Alliance News

This year was a busy year for telemedicine at the state level. State legislatures and medical boards across the country considered dozens of measures, most of them aimed at improving the policy environment for telemedicine. In the flurry of activity, you may have missed some major developments at the national level that are going to continue to propel telemedicine into the mainstream of health care tools. I will elaborate on these developments in future blog posts, but here is a summary.

1. Network Adequacy

The National Association of Insurance Commissioners (NAIC) establishes model guidelines for network adequacy, which defines the sufficient number of medical providers and hospitals a health plan must have to adequately treat patients. On September 1st, the NAIC released a draft Network Adequacy Plan for legislators across the country to consider in 2016. The plan adds telemedicine to the list of criteria an insurance commissioner can take into consideration in determining the sufficiency of networks. This development, if finalized in its current form, means that health plans will be able to use telemedicine as a factor in determining whether plan members have adequate access to providers. In areas with provider shortages, this means that telemedicine will officially be able to fill gaps in access to care.

2. The Medicare Access and CHIP Reauthorization Act (MACRA)

Signed into law in April, the legislation fundamentally changes the way physicians, nurses and other practitioners will be paid by Medicare. Starting in 2019, providers will no longer receive automatic annual payment updates. For the first time, pay increases will depend on performance. Providers can achieve reimbursement growth through one of two paths – participation in an alternative payment model, or positive results as part of the Merit-based Incentive Performance System (MIPS). MIPS will measure performance in four areas: 1) quality; 2) resource utilization; 3) investment in clinical improvement activities; 4) electronic health records usage. Telemedicine will be helpful in either route because providers will be required to reach outside the four walls of their office to ensure holistic, quality care that avoids costly and unnecessary services.
If providers choose MIPS, part of their performance score will be related to improving clinical practice or care delivery. Categories include: (1) expanded practice access; (2) population health management; (3) care coordination, “including use of remote monitoring or telehealth”; (4) beneficiary engagement; (5) patient safety and practice assessment; and, (6) participation in an alternative payment model. Telemedicine was specifically mentioned in the statute, and the other categories of MIPS, such as expanded practice access, population health management, care coordination and beneficiary engagement are significantly advanced by telemedicine tools.

3. Medicare Physician Fee Schedule (MPFS)

In the 2016 MPFS proposed rule published by Centers for Medicare and Medicaid Services (CMS) in July, the agency, for the first time proposed reimbursement for telemedicine services provided in the home setting. They propose adding payment for telemedicine services related to End-Stage Renal Disease (ESRD) counseling in a patient’s home. While the codes are narrow and the patient still has to be connected to an “originating site,” the proposal is a positive step toward telemedicine access in the home for Medicare patients.

4. Comprehensive Care for Joint Replacement Payment Model (CCJR)

In July, CMS and the Centers for Medicare and Medicaid Innovation (CMMI) released a new payment demonstration model aimed at reducing Medicare costs for lower extremity joint replacement. The CCJR creates a mandatory bundled payment for the most common surgeries in Medicare, hip and knee replacements. According to the agency, in 2013, there were more than 400,000 inpatient primary procedures in Medicare, costing more than $7 billion for hospitalization alone. The new payment model will “hold hospitals financially accountable for the quality and cost of a model episode of care and incentivize increased coordination of care among hospitals, physicians, and post-acute care providers.” In order to facilitate improved coordinated care delivery, CMS is lifting Medicare restrictions on telemedicine for CCJR participants. The agency says “the use of remote access technologies may improve the accessibility and timeliness of needed care, increase communication between providers and patients, enhance care coordination and improve the efficiency of care.”

5. U.S. Senate Chronic Care Working Group

In May, a powerful group of bipartisan U.S. Senators, including Finance Committee Chairman Orrin Hatch, Ranking Member Ron Wyden, Senator Johnny Isakson and Senator Mark Warner released a request for information from stakeholders on how to improve chronic care for Medicare beneficiaries. The letter stated, “developing and implementing policies designed to improve disease management, streamline care coordination, improve quality and reduce Medicare costs is a daunting challenge. But we are committed to tackling this urgent matter head on and finding ways to provide high quality care at greater value and lower cost…” The letter went on to specifically ask about “ideas to effectively use or improve the use of telehealth and remote patient monitoring technology.” An implicit recognition that telemedicine and remote monitoring are part of the value equation for chronically ill Medicare patients.

