The Power and Potential of Telehealth: What Health Systems Should Know

January 19, 2017 9:31 am

Proposed legislation in Congress offers the promise that the nation’s healthcare policy will support the expansion of telehealth, allowing hospitals and health systems to fully realize the benefits of this important emerging approach to care.

Telehealth adoption is on the rise, bringing with it the potential to dramatically reshape the way health care is accessed and delivered. Many factors are driving the market, including evolving payment models and increased adoption by providers who are realizing the benefits of telehealth and connected health more broadly. The consumerization of healthcare and patient demand play a role, too.

Recent studies have shown that 76 percent of U.S. patients regard access to care as a higher priority than human interactions with their healthcare providers and that 70 percent of U.S. patients regard communicating with providers via text, email, or video rather than in person as an acceptable option. a Supporting these trends, 61 percent of healthcare IT leaders responding to a recent survey said their organizations had adopted telehealth. b

Although the adoption of telehealth is nascent, early implementation is showing powerful benefits. Nonetheless, several milestones remain to be achieved to cement the role of telehealth in mainstream medicine, including the development of a standard definition of telehealth and the enactment of legislation that will promote its further adoption across the industry.

Definition and Benefits of Telehealth

Any discussion of telehealth should start by defining the term, because Medicaid, Medicare, federal agencies, and individual states all have different definitions and associated regulations, with various implications for telehealth’s role in care delivery and the way providers are paid. As the category continues to mature, a standard definition of telehealth may emerge. For purposes of this article, however, telehealth is broadly defined as “the use of electronic information and telecommunications technologies to support remote clinical health care, patient and professional health-related education, public health, and health administration.”

Telehealth enables healthcare professionals to collaborate in providing services across a variety of settings and distances, thereby increasing access, convenience, and engagement for patients. Clinical benefits include improved utilization and reduced preventable readmissions via remote monitoring. Like traditional in-person care visits, telehealth services are governed by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Health Information Technology for Economic and Clinical Health (HITECH) Act—meaning patients’ privacy and security are protected.

The impact and benefits of telehealth on clinicians and health systems have been well documented. Telehealth allows providers to extend their reach to patients who are in remote locations or are unable to travel. It can help fill gaps in specialist care by eliminating the need for patients to travel long distances to access qualified providers. It also can increase billable time by increasing the number of patients who can be treated within a given period.

From a health system perspective, an increase in the number of insured patients combined with historic provider shortages creates an opportunity to be more efficient than ever. Telehealth can help minimize travel between facilities, saving time and improving appropriate utilization. It can help reduce preventable (and costly) readmissions by monitoring patients—particularly those with chronic conditions—and enabling prevention/early intervention. It is far more cost-effective to prevent an acute episode than to have a patient admitted to the hospital.

In short, as new payment models emerge, healthcare costs continue to rise, and patient populations age and cope with more chronic conditions, telehealth technology has the potential to improve the accessibility and quality of care and reduce its cost.

Payment Considerations

The challenge facing telehealth providers is that payment policy does not yet fully account for the potential benefits of telehealth. Consider that monitoring patients outside of traditional care settings is not currently covered by Medicare.

If the full potential of telehealth is to be realized, payment models must further evolve. Because of the lack of a standard definition for telehealth, public and private payers have different approaches to paying for telehealth services. Medicare, for example, defines telehealth very narrowly, does not pay for training or education, and limits payment to real-time, interactive voice, and video encounters between providers and Medicare beneficiaries, in which the beneficiary is in a place that is remote from the provider—usually a rural area with a designated provider shortage.

Inconsistencies and questions related to payment pose a significant barrier to telehealth adoption that the healthcare community has yet to address collectively. Fortunately, Congress is considering legislative proposals aimed at advancing greater telehealth adoption by addressing Medicare coverage of telehealth services.

Federal and State Telehealth Policy

Most notable among current federal legislation under consideration are the Creating Opportunities Now for Necessary and Effective Care Technologies (CONNECT) for Health Act.and the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act, which aim to promote cost savings and high-quality care under the Medicare program through the use of telehealth.

The CONNECT for Health Act. This legislation would allow telehealth and remote patient monitoring (RPM) services to be used by qualifying participants in advanced alternative payment models under the Medicare Access and CHIP Reauthorization Act (MACRA) and permit the use of RPM for certain patients with chronic conditions. One recent analysis projects that these provisions could yield $1.8 billion in savings over 10 years. c

A summary posted on the website of Sen. Brian Schatz (D-Hawaii), one of the bill’s sponsors, notes that the law also would expand the definition of originating sites, permit further telehealth and RPM in community health centers and rural health clinics, and allow telehealth and RPM to be basic benefits in Medicare Advantage. d Further, the bill would create a bridge program to help providers transition to the goals of MACRA and the Merit-based Incentive Payment System (MIPS)—using telehealth and RPM without most of the current payment restrictions.

