HIT Think Why Medicare needs to increase payments for telehealth


Telemedicine proponents, no doubt, are pinching themselves. After many years of promoting the concept and helping the technology advance to its current state of sophistication, it appears to be nearing the Promised Land.

Professional organizations and payers are giving telemedicine a stature that has eluded it for decades. For example, a recent survey by the Federation of State Medical Boards found that telemedicine was the most important regulatory topic for state medical boards in 2016, beating out resources related to opioid prescribing and the Interstate Medical Licensure Compact.

This past June, the American Medical Association adopted a set of guidelines for the ethical use of telemedicine by physicians and the telemedicine industry, an admission that telehealth is one of many ways in which digital technology is reshaping the way patients receive care. The adoption of guidelines comes after years of physician concern about the impact telemedicine might have on patient care.

Insurers are increasingly recognizing the validity of telemedicine care, particularly as the incentives of value-based care take hold in reforming the way healthcare is reimbursed. For example, WellCare is testing in-home telemonitoring programs for a small sample of its Medicare Advantage members, and Humana is expanding use of the technology on some of its Medicare Advantage plans.

Today, 31 states—primarily through Medicaid—pay for telemedicine services, in addition to many commercial insurers. Interstate licensing compacts, now in force in 18 states with various degrees of implementation, enable providers to offer telemedicine services in more than one state.

Recent blockbuster legislation also has given telemedicine new hope for growth in use within federal programs. The Expanding Capacity for Health Outcomes Act will expand a telemedicine program called Project ECHO, in the hope that Medicare will start to better support remote care technologies. In addition, the 21st Century Cures Act establishes a Health Information Technology Advisory Committee that, among other tasks, will be looking at ways to expand the use of telemedicine and “self-service” technologies.

In addition, the Cures Act also asks the Centers for Medicare and Medicaid Services to examine current and potential uses of telehealth in Medicare, to enable a federal reassessment of how Medicare should cover telehealth services.

Despite all the heady progress, telemedicine has a long way to go to become a factor in the Medicare program. Thomas Ferrante, an associate attorney in the law firm Foley & Lardner, notes that Medicare has only paid about $17.6 million for telehealth in 2015, even as other private and public payers have increasingly expanded reimbursement for services provided remotely.

When you compare that to total Medicare spending of $646.2 billion in 2015, that doesn’t even make for a drop in a bucket—it’s on the order of three ten-thousandths of a percent.

A chief impediment to further use of telemedicine among Medicare beneficiaries has been reimbursement rules imposed by the Congressional Budget Office, which assesses budgets for federal spending, seeking to gauge whether any increase in spending would be offset by reductions in expenditures, a process known as scoring.

It is here that telemedicine has run into a brick wall. The CBO has struggled to find ways to measure the impact that telemedicine would have on federal spending. In a blog published in July 2015, the CBO said it could base findings on the payment rates that would be established for those services, and whether those services would substitute for, or reduce the use of, other Medicare-covered services, or would be used in addition to currently covered services.

“If all or most telemedicine services substituted for or prevented the use of more expensive services, coverage of telemedicine could reduce federal spending,” the blog notes. “If instead, telemedicine services were mostly used in addition to currently covered services, coverage of telemedicine would tend to increase Medicare spending.

“Many proposals to expand coverage of telemedicine strive to facilitate enrollees’ access to healthcare. Therefore, such proposals could increase spending by adding payments for new services instead of substituting for existing services.”

The CBO blog covers its philosophy in assessing the pluses and minuses of telemedicine reimbursement. The crux of the problem is that CBO’s methodology looks back at telemedicine through a fee-for-service perspective, even as Medicare reimbursement, in sum, advances toward value-based approach. It’s yet another impact of Medicare struggling through the transition between the two radically different approaches to reimbursement.

For Medicare to successfully and quickly make the shift to value-based care, it needs to embrace telemedicine. As the nation’s largest payer, it drives technology adoption by what it chooses to reimburse, and what it doesn’t. To fully encourage the further development of telemedicine and its use within the workflow of medical care, Medicare needs to get on board now to enable telemedicine to carry a full load when providers are asked to shoulder most of the risk for patient care.

CBO’s scoring approach needs to be either adapted or made unnecessary by Congress to enable wider use of telemedicine. And this should not be just a question of dollars and cents—we’re not even discussing here the care benefits of quicker access to care in heading off worsening conditions, as well as access to better care for beneficiaries, or access to care, period, for those who are in rural areas and for whom travel is a hardship.

In light of potential benefits to care and savings from the use of current telemedicine technology, here’s hoping we’re talking about a larger sum than the embarrassing total of $17.6 million in Medicare expenditures next year.