Pay to Play: The End of Net Neutrality and Its Effect on Telehealth

Hospital Industry Viewpoint

January 26, 2018

The repeal of net neutrality could force telehealth providers into more costly internet fast lanes. That could mean more financial pressure on providers, especially those in rural areas. Lobbying to create exemptions for telehealth traffic and pursuing joint ventures to defray costs are among the steps providers can take to address these realities.

The Federal Communications Commission (FCC) narrowly voted 3-2 on December 14, 2017, to repeal net neutrality regulations, which prevented internet service providers (ISPs) from prioritizing, blocking, or otherwise interfering with web content. Under the existing rules, ISPs could not provide faster speeds to certain traffic; instead, all internet traffic existed in the same “lane.” With the net neutrality deregulation, ISPs may now permit specific types or sources of internet traffic to receive priority access, likely in exchange for higher fees.

For telehealth, the changes to net neutrality are a mixed bag. Because many forms of telehealth, including interactive audio/video connections, are data intensive, this could result in crucial service interruptions and poorer clinical outcomes if telehealth services are pushed to a slower “lane.” On the other hand, if telehealth providers and/or their patients are willing to absorb the additional costs of “paid prioritization,” telehealth services would be given priority access, ostensibly with better data processing and resolution, particularly in rural areas with less developed internet infrastructure. However, it’s that issue of paid prioritization that is the sticking point for many telehealth providers. Although ISPs have signaled that they will not immediately establish internet fast lanes, all signs suggest that they will. Indeed, even FCC Chairman Ajit Pai said, “By ending the outright ban on paid prioritization, we hope to make it easier for consumers to benefit from services that need prioritization—such as latency-sensitive telemedicine.” (Read the full remarks here.)

Effectively, telehealth providers may be forced into agreeing to use internet fast lanes. If they don’t, services provided on these platforms may fail to comply with myriad state regulations that require telehealth providers to furnish the same standard of care as in-person providers. It could also increase the medical malpractice risks of telehealth providers should an error in diagnosis or treatment occur due to lag or a connection-induced miscommunication.

This new reality puts an additional strain on telehealth providers already fighting for increases in reimbursement. Although many states have enacted various forms of parity laws to require insurers to cover services provided through telehealth, systemic limitations on reimbursement as well as limited coverage by Medicare means that telehealth providers are running slim margins. Increasing costs by way of ISP prioritization fees will only cut into the bottom line further, in many cases risking future investment in this technology.

Ironically, rural telehealth providers will likely carry the heaviest burden as a result of net neutrality repeal. Often lacking the financial ability to meaningfully invest in telehealth technologies, rural physicians and hospitals may not be able to economically justify starting, expanding, or even maintaining a telemedicine program if they must incur additional ISP fees to just to get off the ground.

Individual patients also may suffer from net neutrality deregulation, as it is not clear how ISPs plan to control traffic prioritization to individual consumers in their homes. In other words, even if a telehealth provider is willing to pay for prioritization, there may still be connectivity issues in an interactive telehealth encounter if the patient opts not to pay for prioritization. While the FCC has the power to make exceptions for certain types of traffic, it has not signaled that it will do so and would likely be difficult, in practice, to apply those exceptions to in-home/mobile telehealth traffic.

What Can Telehealth Providers Do Now?

Beyond hoping that the FCC will reverse course or that a legislative fix will soon be enacted, there are several things telehealth providers can do now to address paid prioritization. First, lobbying efforts to the FCC to create exemptions for telehealth traffic are critical. Although Mr. Pai’s comments suggest that the FCC majority actually intends to subject telehealth vendors to paid prioritization, it is possible that the other two members of the majority could be swayed to establish a special exception. Most recently, the FCC did this with respect to its Telephone Consumer Protection Act (TCPA) guidance, allowing pharmacies to communicate with patients regarding “health care” messages without being subject to TCPA’s strict consent requirements. Rural providers interested in pursuing telehealth technologies meanwhile may consider banding together to help defray the costs associated with initial investment and ISP prioritization fees. Joint venture outpatient centers may offer the opportunity for rural hospitals and health systems to establish state-of-the-art telehealth units without breaking the bank. In addition, many telehealth platform vendors should already be assessing their bottom lines to calculate how vendors and providers can share this new financial burden to make their telehealth program feasible.


Washington, DC
Jacob Harper
Albert Shay