The Cost of Red Tape

Recently, the Centers for Medicare and Medicaid Services (CMS) came out with an interpretation of how a hospital should provide quality assurance for physicians providing health care via telemedicine to a patient in the hospital. The issue swirls around privileging, the process used by health facilities, after verification of credentials, to grant a physician the authority to provide a specific scope of patient care services, largely based on past performance, capabilities and skills. The new interpretation represents a dramatic change from the current approach in use across the country and could create a dire situation for telemedicine networks, teleradiology companies and other programs providing remote health services. It would affect all hospital-based telemedicine services across the country, including non-Medicare related services.

However, there is a chance that we might avoid this train wreck before it happens. Recent meetings with CMS officials, other leaders in the Administration and members of Congress have increased the awareness of the issue. Suggestions were offered. The seriousness was made clear. But time is running out.

The new interpretation from inside CMS would require each local hospital to individually privilege every physician providing telemedicine services to patients in the hospital. This is contrary to the procedure currently used by the Joint Commission on behalf of CMS whereby the local hospital can have a written, blanket agreement that accepts both the credentialing and privileging of the distant organization where the physicians are physically located. This has been an efficient and effective approach that relies on the quality assurance controls of the larger referral facilities where there is usually far greater expertise and close oversight of the physician’s activities.

To understand the potential catastrophic costs of such a new requirement, let’s take a conservative look at the potential cost for a single telemedicine network that, over the course of a year, uses 40 doctors to provide telemedicine services to 60 sites.

To cover the costs of privileging, there is generally an up-front application fee by the local hospital for their initial determination of privileging and a fee to maintain a physician’s privileging status every two years. A typical cost for this service would be $300 for the initial application and $150 for the renewal. All 40 doctors would have to be individually privileged at each site in the network since there is no way to predict what doctor would be needed at which local site. This works out to be a minimum of $12,000 for each site for the initial privileging fees with an additional $6,000 per site every two years for the renewals.

For the sample telemedicine network it would result in a minimum additional cost of $720,000 in initial fees plus $360,000 every two years to meet the new CMS interpetation. This just covers the fees and does not include the associated FTE cost of having 3-5 physicians meet to review and take action for each privileging determination.


For all of telemedicine nationally, the cost of this new interpretation by CMS would be astounding, certainly millions of dollars. There are 200 telemedicine networks connecting to over 3,000 sites across the United States. Plus, approximately 3,000 hospitals also contract out for teleradiology services, which, over a year’s time are provided by 20-30 radiologists per site.

Recent conversations and meetings with CMS leaders, officials in the White House and Members of Congress have resulted in an agreement that this issue must be addressed as soon as possible. The deadline for implementing this new interpretation is July 15, 2010.

Stay tuned...

Adoption of Telemedicine Accelerating

A series of news announcements and reports over the past few days provides an interesting look at the breadth and scope of telemedicine being by health professionals and consumers, worldwide.

• Almost 6,000 health-related mobile phone applications are now available for consumers and health practitioners over mobile phones according to a report released on March 1 by MobiHealthNews. Over three fourths of the applications are designed for and marketed directly to the public, the remainder are for use by health professionals. The CEO of Sprint Communications declared at a health technology conference on March 1st that wireless communications will take U.S. health care “out of the '70s.”
  
  



• On March 2nd the Virginia State Legislature unanimously approved a bill mandating that all private health insurers in the state pay for telemedicine services. Virginia becomes the twelfth state to adopt similar legislation with several more states currently considering such a move. All 50 state Medicaid programs already reimburse for remote medical imaging and over half of these state programs also pay for additional telemedicine services.
  
  



• A report just released by Manhattan Research revealed that 39% of physicians now email, secure message, or instant message their patients – a 14% increase since 2006. Dermatologists and medical oncologists are the physician specialist groups most likely to communicate with patients online.
  
