The nascent industry exploded out of necessity
earlier this year, but its future staying power will depend on what insurers
are willing to cover and what regulations stay rolled back.
By: Rebecca Pifer
This story is part
of a series examining the state of
healthcare six months into the public health emergency declared for COVID-19.
As the novel coronavirus spread like wildfire
in the U.S. from the first confirmed case in January to hundreds of thousands
of infections in March, patients stopped going to hospitals and doctor's
offices amid widespread stay-at-home orders. But the need for healthcare didn't
go away.
"For a long time, the biggest battle for
telehealth in general was: Is this real? This is a cool concept, but when do
folks start using this?," Stephanie Davis, senior health IT analyst at SVB
Leerink, told Healthcare Dive. "For better or for worse, the pandemic
solved that."
The coronavirus kicked the digitization of the
healthcare industry up to light speed, cramming a decade of regulatory change
and consumer adoption into roughly a month and a half. States and the federal
government hastily cut barriers and hundreds of companies angled
to use the boost to their advantage.
"There are generations where nothing
happens. There are decades where nothing happens. And there are weeks when
decades happen," Roy Schoenberg, CEO of Amwell, told Healthcare Dive.
"And that's exactly what we've gone through."
Virtual care visits skyrocketed beginning in
March, with the majority of users trying it out for the first time. Vendors
reported daily visit highs in the tens of thousands, from provider
Teladoc's 20,000 visits a day to
Amwell's one-day high of 40,000 visits, sending vendors rushing to
onboard more doctors.
Before the pandemic, McKinsey estimated the
total annual revenues of all U.S. telehealth companies at $3 billion. Now, the
consultancy estimates $250 billion of the nation's health
spend could eventually be digitized. Frost
& Sullivan predicts seven-fold growth in
the industry by 2025.
But as states began to gingerly reopen their
economies over the last month or so, patients trickled back into doctor's offices.
Vendors saw usage drop off in May and June, though no companies were willing to
share specific figures with Healthcare Dive around the decline.
But now, visits are beginning to pick up again
as infections rise in the South and West, leading some states to pause or roll
back openings.
The country's seven-day average of new
COVID-19 cases surpassed 60,000 for the first time on July 14, with
hotspots in states like Texas, California and Arizona. Vendors report
telehealth usage in a geographic area seems to correlate with its COVID-19 case
load.
"We're definitely seeing that reflected in
our visit volume," Robin Glass, president of San Francisco-based
telehealth provider Doctor on Demand, told Healthcare Dive.
'Those
silly rules'
The biggest near-term question mark for the
future of the industry is whether Washington will codify temporarily relaxed
regulations that spurred unprecedented adoption. CMS has been paying for
telemedicine services in federal programs for years, but with significant strings attached.
Following the declaration of a national public
health emergency, the Trump administration changed more than 30 policies,
allowing Medicare to temporarily reimburse telehealth
on par with in-office visits and raising payments for
audio-only visits. CMS now allows more than 100 additional services through
telehealth.
Telehealth providers had always served the
Medicare population through direct-to-consumer pathways or Medicare Advantage,
but a large swath of the 40 million Americans in traditional Medicare were
closed off to the service.
That all changed in March.
In the week ended March 7, only 11,000 Medicare beneficiaries used
telehealth. By the week ended April 25, 1.7 million elderly and disabled
Americans in Medicare were using it, CMS told Healthcare Dive — a monumental
increase of 15,354% in less than two months.
And vendors are taking advantage: In May,
Doctor on Demand became the first telehealth provider to offer
virtual healthcare, including COVID-19 testing and diagnosis, to Part B
beneficiaries.
Telehealth players and providers have clamored for
the administration to keep some, if not all, of the changes. But the most
sweeping flexibilities require Congress to step in.
CMS can't ax the two biggest restrictions on
use and reimbursement mandated by the Social Security Act: the geographic
requirement mandating a beneficiary live in a rural area, and the originating
site requirement mandating they travel to a local medical facility to receive
virtual care.
"A lot of these restrictions before
didn't make sense or were kind of dumb, frankly," Brandon Welch, CEO of
vendor doxy.me, told Healthcare Dive. "The government is realizing, those
silly rules, we don't need to bring those back."
If Congress doesn't allow HHS to determine
exemptions, the moment the national emergency is lifted, all new Medicare
payment for telehealth disappears. There's broad bipartisan support from
top Trump administration officials and lawmakers, though no
firm consensus yet on which to keep after the pandemic eases.
Among the most likely?
