MedPAC Debates Expansion of Telehealth Payment

September 19, 2017 12:44 pm Michael Laff Washington, D.C. –

Expanding Medicare payment for telehealth services could increase access for patients, but it could also contribute to a spike in medical claims without measurable patient improvement.

[Physician and patient in telehealth visit]

That was the core debate( that members of the Medicare Payment Advisory Commission (MedPAC) had during their most recent meeting Sept. 7-8. The commission is required to submit a comprehensive report to Congress detailing telehealth services covered by Medicare and private plans by March 2018. In preparation, its members discussed whether payment for these services could be expanded efficiently.

Medicare is more limited in how it can pay for telehealth services compared to other payers, including Medicare Advantage, private plans and pilot programs managed by CMS. Most health plans from Medicaid, the Department of Defense and the Department of Veterans Affairs cover telehealth, and 34 states have passed laws that require insurers to pay for telehealth visits in the same manner as they pay for office visits.  

Story Highlights
  • The Medicare Payment Advisory Commission discussed how expanding payment for telehealth services could increase access for patients, as well as the potential for increasing claims without leading to a measurable improvement in patient health.
  • In 2016, telehealth accounted for just 319,000 patient encounters for Medicare beneficiaries, at a cost of $27 million.
  • Overall use of telehealth in Medicare remains low, but its use has grown rapidly since 2014, especially in states with large rural populations.  

In 2016, telehealth accounted for just 319,000 patient encounters for Medicare beneficiaries, at a cost of $27 million. These services were concentrated in a small percentage of medical professionals and patients. Ten percent of medical professionals accounted for 72 percent of patient visits, while 10 percent of beneficiaries accounted for 46 percent of the visits.

Overall use of telehealth in Medicare remains low, the commission noted, but use has grown rapidly since 2014, particularly in three states with large rural populations: Alaska, Mississippi and Virginia. The most common reasons for telehealth visits were evaluation and management (58 percent) and mental health (28 percent).

Several commissioners expressed reservations about more claims if Medicare paid for all telehealth consults.

Kathy Buto, M.P.A., suggested allowing greater flexibility for accountable care organizations and Medicare Advantage to pay for telehealth instead of adopting a single policy on payment.

But commissioners grappled with the question of whether telehealth will become a substitute for office visits with the potential to reduce overall costs, or just lead to more billing of extra medical services.

Craig Samitt, M.D., M.B.A., voiced the strongest support for expansion of telehealth payment in Medicare. He dismissed the idea that telehealth can only be a supplement to in-person care.

"It is a substitute that could be more effective and be of higher quality," he said. "The potential value is that it could reduce the total cost of care."

Pat Wang, J.D., took a more cautious approach.

"I see the potential, but it almost sounds too good to be true," Wang said. "I see the potential in areas that are evolving, such as integration of behavioral health into primary care."

Giving another example, Wang noted that medication reconciliation after hospital discharge could be handled by pharmacy technicians through telehealth. Others suggested that mental health and end-stage renal disease patients could receive improved care via telehealth.

Medicare Advantage plans cannot offer telehealth services in urban areas, a restriction some commissioners suggested should be changed. They noted that initiatives under the Center for Medicare and Medicaid Innovation received a waiver to pay for telehealth in urban areas at fee-for-service rates with bonuses tied to savings and quality.

"It's not a free-for-all use of telehealth," Samitt said. "We're seeing expanded use by commercial plans. It should be expanded to mirror that in Medicare."

Commissioners have the same concern that many insurers do about allowing coverage of all telehealth consults without some way to measure a change in a patient's health outcomes.

Commissioner Dana Gelb Safran, Sc.D., warned that telehealth could become an additional source of revenue for medical centers instead of a substitute for in-person care unless budget constraints are set. She noted that urgent care centers were supposed to reduce ER visits but did not, and that hospitals are moving to a "hospital-at-home" model to generate additional revenue, not reduce costs.

Commissioner David Grabowski, Ph.D., said it would be difficult for Medicare to identify lower-value services, so he recommended that any new policy creates a payment model that includes some shared risk for practices.

Commissioner Warner Thomas, M.B.A., pointed to telehealth's value in providing care for stroke and psychiatric patients with the result that utilization of services was reduced among those patients.

"We should pick an area where it can help and make a bet," Thomas said. "We don't want to limit innovation in this."

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