PwC’s Health Research Institute (HRI) issued its annual projection of the coming year’s health care cost growth. Unfortunately, 2016 is no different than previous years. HRI projects a rise of 6.5 percent in medical cost trend, which continues a leveling of the increases we’ve seen since 2007, but it is still an increase.

HRI analyzed PwC’s 2015 “Health and Well-being Touchstone survey” of more than 1,100 employers from 36 industries and a national consumer survey of more than 1,000 US adults. HRI “interviewed industry executives, health policy experts and health plan actuaries whose companies cover more than 100 million employer based members.” Their main findings were that innovation in pharmaceuticals and cyber security investments were increasing costs, but “new efficiencies in the health system should prevent a return to double-digit run-away inflation.”

Remote patient monitoring and telehealth made the report’s short list of cost deflators, which is no surprise to those of us who follow the evidence of virtual care. The report states that “although virtual care is not new, its use will ramp up significantly in 2016. Costs will fall as care transitions from capital intensive “brick and mortar” to remote monitoring and visits.” HRI cited a PwC analysis of diabetes management showing a 10% decrease or $62 million savings for inpatient hospital days and a 10% decrease or $7 million in savings for ER visits.

HRI declared that “remote monitoring is saving billions of dollars across the healthcare system.” The report went on to note that “health systems and insurers should consider partnering with tech-smart companies that can offer a different type of network, clinical skillset and equipment. Retail health and outpatient clinics can also use virtual care to improve primary care access.” No argument here.

The Los Angeles Convention Center is abuzz this week with discussions about the future of patient care as the American Telemedicine Association brings together entrepreneurs, technology and device companies, health systems, and others for their annual meeting. Treating patients is no longer restricted to regular office hours and judging by the exhibit hall at the conference, we are ready to make teleheath and remote monitoring a mainstream part of patient care today. So what’s the hold up? The Alliance for Connected Care has focused on the barriers of reimbursement, licensure, and definition, which we believe are the main barriers.

The centrist think tank, Third Way, just released a report nicely outlining the policy issues holding up telehealth progress, and the solutions. The paper is called Make Telehealth an Easy Way for Patients to Get Care. It’s worth a read, and hopefully policy makers will take a look at it.

The report is one in a series that Third Way will be releasing throughout 2015, all of which focus on removing obstacles to quality patient care and directly improving the patient experience. Their guiding concept is simple: getting people back on their feet quicker and keeping them healthier for longer means they need less care.

The report discusses what telehealth is and the growing consumer demand for it, however the core of the report examines how policy has failed to keep pace with the technology, and how policy should change. No two states define or regulate telehealth in the same way, and inconsistencies often exist within states. Medicaid policies defining and paying for telehealth differ across states, and Medicare limits the coverage of telehealth services to specific sites and geographic regions. Finally, private plans, although showing improvement in telehealth coverage, do not consistently reimburse for telehealth across state lines.

The Third Way report highlights the important roles federal policymakers, state governments, and private health plans play in increasing access to telehealth services and helping ensure it delivers on its promise. Their recommendations include eliminating restrictive state policies, updating Medicare and Medicaid payment policies for telehealth, and authorizing the use of telehealth for populations served under value-based payment models, such as ACOs. In addition, the report presents the growing body of evidence demonstrating the value proposition of telehealth and highlights innovative efforts being piloted by red and blue states that have successfully improved patient outcomes while saving billions.

Third Way recognizes that finding methods to bring care to patients in new ways, to support positive behavioral change, and to engage individuals in their health can be a more cost-effective strategy than simply providing more health care services. Telehealth has proven to be an effective and critical tool for patients and providers in meeting those objectives. It’s time for policy to change to allow more access for consumers.

