The recent Medicare Payment Advisory Commission (“MedPAC” or “Commission”) report should serve as a shot across the bow to telehealth advocates seeking broader Medicare coverage of telehealth. In reading the telehealth chapter, it is clear to me that the MedPAC commissioners are not fully sold on telehealth because, among other reasons, they recommend that the Medicare program proceed cautiously before any expansion of the telehealth benefit. The report also makes certain conclusions that are sure to vex many in the telehealth community.

For those not familiar with MedPAC, it is an independent congressional agency that advises Congress on Medicare-related issues, and it is influential in lawmakers’ consideration of Medicare issues.  By way of quick background, the 21st Century Cures Act of 2016 required the Commission to provide information regarding: 1) the extent to which Medicare covers telehealth; 2) the extent to which commercial insurers cover telehealth; and 3) ways in which the telehealth coverage policies of commercial insurance plans may be incorporated into the Medicare program. This required the Commission to do a broad-reaching examination of the telehealth sector beyond Medicare.

As a preliminary matter, the Commission notes that in 2016, 108,000 beneficiaries accounted for approximately 300,000 telehealth visits totaling $27 million in reimbursement under the Medicare physician fee schedule. Most of the services were basic physician office and mental health services.  More interesting was the Commission’s observation that Medicare beneficiaries using telehealth tended to be under the age of 65, Medicare/Medicaid dual eligibles, and “to disproportionately have chronic mental health conditions.”

At a high level, the Commission concludes that:

• Medicare’s coverage of telehealth services is broad, flexible, and somewhat limited with providers bearing little financial risk for increasing use;
• Commercial insurer telehealth coverage is variable “with few plans covering a comprehensive set of services”;
• Commercial plans cited competitive pressure as the primary reason for covering telehealth “rather than cost reduction” (notwithstanding that a majority of states now have telehealth coverage parity laws in place); and
• Insurers have not found compelling evidence that telehealth reduces costs or improves patient outcomes (the use of telehealth services by commercial insurers is at less than 1 percent of plan enrollees).

The most interesting part of the report, however, was the Commission’s analysis of cost, access, and quality of individual telehealth lines/specialties as candidates for potential adoption into Medicare coverage. The Commission broke down its analysis into several categories:

• Examples of services with clear evidence: telestroke is specifically referenced under this category with the Commission noting that any increase in costs to the program would be justified by the potential improvements to beneficiary access and quality. Other services specifically referenced were those that addressed beneficiaries with physically disabling and treatment-intensive conditions (e.g., ESRD, Parkinson’s disease).
• Examples of services with less clear evidence: mental health services are noted in this category as a type of service that could increase costs substantially while increasing access to care, but without clear evidence “whether the quality of care beneficiaries receive would improve”; and
• Examples of services with unclear evidence: direct-to-consumer, nursing home-based services, and remote patient monitoring were provided as examples of services that while expanding access to care could result in significant cost increases without clear evidence that quality of care would improve.

The report also addresses telehealth coverage by commercial plans, Medicare Advantage, and ACOs, and looks at the various telehealth-related models currently being tested by the Center for Medicare and Medicaid Innovation.  The Commission ultimately recommends that Medicare take a measured approach to expanding telehealth coverage, and only considers those telehealth services that show evidence of balancing cost, access, and quality of care.

Given the fascinating nuggets in the report, the following were the three main takeaways for me:

• A number of significant stakeholders have not fully bought into the telehealth story, particularly on the cost and quality of care fronts. While the access argument has largely been won, the irony is that access can lead to greater utilization, which leads to greater costs under a fee-for-service system.
• For purposes of coverage and reimbursement, the time to treat telehealth as a monolithic, one-size-fits-all sector may be coming to an end. The way the Commission analyzed the propriety of coverage expansion along lines of service may be a harbinger of how these issues will be analyzed in the future.
• Telehealth is a woefully underutilized service with the report noting that less than one percent of commercial plan enrollees use telehealth, and telehealth coverage under Medicare accounts for an almost negligible amount of Medicare reimbursed services.

In the final analysis, the report offers a great window into how one influential stakeholder views telehealth in the context of Medicare coverage expansion, and reflects a view I have heard often in policy circles. The problem is that many analyses regarding telehealth costs and quality often fail to take into account a number of variables, not mention that issues telehealth may impact such as care coordination, disease management, and provider and patient satisfaction are not taken into consideration consistently enough. The irony is that the report comes in the midst of several positive steps recently taken by the federal government regarding virtual care such as Medicare’s new approach to reimbursing remote patient monitoring and passage of the Bipartisan Budget Act (which includes several key provisions expanding coverage of telehealth). All of that notwithstanding, I would recommend that telehealth stakeholders carefully read the Commission’s take on telehealth.