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Summary

Why are telehealth services not being used extensively in the US? Not because of a lack of technology-readiness or demand, but because of a lack of complete reimbursement coverage. Inadequate reimbursement for telehealth stems from the fear of escalated costs at a time when the Centers for Medicare and Medicaid Services (CMS) is focusing on rationalizing healthcare expenditure. However, telehealth proponents seem to have gathered enough evidence to convince the CMS to expand its coverage for telehealth services. Several clinical studies prove that telehealth lowers the cost burden and improves the quality of outcomes. Industry groups such as the American Telemedicine Association (ATA) have long argued that complete coverage for telehealth services will eventually help the CMS to cut costs elsewhere.

Interestingly, private insurers in 25 states and Medicaid in 45 states have already expanded coverage for telehealth, while Medicare, which has the largest market share, has been the late adopter. The US Senate is set to reintroduce the bill to waive some of the Medicare restrictions on telehealth services, which will drive their use. The recent move by the CMS to expand coverage is welcome, as it not only widens the target population for telehealth but also provides a much-needed boost for mobile technologies that focus on remote patient monitoring.

Expanded coverage is a step in the right direction, although there is room for improvement

The adoption of telehealth is largely driven by what is reimbursed and what is not. Healthcare providers currently have limited incentives to promote its extensive use: the lack of reimbursement for data charges incurred during remote consultations, strict rules about the location of the hospital and the patient to be eligible, and the high upfront cost involved in setting up telemedicine infrastructure are major factors inhibiting fully fledged use. Although costs related to telemedicine infrastructure are being addressed by software vendors developing affordable yet effective solutions, reimbursement issues need to be resolved before providers include telehealth as a mainstream component of healthcare delivery.

The proposed changes to the bill are expected to promote the use of the technology. Telehealth services are not covered if patients are not located in rural areas, but the proposed legislation will expand coverage to all patients and hospitals regardless of their location. Also, Medicare does not reimburse telehealth services if patients are located at home, but the proposed legislation will cover home-based video services for hospice care, home dialysis, and homebound seniors.

However, the CMS will still not cover expenses related to data-collection services. These mainly include data charges incurred by healthcare providers for remote consultations and the storage and transmission between patients and physicians of vital-signs data. Although this is a major drawback, the CMS has acknowledged that data collection is a valuable service and will be a part of chronic care patient management, which implies that data collection expenses could be reimbursed as an additional payment in future, though billed as a part of chronic patient management in the proposed legislation. The CMS has allocated a new CPT code, 99490, for chronic patient care management, which is not part of the telehealth code. This facilitates hospitals’ provision of telehealth services to patients regardless of their location.

Appendix

Further reading

“Telemedicine should be better exploited in India,” IT0011-000344 (January 2015)

On the Radar: VSee, IT0011-000333 (November 2014)

Author

Srikanth Venkataraman, Analyst, Healthcare Technology

srikanth.venkataraman@ovum.com

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