concerns the exact same diagnostic service. This is a disadvantage for elderly patients and severely ill patients, who are less mobile. In addition, there is a higher burden for stagnant patients to get access to care, as generally they must pay the full cost of the health care upfront. The Regulation generally does not require patients to pay upfront. Therefore, telemedicine will be less accessible for less wealthy patients. They may not be able to pay the full price upfront under the Directive, and they neither have the means to cover travel costs upfront for receiving the care physically in another country under the Regulation.

At first glance the procedure under the Directive may seem more favorable as the Directive does not always require prior authorization. However, everything depends on the criteria imposed by the member states. The grounds for refusal of prior authorization also depend primarily on the approach of the competent member state. Furthermore, the default application of the Regulation pursuant to the priority rule combined with the higher success rate reinforces the weaker reimbursement position of stagnant patients. As telemedicine solutions are booming, the discrepancy in reimbursement options between a stagnant patient and a patient receiving in-person cross-border diagnostics will become more apparent.

B Telemedicine Solution Providers’ Perspective

The EU spectrum of telemedicine solution providers is diverse: The main actors are telecom companies, Big Tech companies, medical device manufacturers, pharma companies, and start-ups.⁴² Their development of telemedicine solutions holds great potential for society as it can create a scale advantage: A 2018 European Commission study concluded that “the higher the share of telemedicine, the more cost-effective wide-scale deployment becomes.”⁴³ The increased use of telemedicine reduces the total cost of the patient journey and the mortality rate, and increases life quality. Telemedicine can lead to the integration of, for example, e-visits to doctors for routine investigations, but could also create a market for innovative or niche treatments, as it enables reaching a crucial minimum number of patients. However, the 2018 study states that reimbursement is key to speeding up success.⁴⁴ Therefore, the EU cross-border reimbursement challenges are a de facto limitation of the potential scale advantage for telemedicine solution providers. A lack of interoperability across a fragmented EU health care market reinforces this limitation.⁴⁵

Consequently, if a company develops a diagnostics solution and releases it on the EU market, contradictorily, it may have a greater reach if offered physically in the member state which approved such reimbursement, rather than virtually. This way the Regulation is applicable too, and EU patients can access the diagnostic services in a more diverse, reimbursable way. The existing EU reimbursement system may therefore have a retarding effect on the development of the telemedicine market in the EU.

C EU Member State Perspective

The competent member state can decide to exclude cross-border in-home digital diagnostics from reimbursement because of budgetary concerns. When arguing against reimbursement for cross-border health care, member states traditionally state that the measure is necessary for “safeguarding the financial balance of the social security system.”⁴⁶ Cross-border telemedicine may indeed cost money. However, telemedicine may also be cost-effective for the member state.⁴⁷ When assessing whether cross-border reimbursement decisions compromise the sustainability of the social security system, member states should consider whether the advantages of cross-border digital diagnostics counter the potential cost of opening the reimbursement system further. Even though opening up the reimbursement scheme to certain cross-border telemedicine solutions requires the dedication of extra budget for that telemedicine solution, the solution provided could be substantially more cost-effective than the existing in-person alternatives – for example, analysis via data captured by a wearable instead of an expensive scan. Therefore, the overall balance for the member state could be positive, despite covering the reimbursement of both the in-person solution and the telemedicine alternative. The 2018 telemedicine market study noted that “a lack of willingness to adopt new solutions is a barrier to innovation.”⁴⁸ The member states’ adherence to known solutions could therefore hinder the integration of telemedicine solutions in the reimbursed “basket of health care.”

In addition, as mentioned in the introduction, the number of patients requesting health care under both the Directive and the Regulation remains low. Therefore, the real-life impact of telemedicine on the financial balance of a member state’s social security system is still low, even though patients are becoming more independent and increasingly look for care options across borders. The surge of telemedicine and digital diagnostics will require member states to perform thorough assessments regarding their financial benefits and risks, including cost effectiveness. If cross-border patient numbers remain low, the member states should also consider this more limited impact when assessing reimbursement feasibility.

IV Conclusion

In-home digital diagnostics are a form of telemedicine. The reimbursement of cross-border telemedicine constitutes specific reimbursement challenges in the EU. Patients insured in their home member state only qualify for reimbursement of cross-border telemedicine under Directive 2011/24/EU, whereas patients receiving the same care in person abroad qualify for reimbursement both under Directive 2011/24/EU and under Regulation 883/2004. Opting for one reimbursement basis or the other has an impact on the flexibility regarding the price of the health care sought, the potential upfront payment, and the prior authorization procedure which they must follow. Consequently, exclusion of the scope of the Regulation may disadvantage patients receiving telemedicine, as they have less reimbursement options. In addition, the Directive is the less frequented and less successful reimbursement route. Telemedicine solution developers too may face challenges, as the current reimbursement system deprives them partially of the scale advantages linked with telemedicine. Finally, the EU member states need to scrutinize whether they will reimburse in-home digital diagnostics or not, considering the cost-efficiency of telemedicine and the limited recourse made to telemedicine by patients. The overall EU cross-border reimbursement framework has again become “complex and lengthy,” especially when considering both in-person care and telemedicine. The legislator will need to consider whether the increase in telemedicine will again necessitate a modernizing and simplifying effort for this legal framework.