December 12, 2014 | Krista Drobac, Executive director of the Alliance for Connected Care

The reason that telehealth usage among seniors in Medicare is almost non-existent is because the rules were written at a time when telehealth was used primarily to provide access to care for rural patients. To access a physician remotely, Medicare beneficiaries have to be in a rural area and in an “originating site” defined as a hospital, doctor’s office or clinic. This defeats the purpose of today’s telehealth offerings, which are providing access to primary care in the home, office, retail clinic, or wherever.

The telehealth market is growing by double-digits with people in urban and suburban areas accessing care through technology as part of their employer or health plan offerings. Starting in 2015, some Medicare Advantage beneficiaries will even have access to medical providers using telehealth because it is a supplemental benefit in Medicare Advantage. Most seniors enrolled in Medicare fee for service will not have that option.

It’s time to update the payment rules for telehealth and give all seniors access to technology that is increasing access to high-quality primary care. One policy challenge is that the conventional wisdom among policy makers has been that telehealth will increase costs to Medicare. It is said that lifting the rural and originating site restrictions so Medicare beneficiaries can experience telehealth like commercially-insured patients will cause a huge increase in utilization, and therefore costs.

Today, we know that conventional wisdom is wrong. Data from the commercial market shows that access to telehealth does not create excessive use among beneficiaries, particularly those who would otherwise have done nothing. And, if structured as a substitute to in-person care, telehealth can even save money.

The Alliance for Connected Care commissioned a study from Dale Yamamoto, an actuary with 30 years of experience and stellar credentials. He aggregated data from five companies using telehealth in the commercial market — Teladoc, Doctor on Demand, Anthem, American Well and Optum. What he found demonstrates that if we reimburse for telehealth in Medicare when the telehealth visit substitutes for an in-person visit, we may actually save money by averting ER and urgent care visits.

Furthermore, the study dispels concerns that the convenience and accessibility of telemedicine will lead to overutilization and addresses questions about quality of care, finding that:

  • Despite their convenience, commercial telehealth services are not used excessively. The average number of telehealth visits across vendors was 1.3 visits per patient per year.

  • Telehealth visits are used to treat fairly routine, non-emergent conditions. This study found that the most common diagnoses during a telehealth visit are sinusitis, followed by cold/flu/pertussis and urinary tract infections.

  • Medicare could realize savings by replacing in-person acute care services with a telehealth visit reimbursed at the same rate as a doctor’s visit. The study found that replacing in-person acute care services with a telehealth visit reimbursed at the same rate as a doctor’s office visit could save the Medicare program an estimated $45/visit.

  • “Induced utilization” by those people who use telehealth services instead of forgoing care altogether is unlikely to result in increased total costs to the Medicare program. Medicare will only realize losses as a result of making telehealth services available if the percentage of Medicare patients utilizing telehealth who would have otherwise “done nothing” increases to more than 32.8 percent. This study found that this is unlikely given that this population is currently approximately 13 percent in the commercial market.

Telehealth is increasingly becoming part of the spectrum of care patients are receiving in the commercial marketplace. Medical providers are using telemedicine to treat primary care conditions, coordinate care and monitor patients. Studies, including one commissioned by the Alliance for Connected Care in the spring, show that telehealth is important to the bottom line issues of quality, patient satisfaction and cost. All Medicare beneficiaries should have access to it.

This study shows that if structured as a substitute for in-person care, telehealth could even save money.

Now it’s time for Congress to make it happen.

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