Offering telehealth 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
- 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.
- Ken Research, “The US Telemedicine Market Outlook to 2018, Rising Penetration of Telehome Care and mHealth” June 2014
- “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
- http://www.pewinternet.org/2014/04/03/older-adults-and-technology-use/
- http://www.intel.com/content/dam/www/public/us/en/documents/promotions/healthcare-innovation-barometer-infographic.pdf
- Latoya Thomas and Gary Capistrant, “50 State Telemedicine Gaps Analysis Coverage & Reimbursement” American Telemedicine Association, September 2014
This article is featured on theihcc.com.