The Telehealth Cost Wars

Posted by Health Law Informer Author on March 22, 2017

How to properly evaluate and weigh cost savings in health care has long been a controversial subject—perhaps nowhere more so than when technology-enabled health care is evaluated. A recent study is a case in point. The journal Health Affairs recently published a study that has caused quite a stir in the telehealth community. Without getting into details regarding methodology and results—best left for a more in-depth article—the study acknowledges that reimbursement for direct-to-consumer (“DTC”) telehealth visits are lower than would be the case for in-person physician or ED visits. However, the study raised two concerns. First, the researchers posited that there could be increased spending for DTC visits “if the direct-to-consumer telehealth visit is more likely to result in follow-up appointments, testing, or prescriptions, compared to similar visits to other settings.” Second, the researchers believe that DTC physicians “may be more likely to recommend that patients have a subsequent in-person visit with a provider.”  The basis for these concerns is not made entirely clear, and quite frankly doesn’t square with my discussions with DTC telehealth stakeholders.

The study also broadly concludes that DTC telehealth may lead to increased utilization as patients will seek care for illnesses for which they would not have sought care had telehealth not been available. More to the point, the researchers calculated that about 88 percent of telehealth usage represents new utilization. In other words, only 12 percent of DTC telehealth usage replaced or substituted visits to other providers. Ultimately, the study argues that DTC telehealth may increase access by making care more convenient for some individuals, and, thereby, may also increase utilization and health care spending.

In discussing the study with many telehealth stakeholders, a number of significant issues have been raised about the study and some of its working assumptions. These issues have been well-summarized by a noted telehealth insider:

  • Sole focus on acute respiratory infections;
  • A small, non-random sample size (less than a 1,000 out of possible pool of 300,000);
  • Inappropriately associated long waiting room costs to telehealth (“assumed that the time spent on a telehealth visit was the same as the clinic time for the average office visit, so that the only time saved was travel time”);
  • Very short incident to care period (two days) despite other research which has shown that cost advantages of telehealth increases substantially throughout the incident of care period (up to 30 days in other studies);
  • No explanation as to why findings differ substantially from similar analyses of larger populations of telehealth users; and
  • Period studied (claims and enrollment data for the period 2011–13) was when DTC telehealth was just beginning to take hold in the health care ecosystem—many changes have occurred since then.

The researchers themselves acknowledge that the focus on acute respiratory infections likely skewed the results as receiving care for this type of infection does not always improve health, and “an increase in utilization for patients with diabetes or mental illness might be perceived as a net positive” given that these conditions are often left untreated.

It should be noted that there are a number of studies, analyses, and surveys that do indeed show cost savings for telehealth. And as the recent study points out costs should be one factor in deciding whether telehealth services should be offered. Considerations such as access, patient satisfaction, and care coordination are equally as vital.

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