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The Daily Dish

The Future of Telehealth

The future of telehealth under Medicare is one of the most interesting health policy issues at present. Telehealth utilization exploded during the pandemic. Using special authorities under the public health emergency, Medicare allowed telehealth visits from home using commercial video services and reimbursed at the same rate as office visits. The result? The number of Medicare fee-for-service telehealth visits increased from approximately 840,000 in 2019 to nearly 52.7 million in 2020. Ninety-two percent of visits were from beneficiaries’ homes.

This experience has generated interest in legislation to make permanent the provisions that permitted wider use of telehealth. The recently enacted Consolidated Appropriations Act of 2022 extends the telehealth flexibilities for 151 days beginning on the first day after the end of the public health emergency period. It also establishes telehealth reporting requirements for the Medicare Payment Advisory Commission and the Department of Health and Human Services related to telehealth utilization under the Medicare program.

The concern over utilization makes sense. In 2020, despite the sharp rise in telehealth, total Medicare visits declined about 11 percent. What happens in 2021 and beyond when the population is largely vaccinated, the pandemic diminishes, and risks from office visits decline? Is there a continued high level of telehealth visits – perhaps reimbursed at normal office rates – that exacerbates the already-dire financial outlook for Medicare?

Who knows? Indeed, there is a lot that is unknown about telehealth. First of all, it is not just the same “health” done remotely. And, it is not just a single kind of “health.” Telehealth will host an array of services and techniques, some of which will be close substitutes for office services, some of which will be entirely unique, and they will be consumed by a population that will look very different from that meeting in the office.

All of this suggests that the enormous interest in legislation (see, for example, here) should be accompanied by a corresponding caution about the certification of services, setting of payment rates, and the overall fiscal impact on Medicare and the taxpayers. To begin, it would make sense to introduce telehealth along with some fiscal guardrails, such as a cap on total telehealth reimbursements or a requirement that its introduction be budget neutral. And reimbursements should be set by market negotiations as much as possible.

These two features could interact, as well. In Medicare Advantage (MA), for example, there could be a new, capitated telehealth benefit, and MA plans would be free to adopt the services they desire and negotiate the rates they reimburse. These market-based rates could then be used to inform fee-for-service reimbursement rates in traditional Medicare. The possibilities are endless.

The future of telehealth is a fascinating policy issue, but it should be pursued conscious of the risks to the financial outlook of Medicare.


Fact of the Day

Regulatory costs grew dramatically from 2021 to 2022, topping $200 billion for the first time.