MedPAC Explores Expansion of Payment for Telemedicine

March 11, 2016 11:15 am Michael Laff Washington, D.C. –

If Medicare expanded coverage for telemedicine visits, would more physicians use the technology?

[Female doctor on phone, looking at laptop]

That is the question Medicare Payment Advisory Commission (MedPAC) members wrestled with during a recent meeting( as they explored whether telemedicine could deliver on its promise of expanded access and reduced costs.

Despite its potential, overall usage of telemedicine remains low among physicians. Less than one percent of physicians accounted for 22 percent of telemedicine visits in 2014, according to MedPAC. Only two percent of patients had a telemedicine consult more than once per month, and just 69,000 patients used telemedicine in 2014. Although state and federal officials often express concern about physicians consulting patients in another state, only six percent of telemedicine consults crossed state lines.

CMS cannot expand payment of telemedicine services into the traditional fee-for-service model without action from Congress. A prime reason behind the lack of such action is concern about a possible spike in unnecessary consults. Mark Miller, Ph.D., executive director of MedPAC, suggested that using telemedicine for a target population such as stroke victims or hemodialysis patients may address that concern. Commissioners also discussed the possibility of paying primary care physicians a monthly fee of about $8 per member to encourage wider adoption of telemedicine.

Story Highlights
  • The Medicare Payment Advisory Commission recently discussed whether telemedicine could deliver on its promise of expanded access and reduced costs.
  • Less than one percent of physicians accounted for 22 percent of telemedicine visits in 2014.
  • A prime reason that Medicare has been slow to expand telemedicine payment is concern about a possible spike in unnecessary consults.

Commissioner Jack Hoadley, Ph.D., noted that the Congressional Budget Office would likely rate Medicare coverage of telemedicine as an increased cost that Congress would reject. Other commissioners expressed the opposite view, noting that investment in such technology could reduce more expensive services such as hospital visits, ER visits and imaging costs.

"If telehealth suppresses some of those costs, the incremental increase in telemedicine may be good," said Craig Samitt, M.D., M.B.A. "I think we are being overly conservative. We should be embracing the use of technology faster in the industry. Our payment system should not suppress progress."

During their discussion the commissioners referenced a draft technical brief by the Agency for Healthcare Research and Quality( that found mixed results regarding cost and quality of care in 44 studies of telehealth services. Some commissioners were concerned that expanding Medicare payment for such services would increase cost substantially without noticeably improving quality of care. More research is needed to determine the value of telemedicine in primary care, some commissioners said, although they acknowledged that wider adoption may reduce hospital and ER admissions.

Among public and private entities, the Department of Veterans Affairs -- which encourages remote consults by either lowering or waiving copayments -- records one of the highest rates of telehealth usage. In the past decade 736,000 veterans have used such services, mainly for primary care consults, chronic care management and transmission of imaging or other patient data.

Medicare covers a limited set of telemedicine services with a facility fee to rural sites and full fee schedule payment for patients who reside in designated health professional shortage areas.

Commercial insurers may cover telemedicine for after-hours primary care at the same rate as an office visit, but most of them prefer to cover such service within a capitated payment model. Jon Christianson, Ph.D., vice chairman of MedPAC, said some commercial insurers charge a high copayment for telemedicine to discourage its use.

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