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The Virtual Care Reimbursement Parity Puzzle: What Everyone Should Know

In a 2015 survey of family physicians conducted by the AAFP’s Graham Center, family physicians cited education and reimbursement as the two leading barriers to telemedicine adoption by family physicians. Since that survey, not much has changed – particularly in the area of reimbursement parity.  

Telemedicine reimbursement regulations remain complicated, complex and fragmented. And the notion of parity has been variably defined and interpreted within and across states. Today, reimbursement is often a key issue in pending telemedicine bills across the country.

One concerning trend is language included in telemedicine legislation that explicitly prohibits the state from requiring reimbursement parity. If this sort of “carve out” language becomes commonplace, we risk diminishing the ability to use virtual care to address the quadruple aim—improve cost, quality and access, and reduce physician burden.

The Current State of Reimbursement

Currently, 29 states offer coverage parity, which requires insurers to cover telemedicine/virtual care services the way they do in-person care, some with exceptions or restrictions. Only 3 states have legislation mandating both patient coverage parity and provider reimbursement parity, though several states offer provider reimbursement for specific specialties or circumstances. To date, 18 states either do not have legislative language or explicitly exclude parity for coverage and/or reimbursement.

The Trouble with the Current State

The current state of reimbursement parity is largely payer-centric. What I mean by that, is that individual payers determine reimbursement for virtual care and telemedicine services based on their contracts with healthcare organizations and telemedicine service companies. In my experience, this model isn’t in the best interests of patients and providers. Often, primary care providers get cut out of the care delivery process, limiting their ability to use virtual care and other innovative technologies to care for patients at the lowest cost, most appropriate point of care.

What Payer-Centric Reimbursement Looks Like

Payer-centric model; no reimbursement parity

    1. Employer / health plan contract with telemedicine service company for online care delivery.
    1. Member is routed to telemedicine service company provider for care.
    1. Telemedicine service company receives any co-pay and is paid contract rates by employer/health plan.
    1. The visit record remains with the telemedicine service provider.
  1. The primary care provider is left out, and the patient record is often incomplete.

How Reimbursement Parity Should Work

In an ideal world, reimbursement will be fair and equal across all providers, giving primary care physicians and healthcare organizations the ability to effectively compensate providers who care for their patients online.

What Patient and Provider-Centric Reimbursement Looks Like

Patient/Provider Centric Virtual Care; Reimbursement Parity

    1. Patient connects with provider’s virtual care service.
    1. Provider makes diagnosis & treatment.
    1. Provider submits for and receives reimbursement beyond co-pay.
  1. Information is retained in patient’s EHR.

How to Prevent Your Emergency Department from Becoming an Urgent Care

The Challenge:

Across the country, emergency departments (EDs) are experiencing, well, an emergency – specifically, overuse. Patients – for a variety of reasons – are treating emergency rooms like urgent care facilities. A report from the New England Healthcare Institute estimates that this overuse of EDs is responsible for $38 billion in wasteful spending each year. Additionally, a literature review published in the American Journal of Managed Care found that on average 37% of ED visits were judged to be non-urgent. The CDC’s numbers match up, finding that of the 130 million ED visits in 2013, only 8 percent could be classified as “immediate” or “emergent”.

Little girl in the emergency department with a broken arm

Patients treating the emergency room as an urgent care can cause problems for hospitals and health systems. ED use can cause fragmentation, and even with an efficient EHR, can make effective care coordination challenging. What’s more, an ED being used as an urgent care for non-emergencies may increase wait times for all. Using “broken bone” as an example, ProPublica’s ER Wait Watcher shows an average wait time of between 38 and 72 minutes.

Another major concern for health systems related to ED overuse is uncompensated care. Patients treating the ED like an urgent care my receive a rude awakening when they find that their visit cost is only partially covered by insurance or is exponentially higher than a PCP or true urgent care visit. According to an article in the Annals of Emergency Medicine, only 50 percent of ED charges are reimbursed – including reimbursements through Medicare, Medicaid, and private insurance.

