Virtual reality: More insurers are embracing telehealth

Blue Cross and Blue Shield of Alabama resisted paying for most telehealth services for years after their introduction. The insurer, which holds a near-monopoly of the state's commercial market, had cost concerns about the still-evolving technology that electronically connects patients with doctors and other clinicians.

There wasn't even a clear definition of what qualified as a telehealth visit.

Should doctors submit a telehealth claim for every patient phone call? Should real-time video visits be the primary catalysts for payment? Should telehealth be used mostly for primary-care treatments such as ear infections and colds? Should it include more specialized care like psychiatry?

“What is the definition of telemedicine?” asked Doug McIntyre, vice president of network operations at BCBS of Alabama. “People struggled to really tell us what that is.”

But BCBS of Alabama, which operates in a mostly rural state where many people have trouble accessing care, recently shifted gears, in large part because of rapid advances in enabling telehealth technologies.

As of last Dec. 1, the insurer began paying providers for five telemedicine services, including behavioral health and stroke. Amid rising demand, the insurer determined that the technology used to treat patients in those categories was “indistinguishable from a face-to-face visit,” McIntyre said. Earlier last year, BCBS of Alabama also struck a deal with Teladoc to add telehealth for urgent care to its group benefit plans.

More private insurers are paying for telehealth services, a trend experts say will boost relatively low levels of utilization. More than half of states now have laws with rules addressing telehealth coverage.

Nearly all payers now believe telehealth will help rural members access providers and may attract companies that want to offer modern conveniences to employees of the Netflix generation, who expect on-demand services. Insurers are also hoping telehealth will live up to its hype by keeping people out of more expensive healthcare settings.

“They've begun to see the financial value in making these offerings available,” said Nate Lacktman, a healthcare lawyer at Foley & Lardner who specializes in telehealth matters.

Looking ahead, telehealth advocates and providers see seniors on Medicare as the next major arena for growth. Roughly 1 in 5 people older than 65 live outside of a metropolitan area, and seniors usually have worse access to primary-care physicians and specialists if they live in rural areas. Many older adults in urban and suburban areas also face difficulties traveling to their doctors' offices for frequent appointments.

“When you're looking at the chronic condition situations, or simple rural situations (for telehealth), they're (equally) or more relevant to the older population,” said Patricia Smith, former CEO of the Alliance of Community Health Plans.

But Medicare still has restrictive rules for telehealth payment. Insurance, provider and technology trade groups are stepping up their lobbying efforts to pass legislation that will force Medicare to provide greater financial support for the service.

The origins of telemedicine stretch back to the space race in the 1960s. NASA wanted to see how a zero-gravity environment affected astronauts' vital signs. NASA's desire to monitor the health of its faraway astronauts nurtured a curiosity in “Earth-bound physicians trying to diagnose or treat a patient in a remote location,” reads a 1996 essay in the Bulletin of the Medical Library Association.

Today, telehealth includes everything from telephone consultations and live video feeds via Skype to digital CT scans and remote monitoring of intensive-care units. Behavioral health, dermatology, radiology, infectious disease and stroke are commonly covered service lines, and primary-care services are becoming a major focus, since they usually involve quicker diagnoses.

Health insurers have traditionally resisted paying for a technology that made bold and untested claims about reducing costs, even though the argument in favor of it seemed compelling. A $50 telehealth visit to diagnose an ear infection is much cheaper than a $600 trip to an emergency department. Reducing physician office visits by elderly patients with multiple chronic conditions held out a similar promise.

But telehealth didn't have much of a track record. Teladoc, which has a member base of more than 12 million people, admitted as much when it went public in 2015: “The telehealth market is relatively new and unproven, and it is uncertain whether it will achieve and sustain high levels of demand, consumer acceptance and market adoption,” the company stated.

The big fear among payers is that telehealth will merely become an add-on to existing services—a reimbursed phone call or Skype chat that comes before or after the office visit. Medicare, in particular, has been “afraid it's going to blow the doors off spending,” said Jon Linkous, CEO of the American Telemedicine Association, a related trade group.

However, the progression of higher-quality video equipment, smartphones and faster Internet connections is beginning to allay skeptics' cost concerns. Clearer, sharper telehealth interactions presumably will prevent patients from making duplicative in-person visits.

As more people come to value telehealth, it's likely insurance purchasers will assume telehealth visits are covered by their plans. States are moving quickly to establish standards. Twenty-nine states and the District of Columbia have private telehealth coverage laws, with eight of those states enacting new laws in 2015 alone. The National Conference of State Legislatures estimates 32 states will have laws in effect by 2017.

The statutes vary wildly, Lacktman said, but they broadly mandate commercial insurers to pay for telehealth services. Some stipulate coverage only for certain media, such as real-time video. Others require specific criteria only if payers choose to offer telehealth. Insurers in 23 states with stricter telehealth parity laws have to cover telehealth services at rates equivalent to in-person visits.

Medicare, on the other hand, restricts telehealth payment to extremely narrow circumstances, reserving it as an outlet only for seniors who live in rural communities. For example, patients must live outside a metropolitan area, and they must be physically located at specific clinical sites when receiving telehealth.

Medicaid's coverage is more in line with private payers since the CMS gives wide latitude to the states. Coverage of live video telehealth services is almost universal.

