Healthcare Comes Home

By David Thill

Telehealth adoption is low, but don’t expect it to stay that way for too long

Telehealth may be talked about more than it is actually used, but that may change soon. According to a 2016 annual survey by the National Business Group on Health, nine in 10 large employers will make telehealth services available to their employees in 2017. As technology improves and coverage increases, your customers might come to you for help figuring out how they can get on board.

Increasing coverage
Offering employee coverage for telehealth services is a win-win for both employees and their employers, says Steve Wojcik, vice president of public policy at NBGH, for three reasons. First of all, he says, virtual consultations can often be conducted either from home or work, meaning patients have to travel very little – if at all – to consult with their doctors. An added benefit, says Wojcik, is that with these services, patients no longer have to contend with wait times in doctors’ offices.

Next, telehealth services increase patient access to care providers by expanding the geographic range of services, says Wojcik. Simply put, when the consultation happens virtually, the doctor can be anywhere. Wojcik notes that this is particularly helpful for patients in rural areas, where fewer providers may be available.

Finally, virtual visits cost less than face-to-face visits, which should theoretically lead to decreased healthcare costs, says Wojcik.

Despite the benefits, telehealth faces some obstacles to widespread use. Even with increased employer coverage, employees have been slow on the uptake of telehealth services, Wojcik notes. The 2016 findings from NBGH showed that 70 percent of the 133 large employers surveyed offered telehealth in their benefits packages, but only 3 percent of employees at those companies used the services in the first half of the year.

Generally, says Wojcik, new practices bring a learning or “adoption” curve, and employer coverage of telehealth is still in its early stages. As more people become aware of and familiar with the services, their utilization of those services should increase, he says. He believes employers can increase utilization by helping their employees get acquainted with telehealth services. For example, employers might consider working with insurance plan partners or vendors to explain what telehealth consultations are, and even demonstrate them for employees.

Another obstacle Wojcik notes is state regulations that limit the use of telehealth services. These limitations are few, he says, and are “going away rapidly.” But for national companies who employ workers across state lines, having different laws in different states could cause difficulty creating uniform insurance plans for the whole company.

Some states also require that telehealth services be billed at the same rate as face-to-face consultations, says Wojcik. However, he says that because telehealth consultation costs are lower than in-person consultation costs, telehealth payments should also be lower. NBGH advocates for more uniformity across the country in these policy areas, so that employers can more easily cover telehealth services, he says.

Generally speaking, telehealth services include consultations between patients and doctors, as opposed to appointments where doctors have to physically examine patients, says Wojcik. Some examples include behavioral health, prenatal care, chronic care management, and consultations following hospital discharge, he says.

He also believes that as technology improves – for example, as the possibility grows of measuring a patient’s vitals remotely – telehealth services will expand. Additionally, given the possibility of reducing patient costs and the fact that, as Wojcik puts it, telehealth is “much more convenient” than in-person consultations, he believes patient demand for these services will grow.

The cost of convenience

Though direct-to-consumer telehealth services are publicized as convenient and cost-effective forms of treatment, they may encourage greater usage of medical services “and thus may drive up medical spending rather than trim costs,” according to a study conducted by the RAND Corp. and published in the March edition of Health Affairs.

“While direct-to-consumer telemedicine services do increase patients’ access to convenient health care, researchers say new strategies such as higher co-pays or targeted marketing may be needed if telehealth is to fulfill its potential as a cost-saving strategy,” says a news release from the RAND Corp. announcing the results.

Researchers examined insurance claims information from 2011 to 2013 for 300,000 beneficiaries enrolled in a health plan through CalPERS, a larger California public employee benefit organization that began offering direct-to-consumer telehealth services to members in 2012. Researchers focused on care for acute respiratory infections, a group of ailments such as sinus infections and bronchitis “that are the most common reason people seek care from direct-to-consumer telehealth providers,” according to the RAND release.

The study found that for each episode of acute respiratory infection, the cost of telehealth services was about 50 percent lower than a physician office visit and less than 5 percent the cost of a visit to an emergency department.

However, the savings from substitution was outweighed by increased spending on the increased usage of medical services. In other words, even though patients, employers and health plans were saving money on each individual “visit,” they were spending more because patients were “visiting” more.

“There may be a dose response with respect to convenience,” Lori Uscher-Pines, a RAND researcher who co-authored the study, said in the news release. “[T]he more convenient the location, the lower the threshold for seeking care and the greater use of medical services.”

The study estimated that net annual spending on acute respiratory illness increased by $45 per telehealth user. (Of the 300,000 enrollees studied, researchers estimated that 12 percent of the telemedicine visits replaced visits to doctors’ offices or emergency rooms, while 88 percent represented new use of medical services.)

Researchers suggest that if insurers want to increase the proportion of direct-to-consumer telehealth that substitutes for higher-cost care, they may want to consider raising the cost of co-pays for the service. Another strategy would be to develop better tools to encourage people who are high users of emergency department care to use telehealth services instead.

Responding to the study, Jonathan Linkous, CEO of the American Telemedicine Association, said that “[i]t should be noted that respiratory illness is only a fraction of the conditions treated through telehealth, which includes teleICU, remote patient monitoring, and many other services.”

Linkous added that he is “encouraged” by the study’s conclusions about the cost of telehealth visits compared with physician office and emergency department visits.

(For the RAND Corp. news release, visit

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