Economics of Telehealth

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Economics of Telehealth

​Within the past five years, a combination of advancements in information technology (IT), including electronic health records, high-definition video conferencing, remote patient monitoring, mobile devices and networks, and ubiquitous broadband networks, has created an opportunity to leverage telehealth services to improve our national health care system. Health care workers can use telecommunications technology to provide clinical services to patients, to monitor patient health, to consult with other health care providers, and to provide patients access to educational resources. 

​Importantly, the technology has reached the point where, in many situations, health care providers can use IT to offer a comparable quality of clinical health care services remotely as they could in person. For example, the widespread adoption of mobile devices like the iPad and iPhone, as well as the deployment of mobile broadband networks, means that a large number of Americans have access to low-cost, high-quality video conferencing capabilities. While telehealth services will certainly not replace all in-person clinical visits, they have the potential to be an important alternative in many cases, while also saving money and increasing convenience. 

The use of electronically delivered services is one way to help alleviate demand and improve quality. Growing evidence shows that telehealth can be an effective tool for improving health care quality and outcomes while reducing costs.

The Center for Connected Health Policy’s (CCHP) annual State Telehealth Laws and Reimbursement Policies report offers the nation’s most current summary guide of Medicaid provider manuals, applicable state laws, and telehealth-related regulations for all fifty states and the District of Columbia. This report serves as a vital resource for policymakers, health care professionals, and health advocates on how each state defines, governs, and regulates technology-enabled health care, noting policy trends across eleven key categories as indicated in the 50 State Scan of Telehealth Reimbursement Laws and Medicaid Policies - Factsheet.

Policymakers who are striving to achieve better health care, improved health outcomes and lower costs are considering new strategies and technologies. Telehealth is a tool that uses technology to provide health services remotely, and state leaders are looking to it now more than ever as a way to address workforce gaps and reach underserved patients. Among the challenges facing state lawmakers who are working to introduce or expand telehealth is how to handle covering patients and paying providers. 

Medicaid - States have significant control and flexibility in their Medicaid programs, unlike in Medicare, including the ability to decide Medicaid coverage and payment for telehealth. According to CMS, “states are encouraged to use the flexibility inherent in federal law to create innovative payment methodologies for services that incorporate telemedicine technology.”

Private Payers - Currently, 32 states and the District of Columbia have telehealth private payer laws, some of which go into effect in 2016 or 2017. State laws governing private payers vary. Some stipulate certain criteria if payers choose to cover telehealth; some require coverage of telehealth for certain services, certain populations or all beneficiaries; and others require certain payment for telehealth.

State Employee Groups - All states provide health insurance coverage for their employees, collectively paying about $25 billion in 2013. Twenty-four states allow some type of coverage for telehealth in state employee plans, with 21 extending the coverage through their parity laws.

Telehealth Resources:

State Coverage for Telehealth Services 
The health care workforce is stretched to its limits in most states. Despite programs operated by state, federal and local governments aimed at recruiting and retaining primary care professionals to rural and underserved areas, the need outpaces the supply in many communities.  

Telehealth Policy Trends and Considerations
Telehealth presents one strategy to help achieve the triple aim of better health care, improved health outcomes and lower costs.​

AAP Telehealth Advocacy and Policy

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