With the mean cost of care delivered in the ED over $2,000 per visit (approximately 300% the cost of primary care) according to research published in the Journal of Medical Internet Research, that adds up quickly – for both health systems and patients. A study in the American Journal of Medicine found that medical debt is a contributing or primary factor in more than 40% of personal bankruptcies. This creates a financial strain on health systems, and has the potential to result in ED closures, which in turn compromises access for patients experiencing a true emergency.

Why Patients Choose the ED – Access, Access, Access

There is no doubt that many patients go to the emergency department due to a bona fide emergency. But an article in the Journal of Emergency Nursing found that the reasons for going to the emergency department for non-emergency care were centered around access and inappropriate referrals. Specifically, patients visited the emergency room because they were unable to obtain a PCP appointment, were told by staff (not physicians) to go to the emergency room, or felt that it would take less of their time.

A review in the American Journal of Managed Care found similar reasoning around convenience, access, and cost. But the inability to access quality care elsewhere was the foremost reason for patients visiting the ED for non-urgent conditions. This is a particular challenge for uninsured and underinsured individuals and families, as well as those classified as having a low income, and why the top strategy for reducing ED overuse is broadening access to primary care services, according to the Centers for Medicare and Medicaid Services.

Ultimately, many patients go to the ED because they think it is easier than the alternatives. Younger patients, in particular, view the emergency department as a reasonable alternative to a primary care clinic for receiving care. This is part of the larger trend of consumerism in healthcare, in which patient choice is driving change in how and when care is delivered.

So, What’s the Answer?

Unfortunately, there’s no magic bullet to the challenges of supporting efficient use of an emergency department. The good news is there are things health systems can do to help reduce overuse. And one of those things is launching a virtual care service line and driving patients to the online access point in lieu of the ED.

For patients who are unable to obtain a PCP visit, virtual care offers an alternative access point. Available 24/7, unlike primary care clinics or even urgent care facilities, virtual care gives patients unprecedented access to care. Patients who can’t afford to or are otherwise unable to take time away from work to seek care during normal office hours can use the virtual care service to get the care they need. And, when using a virtual care platform that incorporates  evidence-based algorithms and best practice-driven protocols patients are only directed to the urgent care or emergency department visits when clinically appropriate.

Improve Patient Access with Zipnosis Virtual CareWhat’s more, patients seeking convenience in addressing non-urgent needs will likely find virtual care more appealing than the emergency department. They no longer have to leave their home, drive to the hospital, and sit in the waiting room. And virtual visits take a fraction of the time a primary care visit or even a trip to the emergency room would take.

The low cost of virtual care can also help steer patients away from the ED. Patients who don’t have insurance, are underinsured, or are taking on a larger portion of risk with a high-deductible health plan may struggle to pay for emergency care, leaving health systems with higher rates of uncompensated care. Patients who cannot cover a several-hundred dollar (or higher) emergency visit (see the shocking ED price tag example above), may be better able to pay the $30 or $40 for a virtual visit, about the cost of a typical copay.

Most importantly, with a virtual care service, health systems are expanding access to care. That means common conditions can be treated quickly before complications develop and the danger to the patient increases. This can be the difference between a simple urinary tract infection and a kidney infection or an upper respiratory infection and pneumonia. That means, getting patients treatment early could help reduce ED visits and improve patient outcomes.

Transforming Telemedicine into Virtual Care

There is a long-running discussion on what to call this next generation of healthcare tools. Is it telemedicine? mHealth? Virtual care? Connected care? For the time being, “telemedicine” is in the ascendency, but that appears to be changing.

I have always been challenged by the term “telemedicine,” and I’m going to spend a little time in the coming weeks framing up a way to look at the difference between the term and delivery model that has been prevalent for decades, compared to the care delivery tools and models that will carry us forward.

At the heart, Telemedicine is a term born in the 1960’s, a Brubeck-esque fusion of tele-matic modes of communication (phone and video) and medicine. This history is important to understand so we can better usher in the new generation of tools and nomenclature.

