Shane Walker – Principal Analyst, Healthcare Technology
The themes of the American Telemedicine Association’s (ATA) 2016 Fall Forum were familiar, but discussed with increased optimism as the long anticipated evolution from traditional healthcare to more efficient provision is well under way. Some of these themes included EMR integration, healthcare as an international business, increased consumer awareness (Walmart and other direct-to-consumer models), innovation from third party vendors, and the Medicare Access & CHIP Reauthorization Act (MACRA).
MACRA and the Quality Payment Program
MACRA makes three key changes to how Medicare pays providers and creates a Quality Payment Program, ending use of the sustainable growth rate formula for determining payments, rewarding providers for giving better care, and combining existing quality reporting programs into one system. The proposed changes replace a patchwork system with one that is flexible, based on quality of care, and allows providers to choose from two payment paths; the Merit-Based Incentive Payment System (MIPS) or the Advanced Alternative Payment Models (APMs). MIPS payment adjustments and APM incentive payments will begin in 2019 with performance and analysis periods beginning in 2017.
While the industry is still waiting for the final MACRA rule, it is known that MACRA intends to tie 90% of traditional Medicare fee-for-service payments to value-based payments in 2018. Most importantly for the ATA, it is anticipated that MACRA will help telemedicine to simply become another modality within healthcare delivery. Leading up to the MACRA discussion and its impact on telemedicine, Jonathan Linkous, CEO of the ATA, noted that the organization now has 9,600 members including 200 health systems and 200 corporations, and that telemedicine services will touch 20 million people in the United States during 2016. This is a significant number and a point of validation for the hospitals and vendors that have been fostering adoption of telemedicine technologies for decades. The leading remote services in 2016 are radiology and cardiac monitoring.
It is important to note that telemedicine today still primarily consists of rural, or ambulatory, facilities connecting with remotely located specialists. The key benefit is increasing access to care for patients that have difficulty traveling to their physician. This does not capture the full spectrum of this emerging market, which also includes direct-to-consumer vendors such as Teladoc, SnapMD, and American Well. IHS Markit estimates that the full range of video consultations will reach 40 million globally during 2016, growing to 70 million in 2020. Over the next five years it is likely that the majority of direct-to-consumer telemedicine services will be through a healthcare system due to the level of trust most patients have with their traditional physicians. However, if these systems do not act quickly and engage now, the national private label vendors may innovate enough to gain the engagement of the consumers and increase their significance within healthcare delivery.
The state of telemedicine in the US
According to the ATA there are currently 200 telemedicine networks providing connectivity to 3,000+ sites in the US. However, payment and coverage of services delivered through telemedicine continue to be biggest challenge for telemedicine adoption as patients and healthcare providers face a patchwork of insurance requirements, disparate payment streams and complex policy. There has been a slow move away from the hub-and-spoke model, allowing for wider variety of technology applications—23 states and DC do not specify a patient setting or location as a condition of payment, 21 states recognize the home as an originating site, and 13 states recognize schools.
There is a national trend in the US to allow state-wide Medicaid coverage instead of focusing on rural areas or designating a mileage requirement and states are increasingly using telemedicine to fill provider shortage gaps and ensure access to specialty care. Further, states have increasingly used managed care organizations (MCOs) to accommodate capitated payments. MCOs experimenting with innovative delivery models including medical homes and dual-eligible coordination have included telemedicine as a feature of the care plan to reduce costs related to ER and hospital admissions. The ATA reports that 21 states have telemedicine parity laws and 47 state Medicaid programs have some type of coverage for telemedicine.
There is some resistance from physicians to the new interactive telemedicine services such as MD Live and Healthtap due to the low $20 to $49 fees. However, most patients expect copays to be less when using telemedicine, and many question what their payers will cover so utilizing these services as an out-of-pocket expense is likely to continue—provided the fees do not increase. As noted by Ben Wanamaker, director of strategy at Walmart, consumers do not care about high fixed labor cost when investigating which telemedicine provider to use.
Walmart Vision Pilot - Walmart gets into telemedicine
“Telemedicine is a killer omni-channel ‘app’ for healthcare in retail.” Ben Wanamaker
Walmart has a new vision program that includes screening, remote diagnosis, and same visit prescription with fitting. During the ATA Fall Forum presentation, Mr. Wanamaker noted that telemedicine is a killer omni-channel ‘app’ for healthcare in retail and that a one size fits ‘all’, or perhaps ‘none’, will not change consumer behavior. Consumers are motivated by products that solve specific problems in their lives, and will quickly move toward those services that are the most efficient.
As identified during a recent consumer survey conducted by IHS Markit on digital health trends in the US:
- Of the 405 respondents, 50% of the respondents are managing a chronic condition and 83% are using a device to monitor their health.
- Nearly 40% are using a weight scale and 28% use a smartphone.
- Smartwatch usage is increasing at 15%, while activity monitor uptake has edged past blood pressure monitors.
Only 14% of respondents communicate with their healthcare provider on a daily or weekly basis and 55% communicate with their provider monthly or biannually with the highest frequency of communication being once every six months. However, 70% stated that they are interested in sharing the health data they collect with their provider. The trend toward self-monitoring and interest in communicating the data with providers may prove to be advantageous for telemedicine. As consumers become more cognizant of their health data through access to patient portals, they may also find that accessing routine consultations are preferable through video rather than in-person. The challenge for the healthcare industry is to maintain a unique, personal delivery system while achieving economies of scale.