Such programs may better control costs in patients with diabetes or mental illness, who are often undertreated and for whom there is clearer evidence that treatment improves health.

March 14—Telehealth can fuel patients’ healthcare utilization and spending, new research found. But providers and payers can take steps to control costs, one author notes.

One of the first independent analyses of spending on telehealth services found a surge in use and costs under one program. Although its applicability may be limited with respect to the broad range of telehealth initiatives, the findings could provide useful insights for payers and providers.

The RAND Corporation study, which was funded by the California Health Care Foundation, found direct-to-consumer telehealth among 300,000 patients over three years replaced visits to other providers in only 12 percent of cases, with 88 percent representing new utilization. Net annual spending on the acute respiratory illnesses that were examined increased $45 per telehealth user.

“Direct-to-consumer telehealth may increase access by making care more convenient for certain patients, but it may also increase utilization and health care spending,” the authors wrote.

However, one author was quick to note that the financial findings were unlikely to translate to telehealth services beyond direct-to-consumer models.

“For example, the rural hospital that uses telemedicine to have access to specialists, we can’t really comment based on these findings on that kind of application,” said J. Scott Ashwood, an associate policy researcher at RAND. “What we can draw from this study is that when you give consumers access to a convenient technology, they are going to respond to that convenience.”

The upside of the findings is that patients see appeal in the increasing connection between technology and health care.

“If you want to give people access to physicians, this seems like a good way to do it because people do in fact use it,” Ashwood said.

Research Questioned

Criticisms of the study have included its short time frame, which may not capture longer-term savings derived from interventions that prevent minor conditions from becoming costly health problems.

Ashwood said it remains unclear whether utilization would increase or decrease over a longer term.

Critics also have questioned whether such findings would apply to mental health services and the many other areas in which telehealth has become more prevalent.

Steve Wojcik, vice president of public policy for the National Business Group on Health (NBGH), noted that mental health is one of the areas where telehealth has been able to address issues with both access and the costs of untreated conditions.

“Just because someone would not have gone to a face-to-face encounter with a provider does not mean it’s unnecessary,” Wojcik said in an interview. “It may mean they are not able to get an appointment or it could mean they see too high of a cost of doing that—in travel time, time away from work, and cost of the physical visit.”

Ashwood agreed that telehealth may provide savings in higher-cost areas of health care.

“If this option is available, then I think people would take advantage of it, and for other conditions that might be a good thing,” Ashwood said, referring to patients with diabetes or mental illness, who are often undertreated and for whom there is clearer evidence that treatment improves health. “But I would expect that most visits would be new-use in any rollout of this technology to a condition.”

Telehealth supporters said for other conditions, the financial impact of telehealth could resemble that of a Department of Veterans Affairs pilotin which savings included a reduction of more than 40 percent in hospitalizations for mental health patients.

Financial Considerations

Ashwood said the research indicates that payers and providers focused on deriving savings from the use of telemedicine may need to provide access as part of an integrated care model. Cost controls could be established by increased copays for some minor conditions or by marketing telehealth as a care replacement to certain patient populations targeted for cost reduction, such as those who frequently use emergency departments for low-acuity care.

“If you can focus on that replacement or focus on a population for whom replacement would really save you money, then there’s really an opportunity to save money,” Ashwood said.

Employers with health plans that provide such direct-to-consumer benefits may profit from improved worker productivity, but insurers and self-insured employers are likely to view such programs as a cost driver, Ashwood said.

Employers moving toward telehealth have been looking at its “broader benefits,” including increased productivity and employee satisfaction from greater convenience, Wojcik said.

The embrace of telehealth by payers and self-insured employers was seen in an August 2016 survey of the NBGH’s member companies, of which 90 percent planned in 2017 to offer telehealth services to employees in states where coverage is allowed—an increase from 70 percent in 2016.

Wojcik cautioned that although telehealth—especially for mental health services—has become broadly available, few workers at the association’s member companies use it. Employers are still seeking ways to encourage utilization, he said.

In the future, employers will need to focus on targeting telehealth use to the most appropriate conditions and services, Wojcik said.

“At some point, there might be a risk of overutilization particularly because it does reduce the barriers both in terms of time and cost,” Wojcik.  

Another way payers and providers can control telehealth costs is by ensuring clinicians are involved in utilization decisions, Ashwood said.

“I don’t think these results apply to a setting in which someone other than the patient is involved with the decision on whether to seek care,” Ashwood said.

Policy Implications

The research comes as Congress considers expanding payment for telemedicine, especially in Medicare.

Ashwood said he would be hesitant to conclude that the new research “has any real implications for anything other than direct-to-consumer telemedicine.”

NBGH has raised concerns about state and federal requirements that payment rates for telehealth be the same as for care delivered in person, which eliminates much of the potential savings.

“Telehealth from the perspective of access but also from the perspective of competition increases the availability of providers; they are not just bound to the local areas or [only available to people] within a reasonable travel distance anymore,” Wojcik said.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Wednesday, March 15, 2017