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How a Lawsuit Could Impact the Future of Health Care in Texas

In many ways, telemedicine represents the future of health care—yet some fear new rules in Texas could stunt its growth here.

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Telemedicine TK.
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Imagine you’re sick, or you think you might be sick, and you want to talk to a doctor. Instead of waiting a week or two to see your primary care physician, you just open an app on your phone or computer and within minutes you’re video-chatting with a doctor or nurse. Maybe you even have a medical device, like a blood pressure monitor, that connects your computer and transmits images and data to your doctor in real time while you’re talking.

That’s not science fiction. It’s called telemedicine, an $18 billion worldwide industry and one of the fastest-growing sectors in health care. In many ways, telemedicine represents the future of health care, promising to do for medicine what Uber and Lyft have done for transportation. Across the country, the use of telemedicine is expanding as consumers realize how much more convenient it is to talk to a doctor when and where they choose. It’s also a lot cheaper. The average telemedicine visit costs between $40 and $50, compared to the average in-person doctor’s visit, which is about $100 more—not counting the cost of the time and effort it takes to travel to and from a brick-and-mortar doctor’s office.

But here in Texas, where we have an infamous shortage of doctors and nurses, telemedicine has hit a snag. New rules promulgated by the Texas Medical Board last year prompted Dallas-based Teladoc, the largest telemedicine firm in the country, to file a federal antitrust lawsuit against the board. Specifically, the medical board’s new rules (PDF), approved in April 2015 but blocked by a federal judge’s preliminary injunction just days before they were set to take effect, stipulate how physicians in Texas can establish a “doctor-patient relationship” with new patients before engaging in telemedicine. A patient must either visit the doctor in person or meet “face-to-face” over video conference. But the video conference must be at an approved medical site like a hospital, clinic, or a fire station, and there must be a “patient site presenter” on hand, like a nurse or a physician’s assistant. In other words, you can’t just turn on your computer at home, login to a telemedicine app and be connected with a doctor. Put another way, in Texas you have to go to a medical clinic to be seen by a doctor, even if the doctor isn’t there.

This presents a substantial obstacle for Texans who are interested in using telemedicine. Many people, especially younger folks, simply won’t go to a doctor’s office, either because they don’t have what doctors and policymakers call “a medical home,” or because they don’t have health insurance.

So in Texas, which has the highest uninsured rate in the nation, on-demand telemedicine could be a game-changer. It holds the promise that, instead of forgoing medical care, more people might actually seek out a doctor when they’re sick.

All of this is why the antitrust lawsuit Teledoc filed has sparked so much debate—and confusion. Teladoc, which says Texas was already among the most restrictive states in the country for telemedicine, claims the new rules will hamstring telemedicine firms and limit patients’ access to healthcare. The medical board claims just the opposite. It views its new regulations as an expansion of telemedicine, not a restriction of it. Meanwhile, as the case wends its way through federal courts, a consortium of health care and tech groups is calling on the Texas Legislature to step in and settle the matter when lawmakers convene in Austin early next year.

That stands in stark contrast to most other states, which have been working to adjust their laws to accommodate new telemedicine technologies. Indiana, for example, passed a law in March that allows doctors to establish a doctor-patient relationship over video conference, and even prescribe medications, without requiring the patient to go to a clinic first or see the doctor in person. Same goes for Virginia, whose medical board last year issued guidelines for telemedicine that allow a doctor-patient relationship to be established remotely as long as the standard of care is met. Like Indiana and a host of other states, Virginia also allows doctors to prescribe medication remotely, “at the professional discretion of the prescribing practitioner.” And in all these states, patients can send pictures, videos, or texts messages to doctors they have never met before.

That’s not the way it works in Texas, which received among the worst grades of any state in a 2015 ranking by the American Telemedicine Association. In the category of “physician-patient encounters,” Texas got an F, along with Arkansas and Alabama, which Texas tied for the worst overall grade—C. The reason for the failing grades, according to the ATA, was because these states “create the most stringent clinical practice rules for telemedicine providers when compared to in-person practice.”

The Texas Medical Board doesn’t see things that way. In a press release last April, the board said its new rules “expands opportunities” for telemedicine and represent, “the best balance of convenience and safety.” The only scenario that the new rules prevent, the release stated, “is one in which a physician treats an unknown patient using telemedicine, without any objective diagnostic data, and no ability to follow up with the patient.” At a Senate Health and Human Services Committee hearing in June, the board’s executive director, Mari Robinson, told lawmakers that telemedicine is “absolutely allowed in the State of Texas,” and that “there’s a lot of disinformation about that.”