The CHRONIC Care Act. This bipartisan legislation, introduced by the Senate Finance Committee, seeks to modernize Medicare’s telehealth payment policies to improve the management and treatment of chronic diseases. The proposed law seeks to expand access to home dialysis therapy, increase convenience for Medicare Advantage enrollees through telehealth, provide accountable care organizations with the ability to expand use of telehealth, and expand use of telehealth for individuals with stroke. e

Other bills introduced in the 114th Congress include the Medicare Telehealth Parity Act, Telehealth Enhancement Act and Furthering Access to Stroke Telemedicine (FAST) Act. Congress also is paying close attention to the potential to scale successful models around the country. The Expanding Capacity for Health Outcomes (ECHO) Act, recently signed into law, requires a review of a successful model in New Mexico, Utah, and other select states. This model uses teleconsultation to connect specialists with other healthcare professionals through simultaneous interactive videoconferencing aimed at facilitating case-based learning. In general, such legislation has garnered strong bipartisan support in Congress, and given that the country’s newly elected president has been a vocal champion of telehealth adoption, the industry can expect to see telehealth continue to be a legislative priority.

Federal legislation isn’t the only factor driving telehealth adoption. State legislators and state medical societies also are key players in policies around telehealth, given that physicians must be licensed in the state in which they practice. Common legal barriers to rapid advancement of telehealth include credentialing and privileging, online prescribing, malpractice liability, licensing of physicians and other healthcare providers, and informed consent. State-based solutions being employed are providing reciprocal licensing for out-of-state physicians using telehealth, expanding Medicaid coverage for remote care services, and—in the case of Mississippi—using remote monitoring for patients with diabetes in rural areas with primary care provider shortages.

Legislation alone is not a silver bullet, however. To date, payments for telehealth services are determined by narrow definitions, as previously noted. The payment models used by the Centers for Medicare & Medicaid Services (CMS) do not currently include many telehealth technologies and solutions already available. Although new legislation can help advance telehealth adoption, there certainly is a role for CMS as a regulatory body and a testing body for new payment and delivery models through the Centers for Medicare & Medicaid Innovation—as well as for health systems—to lead and help shape the culture and future of telehealth.

Of course, expanding telehealth is a moot point unless patients and providers have access to broadband. For many years, the Federal Communications Commission (FCC) has been addressing this problem in rural and underserved urban areas through initiatives including the Rural Health Care Program and Connect2Health Task Force. The agency provides funding to eligible providers for telecommunications and broadband services necessary to support care delivery. It also has mapped broadband gaps and the correlation of those gaps with the incidence of chronic disease throughout the country. f Congress has increased its oversight of these programs in recent years, recognizing that a strong infrastructure is the foundation of new models that leverage technology to support care delivery.

Actions Steps for Health Systems

Hospitals and health systems should not sit idly by awaiting updated regulation and new policy to be implemented. They can begin to influence the direction of policy with respect to telehealth be in a position to shape its culture by taking the following steps.

Become educated on the latest telehealth research. There is a growing body of evidence that telehealth saves money, particularly in the areas of chronic care management, reduced readmissions, and value-based purchasing. Fluency in the benefits of telehealth can help healthcare experts decide when and how to adopt telehealth technology and provide fodder for conversations with lawmakers.

Talk with state and congressional representatives. Although telehealth legislation generally garners broad bipartisan support, lawmakers look to healthcare experts and practitioners to inform their policy positions. Effective ways for hospital and health system leaders to initiate dialogue and build long-term relationships with lawmakers include calling and writing to invite them to visit healthcare facilities and helping to educate the representatives and their communities by speaking at town hall meetings and other events.

Look beyond payment as a driver of adoption. If health systems examine their outcome objectives, they will find that telehealth plays a role in achieving their goals. Regardless of what happens with policy, regulations, and payment, telehealth technology has clear benefits for meeting performance standards under value-based payments, reducing readmissions, and improving patient access to care. For example, a new Medicare bundled payment approach, the Comprehensive Care for Joint Replacement model, makes providers responsible for all costs associated with knee and hip replacements for 90 days. This model creates incentives for telehealth visits, particularly in patients’ homes, to closely monitor patients after their surgery to prevent complications, emergency department visits, and hospital readmissions. A similar program for cardiac care was introduced this year to reduce costs for bypass surgery and heart attacks.

With a new administration in the White House, now is an opportune time to talk through definitions and issues hindering telehealth adoption and examine the industry’s role in influencing policy and regulation. The answer is not necessarily more legislation, though current legislative proposals will certainly help. Updated regulations and an expanded CMS definition of telehealth that is more inclusive of technology available today will help better align policy with the direction of innovation and improvement in 21st century health care. Meanwhile, health systems can help advance the agenda by educating themselves on the benefits of telehealth, engaging policymakers in ongoing dialogue, and judiciously adopting telehealth where it can help them achieve their strategic objectives.

Samantha Burch is senior director, congressional affairs, HIMSS, Washington, D.C.

David Gray is manager, congressional affairs, HIMSS, Washington, D.C.

John Sharp is senior manager, consumer health IT, 
Personal Connected Health Alliance, Cleveland.


a. American Hospital Association, “The Promise of Telehealth for Hospitals, Health Systems and Their Communities,” TrendWatch, January 2015.

b. HIMSS Analytics, “2016 Telemedicine Survey,” April 2016.

c. Young, J., “New Analysis Finds Proposed Telehealth Policy Changes Would Decrease Federal Spending by $1.8 Billion,” Avalere, Feb. 3, 2016.

d. See “Bipartisan Team of Senators Introduces Legislation to Expand Telehealth Services, Improve Health Outcomes, and Reduce Costs, Feb. 3, 2016.

e. See “S.3504—Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2016,”

f. See


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