Telehealth: Why is it booming?

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Dalia A. Haroune, Solution Principal, Healthcare, Slalom Consulting

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Samantha Vadas, Strategy Consultant, Slalom Consulting

The telehealth market is booming and expected to expand to over $30 billion globally by 2020, according to Modor Intelligence’s research. Its use cases are shifting from remote patient care through data sharing, to remote patient care and wellness through live interaction and teleconsultation. The industry is focusing on applications with proven effectiveness in care outcomes, as well as technologies that enable strategic and operational imperatives like cost savings, revenue growth, and improved patient experience.

Key areas of telehealth seeing this growth are real-time video consults, store and forward specialty consults (particularly between provider facilities using asynchronous transfer of data, images, sound or video), and remote patient monitoring. We’re also seeing an expansion in the care settings where telehealth is used and the champions that are driving its growth. Historically, the use of telehealth has been driven primarily by providers and used mostly in the hospital setting. More recently, we’ve seen applications of telehealth in ambulatory care clinics, doctors’ offices, long-term care facilities, the ER, and in the home. The emphasis on value-based care and the rise of consumerism are encouraging patients, employers, and payors to join providers in championing telehealth and the use of telehealth technology.

Telehealth has been around for decades, so why has it only recently experienced faster growth, adaption, and interest? These are the four main drivers:

1. Triple aim and value-based care

The Wall Street Journal published an article a few months ago stating that telemedicine is transforming healthcare. It could be argued that telemedicine was ahead of its time and that healthcare is transforming in a way that it can finally benefit from its capabilities.

As healthcare continues to shift from transaction-based to value-based, health systems have adopted the Triple Aim, or – as defined by the Institute for Healthcare Improvement – the simultaneous pursuit of improving the patient care experience while improving the health of population at a lower cost. This shift to accountability, cost-efficiency, population health, and care experience is driving the rapid adoption of telehealth across the healthcare industry.

As many have learned in recent years, population health management does not succeed with incremental, cosmetic changes. Impactful population health programs must be truly transformational. It requires a shift in organizational culture; provider alignment; significant investment in technology and analytics capabilities; and changes directed at where, when, and how care is delivered. Provider organizations are progressing in their ability to better manage the care of chronically-ill patients by keeping them out of the hospital and in lower-cost sites of care. That’s not an inexpensive undertaking.

At the end of the day, they’re having to do more with less. This is where telehealth can help. The National Institute of Health estimates a $1,233 average ER visit cost while other expert estimates have it as high as $2,168. Telehealth isn’t going to replace an ER visit for chest pain or trauma, but healthcare experts estimate that effective use of telehealth could replace 15 percent of ER visits, 15 percent of office visits, and 37 percent of urgent care visits. The impact of these cost savings is significant, as is the impact on the patient experience. Depending on where an organization is on the payor contract risk continuum, the benefits of the cost savings may outweigh the telehealth reimbursement barriers.

2. Barriers to physician access

In a 2015 study conducted by American Well, by 2025 there will be a shortage of up to 90,000 primary care physicians (PCPs). By 2020, experts estimate a shortage of 46,000 and specialists. While 25 percent of the United States population lives in rural areas, only 10 percent of our doctors practice there. Behavioral health access has always been a struggle, but to add perspective, there’s only one mental health provider per 790 people in the United States.

In their study, American Well surveyed 2,000+ primary care physicians and found that 57 percent of them were willing to conduct telehealth video visits. Why? Work-life balance was the most popular reason for seeing patients by means of video, followed by increased earning opportunity, and improved patient outcomes. The study also found that 69 percent of physicians cited video as superior to phone or email communication for making accurate diagnoses during new patient consults. That is a pretty big deal.

While telehealth cannot grow the number of available physicians, it can create efficiencies to allow for greater provider access.

3. Advancement in technology

According to the Pew Research Center, 68 percent of U.S. adults own a smartphone – up 35 percent from just four years ago. And as reported by Kantar Media, 84 percent of physicians reported using smartphones to access patient data and for other professional purposes. People expect mobile access for nearly all other aspects of their life – so why not healthcare?