  



• In recent testimony before Congress, the Veterans Administration has requested a significant increase in spending for telehealth services. The agency hopes to increase the use of home telehealth from 35,000 homes to 50,000 homes by the end of next year. A recent study of the VA’s experience found patients enrolled in home telehealth programs experienced a 25 percent reduction in the average number of days spent in the hospital and a 19 percent reduction in hospitalizations.
  
  



• A market report released recently by In-Medica, a European-based research firm forecasts that the number of worldwide gateways used in telehealth applications will increase to over one million in 2014 and to around 3.6 million in 2018.

Telemedicine and the Underserved Community

This week I had the pleasure of sharing a podium with Dr. Garth Graham, the Deputy Assistant Secretary for Minority Health in the Department of Health and Human Services. We spoke at the annual meeting of the Health Information Management Systems Society in a session titled: “Underserved Communities and the Health Information Technology Landscape – the Necessity for Partnership.”

Dr. Graham pointed out the critical healthcare issues facing underserved and minority communities and the work of the National Partnership for Action to End Health Disparities. More information is available on this initiative at http://minorityhealth.hhs.gov/.

I spoke about the potential role of telehealth in addressing some of these issues. This came out of previous discussions with the Office of Minority Health and a special meeting they sponsored on this issue several weeks ago.

It seems to me that three facts frame the issue:

1. Minority populations suffer from a number of chronic diseases at a disproportionate rate. A few examples:

• African Americans are about twice as likely to have diabetes.
• Hispanic Americans have a higher prevalence of diabetes.
• African Americans have 4.5 times more asthma-related emergency room visits.
• African American men are 30% more likely to die from heart disease.

2. For a variety of reasons, minorities have more difficulties accessing quality health care. Notable reasons include: cost; accessibility to the work place or home; travel time and language.

3. This lack of regular access to health provider is an important factor leading to greater use of emergency room visits for non-emergency conditions. The average use of emergency room visits is more than double for minorities. The average visit to an emergency room costs about $1,000 in 2007 so paying for avoidable emergency room visits has reached crisis proportions for health insurance payers, American tax payers and for those who must pay out of pocket for their health care.

So, how can telehealth help? Study after study has concluded that remote monitoring can spot health problems sooner, reduce hospitalization and use of emergency rooms, improve life quality and save money.

• A meta analysis of research studies related to the use of remote monitoring for congestive heart failure concluded that the use of remote monitoring resulted in a 27%–40% reduction in overall admissions.
• The study authored by VA national telehealth staff members, looked at health outcomes from 17,025 VA home telehealth patients. The results show that when home telehealth was used, there was a 25% reduction in the average number of days hospitalized and a 19% reduction in the number of hospitalizations for patients. The data also shows that for some patients, the cost of telehealth services in their homes averaged $1,600 a year which is lower than in-home clinician care costs.
• A study of 281 congestive heart failure patients who received telehomecare found that they experienced a 60 percent reduction in hospital admissions, a 66 percent decline in emergency room visits and a 59 percent reduction in pharmacy utilization. In contrast, the control group experienced increases in all of these areas.

Using telehealth to overcome such disparities requires a change of thinking for many U.S. policy makers.

One of these changes is recognizing that telemedicine is not just a rural solution. Historically, government grants and program targets have only supported telemedicine services for those living in rural and remote areas. Such a policy may have been appropriate when telemedicine was first established. However, times have changed. Medical devices have become cheaper, better and smaller. So too have telecommunications services. The growth of cell phones and small health monitoring devices have matched the growth in older and chronically ill populations.

Another is recognizing and paying for remote health monitoring. While recognized as an important component in the delivery of health services for veterans and other covered populations, Medicare still has resisted any effort to encourage and pay for remote monitoring as part of covered home health services.

Of course telehealth will not solve all of the problems related to the underserved. But it is a critical tool. The evidence is in, the need is well documented and the conclusion is self evident. Using telehealth to help meet the needs of all underserved populations should be a priority for the U.S. as well as all governments.