Telehealth: Overcoming the Obstacles and Pursuing the Opportunities

Bill Ferra
Bill Ferra

Guest post by Bill Fera, principal, Ernst & Young LLP.

Healthcare reform, the newly insured and a growing interest in population health management are accelerating the market’s interest in telehealth technologies and services. Healthcare providers are developing integrated strategies for adopting these technologies with the goal of extending capabilities and patient interactions beyond traditional care settings. As more payers and employers begin to pay for telehealth services, the value of these tools is coming into focus. Market analyst IHS predicts the US telehealth market will grow from $240 million in revenue in 2013 to $1.9 billion in 2018, an annual growth rate of more than 50 percent, according to Forbes. Keys to the anticipated surge are the current physician shortage, an expanded patient base under the Patient Protection and Affordable Care Act and an effort to put consumers at the center of their own care.

Overcoming the obstacles

Historically, the healthcare industry has proceeded carefully in the world of digital advancements. High investment costs and uncertain return on investment have created a tenuous economic model. Healthcare providers also face three other key obstacles: uncertain reimbursement, varied state licensing laws and the potential for breaches in privacy and security.

Navigating reimbursement challenges

Reimbursement for telehealth services varies widely. Medicare pays for some services, especially in remote rural areas, but the program has several restrictions. It generally covers only services delivered “real time,” through videoconferencing, as opposed to “anytime,” through store-and-forward technologies.

Medicaid is the most common route states are taking to implement their telehealth programs.  The National Conference of State Legislatures (NCSL) notes that to date, 43 states and the District of Columbia provide some form of Medicaid reimbursement for telehealth services.

Private payers need to comply with state regulations. Currently, 19 states and the District of Columbia require private insurance plans in the state to cover telehealth services, according to the NCSL. Arizona will join this list in January 2015. Nontraditional payers for telehealth services range from charitable organizations, long-term care and community health providers to self-insured groups and agencies serving special populations.

Policies continue to evolve. Several bills are before Congress to establish a federal standard for telehealth, while Medicare’s 2014 physician fee schedule will expand coverage incrementally for telehealth services.

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