The board declined an interview request for this article and instead sent a link to a one-page explainer (PDF) of its telemedicine rules, which don’t address the differences between Texas and other states. Those differences are significant, and not just because of the rules passed last year. Even back in 2010, the medical board issued rules for telemedicine that require a clinician to be present with the patient during a video conference, and only allows doctors to use telemedicine with patients they have seen in person within the last year.

That’s why, for the past six years, Teladoc has offered video-conferencing services in 48 states, but not in Texas. The Texas Medical Board claims its rules are designed to ensure patient safety, but Teladoc’s chief executive officer, Jason Gorevic, says the company’s data and track record show that remote care is safe. Not only has Teladoc never had a medical malpractice claim, but it boasts a 95 percent customer satisfaction rating and a customer retention rate of more than 90 percent. The key to Teladoc’s success, says Gorevic, is empowering patients. “Patients are pretty good at deciding when it’s appropriate for a telehealth visits as opposed to an in-person visit. It’s true that we can’t suture a laceration or set a broken bone, but for a host of other things it’s highly effective.” At the same time, the company keeps a close eye on its doctors by conducting monthly reviews, analyzing prescribing patterns, and tabulating customer satisfaction scores.

Now, Teladoc is claiming that the new raft of medical board rules regarding doctor-patient relationships amount to a violation of federal antitrust law by illegally limiting competition. U.S. District Judge Robert Pitman, who issued the injunction last May, indicated Teladoc’s argument would likely succeed. The case is now before the Fifth U.S. Circuit Court of Appeals, and in September, the Federal Trade Commission filed an amicus curie brief siding with Teladoc, writing, “There is no evidence that any disinterested state official reviewed the TMB rules at issue to determine whether they promote state regulatory policy rather than TMB doctors’ private interests in excluding telehealth—and its lower prices—from the Texas market.”

There’s good reason to think Judge Pitman is right about the company’s chances of success. Teladoc’s legal argument hews closely to a 2015 Supreme Court ruling that found the North Carolina Board of Dental Examiners violated antitrust law when it tried to shut down teeth-whitening kiosks under the guise that such services consisted of “the practice of dentistry,” and therefore could only be performed by dentists. The Supreme Court ruled that the dental board, because it is controlled by dentists, was essentially behaving like a cartel, using its regulatory muscle to crack down on non-dentist competitors. Any board consisting of a majority of market participants—the Texas Medical Board has 19 members, 12 of whom are physicians—would need to have direct state oversight to guard against this sort of thing, the Court ruled. In his majority opinion, Justice Anthony Kennedy wrote that antitrust law “applies to this case with full force, particularly in light of the risks licensing boards dominated by market participants may pose to the free market.”

Teladoc claims the two cases are more or less identical. “We think the Supreme Court case is a good example of what the medical board is trying to do,” says Adam Vandervoort, the company’s chief legal officer. “It recognizes that members of a profession are subject to self-interest.” When he issued the injunction last year, Judge Pitman stuck closely to the Supreme Court ruling, writing that state oversight of a regulatory board must include the power to override or change board decisions. The way the State of Texas currently oversees the medical board does not meet that requirement, Pitman argued. Although the Legislature exercises oversight of the board through the Sunset Commission, which reviews state agencies once a decade, lawmakers don’t have the ability to override or change individual board decisions or rulings. Of course, state and federal courts can do this through judicial review, and so can the State Office of Administrative Hearings. That’s how the medical board ended up in a lawsuit with Teladoc to begin with.

But not everyone agree the two cases are similar. Rocky Wilcox, general counsel for the Texas Medical Association, said North Carolina’s dental board was “ripe for challenge,” in part because six of its eight members are, by law, licensed dentists. Moreover, the Texas Medical Association—a group with significant sway in the capital—has publicly supported the medical board’s telemedicine rules on the merits. “There are a lot of doctors in Texas that use telemedicine every day,” says Wilcox. “We’re just trying to figure out what’s the safe way for that technology to be used.”

But ironically, the question of regulatory overreach at the heart of the lawsuit might well be settled not in federal court but in the State Legislature. Texas eHealth Alliance, a group that includes major organizations like the Texas Hospital Association and the University of Texas (and Teladoc), released a draft bill (PDF) in July that would resolve the legal standoff by changing state law to allow doctors to establish a relationship with patients by “synchronous audio-visual interaction” or a variety of other technologies. Doctors wouldn’t, however, be allowed to rely solely on telephone calls, email, fax, or internet questionnaire. That would effectively codify in statute some of the regulations the medical board has previously issued, while repudiating the requirement that doctors must either meet patients in person or speak to them via video conference with a clinician present in order to establish a relationship.

