Barking Up A New Tree

Changes in the way healthcare services are paid from fee-for-service to single payment mechanisms create vast new opportunities for telemedicine but shift the decision makers that govern adoption and market expansion.

Since the start of ATA, the Holy Grail for many has been the expansion of existing fee-for-service insurance programs to cover telemedicine. In a perfect world, programs such as Medicare would reimburse for the following:

• All clinical telemedicine services, as defined by CPT and HCPC codes;
• Telemedicine from any location of the patient - rural or urban;
• Telemedicine originating from any type of facility;
• Telemedicine services provided by any type of appropriate health professional; and
• Remote health services provided by any method of delivery: live or store-and-forward.

Time consuming, piece by piece efforts to expand telemedicine over the past fifteen years have focused on fee-for-service coverage, trying to convince payers, acting as gatekeepers in such a system, rather than the providers and healthcare administrators. Annual petitions to the Centers for Medicare and Medicaid Services to expand covered clinical service codes have resulted in adding about 15 services as eligible for reimbursement. Federal and state legislatures have added eligible facilities and types of providers.

Despite these efforts, overall, fee-for-service coverage for telemedicine remains a problem. Large holes in coverage remain. For example, fee-for-service programs altogether ignore paying for remote monitoring except for a few cardiac monitoring services. consumers in urban areas, about 70 percent of the U.S. population, are not eligible for most remote health services. Providers using interactive telemedicine are forced to follow complex billing and coding procedures to ensure the procedures are reimbursed.

All of this is changing. The growing trend to single payments that cover individual lives, certain medical conditions and episodes of care allows providers flexibility to use telemedicine services whenever and wherever they make sense. These alternative payment mechanisms are expected to mushroom in the next three years. Two examples:

Medicaid - In 2008, 71 percent of the 47 million Medicaid enrollees were in a managed care plan. This is over 33 million insured, up from 17 million ten years ago. This is expected to grow quickly as Medicaid starts to cover about half of the additional 30 million uninsured under health reform. Within three years there could be as many as 60 million Americans covered under Medicaid managed care programs. Of course, these plans cover lower income patients and have less incentive to use some high tech solutions. However, because cost containment is a critical factor, lower cost telemedicine solutions such as remote monitoring for chronic care populations will remain a very attractive alternative.

Medicare – While the overwhelming majority of current payments under Medicare remains traditional fee-for-service this is changing. The traditional managed care side of Medicare, Medicare Advantage, serves less than 15 percent of enrollees. However, health reform is accelerating the use of a wide-range of other, pseudo-managed care approaches including bundling of payments, shared savings, Accountable Care Organizations and Medical Homes that will transform the fee-for-service side of the program. These single, capitated payment approaches allow providers to make the decisions on the way services are provided.

This trend may spark another growth spurt in telemedicine. Under these new payment systems, decisions regarding the use of telemedicine are delegated to local and regional managed care organizations, regional accountable care organizations and healthcare systems managing bundled services. In recent years, single-payer health systems such as the Veterans Administration and countries with socialized healthcare have increasingly relied on telemedicine. The single payment approaches offer far greater incentives for using telemedicine. This is especially true for remote monitoring services.

However, whether the decisions are made by payers in a fee-for-service system or providers under single payment initiatives, the use of telemedicine will continue to be based on its efficacy and its impact on costs and access. A remote ICU initiative, outsourced imaging service, or mHealth application will still have to be proven as a trusted, worthy component in the delivery of healthcare.

What may be different with the growing number of integrated, regional, single payment mechanisms is that the use of telemedicine services will not be stand-alone programs or applications and decisions on their use will be made by providers, not payers.