For many years, telehealth advocates have accused payers of being unwilling to reimburse for proven telehealth interventions, which can significantly reduce medical costs.
Well, we have crossed that chasm, and telehealth is about to experience explosive growth. RNCOS Business Consultancy Services has just released a report predicting 18.5 percent annual growth in telehealth worldwide through 2018. The U.S. will outpace the rest of the world. Forbes contributor Bruce Japsen recently interviewed an analyst at another market research firm, IHS, who predicts that the U.S. telehealth market will grow to $1.9 billion in 2018 from $240 million today, an annual growth rate of 56 percent. This is explosive, and it has led to increased political activity.
Given the risk of unintended consequences of legislation and regulation, it’s a good time to have a look at how the major players are shaping policy.
According to Mr. Japsen’s interview with Roeen Roashan of IHS, much of the dramatic growth in U.S. telehealth will be driven by Accountable Care Organizations (ACOs), in both Medicare and among the privately insured. Although there are different models of ACO, all move beyond the traditional Fee-For-Service (FFS) payment system by implementing incentives to reduce costs while increasing quality. For example, if a physician in an ACO meets certain quality indicators that evidence suggests will reduce the risk of a patient being hospitalized, she will be rewarded by the ACO. In the old (but still dominant) payment model, her income would not have suffered for failing to meet these quality indicators. ACOs are found all over the country, with different levels of penetration, according to research by Leavitt Partners.
The jury is still out on whether ACOs will succeed. My own expectation is that early experience will not result in a “general theory” of ACOs, just like the previous experience of managed-care, which ramped up in the 1970s and peaked in the late 1990s, did not lead to a “general theory” of HMOs. A few worked and many did not, with leadership and commitment by all interested parties being critical to success. The ACO experience will likely be similar. Nevertheless, new technology has the potential to increase the likelihood of success. For example, remote monitoring of diabetic patients’ blood glucose from home can trigger an early intervention – maybe a phone call from a nurse on the care-team – that reduces the risk of hospitalization.
Traditionally, Medicare pays FFS via fee schedules. A certain code is attached to a certain procedure (the result of a cumbersome and confusing process) and this allows claims to be reimbursed. Medicare covers certain telehealth services, especially in remote rural areas. However, one of the most important telehealth services, sending a digital image to be stored at another site and read by a specialist (i.e. without the patient and physician speaking with each other over the phone), is not generally covered. Medicare coverage of telehealth tends towards mental health and behavioral interventions.
Date: December 28, 2013