Telemedicine Insurance Reimbursement Is A Bad Idea - At Least for Now
August 31, 2015
An article I stumbled upon by Sarah Jacobson of “Rock Health” provides an excellent survey of the regulatory state of telemedicine. It details the federal and state regulatory environment and is generally hopeful about telemedicine’s future prospects. As an entrepreneur and CEO of a telehealth service, this should be music to my ears. But at least one part of her article isn’t.
Ms. Jacobson writes, “Definitional clarity is needed on the types of services covered and their reimbursement rates compared to in-person services.” More than 20 jurisdictions and in some circumstances Medicare and Medicaid now require insurance carriers to cover telemedicine the same way as in-office visits. This puts telehealth at a huge disadvantage--not the advantage that the states and the feds were hoping to give their citizens.
Telehealth care is far less expensive to deliver than in-person care. Making it subject to the same co-payment (or full payment under a high-deductible healthcare plan) as an office visit is bad policy. What will encourage patients to break their old habits, if telemedicine costs the same as an office visit? One of the most intractable challenges of promoting new ways of doing things is that old habits ebb ever so slowly. Patients will keep going to the ER at 3 a.m., even though 71% of such visits (at least for patients with employer-sponsored plans) are unnecessary.
The Centers for Disease Control and Prevention report that 136.3 million visits to ERs occurred in 2011 (the most recent year for which I could find decent statistics). While the uninsured accounted for a disproportionate share of those visits in past years, the proportion of uninsured patients has declined dramatically with the passage of the Affordable Care Act. But even assuming that half those visits were by those with employer-sponsored health insurance plans, the potential savings stemming from telemedicine triage would be some $70 billion annually--just under 10 percent of the $750 billion of annual waste in the U.S. healthcare system at an average ER visit cost of slightly more than $1,000. While it is unlikely that those savings could be fully realized in a healthcare system where choice remains and telemedicine cannot be forced, it is certainly an attractive brass ring to grab for.
How do we do this? Payers (employers and the government) should fully cover the cost of telemedicine services until using telehealth has become a habit. Within a few years, the convenience of telemedicine will sell itself. No one wants to go to the ER at 3 a.m. or travel to a doctor’s office during work hours and wait with other sick people if they know there is an effective alternative. Once introduced and trusted, the convenience of telehealth solutions is undeniable and patients become regular users. In the meantime (and, really, forever after), payors will save billions of dollars by providing the right healthcare via the right medium at the right time. And we patients will have a better, less expensive healthcare experience.