The group’s executive director, Nora Belcher, says the draft legislation is based on the Indiana law, and that their goal is to create a “simplified regulatory framework, something different than what the medical board has done.” But Belcher is quick to add that, “This isn’t about the lawsuit for us. It’s about pulling up and looking forward and planning for the future because this technology is moving very quickly, and demand for telemedicine is exploding.” Even groups that support the medical board’s rules, like the Texas Medical Association, are taking a look at Indiana’s law and the draft bill from the Texas eHealth Alliance. “The general feeling is that the legislature is going to look at this issue and we want to be ready,” Wilcox says.

The Legislature seems at least somewhat aware that it needs to step in. Last session, both the Senate and House issued interim charges to study telemedicine and give recommendations about how to improve it. To date, most of these hearings have steered clear of the lawsuit and spent considerable time hearing testimony about how great telemedicine is in Texas. To be fair, Texas was one of the first states to invest in telemedicine technology in the 1990s, and since then has tried to encourage its use in rural areas where medical specialists are scarce. One pilot program, supported by state funds and run by the Texas Tech University Health Sciences Center in Lubbock, will equip ambulances in rural West Texas with technology that allows first responders to communicate with physicians at regional trauma centers on a secure internet connection and transmit patient data in real-time while en route to a trauma center or an emergency room.

Those are real advances, and will likely save some lives in rural communities. But the big gains from telemedicine will come from hundreds of thousands of consumers using the services for routine care—and doing so on their own initiative from their homes and offices. To make that possible in Texas, lawmakers might need to act. During the 2015 session, Representative Jodie Laubenberg filed several telemedicine bills, including one that would have prevented the medical board from issuing the rule requiring a face-to-face consultation if the physician had never seen the patient. The bill was introduced and referred to the House Public Health Committee, but after the board published its new rules in April and Teladoc sued, Laubenberg, pulled it. “If something’s going to court, we stand back,” she said—a line that’s since been repeated in interim hearings on telemedicine.

But Laubenberg, along with Teladoc and many other Texas-based healthcare firms, thinks the legislature should step in once the court case is settled. They think this is about something much larger than a single antitrust suit. “Over the last five to ten years, telemedicine changed from a promise to a reality,” says Gorevic. “Now we’re starting to see the benefits. Today it’s becoming part of the fabric of the healthcare delivery system.” Just how much a part of the fabric it becomes in Texas depends not only on the Fifth Circuit Court, but how well lawmakers can work with regulators once the dust settles. Right now, the tide seems to be turning in telemedicine’s favor. In September, Robinson, the medical board’s executive director since 2001, announced she’s leaving the board to direct the telemedicine program at University of Texas Medical Branch in Galveston.

For lawmakers like Laubenberg, the issue is about something yet greater than healthcare: the degree to which regulatory boards should make up rules for their industries. “I’ve never been a big fan of agency rulemaking. They tend to go rogue,” she said. “I think the medical board thought they could get ahead of it, but the issue’s too big, and they couldn’t do it.”

John Daniel Davidson is a writer in Austin, Texas, and a senior correspondent at The Federalist.

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  • I am really surprised that Texas Monthly would publish this piece by a hack for the Texas Public Policy Foundation. John is the latest victim of the Teladoc PR blitz and you gave him and them a forum for publicity. They’ve managed to convince the rest of the country that Texas is anti-telemedicine when, in truth, we’re working hard on many fronts to make it work well for this state.

  • dbob

    What a wonderfully unbiased writer you have here covering this important topic for your publication — http://www.cato.org/multimedia/daily-podcast/texas-doctors-organize-against-innovation

  • Gary Denton

    Sorry, there is huge potential for abuse if a doctor never sees a new patient but can prescribe anything after the patient initiates a video call. What a way to get controlled substances. This is a hack PR piece for TPPF and Teledocs.
    Medical care by video is the future, but only after reasonable precautions are put in place.

    • Eric

      Gary, I understand your concern, but telehealth physicians cannot prescribe controlled substances. The service is for issues like sinus infections, allergies, poison ivy, etc., and the prescription rate is actually a little lower than it is in in-office visits with a doctor.