Does telemedicine improve quality, reduce costs?

Telemedicine is hitting its adolescence-quickly gaining steam but leaving those around it a little unsure of just how well it will work. For patients, telemedicine offers better access to providers; for payers, it is an effective way to monitor and offer early intervention; and for providers, it is an easy way to connect with patients more often.

Still, concerns over privacy, security, reimbursement, and costs remain. 

Reach and potential

ReedMorgan Reed, executive director of ACT | The App Association, and a member of the American Medical Association’s (AMA) working group on telemedicine, says that while existing telemedicine tends to focus on being a direct replacement to face-to-face meetings between a physician and patient, the future of telemedicine will expand far beyond this and encompass asynchronous, store-and-forward technologies for remote patient monitoring.

In addition, using telemedicine doesn’t necessarily mean an all or nothing approach, says Nathaniel Lacktman, partner at Foley & Lardner and head of its telemedicine and virtual care practice.  In chronic cases, in particular, occasional face-to-face visits supplemented with remote health monitoring work well, he says.

According to findings from a survey by Foley & Lardner, the "2014 Telemedicine Survey Executive Summary," 90% of health plan leaders report that they have already begun developing or implementing a telemedicine program, although only 6% categorized their program as “mature.” In terms of the types of telemedicine being offered, 64% used remote monitoring, 54% used store-and-forward technology, and 52% used real-time interaction services.

“It’s the most powerful technology we have today to do that because it helps reduce barriers for patients accessing care, and therefore increases the likelihood that a primary care physician (PCP) will actually be able to see and treat the patient and manage the chronic condition before it spins out of control and turns into acute inpatient stays,” Lacktman says. “We’re at the tipping point now. Like any new trend it takes time to have awareness, understanding, acceptance and adoption. But we’re going to see a lot more in the coming years.”

A report by the American Telemedicine Association (ATA), "Operationalizing Telemedicine in Managed Care: Lessons from Kaiser Permanente," states that 20% to 30% of face-to-face visits could be achieved in alternative, non-face-to-face venues.

Next: Efficacy and results

Efficacy and results

ThorpeJill DeGraff Thorpe, Esq., partner in healthcare division at Manatt, Phelps & Phillips, says telemedicine has particular benefit in uses such as access to remote specialists and primary care. In the case of specialty work, it not only allows patients in rural or underserved area to gain access to a specialist, it enables hospitals to re-brand themselves and expand their reach. In cases of local specialty consultations, or consultation within a hospital system, Thorpe says telemedicine can save a lot of time and travel-a plus for physicians who are being moved away from main campuses to shuttle between community health centers.

A presentation co-authored by Thorpe on care management with remote monitoring revealed that 59% of the participants had two or more chronic condition-primarily hypertension or diabetes. During the six months in the telehealth program, patients with hypertension saw a 5.2-point systolic reduction, a 3.4-point diastolic reduction, and a 2.8-beat heart rate reduction. For patients in the study with diabetes, a 0.33-unit reduction in A1C, and a 33% reduction in emergency department visits over six months.

Telemedicine could be particularly successful in managing chronic conditions, according to an Accenture report, "Virtual Health: The Untapped Opportunity to Get the Most out of Healthcare," about 26% of physician visits each year are due to hypertension, and replacing just one of those visits per patient could save about $300 million annually.

Using a combination-perhaps an annual in-person visit with a PCP and ongoing maintenance care throughout the rest of the year via e-visits, could potentially save $2 billion in healthcare spending-the equivalent of 24,000 PCPs or 11% of the primary-care physician workforce, according to the report.

An study examining the efficacy of using telemedicine for mental health needs, "Leveraging Remote Behavioral Health Interventions to Improve Medical Outcomes and Reduce Costs," found that Aetna patients who used the telemedicine program had 31% fewer hospital admissions over six months than those using traditional therapies, 48% fewer inpatient hospital stays, and about 27% fewer emergency department visits. While the utilization of outpatient services stayed roughly the same, the number of mental health visits was significantly higher in the cohort that used telemedicine services-19,713 visits per 1,000 patients in the group using telemedicine versus 2,822 visits per 1,000 patients in the group using traditional visits.

Aetna estimates that those patients who fully participated in its telemedicine program over the six-month study period saved about $864,000 per patient.

Next: Payer and provider benefits

Payer and provider benefits

LinkousJonathan Linkous, chief executive officer of the ATA, says “business is booming” in telemedicine, with employer and private plans taking the lead. As payers move toward value-based payments, telemedicine will be particularly helpful in improving patient care, and keeping patients out of the hospital.