Based on congressional hearings and draft
bills, including the bipartisan Protecting Access to Post-COVID-19
Telehealth Act: ending site origination and geographic requirements,
and allowing Medicare to continue broad telehealth reimbursement. Less likely
is continued lack of enforcement of HIPAA penalties, which has allowed doctors
to use platforms like Zoom, FaceTime and Skype to see patients during the
emergency.
Concerns about privacy have dogged telehealth
from the start, and bringing non-HIPAA-compliant platforms into the mix hasn't
helped assuage worries that clinical information isn't being used
appropriately, experts say. Consumer platforms arguably don't have the same
protections and certifications as devoted telehealth platforms — and vendors
don't want low-cost alternatives that could entice users away from their
offerings.
"I don't think anyone wants to relax the HIPAA
rules long-term,"Teladoc COO David Sides told Healthcare Dive.
RELATED COVERAGE
Hear more from top telehealth executives ➔
Additional insights from interviews with Roy
Schoenberg, president and CEO of Amwell; David Sides, COO of Teladoc; and Robin
Glass, president of Doctor on Demand.
And Cowen analysts don't think permanent
change will be enacted until the second iteration of the 21st
Century Cures act, sometime next year. But if Congress doesn't
intervene, CMS has some authority over what services can be delivered via
telehealth.
CMS could, for example, permit audio-only
telehealth services or clarify that physicians can provide remote patient
monitoring services to patients with chronic conditions. The agency
already permanently allowed the
use of virtual care in home health late June, though it can't be reimbursed as
a visit.
More changes will likely come with the
publication of the Medicare physician fee schedule, which historically runs in
July.
"Were we to make these permanent, they
would show up as proposals in that proposed rule," Emily Yoder, an analyst
with CMS' Division of Practitioner Services, said at a virtual briefing
run by the Connected Health Initiative earlier this month.
Another regulatory barrier vendors are
hankering to modify is the patchwork state licensure system, which largely
forbids providers operating in one state to see patients in another, virtually
or otherwise.
Dozens of states began
offering emergency licensing for qualified medical personnel amid the
coronavirus, though many have significant caveats. Vendors argue a quick
removal of the licensures post-COVID could harm continuity of care for
patients, and the industry's largest trade group, the American Telemedicine
Association, has lobbied for a federal licensure system greenlighting
providers nationwide.
Experts say it's unlikely state licensure goes
away completely, as it keeps physicians accountable to their state medical
boards. However, the pandemic has proved the importance of having a backup
plan in place to allow providers more license portability in event of the next
public health emergency.
And federalization could happen down the road,
whether through a national credentialing process similar to that used by the
Department of Veterans Affairs or multistate compacts allowing doctors to apply
for a license in another state through an expedited process. Almost 30 states already participate in
such a compact for physicians.
It's difficult to predict what the regulatory
landscape will look like coming out of the pandemic, but experts say it's hard
to see the U.S. going back to the previous potpourri of federal and state rules
and regulations.
"It's going to be interesting to see how,
or if, our nation and individual states try to go back to a pre-regulatory
telehealth framework after this," Pat Carroll, CMO of telehealth
startup Hims & Hers, told Healthcare Dive.
The
parity problem
The pandemic has also been an interesting
experiment for how far America's private payers are willing to go in covering
telehealth. Most major commercial insurers, following Medicare's
lead, have expanded what services can be offered virtually and waived cost
sharing for consumers, though most organizations are extending the relaxations
month-to-month, not permanently.
Like in Medicare, the allowances and higher
reimbursement led to striking adoption. Compared to the same time last
year, commercial telehealth claim lines increased by 4,334% in March and 8,335%
in April, according to nonprofit FAIR Health.
Before COVID-19, reimbursement for telehealth
grew at a snail's pace: Medicare expanded coverage for its Medicare Advantage
beneficiaries on a code-by-code basis. Commercial payers and self-funded
employers allowed virtual consultations generally only for urgent care or
behavioral health needs. State laws began to evolve to incentivize telehealth
commercially in Medicaid — but restrictions remained.
The majority of states have laws that govern
how private insurers reimburse for telehealth. However, only five require
commercial payers to cover services provided via telehealth the same way they
would reimburse for in-person services, according to the Center for Connected
Health Policy.
Vendors and some doctors want universal parity
after COVID-19, arguing paying the same for telehealth and in-person services
could cut down on the costs of operating brick-and-mortar locations. Facility
fees paid by the federal government could drop sharply if doctors pivot to
telehealth in large numbers, and doctors would have less overhead in staffing
and rent.
However, analysts say it's unlikely, due to
the worry telehealth would be used as a precursor to, or in addition to,
in-person services, instead of as a replacement for them.
