Telemedicine in 2016: A Look Ahead

Last year showed us that telemedicine continues to be an innovative alternative to traditional brick-and-mortar health care. The number of providers offering telemedicine services notably increased, and several states enacted laws requiring health plans to cover telemedicine. Here are four key trends that will drive the continued growth of telemedicine to transform health care in 2016.

1. Greater Payment Opportunities

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. While a 2014 telemedicine survey found that reimbursement was the primary obstacle to telemedicine implementation, new laws requiring coverage of telemedicine-based services have since been implemented at the state level. Currently, 29 states and the District of Columbia have laws requiring that health plans cover telemedicine services.

Cigna has been covering care through telemedicine provider MDLIVE for Cigna’s self-insured employers since 2014. In April 2015, UnitedHealthcare followed suit, announcing that its self-funded employer customers will enjoy virtual visits as a covered in-network benefit, with coverage expanding in 2016 to individual and employer-sponsored plans. By next year UnitedHealth Group predicts that 20 million of its members will have access to covered telemedicine services via its three partner networks. Anthem’s LiveHealth Online predicts similar numbers for its members across 14 states. Aetna and Humana have comparable types of coverage for certain customers.

On the government side, we will assuredly see more coverage among Medicaid managed care organizations and Medicare Advantage plans. The Veterans Administration last year expanded use of telemedicine across state lines to increase access for patient consultations. Additionally, the Medicare Telehealth Parity Act of 2015 is making its way through the House. If it becomes law, it will expand the definition of telemedicine and the types and locations of services available, as well as provide reimbursement parity under Medicare.

We will also see a dissipation of the misconception that a telemedicine program creates a financial strain or must rely on grant funding. Providers are creating sustainable telemedicine arrangements that generate revenue, not just cost savings, while improving patient care and satisfaction.

At the same time, consumers are increasingly willing to visit retail medical clinics and pay out-of-pocket (so-called “retail medicine”) for the convenience and multiple benefits of telemedicine services when telemedicine is not covered by their insurance plans. In 2015, both CVS Health and Walgreens publicly announced plans to incorporate telemedicine-based service components in their brick and mortar locations. There will be continued expansion of these services throughout 2016.

2. ACOs Will Use Telemedicine to Improve Care and Cut Costs 

This will be the year of telemedicine and Accountable Care Organizations (ACOs). Since the advent of 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. ACOs 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 them achieved enough savings to qualify for those incentives last year. Meanwhile, only 20 percent of ACOs use telemedicine services, according to a 2015 study. 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. 

3. Cross-Border Licensure and the Interstate Medical Licensure Compact

2015 saw notable efforts to streamline and simplify physician licensing across state lines. Perhaps the most important example gaining traction is the Federation of State Medical Boards’ Physician Licensure Compact. Under the Compact, participating state medical boards would retain their licensing and disciplinary authority, but would agree to share information and processes essential to the licensing and regulation of physicians who practice across state borders. The Compact has received significant support. 11 states have enacted the legislation, with bills introduced in 9 more states. More participation is anticipated in 2016.

4. 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. They are exploring both institutional arrangements and direct-to-patient service offerings such as internet-based medical consultations and online second opinions.

These cross-border partnerships will provide access to more patients, create additional revenue and help bolster international brands. Many programs that were in “pilot” phase in 2015 will see a maturation and commercialization in 2016, as they are a win-win for participants in both countries.