In July 2024, Pennsylvania enacted two significant pieces of legislation relating to telemedicine and physician noncompetition agreements that will have a meaningful impact within the healthcare delivery system with the state.
What You Need to Know:
- Act 42 expands the use of and ensures reimbursement for telemedicine services provided by a health care provider in Pennsylvania.
- The Fair Contracting for Health Care Practitioners Act bans noncompete covenants in employment agreements with certain health care practitioners.
- Both laws are important statutory developments in Pennsylvania that will significantly impact Pennsylvania’s provider community.
Act 42 (formerly Senate bill 739) will expand the use of and ensure reimbursement for telemedicine services provided by a health care provider in Pennsylvania (the “TeleMed Act”). The TeleMed Act applies to asynchronous interactions, synchronous interactions, and remote patient monitoring (each of which are defined in the TeleMed Act). The TeleMed Act specifically requires health insurance policies (again, a defined term in the TeleMed Act) to “provide coverage for medically necessary health care services provided through telemedicine and delivered by a participating network provider who provides a covered health care service through telemedicine consistent with the insurer’s medical policies.” Importantly, the TeleMed Act mandates that, “[a] health insurance policy may not exclude a health care service from coverage solely because the health care service is provided through telemedicine.” A health insurance policy includes policies issued by an insurer that provides medical or health care coverage and dental and vision coverage, but excludes from the definition multiple types of other policies, including a worker’s compensation policy, automobile medical payment policy, and an accident-only policy.
The TeleMed Act also specifies that payment by an insurer cannot be conditioned upon the use of an exclusive or propriety telemedicine technology or vendor. Moreover, the TeleMed Act requires a provider who provides health care services through telemedicine to be subject to the same standard of care that applies to health care services in an in-person setting.
The TeleMed Act was signed by Governor Shapiro on July 3, 2024, and takes effect as follows:
- For health insurance policies for which rates or forms are required to be filed with the Pennsylvania Department of Human Services or the Federal Government, the TeleMed Act’s requirements take effect once those rates or forms are first filed on or after 180 days following October 1, 2024.
- For health insurance policies for which neither rates nor forms are required to be filed with Pennsylvania Department of Human Services or the Federal Government, the TeleMed Act’s requirements apply to a policy issued or renewed on or after 180 days following October 1, 2024.
Telemedicine has grown in use during the past decade and there was a pronounced spike in usage during the COVID-19 pandemic. The TeleMed Act establishes requirements for insurers to reimburse for telemedicine services that provide the same standard of care for in-person services, as such, providers and patients will likely embrace its passage.
The second meaningful piece of health care legislation enacted is entitled the Fair Contracting for Health Care Practitioners Act (the “FCHCPA”). The FCHCPA prohibits a “noncompete covenant” (a defined term in the FCHCPA) in employment agreements entered into after January 1, 2025 (the Effective Date) applying to medical doctors, doctors of osteopathy, certified registered nurse anesthetists, certified registered nurse practitioners, and physician assistants, as “contrary to public policy.”
The lone exception to the broad ban on a noncompete covenant in the FCHCPA is if the length is no more than one-year, provided that the health care practitioner was not dismissed by the employer. This exception does not include any geographic (mileage or other) parameters.
The FCHCPA specifically excludes from the ban on noncompete covenants if it was entered into with a health care practitioner who has an interest in a business entity as a direct result of: the sale of an ownership interest or all or substantially all of the assets of the business entity; a transaction resulting in the sale, transfer, or other disposition of the control of the business entity (including by merger or consolidation); or the health care practitioner’s receipt of an ownership interest in the business entity.
While the FCHCPA imposes a general ban on noncompete clauses, it does expressly permit an employer to recover “reasonable” expenses from a health care practitioner if the expenses are: directly attributable to the health care practitioner and accrued within three years prior to separation; related to relocation, training and establishment of a patient base; or amortized for up to five years from the data of separation by the health care practitioner.
The FCHCPA also includes patient notifications requirements. Within 90-days of a health care practitioner separating from an employer, the employer must notify the health care practitioner’s patients (those that were seen within the past year and had an ongoing outpatient relationship for two or more years) of: (i) the health care practitioner’s departure; (ii) how the patient may transfer the patient’s health records to a health care practitioner other than with the employer, if the patient so chooses; and (iii) that the patient may be assigned to a new health care practitioner within the existing employer if the patient chooses to continue receiving care from the employer.
Finally, the FCHCPA requires the Health Care Cost Containment Council to perform study relating to the impact of the FCHCPA on or before January 1, 2028.
The FCHCPA was enacted by Pennsylvania following additional federal and state activity with respect to noncompete covenants generally, including the Federal Trade Commission’s Rule Banning Noncompetes issued on April 23, 2024 (the “FTC Rule”) (we discussed the FTC Rule’s impact for hospitals, health care practices and physicians in a prior alert). The state-by-state landscape for noncompete agreements – whether health care specific or industry agnostic – continues to change.
It is not clear if the FTC Rule will take effect (several suits have been filed, including one in Pennsylvania) or if any party will challenge the FCHCPA. If either or both the FTC Rule or the FCHCPA survive legal challenges, there will likely be a new landscape for Pennsylvania’s health care providers to navigate within an already constantly changing health care delivery system. The TeleMed Act and the FCHCPA are two very important statutory developments in Pennsylvania that will impact Pennsylvania’s provider community. Providers, payors and patients need to understand the importance of both statutes and how they both will impact the delivery, payment and accessibility to care.
