Telemedicine is a key component in the health care industry
shift to value-based care as a way to generate additional revenue,
cut costs and enhance patient satisfaction. One of the biggest
changes to health care in the last decade, telemedicine is
experiencing rapid growth and deployment across a variety of
applications.
The quick market adoption of telemedicine is fueled by powerful
economic, social, and political forces — most notably, the
growing consumer demand for more affordable and accessible care.
These forces are pushing health care providers to grow and adapt
their business models to the new health care marketplace.
Simultaneously changing is the misconception that telemedicine
creates a financial strain or relies on grant funding. Smart health
system leadership are creating sustainable telemedicine
arrangements that generate revenue, not just cost savings, while
improving patient care and satisfaction. Research conducted by
the American Telemedicine Association reveals that telemedicine
saves money for patients, providers, and payers compared to
traditional health care practices, particularly by helping reduce
the frequency and duration of hospital visits.
It is expected that the global telemedicine market will expand at a
compound annual growth rate of 14.3 percent through 2020,
eventually reaching $36.2 billion, as compared to $14.3 billion in
2014. And while the growing demand for convenience, innovation, and
a personalized health care experience may be the greatest factor,
other forces are at work as well.
These five trends will drive telemedicine's continued growth
and transformation of health care delivery in 2016:
1. Expanding Reimbursement and Payment
Opportunities
Both private and government payers will continue to expand
telemedicine coverage as consumers gain experience with the
technology and increasingly demand access to telemedicine-based
services. Some health plans have already begun bolstering their
coverage of telemedicine, which they view as a form of
value-based care that can improve the patient experience and offer
substantial cost savings. On the government side, 2016 will
particularly see more coverage among Medicaid managed care
organizations and Medicare Advantage plans.
While Foley's 2014 telemedicine survey
revealed that reimbursement was the primary obstacle to
telemedicine implementation, new laws requiring coverage of
telemedicine-based services have been implemented at the state
level, and 2016 will be the year these laws drive implementation in
those states. Similarly, providers are becoming increasingly
receptive to exploring payment models beyond fee-for-service
reimbursement, and 2016 will continue the growth of these
arrangements. Examples include institution-to-institution contracts
and greater willingness by patients to pay out-of-pocket for these
convenient, valuable services.
2. Uptick in International Arrangements
In 2016, more U.S. hospitals and health care providers will forge
ties with overseas medical institutions, spreading U.S. health care
expertise abroad. These cross-border partnerships will provide
access to more patients, create additional revenue and help bolster
international brands. According to the American
Telemedicine Association, more than 200 academic medical
centers in the U.S. already offer video-based consulting in other
parts of the world. While many of these are pilot programs, 2016
will see a maturation and commercialization of much of these
international arrangements, as they are a win-win for participants
in both countries.
The growing purchasing power of middle-class populations in
countries like China is giving more patients the means and
opportunity to pursue treatment from Western medical centers. We
have seen both for-profit and non-profit models for international
telemedicine — hospitals partnering with organizations in
the developing world to expand health care availability or offering
commercial care to customers in nations with areas of concentrated
wealth but lacking the capabilities and access of Western health
care.
3. Continued Momentum at the State Level
State governments across the U.S. are leading the way in
telemedicine expansion. According to a study by the Center for
Connected Health Policy, during the 2015 legislative session, more
than 200 pieces of telemedicine-related legislation were introduced
in 42 states. Currently, 29 states and the District of Columbia
have enacted laws requiring that health plans cover telemedicine
services. In 2016, we will see more bills supporting health
insurance coverage for telemedicine-based services introduced in
various state legislatures.
While state lawmakers are leading the way in incorporating
telemedicine into the health care system, two recent developments
point to a burgeoning interest at
the federal level. The Centers for Medicare and Medicaid Services
(CMS) is considering expansion of Medicare coverage for
telemedicine, and a bill working its way through the U.S. House of
Representatives would pay physicians for delivering telemedicine
services to Medicare beneficiaries in any location.
4. Retail Clinics and Employer Onsite Health Centers on the
Rise
A recent Towers Watson study found that more
than 35 percent of employers with onsite health facilities offer
telemedicine services, and another 12 percent plan to add these
services in the next two years. Other studies suggest that nearly
70 percent of employers will offer telemedicine services as an
employee benefit by 2017. The growth of nation-spanning
telemedicine companies such as MDLIVE and the now
publicly-traded Teladoc, which offer
health services tailored to the specific needs of employers and
other groups, is a reflection of the demand for these
services.
Additionally, consumers are increasingly willing to visit retail
medical clinics and pay out-of-pocket for the convenience and multiple
benefits of telemedicine services when telemedicine is not
covered by their insurance plans. Both CVS Health and Walgreens have publicly
announced plans to incorporate telemedicine-based service
components in their brick and mortar locations.
5. More ACOs Using Technology to Improve Care and Cut
Costs
2016 will be the year of telemedicine and ACOs. Since the advent of
Medicare Accountable Care Organizations (ACOs), the number of
Medicare beneficiaries served has consistently grown from year to
year, and early indications suggest the number of beneficiaries
served by ACOs is likely to continue to increase in 2016. These
organizations present an ideal avenue for the growth of
telemedicine.
While CMS offers heavy cost-reduction incentives in the form of
shared-saving payments, only 27 percent of ACOs
achieved enough savings to qualify for those incentives last year.
Meanwhile, only 20 percent of ACOs use telemedicine services,
according to a recent study. We believe
the widespread need to hit the incentive payment metrics, coupled
with the low adoption rate will lead to significantly greater
telemedicine use among ACOs in 2016.
This is the first in a series of articles exploring these five
trends in more depth. Visit Foley's health care blog "Health Care Law Today" to read more
in-depth analysis on each of the five trends over the next few
weeks.
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