But the extent of coverage varies. California's Medicaid program, for instance, permits telehealth services to be provided to anyone in any setting, while Idaho Medicaid will pay only for telehealth if the patient is in a rural area with a shortage of providers. A majority of Medicaid programs do not have geographical restrictions, according to the Center for Connected Health Policy.

Many large national carriers, including Aetna, Anthem and UnitedHealthcare, cover virtual physician visits in urban and suburban areas, as well as for their rural beneficiaries. In fact, most major commercial insurers and self-insured employers will include some kind of telehealth benefit.

It's a centerpiece offering for some insurance startups like Oscar. Copays and deductibles usually apply, but total out-of-pocket costs usually don't exceed $50 for a basic visit.

“With today's modern family and professional life and the practicalities of getting to the doctor, we need to offer the access and convenience of a virtual visit,” said Michael Radeschi, director of product management at Highmark, a Blue Cross and Blue Shield affiliate based in Pittsburgh.

He cautioned that the technology can't replace all the nuances of in-person clinical care, despite rhetoric from technology optimists who say medicine eventually will be able to be delivered through an iPad. “If we found ourselves at 40% to 50% of professional services that were telehealth, we'd be a little nervous,” Radeschi said.

Most insurers use third-party companies to manage telehealth functions. Teladoc, Doctor on Demand and American Well are among the nascent field's leaders. Anthem created its own telehealth joint venture with American Well called LiveHealth Online.

Despite a growing willingness to pay for telehealth, it still hasn't penetrated primary care in any significant way. Only 15% of 1,500 family physicians used telehealth in their practices, according to a survey last fall from the Robert Graham Center for Policy Studies, the American Academy of Family Physicians and Anthem.

More than half of the doctors surveyed said a lack of payment was the top barrier to using telehealth in their practices. Many physicians had no idea what Medicare, Medicaid or private insurers paid for telehealth services. “Insurers could do a better job of informing physicians of what their current reimbursement is,” said Miranda Moore, a health economist at the Robert Graham Center.

Demand from healthcare consumers also remains meager, although it is growing. Demand was tepid after Highmark entered virtual medicine with Teladoc, so it expanded its service by adding Doctor on Demand and American Well to its networks. Those two vendors emphasize video visits, whereas Teladoc is more Web- and telephone-based. Not much has changed yet.

“It creates a lot more buzz than it does use,” Radeschi said. Only 4% to 5% of Highmark's national commercial members have used telehealth services, and the usage rate in the insurer's Affordable Care Act exchange plans is below 2%.

John Jesser, president of Anthem's LiveHealth Online, said his telehealth firm manages “thousands” of visits a year, but he declined to share specific figures.

Anthem is pushing LiveHealth Online more—15 million Anthem members across group, individual and Medicare Advantage plans now have access to it. But most people don't know it's part of their plan.

“This is like the early days of Amazon when you were still able to buy books,” Jesser said.

The limited uptake in the commercial market is still way ahead of Medicare, which almost always sets the bar for private insurance determinations. The American Telemedicine Association's Linkous called Medicare the “Luddite” of telehealth because of its strict limits on how, when and where it can be provided.

“If you're a prisoner, a Medicaid recipient or an employee, you can get a telemedicine service,” Linkous said. “But if you're a Medicare recipient, you can't really, so it's a little crazy.”

Medicare paid only $17.6 million in telemedicine services in 2015, practically a rounding error in the $634 billion program. The Congressional Budget Office has been highly skeptical of claims that telehealth coverage will reduce Medicare spending, and the budget scorekeeper recently said it doesn't have enough data to weigh in.

Congress is taking up the issue. A bipartisan group of legislators introduced a bill this month, the CONNECT for Health Act, that would loosen some of Medicare's rules. Telehealth and remote patient monitoring would become standard for Medicare's alternative payment models and Medicare Advantage.

The CMS has acted on a few fronts. For example, Medicare will waive some telehealth requirements for Next Generation accountable care organizations. Linkous expects there will be full Medicare coverage for telemedicine within the next decade because baby boomers and employees who have already used the services are “going to start demanding it.”

McIntyre of BCBS of Alabama recently used Teladoc for what he called a persistent, annoying cough. An antibiotic didn't help, so the provider recommended during the five-minute call that he try an oral steroid. It worked for McIntyre, which saved him time and money. But he wonders how many people have that kind of seamless experience.

“My fear is what percentage of those people has a Teladoc appointment and then is going back to the doctor anyway?” McIntyre said. It's that fear, however faint, that still lingers among many insurers as they expand payment for telehealth services.

The flip side, advocates argue, is that telehealth will inevitably help patients, even if there is the occasional in-person follow-up. The modality allows physician groups to treat patients outside of traditional hours, and eliminates the costs associated with wasteful travel and wait times.

Further, people living in remote regions can receive necessary care they otherwise might not have gotten.

“Do we really want to ration care by inconvenience, or do we want to find ways to deliver valuable care as conveniently and inexpensively as possible?” Dr. David Asch, a professor of medicine and medical ethics at the University of Pennsylvania, wrote in an editorial last November for the Annals of Internal Medicine.

And that's the rationale that has been winning over payers. “We're underserved in almost every county of the state in most specialties,” McIntyre said. “If this provides that opportunity for someone to get care they need, then it's a good thing.”