Offering telehealth¹ to employees or health plan beneficiaries used to be a differentiator in benefits – an added perk for employees or health care consumers increasingly demanding convenience and accessibility. Today, it is rapidly becoming a necessary addition to benefit packages. Not only do employees and prospective health plan enrollees want it, but it’s also good for containing health care costs.

Various market research organizations peg the telehealth market growth rate between 18-30 percent per year. According to Ken Research, in 2013 the market for telehealth generated annual revenue of $9.6 billion, which is 60 percent growth from 2012 when overall revenue was $6 billion. Their research shows that the telehealth market is expected to grow to $38.5 billion in revenue by 2018, a compound annual growth rate of 32 percent from 2013-2018.²

There are several factors contributing to this rapid growth: 1) telehealth is delivering results for patients and saving money; 2) patient satisfaction with telehealth is very high; 3) consumers are demanding more convenient high-quality care, which today’s telehealth providers are delivering.

In the employer market, according to Towers Watson, a global benefits advisor, 37 percent percent of employers surveyed in 2014 said that by this benefit year (2015) they expect to offer their employees a telemedicine benefit “as a low-cost alternative to emergency room or physician office visits for nonemergency health issues.” That is a 68 percent increase from 2014 when 22 percent of employers offered the benefit. Another 34 percent are considering offering telemedicine for 2016 or 2017.”³

Telehealth is showing real results for employers’ resource utilization and medical spending.  A recent analysis conducted by Niteesh K. Choudhry, MD, PhD of Harvard University on two employers – Home Depot and Rent-a-Center – found that utilization of telehealth showed significant health care savings.  The study compared employees who used Teladoc (the telehealth provider) to carefully matched users of traditional medical services over an episode of care, as well as monthly utilization and total spending before and after the introduction of telehealth to employees. Teladoc was the telehealth provider. The episodic analysis examined roughly 5,900 consults for Home Depot members and 3,400 consults for Rent-a-Center members.  The resolution rate was 92 percent for both populations. In other words, employees did not need follow-up care from an office visit or emergency room after a telehealth visit.  An estimated average claim savings of $673 for Home Depot resulted in a 12-month total savings of $5.9 million, and a $460 per-claim savings for Rent-a-Center for an annual total savings of $1.2 million.

In the Medicare market, a recent actuarial study commissioned by the Alliance for Connected Care and conducted by Dale Yamamoto, a distinguished actuary with more than 30 years of experience, looked at how much savings could be achieved if Medicare had a telehealth benefit without rural or facility restrictions. It 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.

While Medicare fee-for-service has significant restrictions on the use of telehealth, Medicare Advantage can offer the service. This year, Anthem has led the way by providing seniors in 12 states access to LiveHealthOnline, their 24-hour online physician access service. All seniors need is web access and a web camera. According to a recent study by the Pew Research Center, six out of 10 people age 65 and over go online and 47 percent have a high-speed broadband connection at home⁴, which means that more and more seniors will now have access to virtual care in their homes.

Besides cost savings, patient satisfaction is another driver of employer and health plan interest in offering telehealth. According to a recent Intel survey, 72 percent of consumers said they’re willing to see a doctor via telehealth video conferencing for non-urgent appointments.⁵ Three Alliance for Connected Care members, Anthem, MD Live and Teladoc all report patient satisfaction rates of more than 95 percent. Health care consumers are demanding convenient high- quality care, and telehealth offers it.

The main challenges to telehealth in 2015 are regulatory and legislative. While more than 20 states require coverage of telehealth in the commercial marketplace, forty-five states cover telehealth in Medicaid, and Medicare Advantage allows telehealth, Medicare fee for service is lagging behind and telehealth faces threats from state legislatures and medical boards across the country.