Let’s start with “tele.” It sounds like “8-track” to me. It harkens back to a time when I would look up Domino’s Pizza in the phone book. To when I had to avoid tripping over the phone cord as my mom talked in the hallway. It feels like green vinyl in a Pinto. Like the anti-Mackclemore leisure suit at the Salvation Army. It’s stale and, let’s be honest, out-dated.

I’ll frame this up with a few simple word associations:

Telemedicine = Testing
Virtual Care = Viability

For some, having a healthcare encounter over the phone is novel and new – but it’s not state-of-the-art. This is an important distinction between our first EXPERIENCE with telemedicine and its relevance as a term for future experiences. I would make a significant wager that the majority of our healthcare interactions over the next 10 years will not be the phone calls or 1-1 video visits with a healthcare provider the industry has been testing since the 60s. Instead, we will experience of stream of healthcare that disposes of the analog shackles, unlocks new economic models not built around transactions and delivers durable value.

Telemedicine = Analog
Virtual Care  = Digital

The telemedicine gene pool is analog. The other day, I took a cab from downtown Miami to the airport. The cabbie was genial enough, but when we got to the airport, he frowned when I wanted to use my credit card. He manually typed in my card info onto his terminal, submitted for approval (queue dial-up noises) and waited for the print-out. The printer ran out of paper – so he had to dig through his glove box for a replacement roll, re-thread it and re-print. It was a stark reminder of a time—not long ago—when getting an analog ride to the airport was common place. Telemedicine is like that transaction: labored and inefficient.

Telemedicine = Transactions
Virtual Care = Value

Finally, there’s a transactional feel to the term: I “do” telemedicine; I “practice” telemedicine. It implies a direct connection between a patient and provider – or the healthcare ecosystem. We’re at an important transition in healthcare delivery. The combination of moving care from brick-and-mortar to the digital world and changing payment from fee-for-service into value-based care is forcing healthcare providers and the innovators who support them to develop new ways of providing value.

So there you have it. Telemedicine is dead – well, on life support. Virtual care is the future, and the future looks bright.

Next time, I’ll dig a bit deeper into the testing and viability differences between telemedicine and virtual care. Until then, don’t trip on the telemedicine cords in the hallway.

Solving the Patient Engagement Puzzle with Virtual Care

Patient engagement is becoming increasingly important, and virtual care offers health systems a solution to meet patient needs while fitting healthcare into their lives. Kevin Smith, Zipnosis’ Chief Clinical Officer and innovative healthcare pioneer, discusses how virtual care can help health systems better engage with patients to boos patient retention and minimize patient leakage.

Beyond telemedicine: When was the last time you placed an Amazon.com order by phone or video?

Value-based care is driving the evolution from traditional telemedicine models to virtual healthcare

Say the word telemedicine, and most people think of patient encounters that start with live, direct-to-video or phone visits between patient and provider. However, with value-based care driving new reimbursement models, quality, efficiency and cost are more important than ever. As a result, the market is rapidly moving away from traditional telemedicine and embracing virtual healthcare—a more modern, innovative approach that connects the online experience with the brick-and-mortar and benefits health systems, providers and patients.

The digital delivery of modern virtual healthcare, done correctly, uses structured data in the form of online, adaptive interviews to guide patients through their healthcare encounters. Providers, following evidence-based pathways, leverage this structured data to create an online diagnosis and treatment plan with high rates of clinical guideline adherence. While these encounters always include online, adaptive interviews as their foundation, they allow for appropriate escalation of care, including supplemental photos, videos and/or phone calls (ONLY when needed)—and/or referrals for in-person care.

The Future of Telemedicine Will Be Different Than You Think

Like jetpacks and flying cars, telemedicine has been part of our collective vision of the future for a long time. Has that future finally arrived?

I haven’t seen any cars flying by lately, but I did gaze heavenward in July when Teladoc achieved a dreamy billion dollar IPO. While that kind of market validation is reassuring for those of us working to transform healthcare delivery, I can’t help but wonder whether investors and the media are buying into a vision of the future that won’t quite match reality.

Why am I skeptical? Because when it comes to telemedicine – unlike flying cars and jetpacks – it’s not technology holding us back. The barriers are economic. Can telemedicine make it easier for patients to get treatment and also provide a sustainable economic benefit to providers?