There has also been tremendous growth in wearables in recent years. As wearable technology continues to grow, the industry advances its ability to effectively digest the data from wearables and use it to manage care. Cloud solutions allow providers to more efficiently share patient records with specialists who are not geographically accessible, allowing them to collaborate more effectively to make appropriate treatment decisions in real-time. The cloud also provides a more effective option for storing and accessing the ever-increasing volume of medical imaging and patient medical information.

The growth of “on-demand” healthcare is not only increasing physician access and driving down costs, but is also creating opportunities for technology companies to provide faster, more convenient, customized user-experiences – resulting in improved outcomes and an enhanced overall patient experience.

4. Legislation and reimbursement

Legislation is starting to address barriers in telehealth by focusing on three primary policy areas:

Coverage and reimbursement

Today, there are barriers to the use of telehealth because of the differences in both public and private coverages and payment across states. Inconsistent telehealth definitions add to the confusion and make it harder for legislative progress.

Though Medicare is a federal program, it affects what states can do for vulnerable populations, including those dually eligible under Medicare and Medicaid. A patient must be at a medical facility in a rural area for telehealth services to qualify for Medicare reimbursement. Medicare limits coverage of live-video telehealth for office visits, including office psychiatry services and provider consultations. Store and forward methods are only covered in Alaska and Hawaii, the two exceptions to the live video policy. Remote patient monitoring is not covered at all. While a provider can deliver care via telehealth, the originating site must be a medical facility, so the patient’s home is not an option.

Even with these limitations, there has been a 27 percent increase in Medicare fee-for-service telehealth claims and a 25 percent increase in the number of payments.

Licensure

The relevance of licensure relates to its portability across state lines. The provider must be licensed in the state where the patient receives care, making it difficult to expand access across state lines. To address the barrier, some states grant temporary licenses, have telehealth-specific licenses, or have reciprocity with neighboring states. This often comes with the agreement that providers will not set up a physical office in the state where the patient is located. Some states, like Alabama and Pennsylvania, have agreements with other states to grant licenses to out-of-state physicians which in turn accept the home state license. Connecticut endorses out-of-state physicians by allowing them to obtain an in-state license based on their home state standards. We also see interstate compacts that enact the same legislation across participating states. These are often accompanied by licensure compacts intended to simplify and expedite the process for seeking licenses in participating states.

Safety and security

Telehealth is simply a modality of delivering care. Therefore, the standard of care for each type of service still applies. As a result, some argue there is little or no need for other additional safeguards. However, as the use of telehealth continues to grow, the standard of care for telehealth encounters will likely evolve. Some states are already working to ensure patient safety by defining which services are appropriate to be delivered remotely; creating guidelines for establishing a patient provider relationship and prescribing; and maintaining certain informed consent requirements.

There are at least three pending congressional bills that, if passed, would expand telehealth under Medicare. Two bills were introduced in 2015 and the third was introduced in early 2016. All remain under consideration.

  • The Medicare Telehealth Parity Act of 2015 would amend the definition of an originating site beyond just a medical facility. It would also allow for a study of the effectiveness and savings of telehealth services.
  • The Telehealth Enhancement Act of 2015 would expand originating sites and authorize ACOs to include telehealth as a supplemental benefit.
  • CONNECT for Health Act of 2016 would expand the use of telehealth and remote patient monitoring services in Medicare, toward the goal of cost savings and quality care. 

Medicare’s restrictions of telehealth have resulted in states taking it upon themselves to lead in passing legislation. Twenty-nine states and the District of Columbia have enacted commercial payment statutes. Over 200 pieces of telehealth legislation were introduced in 42 states in 2015. The problem is there is little consistency across State legislation. In spite of this, progress is being made:

  • 49 states have some coverage for telemental health;
  • 13 states authorized coverage for store- and forward-based services;
  • 25 states have some form of coverage for home telehealth; and
  • 17 states authorized coverage for remote patient monitoring

Bottom line

Telehealth is proving to be an effective tool in managing the health of the population, improving outcomes, and reducing costs. It has come a long way and has the potential to fundamentally shift how we access and provide healthcare. But as telehealth’s adoption in the industry continues to grow, so do its challenges. The healthcare industry needs to continue identifying the right patients, technologies, and processes that will set telehealth up for success.

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