AHA Brief: Coverage for Telehealth Services Not Keeping Pace with Care Delivery Innovations

April 26, 2016
There is a growing body of evidence that telehealth can not only expand access to services but also create cost savings, yet limited coverage impedes the expansion of telehealth services, the American Hospital Association wrote in a recent brief on telemedicine.

There is a growing body of evidence that telehealth can not only expand access to services but also create cost savings, yet limited coverage impedes the expansion of telehealth services, the American Hospital Association wrote in a recent brief on telemedicine.

According to the AHA, coverage for telehealth services, especially in Medicare, has not kept pace with technological and care delivery innovations.

“Private payers have made more progress in recognizing the benefits of telehealth services through their coverage and reimbursement guidelines, while retail clinics are incorporating telehealth to increase convenience and patient access to doctors. As telehealth technologies evolve, it will be important for policymakers to understand the prospective benefits and embrace a framework that allows patients, providers and payers to incorporate technological innovations in care delivery,” the AHA issue brief stated.

The brief specifically focuses on the Veterans Health Administration (VHA), which began introducing telehealth programs in the 1990s and pioneered the use of telehealth in the U.S. The VHA has served more than 150,000 beneficiaries with telehealth services since 2012.

And, the AHA brief notes that as the VHA’s program matured, it created substantial efficiencies. “The annual cost to deploy the telehealth program in 2012 was $1,600 per patient per year, compared to over $13,000 for traditional home-based care and over $77,000 for nursing home care. Telehealth also was associated with a 25 percent reduction in number of bed days of care and a 19 percent reduction in hospital admissions across all VHA patients utilizing telehealth,” the AHA issue brief stated.

And, the VHA achieved significant reductions in hospitalizations with more than 40 percent for mental health patients; 25 to 30 percent for patients with heart failure and hypertension and around 20 percent for patients with diabetes and chronic obstructive pulmonary disease (COPD).

“Overall the VHA estimated average annual savings of $6,500 for each patients that participated in the telehealth program in 2012. This equates to nearly $1 billion in system-wide savings associated with the use of telehealth in 2012.”

There is evidence that other organizations are seeing savings as well. The Agency for Healthcare Research and Quality (AHRQ) has noted studies that have reinforced the value of telehealth interventions for treatment of stroke, management of chronic conditions and behavioral health, and for counseling and monitoring.

The issue brief cites research indicating that fewer follow-up visits are required after telehealth visits, in comparison to physician offices and emergency departments, and access to physician visits through telehealth could substitute for more costly emergency department visits. And, the brief cites another study that found that telehealth physician visits reduce admissions from nursing homes and that tele-emergency specialty consults improve outcomes and reduce need for transfers.

The issue brief also highlights St. Louis-based Mercy Health’s telehealth and telemonitoring programs, including its Virtual Care Center. Through these programs, expected inpatient length of stay and mortality rates have declined 40 percent, while the average cost of care has declined, according to the AHA.

The issue brief also urges policymakers and regulators to look at the private sector with private insurers and retail clinics making investments in telehealth. Many private insurers are rapidly incorporating telehealth into their Medicare Advantage, commercial and individual benefit packages, including physician telehealth visits in both urban and rural areas.

However, among public payers, AHA argues, Medicare offers the most limited coverage of telehealth, “paying for a narrow set of services and only in rural areas.” And, the issue brief notes that the Centers for Medicare & Medicaid Services (CMS) has recently allowed for expanded use of telehealth by waiving the geographic and practice setting limitations for providers participating in certain experimental Medicare payment initiatives, such as the Bundled Payments for Care Improvement Initiative (BPCI) and the Next Generation Accountable Care Organization (ACO) model.

According to the Congressional Budget Office (CBO), expanding access to telehealth would increase spending due to higher utilization, the AHA issues brief states. However, the AHA argues that the CBO has “significantly overestimated the cost of adopting telehealth in previous bills that became law.”

In 2001, Congress authorized the use current limited guidelines on telehealth coverage for Medicare. At that time, CBO predicted telemedicine would cost Medicare $150 million in the first five years after the law was passed. In practice, the program has spent only $57 million on telehealth services over 14 years.

The AHA also says that additional research into telehealth is needed to advance care delivery and enhance the patient experience. Specifically, the AHA issue brief states that additional research “using larger samples sizes, diverse geographies and a broader range of conditions and services, can help policymakers better understand the full range of benefits that telehealth can yield in providing care in more efficient and cost-effective ways.”

“Additionally, the inclusion of telehealth in value-based payment models can help assess the value of telehealth in situations where financial incentives promote quality improvement and cost savings. Finally, geographic limitations on telehealth use should be lifted, as patients regardless of care setting or physical location can benefit from increased access to expert physicians that can promote adherence to treatment plans that reflect the latest clinical best practices,” the AHA states.

“In conclusion, by modernizing Medicare coverage of telehealth, including telehealth services in innovative payment models and committing additional resources to understanding the patient and cost benefits of telehealth, policymakers can advance the delivery of care and benefit patients,” the issue brief stated.

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