Why Not Getting Paid Directly for Telehealth May Not Matter

During and after a recent presentation regarding telehealth before a health care executive group, we were inundated with the following question:  Why should a hospital provide telehealth services when often times it will not get paid for those services?  It is, on its face, a great question.  After all, few of us would want to provide services we know will not be reimbursed.  But, in many ways, the question misses the boat.  While a hospital may not be paid directly for providing telehealth services, it nevertheless could significantly benefit in a number of ways that prove just as valuable to the hospital.  This is especially the case as we transition from a fee-for-service system to one rewarding quality of care, patient outcomes, and clinical integration.  In other words, measuring the value of telehealth services solely based on direct reimbursement is misguided.

The Indirect Benefits of Hospitals Providing Telehealth

The questions raised during our presentation, however, gave us an opportunity to organize our thoughts about telehealth’s “indirect” benefits.  Here are four reasons why it may be worth providing telehealth even in circumstances in which a hospital or provider is not directly reimbursed for providing the service.

• Penalty/Cost Avoidance: Providing telehealth is a great way to avoid certain future costs, especially those related to inpatient readmissions, ED admissions, and post-acute care management.  Take readmissions—almost 20 percent of Medicare beneficiaries are readmitted to the hospital within a month of discharge.  Many of the discharges are avoidable and the result of poor transitional care.  And Medicare now reduces payments to hospitals with excess readmissions.  Telehealth interactions are one effective way to better engage patients, more closely monitor disease states, and help reduce complications—all great tools in the fight against excess readmissions.  So, in this context, using telehealth as a means to reduce readmissions (and not incur penalties) may outweigh the lack of direct reimbursement for those services.  This is a scenario likely to play out repeatedly as we transition out of fee-for-service into a system in which hospitals and providers are rewarded for the value of care they provide—not the volume.
• Branding/Geographic Reach:  Telehealth may provide a great vehicle for a hospital to extend its brand further outside its market in ways previously inconceivable.  In many of the programs I see being implemented around the country, the institution is often providing telehealth services to other hospitals (such as rural hospitals) and facilities (clinics, physician offices) it would otherwise have little opportunity to interface with.  There are countless examples, many involving telestroke, teleICU, and telepsychiatry programs.  What is increasingly becoming clear is that telehealth is a highly effective way to increase a hospital’s market footprint just in the course of normal business.
• Short-supply specialists. Many hospitals and other health care facilities often lack specialty care.  Some of the specialties suffering the most acute shortages include cardiology, critical care, oncology, psychiatry and neurology.  Hospitals are now turning to telehealth as a means to provide specialty care to their patients who would otherwise not have access to such care.  By leveraging the power of telehealth, many institutions are actually treating patients who would likely otherwise be unable to receive the care they need—thereby reducing further complications and potentially significant downstream costs.
• Patient Satisfaction. Patient satisfaction with telehealth has always historically been high.  Patients report that they appreciate: i) the ability to connect with health care professionals with the expertise to treat their conditions—regardless of the distance; and ii) as well as the individualized personal care they receive from telehealth interactions.  A number of studies further confirm these conclusions.  One such study showed that patient satisfaction from the use of telehealth increased by 85 percent. Patient satisfaction, in addition to being measured in many payers’ quality matrices, plays a significant role in how a hospital is viewed in the community.

More Payers Are Reimbursing Than You Think

As we have discussed, there are many “indirect” benefits for hospitals providing telehealth—but we cannot lose sight of the fact that many payers do indeed reimburse providers for telehealth.   Many leading private insurers provide coverage and reimbursement for telehealth.  Generally these coverage policies provide reimbursement for telehealth services involving the use of real-time interactive audio, video, or other electronic media for diagnosis and consultation.  Note that an increasing number of the largest health plans have various telehealth initiatives underway that directly reimburse providers for services such as teleconsults.

There are also a growing number of states that have passed telehealth parity statutes which require health insurers to pay for services provided via telehealth the same way they would for services provided in-person.  Almost a third of all states have enacted these statutes, and another dozen or so states are considering similar legislation.  Additionally, about 44 Medicaid programs currently reimburse in some way for telehealth.  Medicare, however, lags behind other payers in reimbursing given its many restrictions—but even Medicare provides some coverage for telehealth.