Latest News

Post-Pandemic, Payers May Be Reining In Telemedicine

By Deborah Borfitz

September 10, 2020 | Telemedicine is probably not appreciably lowering the overall cost of patient care, according to Maria Turner, managing director at global management consulting firm AArete and leader of its healthcare Payment Intelligence practice. “Many payers are already approaching encounter numbers that are close to 90% of where they were last year at this time, with a notable shift to the telehealth place of service setting.”

The widespread transition from in-person to telemedicine visits—accounting for as much as ten times pre-pandemic norms for providers—is a big factor in overall payer spend, she says. Telemedicine utilization peaked in April and May and is now trending downward, but visits levels are still high. Among the telemedicine visits types on the “top 10” list are those for evaluation and management (E&M) of patients, behavioral health, substance abuse, and physical (and other) therapies. Emergency department visits and eye exams also made first-time appearances on the telemedicine front during the pandemic.

People have also started coming in for elective procedures and in-person care they had postponed during the peak of the COVID-19 outbreak, Turner adds. 

Another factor contributing to payer spend are medical issues that can’t be addressed via a telemedicine visit, necessitating a second face-to-face encounter (or a visit to a COVID-19 testing center), effectively doubling the cost, Turner continues. She notes that over 10% of telehealth E&M visits result in a second E&M visit within 24 hours and nearly 30% within a week. A more sinister possibility is that provider fraud, waste and abuse may have crept in—or intensified—under payment policies loosened to accommodate the pandemic.

To detect billing irregularities or utilization trends with telemedicine, or properly evaluate the cost effectiveness of the technology-enabled approach, requires having a sufficient volume of claims to draw conclusions, says Turner. That critical mass is only now being reached. Most claims for telemedicine services delivered in March and April didn’t start rolling in until later in May, since providers needed time to adjust to newly issued reimbursement codes and instructions. 

Post-pandemic, Turner expects the telemedicine landscape will look a lot different than it does today. Among her predictions: 

  • Penalties for violating the Health Insurance Portability and Accountability Act (aka HIPAA) will be reinstated by the U.S. Department of Health and Human Services (HHS), prompting many everyday video chat applications to layer on security features to reduce the risk of exposing protected health information to a potential breach.
  • HHS will resume audits to ensure telemedicine is not being used for new (versus established) patient E&M visits, which is not in accordance with agency rules.
  • Telemedicine, historically offered predominantly in rural areas, will continue to be both a rural and urban phenomenon.
  • Only in some care settings, including physicians’ offices, will telemedicine visits continue to be reimbursable based on the relatively low risk posed to patient safety and quality of care. Currently, HHS rules allow telemedicine visits to be coded according to where the service would have been performed had it happened in person and to get paid accordingly (i.e., 100% parity with the in-person non-facility rate).
  • Provider specialists who can now bill for an E&M encounter via telemedicine will scale back down to practitioners (primarily physicians, nurse practitioners, physician assistants and some clinical psychologists) and perhaps a few clinicians, based on care quality concerns and suspected abuses since eligibility broadened. Midwives, dieticians, nutritionists, and social workers are among the E&M newbies since the pandemic hit.
  • Expanded use of telemedicine for the provision of preventive health services is likely here to stay since equipment is available to screen and monitor patients remotely and electronically transmit the information back to their provider. Some of the newly created payment codes are in fact labeled as temporary (e.g., physical therapy and emergency department visits), Turner says, suggesting they’re more likely to be abandoned post-pandemic.
  • The payment rate for office-based practitioners performing telemedicine services will revert back to the pre-COVID discounted amount since telemedicine visits don’t come with the higher overhead costs of brick-and-mortar care (e.g., support staff, exam table paper, patient gowns, furniture, and fixtures).
  • Patient copayments, which payers have largely waived for telemedicine visits during the pandemic, will probably be back and may end up being higher than for in-office visits given the recognized positive impact of the physician/patient relationship on care outcomes.
  • Per-member-per-month payment agreements that some telehealth vendors and primary care physicians have with payers will need to be re-negotiated, since telemedicine will continue to be utilized well above historic norms. The capitated payment model (with only a small per-visit rate) is unsustainable for telehealth vendors if telemedicine continues to be used at “extreme levels” as it was at the start of the pandemic, Turner says. In addition, most such agreements with practitioners haven’t factored in telehealth at all and so they have been paid outside of the capitated rate for those services—another source of the spike in spend.

Fraud, Waste, and Abuse Potential

The shift in spend from office and outpatient settings to services rendered via telecommunication technologies has “put a lot of eyes on telemedicine” across the payer community, says Turner. The impact on both cost and quality of patient care are being examined.

For example, telemedicine visits shouldn’t be any shorter than traditional, in-person visits or patients could be getting shortchanged, Turner says. From the standpoint of payers, encounters lasting less than five to 10 minutes aren’t technically a telemedicine visit at all. They might instead be an “e-visit” or a “virtual check-in.”

An e-visit describes E&M that happens via an online web portal and the latter short, patient-initiated communications with a healthcare practitioner (including remote evaluation of images and data for provider interpretation and patient follow-up), and both are limited to established patients and are reimbursed at a substantially lower rate. Only a single, billable E&M visit is allowed when patients end up coming in for an E&M visit after a virtual check-in or e-visit, she adds.

To detect aberrant levels of service (abuse) or intentional repetitive patterns of bad behavior (fraud) on the part of providers is facilitated by whistleblowers, Turner notes. However, with cost-sharing for COVID testing and certain telemedicine visits being waived, health plan members are less likely to complain because they are not financially impacted, and they might not even receive an explanation of benefits.

Unnecessary or non-compliant care, or services billed for but never rendered, were problems for payers long before the pandemic came along, Turner says, although COVID-19 has offered a few new arenas for cheating the system. The possibilities include prescribing unproven treatments for the virus (high doses of vitamin C) or excess quantities of drugs or durable medical equipment (diabetes test strips are a perennial favorite) that may never get used, billing for an excessive number or frequency of visits or increased visit times (various therapies), ordering unrequired levels of COVID-19 testing to generate a billable E&M visit and an allowable upcharge during the pandemic period, and therapists working “impossible hours” based on the number of patient telemedicine visits claimed on any given day, as well as purposefully upcoding e-visits and virtual check-ins as telemedicine visits.

Then there are the telemedicine visits where it is questionable if the service can even be done remotely, says Turner, citing the example of the removal of impacted ear wax via professional irrigation techniques. Billing codes for personal care attendants who help persons with disabilities and chronic conditions accomplish activities of daily living such as eating, bathing, and dressing are also, perplexingly, being billed as if delivered entirely by telephone.

A showdown over telemedicine’s rightful place in healthcare, and where to close some loopholes, is coming, says Turner. Medicare beneficiaries won’t be the only ones impacted. HHS governs reimbursement rules for the Centers for Medicare & Medicaid Services, which has long guided the coverage policies of most state Medicaid plans, the federally facilitated Health Insurance Marketplace, and commercial payers.