BY GAIL WILENSKY, PHD ON November 21, 2016
Virtual physician visits and telemedicine, once viewed primarily as a means to help provide care to individuals in rural areas or to link physicians in rural areas to specialists or colleagues in academic centers, are now also being considered as part of a strategy to make care more convenient and readily available to large numbers of patients in urban areas. So it’s not surprising that virtual visits and broader issues raised by telemedicine have become the focus of renewed interest.
The questions that are raised are the obvious ones. Will telemedicine improve patient health? Does it make financial sense—and if so, for whom? Will it increase or decrease total health care costs? The answer to these questions, as is true in so much of health care, is that “it depends.”
In considering the potential cost-effectiveness of virtual physician visits, it’s important to distinguish between virtual visits that occur on a “one-off” basis from those that are an extension of care provided by an individual’s usual source of care. Companies like Teladoc and American Well advertise that they provide board-certified physicians licensed in a patient’s state. These companies have been established to provide on-demand remote medical services for nonemergency care using telephone and videoconferencing technology on an on-demand basis, but both companies also work with health plans providing virtual physician visits.
One-off Virtual Visits
The one-off virtual visits are comparable with the visits provided by urgent care centers or other “doc-in-the-box” sites that provide medical services to individuals without access to the patient’s medical records or knowledge of prior treatment. In addition, the results of the treatments provided by off-off virtual visits rarely become part of the patient’s permanent medical record—and therein lies the concern. Although providing the patient with easily accessible service may be the difference between an individual receiving care and going without it, having care occur in isolation raises concerns about whether the care is inappropriate for a particular patient or whether appropriate follow-up on care is lacking.
When virtual visits are provided as an optional benefit by an employer or as part of a health plan’s benefits, the potential for information-sharing is enhanced. Interoperability challenges between the medical records of the virtual providers and the patient’s usual source of care is frequently an issue, but as interoperability between electronic records of different systems improves more generally, getting information about care provided to a patient outside of their usual source of care should become less challenging.
What About Costs?
Virtual visits that make care easily accessible could increase costs of care if patients use them much more often than they use traditional physician visits. However, even in the one-off environment, virtual visits may be cost-effective if they substitute for emergency department visits, which also carry all the dangers of providing care without prior knowledge of the patient’s health and care history.
A major determinant of whether virtual visits are likely to be cost-effective or cost-saving is whether the care is being financed in a fee-for-service environment or as part of an arrangement in which clinicians and institutions assume the financial risk of providing care within a fixed budget. Depending on how the fee is set, it is more likely that virtual visits will be cost-additive in a fee-for-service environment than in an at-risk environment, even when the latter is not a fully integrated managed care system like Kaiser Permanente or Geisinger Health System.
When physicians or health plans are at financial risk of providing all of a patient’s care within a set amount of money, they have a strong incentive to provide virtual visits only when they are cost-effective or substituting for a more expensive type of care. In a fee-for-service environment, the physician has an incentive to provide additional care as long as it might provide some benefit to the patient and the physician has time available that does not have a higher or more valuable use (to the physician).
This trade-off explains the limited and selected use of telemedicine in Medicare, which, despite the rapid growth of Medicare Advantage, remains predominately traditional fee-for-service. Coverage of telemedicine under traditional Medicare is primarily limited to certain providers and care provided in rural areas. According to the Medicare Payment Advisory Commission’s June 2016 report to Congress, although the number of telemedicine visits has grown quite rapidly (more than 500% from 2008 to 2014), only a small fraction of Medicare beneficiaries use these services.
Similarly, only 3000 of 233 915 individuals enrolled in the California Public Employees Retirement System who were offered virtual visit availability took advantage of virtual visits. This may change as patients come to view virtual visits as more a part of mainstream medicine than they are today.
Medicare Advantage plans have to provide the same coverage for telemedicine as traditional Medicare offers. These plans also can provide extra telemedicine benefits as long as the extra benefits are paid from a plan’s rebate dollars or by charging enrollees a supplemental premium. The Centers for Medicare & Medicaid Innovation (CMMI) allows telemedicine benefits to be provided in some of its pilot programs, such as their bundled payment demonstrations and in organizations participating in the CMMI’s Next Generation ACO (accountable care organization) model.
Over the next decade, we should expect continued improvements in the availability and quality of digital and virtual communications between patient and their physicians, in the form of virtual visits and likely the direct linkage of data from the physician’s office and from patients’ wearable devices. When the health plan or physicians assume the financial risk of providing all or a portion of the care to a patient for a fixed price (such as part of an episode-based payment), there will be strong incentives to provide virtual visits only when they don’t increase the overall cost of care. Within other financial settings, constraints on the use of virtual visits are likely to continue unless their cost-effectiveness is clearer to insurers and government than they are today.
About the author: Gail Wilensky, PhD, is an economist and Senior Fellow at Project HOPE, an international health foundation. She directed the Medicare and Medicaid programs, served as a senior adviser on health and welfare issues to President George H. W. Bush, and was the first chair of the Medicare Payment Advisory Commission. She is an elected member of the Institute of Medicine.
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