The reimbursement structure for Medicare was created nearly 15 years ago when smartphones didn’t even exist. The policy limits the coverage of telehealth services to specific sites and geographic regions. Generally, covered telehealth services must be provided in rural areas as determined by the Department of Health and Human Services , which change every year. As a result, Medicare beneficiaries living outside of rural areas or who are not in a designated facility in a rural area have limited access to providers via telehealth and are unable to benefit from telehealth services. This needs to change and the Alliance for Connected Care is working to support legislation being developed by the U.S. House Energy and Commerce Committee this year.

Among states, there is a patchwork of regulation that often inhibits the kind of telehealth offerings that employers and patients want. The American Telemedicine Association said it best, “for telemedicine adoption. Patients and health care providers may encounter a patchwork of arbitrary insurance requirements and disparate payment streams that do not allow them to fully take advantage of telemedicine.” ⁶ We need updated policies at the state level that makes sense for the technology and innovation we have today so consumers are not denied access to quality and convenience.

Footnotes

1. Given that the definition of telehealth is often confusing, telehealth in this context is real-time communication that allows patients and providers to interact directly through a communication device such as a telephone or videoconferencing. While store-and-forward and remote patient monitoring technologies are increasing in popularity and can greatly contribute to patient care and lowering costs, I am specifically referencing the former in this article.
2. Ken Research, “The US Telemedicine Market Outlook to 2018, Rising Penetration of Telehome Care and mHealth” June 2014
3. “Current Telemedicine Technology Could Mean Big Savings, Towers Watson expects a 68 percent increase in the number of employers offering telemedicine in 2015.” http://www.towerswatson.com/en-US/Press/2014/08/current-telemedicine-technology-could-mean-big-savings August 11, 2014
4. http://www.pewinternet.org/2014/04/03/older-adults-and-technology-use/
5. http://www.intel.com/content/dam/www/public/us/en/documents/promotions/healthcare-innovation-barometer-infographic.pdf
6. Latoya Thomas and Gary Capistrant, “50 State Telemedicine Gaps Analysis Coverage & Reimbursement” American Telemedicine Association, September 2014

By Krista Drobac

Executive Director, Alliance for Connected Care

This article is featured on theihcc.com

The time for telemedicine reimbursement in our country is now.

Telemedicine has gone beyond just being a solution for rural consumers who cannot access medical care. It has continually been shown to improve access to care in urban, suburban and rural areas. It also reduces emergency department and urgent care visits, and gives consumers a convenient alternative during business hours and after.

More and more health care systems are adopting telemedicine as part of their spectrum of care. Employers are offering telemedicine as a benefit to their employees. Consumers are even seeking telemedicine directly through the plethora of new apps.

While the case is clear for providing access to telemedicine for more consumers, laws and regulations have lagged behind the evolving technology and consumer demand.

Thankfully, Ohio is on the vanguard of reform and moving forward providing Medicaid reimbursement for telemedicine. Thanks to legislation sponsored by former State Representative Lynn Wachtmann (R-District 81) and State Representative Anne Gonzales (R-District 19), as of Jan. 2, 2015 and a new state Medicaid rule, there is Medicaid reimbursement for telemedicine in certain circumstances.

With approximately 450,000 new Medicaid recipients enrolled in Ohio after passage of Medicaid expansion, the new Medicaid rule effective January 2nd will not only benefit the State of Ohio and its Medicaid recipients, it also will help the residents in Ohio living in both rural and urban underserved counties in the state.

Currently, 45 states provide some sort of Medicaid reimbursement for telemedicine, and 22 states require commercial reimbursement of telemedicine. However, the federal government continues to miss the mark and fails to pass progressive legislation allowing for Medicare reimbursement of telemedicine services.

While Medicare does provide reimbursement in some cases, those circumstances are limited to care that is provided in rural areas. The federal government needs to look at the progress of the states like Ohio, which have served as the models for reform, by embracing today’s technology to connect individuals to care.

By Christine Dodd and Krista Drobac

Christine Dodd is a Director of Public Affairs with the law firm of Ice Miller. Krista Drobac is the Executive Director with the Alliance for Connected Care.

This article is featured on medcitynews.com