Nathaniel Lacktman, Esq.
Healthcare Partner, Foley & Lardner, Tampa, Florida
Telemedicine continues to be an innovative alternative to traditional brickand- mortar healthcare. The number of providers offering telemedicine-based services rapidly increased in 2015, and several states enacted laws last year requiring health plans to cover telemedicine services and telemedicine technology. It is expected that the global telemedicine market will expand at a compound annual growth rate of 14.3 percent through 2020, eventually reaching $36.2 billion, as compared to $14.3 billion in 2014. And while the growing demand for convenience, innovation and a personalized healthcare experience may be the greatest factor; other forces are at work as well.
Here are five key trends that will drive telemedicine’s continued growth and transformation of healthcare delivery in 2016.
- Greater Payment Opportunities
Both private and government payers will continue to expand telemedicine coverage as consumers gain experience with the technology and increasingly demand access to telemedicine-based services. Some health plans have already begun bolstering their coverage of telemedicine, which they view as a form of value-based care that can improve the patient experience and offer substantial cost savings. On the government side, 2016 will particularly see more coverage among Medicaid managed care organizations and Medicare Advantage plans.
Simultaneously changing is the misconception that telemedicine creates a financial strain or relies on grant funding. Smart health system leadership are creating sustainable telemedicine arrangements that generate revenue, not just cost savings, while improving patient care and satisfaction. Telemedicine saves money for patients, providers and payers compared to traditional healthcare practices, particularly by helping reduce the frequency and duration of hospital visits.
While Foley & Lardner’s 2014 telemedicine survey1 revealed that reimbursement was the primary obstacle to telemedicine implementation, new laws requiring coverage of telemedicinebased services have been implemented at the state level, and 2016 will be the year these laws drive implementation in those states. Providers are becoming increasingly receptive to exploring payment models beyond fee-for-service reimbursement and 2016 will continue the growth of these arrangements. Examples include institution-to-institution contracts and greater willingness by patients to pay out-of-pocket for these convenient, valuable services.
At the same time, consumers are increasingly willing to visit retail medical clinics and pay out-of-pocket for the convenience and multiple benefits of telemedicine services when telemedicine is not covered by their insurance plans. In 2015, both CVS Health2 and Walgreens3 publicly announced plans to incorporate telemedicine-based service components in their brick-and-mortar locations. There will be continued expansion of these services throughout 2016.
- More Telemedicine-Friendly State Laws
State governments across the U.S. are leading the way in telemedicine expansion. According to a study by the Center for Connected Health Policy,4 during the 2015 legislative session, more than 200 pieces of telemedicine-related legislation were introduced in 42 states. Currently, 29 states and the District of Columbia have enacted laws requiring that health plans cover telemedicine services. In 2016, we will see more bills supporting health insurance coverage for telemedicine-based services introduced in various state legislatures.
While state lawmakers are leading the way in incorporating telemedicine into the healthcare system, there is a burgeoning interest at the federal level. The Centers for Medicare and Medicaid Services (CMS) is considering expansion of Medicare coverage for telemedicine, and a bill working its way through the U.S. House of Representatives would pay physicians for delivering telemedicine services to Medicare beneficiaries in any location. We may see these policy changes debated further (or possibly implemented) in 2016.
- Medicare Accountable Care Organizations (ACOs) will Use Telemedicine to Improve Care and Cut Costs
Telemedicine is establishing itself as a key component in the healthcare industry’s shift to value-based care. It can generate additional revenue, cut costs and enhance patient satisfaction. In 2015, telemedicine saw rapid growth and deployment across a variety of applications. This adoption is fueled by powerful economic, social and political forces-most notably, the growing consumer demand for more affordable and accessible care.
2016 will be the year of telemedicine and ACOs. Since the advent of ACOs, the number of Medicare beneficiaries served has consistently grown from year to year and early indications suggest the number of beneficiaries served by ACOs is likely to continue to increase in 2016. These organizations present an ideal avenue for the growth of telemedicine.
While CMS offered heavy cost-reduction incentives in the form of shared-saving payments, only 27 percent of ACOs achieved enough savings to qualify for those incentives last year.5 Meanwhile only 20 percent of ACOs use telemedicine services, according to a 2015 study.6 The widespread need to hit the incentive payment metrics, coupled with the low adoption rate will lead to significantly greater telemedicine use among ACOs in 2016.
- Cross-Border Licensure and the Interstate Medical Licensure Compact
2015 saw notable efforts to streamline and simplify physician licensing across state lines. Perhaps the most important example gaining traction is the Federation of State Medical Boards’ Physician Licensure Compact. Under the Compact, participating state medical boards would retain their licensing and disciplinary authority, but would agree to share information and processes essential to the licensing and regulation of physicians who practice across state borders. The Physician Licensure Compact has received significant support and at least 10 states have completed the process necessary to bring it to adoption once it becomes effective. More participation is anticipated in 2016.
A 2015 Towers Watson study7 found that more than 35 percent of employers with onsite health facilities offer telemedicine services and another 12 percent plan to add these services in the next two years. Other studies suggest that nearly 70 percent of employers will offer telemedicine services as an employee benefit by 2017. The growth of nation-spanning telemedicine companies such as MDLIVE and the now publicly-traded Teladoc, which offer health services tailored to the specific needs of employers and other groups, is a reflection of the demand for these services.
- International Arrangements
In 2016, more U.S. hospitals and healthcare providers will forge ties with overseas medical institutions, spreading U.S. healthcare expertise abroad. They are exploring both institutional arrangements and direct-to-patient service offerings such as internet-based medical consultations and online second opinions.
These cross-border partnerships will provide access to more patients, create additional revenue and help bolster international brands. Many programs that were in pilot phase in 2015 will see a maturation and commercialization in 2016, as they are a win-win for participants in both countries.
The growing purchasing power of middle-class populations in countries like China is giving more patients the means and opportunity to pursue treatment from Western medical providers. We have seen both for-profit and non-profit models for international telemedicine and hospitals partnering with organizations in the developing world to expand healthcare availability or offering commercial care to customers in nations with areas of concentrated wealth but lacking the capabilities and access of Western healthcare.
- While Foley & Lardner’s 2014 telemedicine survey, http://www.foley.com/2014-telemedicine-survey-executive-summary/
- CVS, Direct to Consumer Services https://www.cvshealth.com/content/cvs-health-partner-direct-consumer-telehealthproviders-increase-access-physician-care
- Walgreens press release announcing telehealth expansion, http://news.walgreens.com/press-releases/general-news/walgreensand-mdlive-expand-telehealth-platform-to-three-new-states-add-desktop-and-tablet-functionality.htm
- Reimbursement report CCHPCA, http://cchpca.org/sites/default/files/resources/STATETELEHEALTH POLICIES AND REIMBURSEMENT
- CMS Shared Savings Program, https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-08-25.html
- ACOs use of telemedicine services savings, EHIDC, https://www.ehidc.org/articles/418-2015-aco-survey-results-webinar
- 2015 Towers Watson study, https://www.towerswatson.com/en/Press/2015/05/employers-plan-to-expand-use-of-onsite-health-centers