A view from the Center

Deloitte's Life Sciences & Health Care Blog

Telehealth: Aligning the incentives with the demand

Walking with my dog Tarot down my street last week, I was stopped by a man selling organic lawn services. He explained how beautiful my yard would look and how much easier it would be for me if I used his services. He stressed that this was a much more sophisticated service than older services I might have been familiar with – it could reduce harmful runoff and environmental impact and is safe for my pets.

Despite his impassioned pitch, I told him I wasn’t interested. Undeterred, he began to recite additional innovations. I finally had to explain: Tarot spends most of the day running in the yard, to the point that our grass was perpetually torn up. We had finally replaced it with artificial turf. No matter how good his lawn service was, we had absolutely no use for it.

Such has been the history of telehealth. For years, it has been pitched as a solution to a range of problems – access, cost, quality, convenience, and beyond. Year after year, new and increasingly sophisticated entrants appeared, but adoption of telehealth remained relatively anemic. Why?

As discussed in a recent Deloitte health policy brief, Realizing the potential of telehealth, a lack of aligned incentives, rather than a lack of good technology, has stymied telehealth adoption. Reimbursement, competition, licensure, and others issues have been insurmountable barriers for most providers and payers. As a result, telehealth has been largely restricted (albeit highly successful) to integrated delivery systems and government health services where the business model made sense. However, with the expansion of new reimbursement models and the rise of consumerism, new drivers of adoption have emerged.

For example, the US Centers for Medicare and Medicaid Services (CMS) Next Generation Accountable Care Organization (ACO) model is testing whether strong financial incentives for ACOs, combined with tools to support better patient engagement and care management, can improve health outcomes and reduce expenditures for beneficiaries in traditional Medicare.1 Under the model, CMS waives some traditional telehealth restrictions. Unlike in traditional Medicare, ACOs providing telehealth services do not have to be in rural areas or originate from a medical facility (they can originate from the patient’s home). ACOs can experiment with using telehealth to reduce avoidable hospital readmission rates and triage patients to urgent care or the physician office instead of using the emergency department.2 Under these experimental reimbursement models, the incentives for using telehealth services may be more properly aligned among the different stakeholders.

CMS has other demonstrations and initiatives that waive certain telehealth restrictions. For example, the Comprehensive Primary Care Plus (CPC+) Model,3 the Comprehensive Care for Joint Replacement Model (CCJR),4 and the Bundled Payment for Care Improvement Initiative (BPCI) all have waivers around telehealth.5 Under the CPC+ model, participating practices must provide patients with 24-hour access to care and deliver preventive care services, engaging with patients and their families and coordinating care with hospitals and other clinicians, such as specialists. Telehealth may provide a cost effective way for physician practices to meet these requirements.

Outside of Medicare, much of telehealth oversight takes place at the state level. States regulate telehealth coverage through three major channels: Medicaid reimbursement, private insurance parity, and provider licensing and reciprocity. In general, states have taken diverse approaches to regulating the service and addressing licensing issues, creating a mixture of barriers and incentives for telehealth.

Medicaid programs in 47 states and the District of Columbia (DC) provide some level of reimbursement for live video, the most traditional telehealth service. Only five states offer what could be considered a “full” range of services, reimbursing for live video, store and forward, and remote-patient monitoring (though the restrictions and limitations vary).

The private insurance market looks different. Twenty eight states and DC have laws requiring private insurers to reimburse for telehealth services at the same rate as in-person services. Though many telehealth companies accredit this as a “win,” as payment models evolve toward value-based models, payment parity laws may become less relevant. Shared risk and shared savings models are expected to increase the incentives for health plans to encourage the use of telehealth services as they will have more incentives to reduce avoidable hospital readmissions and triage patients to urgent care centers or the physician offices.

As care delivery models evolve, it’s also important to note what consumers expect. Deloitte’s 2016 Survey of US Health Care Consumers found that about half of surveyed consumers, whether they have a chronic condition or not, say they would use telehealth for post-acute care or chronic condition monitoring. Additionally over the last few years, a proliferation of vendors have started offering direct-to-consumer telehealth services. While some consumers may prefer only using telehealth services from their physician or health plan, some health care organizations see these industry disruptors as a threat to their usual way of business.

Meeting consumer demand and innovating business strategy may be a motivator, beyond cost and quality alone, for broadening telehealth adoption.6 Telehealth is finding its way into broader use as new drivers and new business models emerge. Perhaps now it can run free, just as Tarot can in our yard.

Sources:
1 Patrick Conway, “Building on the success of the ACO model,” The CMS Blog, March 10, 2015.
2 Studies have shown that a quarter of all ER visits are for non-emergent care, resulting in otherwise avoidable health costs. Using telehealth to increase appropriate care sites is one strategy of ACO care coordination.
3 Centers for Medicare and Medicaid Services, Comprehensive Care for Joint Replacement Model, 2016.
4 Ibid.
5 CMS, BPCI: General Information, 2016.
6 Darius Tahir, “Telehealth services surging despite questions of value,” Modern Healthcare, February 21, 2015.

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Author bio

As director of the Deloitte Center for Health Solutions, Dr. Greenspun serves health care, life sciences, and government clients on key innovation and clinical transformation issues. He has been named one of the “50 Most Influential Physician Executives in Healthcare” by Modern Healthcare, co-authored the book “Reengineering Healthcare,” and has served on advisory boards for the World Economic Forum, WellPoint, HIMSS, Georgetown University. Prior to joining Deloitte, he served as the Chief Medical Officer for Dell.