“Telemedicine can really improve care, there’s no issue about it,” Linkous says.

Even in cases where telemedicine results in the same level of care, if it keeps the patient out of the emergency department or inpatient care, that is a better return on investment, he says.

According to the Foley & Lardner report, as providers bear a greater share of the risk-and potential reward-for keeping their patients healthy, cost-effective methods of engaging patients, such as via telemedicine, are critical. "... Telemedicine offers ways to streamline operations and create multiple touch points with patients, making it one of the most reliable methods for transitioning to a post-Affordable Care Act, forward-looking reimbursement model," the report states.

Reimbursement concerns

Half of the executives that participated in the Foley & Lardner survey said improved quality of care is the greatest benefit of telemedicine. However, the majority said they did not expect immediate financial benefits. That may be because reimbursement for telemedicine services remains a challenge. Twenty one percent of those surveyed said they receive lower rates from managed care companies for telemedicine encounters versus face-to-face encounters, and 41% said they receive no compensation at all for telemedicine encounters.

About 20% of those polled share concerns about Medicare coverage of telemedicine services, and 18% were worried about states failing to mandate telemedicine coverage by commercial health plans. Roughly half of also expressed concern over convincing physicians about the credibility of telemedicine, as well as reassuring them they would be appropriately compensated.

Two dozen states now mandate private insurer reimbursement for telemedicine services, and it is covered by Medicaid in more than 40 states. Additionally, more than 20 states require that telemedicine visits are reimbursed at the same rate as in-person visits. Financial support is growing, as well. Congress has designated $26 million to fund telemedicine programs in rural communities, and there are more than 100 bills before state lawmakers to require private payers and Medicaid to cover telehealth services. The federal government also expanded its Medicare reimbursements for telehealth in 2014 to include greater coverage of chronic care plus new allowances for annual wellness visits and psychotherapy, according to a review by PwC.

Next: Patient and provider buy-in

Patient and provider buy-in

Although the healthcare industry is slowly moving toward adoption of telemedicine, there is not much confidence that patients will follow. The Foley & Lardner report reveals that 87% of health plan executives polled didn’t believe the majority of their members would get on board with telemedicine within three years. A quarter of those surveyed believed less than 10% of patients would utilize telemedicine services.

Linkous disagrees, saying that two decades worth of studies on patient acceptance of telemedicine reveal that negative sentiment is rare. “There is a lot of room for growth and there will be a lot of growth, but with that increase in the number of patients and the people using it, you can’t say there’s a reason to resist,” Linkous says.

LacktmanIn fact, Lardner says resistance from traditional medicine is likely to be more of a barrier than patient reluctance. One of the biggest barriers to physician buy in is that physicians who want to offer telemedicine services must be licensed in the state in which their patient is located, says Linkous. “That causes delays, that causes expense, and that causes patients to not be able to access their doctor."

Lacktman says health plans should be offering incentives to providers to use telemedicine, especially as states are starting to jump on board. “State legislatures are passing laws forcing health plans to cover the services, because the benefit is evident, but managed care is dragging its feet,” he says. In states that have begun to require equal reimbursement for telemedicine services, health plan premiums have not increased, Lacktman says.

Telemedicine unknowns

Despite the potential that telemedicine represents, many plans are hesitant to move forward with telemedicine reimbursement. One concern is that, even if telemedicine is a covered service, it could result in increased visits and therefore an overall increased cost of care, says Lacktman. “Health plans aren’t comfortable enough to project costs."

Rich Feifer, MD, MPH, national medical director and chief medical officer of national accounts at Aetna, agrees. He says health plans will have to be cautious going forward in a fee-for-service payment model that telemedicine does not result in unnecessary care. The easy access to telemedicine services would result in more discretionary care, resulting in higher total costs despite possible improved outcomes and lower individual encounter costs. “We need to deploy this carefully so we don’t see a big cost bubble unexpectedly,” Feifer says.

In transitioning to value-based payments, Feifer says telemedicine will be particularly useful in alleviating physician shortages by offering an alternative venue to care for certain patients, ensuring adequate face-to-face exam time for those who need it most.

“The most important issue is to address this need. It’s a clinical need, it’s a consumer need,” Feifer says. “Address it, don’t avoid it, but do so in a way that is smart and leverages the technology for necessary care and avoids growth for unnecessary services.”

Rachael Zimlich is a writer in Columbia Station, Ohio.