Healthcare Technology Featured Article

May 28, 2015

Telemedicine Costs for Medicare Well Short of Estimates

According to the Centers for Medicare & Medicaid Services (CMS), Medicare telemedicine reimbursement totaled $13.9 million last year—bringing the collective total for telemedicine costs to $57.6 million paid out in the last 14 years.

It’s a figure that shows that telehealth is a more efficient form of patient care than originally thought, despite the technology investments necessary to support it. In 2001, the Congressional Budget Office estimated it would cost CMS $150 million during the first five years, or $30 million a year, to reimburse for telehealth encounters—a vastly overblown estimate.

And no wonder: Telehealth means that patients can have a consultation and diagnosis session with a physician in a remote location over a video link or other communications method—a care option that not only allows equity of healthcare access to all Americans, no matter where they live, but also allows offices, clinics and hospitals to optimize their human resources. It also has the potential to cut down on waiting times, thereby improving care outcomes.

“The purpose of a telehealth encounter is to get the right care to the right person at the right place and at the right time, resulting in early diagnosis and treatment and more efficient care,” explained Rob Sprang, director of Kentucky Telecare and president of Robert J. Waters Center for Telehealth and e-Health Law (CTeL), in a blog. “For example, if a patient has to wait three months to see a dermatologist, the disease progression can be significant, and potentially more costly.”

The 2014 figure reflects payments of $12.482 million for provider fees at the location of the telemedicine provider, and $1.452 million for originating site fees (i.e., the location of the patient). Since the implementation of the program, in 2001, CMS’s Medicare reimbursement for distant site services totals $51 million and $6.5 million for originating site fees.

While the figures show that reimbursement for telemedicine services has steadily increased since 2008, it’s important to keep in mind that this is not “additional reimbursement”—but rather reimbursement that takes the place of in-office payments. As such, telemedicine parity bills that require the same level of coverage from insurers are becoming law in many states—27 so far.

“It is well past time for policymakers to recognize the vital role that telehealth can play in a more efficient, reformed healthcare system that rewards quality care and successful outcomes rather than today’s model that rewards providers on a transactional basis—the more they do, the more money they make,” Sprang said.

Edited by Maurice Nagle

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