Temporary reimbursement expansion for virtual visits is eroding key barriers to adoption and driving infrastructural change

Telehealth is by no means new to the digital health game — the American Telemedicine Association (ATA) was launched in 1993, and CMS coverage of fee-for-service teleconsultation services began in 1999. However, adoption and utilization of telehealth services have been gated by modernization of reimbursement policies, driving lack of patient awareness and comfort utilizing telehealth services and lack of provider support for bringing these services online. Despite payors’ cost concerns, key advantages cited by telehealth advocates include reduced costs and improved outcomes through reduction of unnecessary in-person visits and increased convenience and accessibility of preventive and non-emergency care. CMS’ initial telehealth coverage decision limited reimbursement to qualified originating sites and geographies — namely patients in rural areas and areas with shortages of healthcare providers. Last year, CMS enacted several key changes:

• Eased geographic restrictions for treatment of end-stage renal disease, stroke, and substance use disorders
• Expanded reimbursement to include virtual check-ins, or evaluations to assess whether a patient requires an in-person visit
• Coverage of “store-and-forward” services, or practitioner review of pre-recorded patient information without the patient virtually present
• Interprofessional consultations, or virtual (internet or phone) consultations between treating professionals
• Remote physiological monitoring (RPM), including device set-up and training, data review, and patient consultation

While momentous changes for telehealth providers, restrictions on scope, frequency, and allowable amounts for these reimbursements remain significant barriers to provider adoption and patient utilization. Changes have been slow, following the Medicare Payment Advisory Committee’s (MedPAC) recommendation that CMS take a “measured approach to considering the incorporation of telehealth services”. While scope of coverage and pace of modernization has been a bit better in the private payor space, MedPAC noted that "commercial plan coverage of telehealth services is not uniform," highlighting that private coverage decisions "consistently pertained to employer demands and competition rather than cost savings." In the wake of the COVID pandemic, the urgency and necessity of deploying telehealth solutions has fissured stubborn barriers to adoption among payors, providers, and patients, catalyzing infrastructural changes likely to survive the pandemic. To prevent unnecessary in-person visits and accelerated rates of viral transmission, the CDC issued guidance to screen patients remotely and treat isolated patients remotely when possible. CMS followed suit by temporarily lifting geographic and intrastate consultation restrictions, expanding virtual check-in reimbursement to all Medicare patients, an unprecedented scale of expansion for the industry with a $500 million price tag. "The regulations we see both at the federal and state level are being relaxed to the point that they're finally catching up with what technology can do for patients and clinicians," said Ann Mond Johnson, CEO of the American Telemedicine Association (ATA), in an interview with HLTH this morning. While coverage is temporary, increased demand for telehealth services has outstripped healthcare providers’ and telehealth companies’ IT and human infrastructure, triggering large-scale investments and platform rebuilds. Amwell reported a 10x increase in visits, quadrupling of IT loads, and wait times spiking from 5-10 minutes to 60-70 minutes in mid-March, prompting major expansion of the platform’s network and bandwidth. Market leader Teladoc reported a 50% surge in daily visits (~100K visits per week). Competing telehealth services Doctor on Demand and 98point6, among others, have announced plans to boost their physician networks by as much as five-fold. Providers have similarly responded by adopting telehealth solutions and infrastructure and building virtual intake workflows. Yesterday, the FCC’s Chairman proposed a $200 million fund for providers to bring telehealth equipment and infrastructure online, using federal funds appropriated by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. These telehealth builds would not only be hefty “sunk costs” to dismantle, but already align with digital transformation initiatives hospitals have largely bought into but delayed implementing. The pandemic has undoubtedly brought patients face-to-face with leading barriers to adoption — awareness of solution availability, clarity of reimbursement coverage, trust of comparability to in-person visits, and accessibility of patients’ existing providers (as opposed to having a different “virtual” doctor). Hiccups in user experience and satisfaction are inevitable as telehealth solutions build capacity to meet the spike in demand COVID has created. However, industry leaders argue these solutions are building awareness, trust, and rapport among patients and providers that could create pressure for payors to continue reimbursing these services after the pandemic subsides, ushering in a new era for telehealth. We expect total annual virtual visit volumes to reach ~20 million by 20231, with huge potential upside from expanded reimbursement and greater domestic and international market penetration. Telehealth has a long way to go before we see remote patient monitoring devices and digital biomarkers pair with virtual consultations as the new standard for primary and chronic care. However, COVID has cast a long-overdue spotlight on telehealth’s ability to reduce unnecessary in-person visits (and associated medical costs), and has — at least temporarily — cracked longstanding barriers to adoption that may pave the first steps toward a future in which telehealth is simply “health”. "I've been really encouraged by the adoption of telehealth by practitioners who just want to maintain their patient practice independent of COVID. They have asymptomatic patients who need continued guidance or interaction, and I think it's been great how they've adapted to this very, very quickly," Johnson commented.For more DeciBio Insights on COVID-19's impact on the diagnostics space, see below:

• Going Viral: What the COVID-19 Outbreak Teaches Us About the Evolution of the Biotech Industry
• Supplying the COVID Demand — How Dx Behemoths and Tele-Diagnostics Entrants Aim to Close the Gap

1 Assumes ~65% market share for Teladoc by 2023 (reported to be 75% in 2016) and 30% p.a. growth in total annual visit volume, in-line with company guidance of 20-30% growth for the “foreseeable future”. Teladoc’s total 2019 visit volume increased 57% year-over-year.

CHRIS LEW | SENIOR ASSOCIATE

Chris focuses on digital diagnostic, therapeutic, and remote patient monitoring technologies and their impact on personalized medicine and population health. Chris has led market analysis and strategy engagements across the diagnostics and health tech spaces. Connect with him on LinkedIn or reach out at lew@decibio.com.Disclaimer: Companies listed above may be DeciBio clients and/or customers