Telehealth visits face uncertain flexibility amid tepid investment
It’s no secret that telehealth use has plateaued. McKinsey has walked back its early pandemic prediction that telehealth visits would be a $250 billion market. Earlier this year, Bloomberg Intelligence released a more realistic projection of $20 billion.
Sinking demand is one factor; as early as the summer of 2020, hospitals were confronting a steep decline in telehealth visits. The most recent analysis of Medicare claims data from FAIR Health puts telehealth usage at 5.4% of all visits.
Another is the cloud of uncertainty surrounding the so-called “telehealth flexibilities” enacted in the pandemic’s early days. Looser regulations have allowed more practitioners to bill for more telehealth services at payment parity with in-person visits during the declared public health emergency (PHE). Initially, this flexibility was due to end when the PHE did. In March, the omnibus spending bill extended the flexibilities for 151 days after the end of the PHE, which is expected to end in October.
Without flexibility in place beyond next spring, the Centers for Medicare & Medicaid Services is due to return to pre-pandemic regulatory and payment restrictions. Fewer specialties will be covered, and federally qualified health centers won’t receive reimbursement save for mental health services. (Audio-only telehealth in rural areas is a notable exception.)
Against the backdrop of telehealth utilization potentially dropping to its pre-pandemic level of less than 1% of all visits, investors have become bearish. Both Rock Health and CB Insights report drops in venture capital funding for digital health companies in 2022 after record-breaking years in 2021. Market leaders Amwell and Teladoc Health have seen stock prices drop 56% and 75%, respectively, in the last year.
Five steps could turn the tide back in telehealth’s favor, though each comes with challenges.
Congressional action. In July, the U.S. House passed legislation that would expand telehealth flexibilities until the end of 2024. The bill now awaits the Senate – but also scrutiny about telehealth’s potential for fraud, over-prescription, and over-utilization. Advocates such as the American Hospital Association and American Telemedicine Association are calling for permanent flexibility.
Business model shifts. The law form Foley & Lardner notes that telehealth vendors have a much larger pool of potential patients if they contract with payers instead of pursuing direct-to-consumer, cash-based business models. However, this brings administrative and operational headaches and requires significant revenue cycle management expertise.
Service integration. Standalone telehealth programs struggle to build long-term patient relationships. Services that integrate with existing brick-and-mortar facilities – particularly primary and outpatient care – offer patients a continuous care experience.
Technology integration. Telehealth workflows can stall if incorporating data from electronic health record and remote patient monitoring systems requires phone or email engagements. This is equally critical for continuity of care, especially as Bloomberg sees remote glucose monitoring as 60% of the telehealth market.
Advances in oncology. Survey data shows that patients with cancer prefer telehealth for evaluation and condition management, as it reduces the wait time and travel burden often associated with cancer care appointments. This lets them begin treatment sooner.
Brian Eastwood is a Boston-based writer with more than 10 years of experience covering healthcare IT and healthcare delivery. He also writes about enterprise IT, consumer technology, and corporate leadership.