Telehealth Post-COVID: going digital to reduce costs?

Even after a period of record investment in digital health – over $14.1 billion in 2020 according to a report by Rock Health – and widespread telehealth adoption that saw a 43% uptick in traditional video telemedicine, the extent to which virtual care will continue to be leveraged post-pandemic remains uncertain.

From a patient and provider perspective, the expansion of this care modality has been well received. According to the AMA’s COVID-19 Telehealth Impact Study, 79% of patients reported being very satisfied with the care they received during their most recent telehealth visit, and 73% said they will continue to use telehealth services in the future. For providers, a vast majority say they are motivated to increase telehealth usage in their practice. However, there are additional complicating factors at play that will ultimately determine the future of virtual care.

The most pressing is the fate of CMS’s COVID-19 temporary waivers, which have greatly expanded equitable access to telehealth services for Medicare and Medicaid beneficiaries. Although the Biden administration has said that they hope to permanently expand access to telehealth, the fate of these waivers – and of vulnerable populations’ access to virtual care – remains in limbo. They are currently set to expire at the end of the Public Health Emergency declaration, which, for now, continues to be renewed every 90 days, and will likely require congressional intervention to solidify telehealth as a routine care pathway.

Another important factor is telehealth’s impact on healthcare costs – will it result in increased spending, or reduce overall healthcare expenditures? The answer is not necessarily clear.

Savings through substitutions

There are several ways in which telehealth is generally accepted to provide savings. One area, for example, is in the out-of-pocket costs per visit for patients. A 2017 study found that telehealth visits cost patients an average of $79, compared to $146 for an office visit. That is in addition to savings associated with time and travel costs, estimated to total $89 billion a year in lost time.

Another potential source of savings is the streamlining of chronic care management (CCM) for the rapidly growing Medicare beneficiary population, particularly those in need of quick but regular check-ins with their doctors. The ability to leverage virtual care – whether in the form of phone calls, video appointments, or remote patient monitoring – as a replacement for more expensive office visits can reduce health care costs for this patient population significantly.

Additionally, there are some instances where telehealth can divert patients away from costly emergency department care, saving more than $1,500 per visit according to one recent study. All of these sources of savings, however, assume that the vast majority of telehealth usage is as a substitute for in-person care.

Improved outcomes

Telehealth has the potential to greatly improve health care access, a major factor in health care outcomes. Although the changes in telehealth regulations and utilization are too new to clearly track the impact on disease outcomes it is clear that telehealth improves healthcare access.

As the health care system focuses more on social determinants of health, telehealth seems poised to solve many of the barriers to care faced by patients in the U.S. Telehealth greatly expands access to care for rural Americans. In addition, those with transportation problems or multiple health conditions find it difficult to get to appointments. Improving access with telehealth has the potential to drive significantly improved chronic disease health outcomes in the U.S.

Potential pitfalls

On the other hand, there are several proof points to support the idea that the convenience of telehealth may actually lead to higher costs, rather than savings. Research shows that up to 90% of patients say they wouldn’t have sought care if telehealth wasn’t available, and new utilization has far outpaced substitute care. This is particularly true when it comes to younger patients and those seeking preventive healthcare. Despite the commonly held belief that prevention reduces health care costs through early detection and better management of chronic conditions, various analyses over the last several years have debunked this theory.

The challenges associated with telehealth fraud, waste, and abuse may also contribute to higher costs. One example is direct telehealth fraud in the form of upcoding phone call check-ins to full telehealth appointments. Another source of abuse may be billing of services not rendered.

The biggest source of wasted costs associated with telehealth, however, may be the time and effort it takes to ensure that payments are made correctly and by the right party, otherwise known as payment integrity. Although many payers, providers, and health systems are increasingly deploying advanced technology such as artificial intelligence to prevent these forms of waste, it will take greater utilization to reduce or eliminate this source of spending.

Making telehealth work in the health care system

The vast expansion of telehealth driven by the COVID-19 pandemic has opened the door for many benefits that telehealth can provide. Big data analytics and research will be critical to determine the impact that telehealth has on the health care system. Key analytics use cases will include understanding the impact on health outcomes and costs, identifying and preventing fraud, waste and abuse, and integrating telehealth into effective population health and outreach programs. Without data driven analysis it will be impossible to realize the full benefits that telehealth might provide.

Call is chief medical officer at Gainwell Technologies