"Telehealth has historically faced a
Catch-22 where a lack of reimbursement stymies growth, but reimbursement parity
with in-person visits undermines the promise of reduced healthcare costs,"
Danielle Bradnan, an associate at research firm Lux, told Healthcare Dive.
CMS enacted parity in Medicare during the
emergency. But agency head Seema Verma has said in interviews CMS will
reevaluate payment rates moving forward, especially if Congress gives its
blessing to broader telehealth reimbursement.
"I don’t see it as a one-to-one,"
Verma told STAT in June.
"It becomes a bit of a political
bomb," SVB Leerink's Davis said. "I think you probably get
somewhere in the middle — close to parity but not all the way."
The
next big thing: providers
Before the pandemic, telehealth was largely
delivered direct-to-consumer through apps like 98point6 or covered by employers
or health plans for their members.
The pandemic forced providers to implement or
expand their telehealth offerings to recoup a lost slice of patient revenue.
Many are now discovering it's a similar experience to delivering care in the
brick-and-mortar setting, a revelation that could drive a sea change in how
healthcare is delivered, as some hospitals report jumps in utilization in the
multiple-thousand-percentage range.
By the numbers
+9,000% Increase in UVA's Center for
Telehealth virtual care visits between February and May
+3,700% Increase in UPMC's telemedicine visits
from about 250 encounters per day in March to as many as 9,500 per day by the
end of April
50,000 Number of Intermountain's telehealth
visits per week in March and April, up from 100 a month pre-COVID
70,000 Number of telehealth visits Providence
runs weekly — same as the number of visits it had in all of 2019
Despite rising volumes, there's still a wide
untapped provider base for vendors. Only 76% of U.S. hospitals had virtual care
capabilities before the pandemic, according to the American Hospital
Association, but a growing number of tech-savvy facilities are implementing
tools for post-surgical followups, or to run a case past a remote specialist
for services like teleICU or telestroke.
Teladoc acquired InTouch Health in a $600
million deal that closed earlier this month to
grow health system products. InTouch contracts with more than 450
hospitals and health systems, including 30 of the 50 largest U.S. health
systems like Kaiser Permanente and HCA.
Amwell, which provides virtual care to
patients through its payer clients and also has physician groups and hospitals
paying for its platforms, saw active providers on its platform multiply tenfold
since January. Doctors at client hospitals and health systems on Amwell's
platform increased 1,300% since the start of the pandemic.
But the ROI of telehealth is less clear for
small, physician-led practices, experts say, though they've also seen
widespread adoption.
Vendor doxy.me had about 70,000 provider
clients using its platform prior to the pandemic, running about 12,000 sessions
a day. Now, the company has about 700,000 doctors and 1 million video sessions
a day.
At one point in the middle of March, doxy.me
was adding more users each hour than it added over an entire month before the
pandemic, Welch said.
By early April, almost 14% of physicians'
weekly visits were being conducted via telemedicine, according to an analysis conducted
by Harvard University researchers and health tech company Phreesia, up
from basically zero pre-pandemic.
However, that percentage steadily declined
to just 8% by the end
of June, a drop researchers said could be due to the high cost and difficultly
of implementing telehealth technology.
Some believe telehealth will quickly
become adjunct to in-person care again, though perhaps at higher levels. A
July analysis by WELL Data Insights estimates telehealth will account
for just 15% of total visit volumes over the rest of the year. Most physicians
predict fewer than 10% of visits next year will be virtual, according to
a July report from
Sage Growth Partners.
But industry officials are betting virtual
care will be permanently useful for the 45% of Americans with chronic
conditions, who may find it dangerous or difficult to head into a hospital for
needed care, especially during a pandemic.
"I think that's where the biggest change
is going to be," Amwell's Schoenberg said. "The industry's going to
morph to create new products that are oriented around managing those patients
at home."
There are indications that shift is already
occurring: The digital health sector shattered investment records in
the first half of 2020 with $6.3 billion in funding, with telehealth
receiving the lion's share.
Some $194 million went
to Amwell, which is reportedly exploring an IPO for
later this year, but hundreds of millions went to the wearables sector,
too, as providers look for devices to track the progression of COVID-19 and
remotely monitor patients' temperatures, blood pressure, and respiratory and
heart rates in their homes.
How much the U.S. is willing to pay for
virtual access to healthcare, which vendors will emerge out of the pandemic on
strongest footing, whether access will be equitable for all Americans, to what
extent telemedicine will replace the in-person encounter — these questions, and
more, define the future of a nascent industry. Many will be answered
within the next few months.
Either way, one thing is clear: A
post-COVID delivery system will include more virtual care than ever before.
"The horse has left the barn
here," Davis said. "It's going to be very hard to reverse any of
this."
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