Telemedicine’s Jobs-To-Be-Done

Telemedicine has been available since the early days of the space program. 60 years ago NASA could diagnose and treat astronauts on space flights via video consultation. Today, video is available on any smartphone or computer, people are starting to record their personal biometric data obsessively, and connectivity is ubiquitous, so it would seem that any remaining barriers to telemedicine have finally been eliminated. Then why are we not using video en masse for diagnosis and treatment?

The simple answer is that it’s still not convenient for patients or economical for providers.  Unfortunately, few of those heralding the next great advance in healthcare delivery take the time to really pencil out the ROI and the value add. We’re so infatuated with sexy video screens and the novelty of telemedicine, we gloss over the cold, hard facts.    

Where’s the Volume?

So let’s run the numbers.

The going price for a video consultation with a clinician runs about $40 to $50. From the consumer’s or payer’s perspective, this price is outstanding since emergency visits cost about $500 and a trip to urgent care runs about $250. Most of those visits are for minor ailments treatable by any primary care doctor or nurse practitioner. That’s why, if telemedicine was widely adopted, estimates of system-wide cost savings run as much as $25 billion.

Cost containment, however, does not a healthy market make. There’s a flip side to any exchange. Is it financially worthwhile for clinicians to perform primary care visits via video, and does the revenue model work for telemedicine businesses?

The short answer is no. Currently, most clinicians doing video visits handle about 100 to 500 a year, and the overall volume in the market is insufficient to keep clinicians working at their capacity, let alone earning the pay they would otherwise make through in-person consultations.

That reality is reflected in Teladoc’s IPO filing. A billion dollars in market capitalization notwithstanding, Teladoc’s expected revenues for the year are only around $74 million while costs are rising faster than revenue and the projected volume of customers will not make up the difference.

Although expectations around margins and profitability are generally different for emerging technology businesses, healthcare is in the throes of wrenching change to its business model. It’s unlikely that clinicians will embrace an approach that earns them even less money than they make now. It’s also hard to imagine outsourced telemedicine services like Teladoc, MDLive, American Well or Doctor-on-Demand driving growth that way, or investors continuing to back such ventures given the immense investments in marketing and infrastructure.

The Social Side of Telemedicine

Economics aside, there’s also an engagement factor to consider. Will consumers and clinicians find reasons to be drawn to telemedicine?

There’s no doubt that patients are more willing to engage with clinicians by video than they were a few years ago. Every busy parent I know likes the idea of avoiding the doctor for simple care. However, actually using video during the course of a normal hectic day is a barrier. Imagine trying to do a video call while juggling sick kids or sitting in your car. Now compare that to the ease with which you can order an Uber car or buy something on Amazon. In other industries, no thriving mobile service relies on video to conduct transactions.

And what about clinicians? Personally, I can’t imagine one 15 minute visit every four days or so providing enough activity to keep even an easy-going semi-retired healthcare professional content.

In my experience, physicians and nurse practitioners want to actively practice medicine and help patients. Their job satisfaction already wanes from struggling with crushing paperwork and cumbersome EMR data entry. Sitting in front of a row of video screens waiting for one or two visits a week would only exacerbate their dissatisfaction. Clinician satisfaction and engagement is key to any successful delivery model. Unhappy, under-paid clinicians are an anathema for change in healthcare.

The Search for a Better Answer

Instead of gazing heavenward, waiting for flying cars, let’s ground ourselves in solid economics and an understanding of what healthcare consumers and providers need to make telemedicine work.

In the next few blog posts, I want to show you how a new model for telemedicine, rooted in evidence-based care, is proving its ROI with health systems across the country. In the vision I’m going to lay out, patients get access to cost-effective, quality care in the right setting, providers are fully engaged within their workflow, and health systems get a boost to their bottom line and their market share. In the process, telemedicine starts to look a lot less like science fiction and more like another valuable convenience in our connected world.

Sources:

Resources

Calculator: Cost Shift Revenue

Offering Virtual Care to Covered Populations