Long-Term Telemedicine Cost Implications

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What a year 2020 was for the healthcare world. One of the surprise winners, however, was the concept of telemedicine. While it had been around for decades, it never rose to “gamechanger” status. Then, COVID hit. Telemedicine has proven itself critically important for people during the pandemic in order to continue seeing their healthcare providers virtually. Public adoption was almost instantaneous. After all, as a society we quickly adapted to remote work, remote school, remote birthday parties, so why not remote medicine?

The issue, however, is that if patient usage continues at these pandemic rates, people may use their healthcare benefits in situations when they may not have sought care in the past. Why? Due to easy access from home, near instant response and 24/7 availability, people will naturally be more likely to contact their doctors for minimal and non-emergency issues. 

As an organization that’s made it its mission to ensure employers can provide employees simplified access to benefits like health insurance, it’s a catch-22. The catch is that increased access will eventually lead to significant cost implications for employers – our clients, the people for whom we try to reduce costs.

How did we get here?

The shift from very-little-utilization of telemedicine to today’s commonplace usage occurred because governments, insurance carriers and providers quickly worked together to ensure patients had access to their healthcare during the pandemic (see our infographic: What HR Leaders need to know about telemedicine utilization). Thanks to rapid action, videoconferencing utilities like Zoom were now HIPAA compliant. This made telemedicine ubiquitous. But it was the risk of COVID infection which made telemedicine a near-universal requirement.

The future of telemedicine

There might be a school of thought that says we are all winners in this situation: patients have access to medical care from home, employers and carriers can feel like they are helping patients utilize their care at no additional per-visit cost, and providers are able to continue their practices and serve their communities. Except, it’s not that simple. 

While it may have been a necessary stopgap for telemedicine to cost the same as in-person visits during the height of the pandemic, the reality is that running a telemedicine practice will cost providers significantly less over time. Telemedicine has been available for many years and studies show it’s often a fraction of the cost compared to having in-person appointments and treatments. The data clearly bears this out.

Our concern is that if carriers are required to pay the same rates indefinitely, the long-term telemedicine cost implications include reduced healthcare dollar efficiency because of over utilization, and missed opportunity of inherent cost efficiencies and savings. We predict a domino effect where patients eventually see higher out of pocket and premium costs. This is the wrong direction.

State legislators are grappling with the issue, some moving ahead decisively. For instance, in Massachusetts, state law will allow certain providers to bill telemedicine visits at the same rate as in-office visits for the next 2 years. The initial idea behind maintaining the same rate during the pandemic was to ensure reliable access. But is this viable for the long term? 

Telemedicine certainly has its place, and it’s been a wonderful resource during the pandemic. However, data shows that it costs less per visit. Our recommendation is for the industry to enact a more thoughtful long-term plan where telehealth is integrated into the health system appropriately, with cost-corrected reimbursement for providers. This will ensure it remains available to members, that costs are trimmed where possible for carriers and employers, and that providers are compensated fairly.

1 HIPAA Compliance Datasheet, Zoom, November 2020

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