The Trump administration recently announced an emergency waiver that would temporarily allow Medicare beneficiaries to receive a wide range of medical care through telehealth appointments. Many of the nation’s largest insurers are also temporarily waiving copays for such services, and federal regulators have eliminated penalties that had prevented the use of popular video chat for medical consultations.
Industry lobbyists are now pressuring Congress to expand Medicare reimbursement for telehealth services permanently. While temporary expansion is appropriate during the Covid-19 crisis, evidence of telehealth’s impact on the delivery of quality health care remains mixed. Though telehealth is clearly convenient, it could easily add to overall health-care costs without improving medical outcomes—unless payment incentives are appropriately structured.
The pandemic has led to a boom in telehealth utilization, as physicians have stopped in-person consultations. Medical providers that had previously billed for few telehealth consultations are now seeing most patients that way, helping to offset a steep drop in other revenue. Telehealth potentially ranges from interactions with physicians by phone or email to video calls and sophisticated monitoring and transmission of diagnostic data. Advocates argue that telehealth can and should displace traditional in-person care. They believe that it can save patients the trouble of traveling to and waiting in physician offices, offering a better fit for nine-to-five work schedules or family responsibilities. Telehealth could also increase access to care for patients with mobility problems.
The suitability of telehealth varies significantly from specialty to specialty. While in-person treatment is clearly needed for most surgeries, mental health and therapy services can be delivered without physical contact. Pediatricians have long been accustomed to answering off-hours phone calls, but as video-call quality improves, diagnoses can be made remotely with greater confidence. High-resolution imaging similarly facilitates remote practice in specialties such as dermatology and radiology. Data from digital stethoscopes, ultrasounds, and EKGs can be transmitted to enable remote monitoring and management of patients with ongoing chronic conditions.
Telehealth can also facilitate the treatment of patients living in isolated rural areas, where no relevant specialists may be located nearby. This may occur in conjunction with local medical professionals. One of the most promising areas of telemedicine has been tele-stroke services, which allow neurologists based in academic medical centers to work with staff at local hospitals. By enabling the treatment of stroke patients closer to home, these services can significantly improve outcomes for those with such a time-sensitive condition.
Yet the popularity of telehealth has until recently failed to live up to the hype, even though 42 states have laws requiring insurers to cover some form of it. A 2016 survey of large employers found that 90 percent planned to offer telehealth (up from 7 percent in 2012) but that only 3 percent of eligible employees actually used it. Lobbyists blame the absence of Medicare reimbursement for the slow adoption. Before the Trump administration’s recent announcement, Medicare coverage of telehealth was largely limited to rural residents, who were required to travel to medical facilities to see doctors working at another location. As a result, in 2016, telehealth accounted for just 0.4 percent of Medicare spending on physician services.
The reluctance to expand Medicare coverage to telehealth owes much to cost concerns. The Congressional Budget Office has warned that letting medical providers bill for telehealth may add to the program’s cost, rather than generating savings from a lower-cost alternative to existing services. A 2018 MedPAC report commissioned by Congress found little evidence for claims that telehealth reduced costs or improved medical outcomes beyond a few specific areas. In fact, in ten states, insurers must pay providers the same amount for telehealth consultations as for in-person visits, and insurers often receive no discounts for remote services, even when permitted. Medicare Advantage plans, moreover, can’t use telehealth providers to meet network-adequacy requirements—which means, in turn, that these providers can’t be used as leverage to negotiate cheaper prices.
The availability of telehealth appears to increase utilization of medical services, leading Adam Licurse and Ateev Mehrotra of Harvard Medical School to suggest that it may make seeing the doctor “too convenient.” For low-acuity respiratory conditions, 88 percent of telehealth consultations added costs. A similar pattern was observed with respect to mental-health telemedicine visits.
In some circumstances, though, this added convenience may lead to patients receiving care for untreated conditions—yielding better medical outcomes. The CBO estimated that while the expansion of Medicare tele-stroke coverage would add costs for taxpayers, it would likely reduce the number of stroke patients being discharged with severe disability. Nonetheless, this isn’t the case for all services: a randomized controlled trial of hospital patients discharged to telemonitoring found similar levels of readmissions but a higher mortality rate among those telemonitored.
Telehealth advocates hope that the Covid-19 crisis will change patient habits and revolutionize the way in which care is delivered. The pandemic will surely yield a lasting increase in telehealth, but it’s unlikely to displace in-person consultations entirely, and technology has still not advanced enough for surgery to be performed routinely at a distance. Nor will medical consultations likely be outsourced to cheaper doctors abroad anytime soon. Telehealth is most effective as a supplement to an ongoing personal relationship with a clinician who knows the patient well, not as an isolated encounter.
In time, telehealth may hold the most promise as the health-care system transitions from fee-for-service payment for discrete encounters toward a system of flat fees per patient—that is, payment for the management of chronic medical conditions. Such arrangements would replace the current incentive to inflate patient volumes with one that reduces costs and improves medical outcomes.