Study: Telemedicine Can Reduce Healthcare Costs, Improve Outcomes & Patient Satisfaction

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Calls on Massachusetts to adopt telemedicine through the Group Insurance Commission, MassHealth and other state-run health programs

BOSTON – Massachusetts should more aggressively embrace telemedicine, which can reduce healthcare costs, increase patient satisfaction, and is more convenient for both patients and physicians, according to “Dialing up Telemedicine,” a new study published by Pioneer Institute.

“Until now, Massachusetts has been tentative when it comes to reimbursing for telemedicine as part of Medicaid and other programs,” said Pioneer Institute Executive Director Jim Stergios.  “There’s more we can do to capture the lower costs and higher quality outcomes it can provide.”

The most common form of telemedicine is live interactive appointments via videoconference that closely simulate in-person meetings between a patient and his or her doctor.  The appointments make it easier for rural patients to access specialty care, have been shown to improve patient satisfaction and outcomes, and are more convenient for both patients and physicians.

“Store and forward” allows patients or other doctors to communicate with a physician via email or a web application such as a patient portal.  This approach is more commonly used in fields like dermatology, radiology or pathology, where tests are often interpreted after an appointment.

Remote patient monitoring allows patients to remain at home while a device such as a blood sugar or heart monitor relays information to a doctor.

The American Telemedicine Association (ATA) estimates that connecting rural emergency rooms via telemedicine rather than transferring patients would save $537 million annually, its use at correctional facilities would save $270 million per year, and nursing homes could save over $800 million.

ATA finds that telemedicine is currently reducing the cost of managing chronic conditions by 10 percent, while hospital in-home programs are seeing 19 percent savings.  Other benefits include higher patient satisfaction rates and shorter treatment times.

Medicare was among the first programs to reimburse for telemedicine and many state Medicaid programs are based on Medicare’s model, which traditionally reimbursed only for live interactive appointments and required patients to go to a healthcare facility rather than join the appointment from home.

But states are beginning to loosen those restrictions.  As of August 2016, 48 states cover live interactive appointments, 12 reimburse for some form of store and forward, and 19 reimburse for remote patient monitoring in their Medicaid programs.  Half the states now allow patients to join appointments from home.

Twenty-three states require that private insurers reimburse for telemedicine at the same rate as an in-person visit, while nine others have some form of reimbursement parity legislation.  Massachusetts is one of only two states that don’t mandate telemedicine coverage for Medicaid (MassHealth) recipients and have no reimbursement parity legislation.

According to author Scott Haller, strict reimbursement parity creates an incentive for insurers and providers to participate in telemedicine, but forfeits much of the savings, which average $126 per acute care visit, according to one study.

Haller recommends beginning at close to fully equal reimbursement, but bringing reimbursements more in line with actual costs as more providers and insurers participate.

He also urges the Group Insurance Commission (the commonwealth’s public employee health insurance administrator) to adopt telemedicine, along with MassHealth and other state-run health programs.  Patients should also be allowed to join appointments from home, rather than be required to travel to a healthcare facility.

About the Author

Scott Haller is graduated from Northeastern University with a Bachelor’s Degree in Political Science. He started working at Pioneer Institute through the Northeastern’s Co-op Program and continues now as the Lovett C. Peters Fellow in Health­care. While Scott’s original focus was on the MBTA, he has shifted his focus towards healthcare price transparency. He previously worked at the Massachusetts Office of the Inspec­tor General.

About Pioneer

Pioneer Institute is an independent, non-partisan, privately funded research organization that seeks to improve the quality of life in Massachusetts through civic discourse and intellectually rigorous, data-driven public policy solutions based on free market principles, individual liberty and responsibility, and the ideal of effective, limited and accountable government.