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Telemedicine: What Brokers Need to Know About Anticipated Demand

Renee Sazci · May 27, 2020 · 9 min read

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Telehealth vs. Telemedicine

What is Telehealth?

While there isn’t a universal definition, “telehealth” is generally an umbrella term that encompasses an array of services and technologies focused on improving remote patient care, health education, research, and health care delivery. For example, telehealth provides access to those in need of treatments; mental health patients who require consistent monitoring; access for students who want to study remotely; medical professionals who wish to connect; and more.

What is Telemedicine?

Telemedicine is a branch of telehealth that refers solely to the delivery of clinical or remote patient care services. Telemedicine reduces the barrier to access and increases convenience to the patient’s primary care physician and a range of medical specialists. It is most commonly applied to medical specialties and uses that do not require in-person examinations or operations. Telemedicine is a convenient alternative for patients to receive outpatient care when they need it.

The first use of hospital-based telemedicine occurred in the late 1950s to serve patients living in remote areas. Since then, technological advances such as the internet, high-quality and secure video, and smartphones have enabled telemedicine’s expansion. Today, telemedicine allows patients to speak with doctors via real-time two-way video (video conferencing).

Telemedicine is commonly administered via Health Insurance Portability and Accountability Act (HIPAA)-compliant video conferencing software. The software connects physicians or healthcare providers with patients over video conferencing and allows the sharing of photos or recorded video. With the support of this technology, healthcare providers can consult patients about an injury, diagnose an illness, or write a prescription without seeing the patient in-person. Because of technological advances, telemedicine has seen demand grow and legislation broaden, enabling telemedicine’s expansion.

Telemedicine's Growing Demand

telemedicine smartphone

Telemedicine is beneficial for a range of patients, and demand is growing. According to an “American Well Telehealth Index: 2019 Consumer Study,” 66% of consumers, 168 million people, say they are willing to try telemedicine. And although employees cited technical issues, quality of care, and security concerns as past reasons for not using telemedicine, these have largely been overcome. Telemedicine experienced an astonishing 1,398% growth between 2014 and 2018. And as of 2019, 20 million people have tried telehealth or telemedicine—up from 350,000 in 2013.

This growth is, in part, a result of the acceleration of technological advances and smartphone ownership. In 2019, 81% of Americans owned a smartphone, enabling more people to access video and chat, at the tip of their fingers. As smartphone ownership increases, telemedicine is expected to grow and become a normalized healthcare offering. This enables employees and their families access to medical services more conveniently, and when they need them.

Patients are Turning to Telemedicine for Primary Care

telemedicine primary care

Due to direct-to-consumer telemedicine expansion, starting in 2017, primary care became the most frequent use of telemedicine. And as the quality of care provided via telemedicine becomes comparable to that of an in-person visit, more employees are moving appointments online.

According to telemedicine claims data, for illnesses or mental health concerns that are traditionally seen by a primary care physician, patients are increasingly substituting in-person visits for telemedicine visits. One of the most common reasons for visiting a primary care physician is for a cough. And in 2018, the number one reason (16%) for all telemedicine visits was for a consultation of an upper respiratory infection that resulted in sinusitis, respiratory infections, pharyngitis, or nasopharyngitis diagnosis. This is in alignment with the most common reason to visit a primary care physician.

The second most common reason for a telemedicine appointment was to address a mental health concern, accounting for 11% of all visits. About six percent of patients were seen for a mood disorder (mid-to-major depressive disorder or bipolar disorder), while five percent of visits were for anxiety, stress, obsessive-compulsive disorder, or a phobic disorder. These are also common primary care diagnoses. The third most common visit, five percent of diagnoses, was for patients seeking a prognosis due to an injury, poisoning, or other consequence of an external cause. That was followed by urinary system issues and reproductive health services, each with four percent.

Employees are increasingly choosing to substitute routine and acute in-person primary care visits for telemedicine because it offers greater convenience, without the travel time or cost, and faster care for common ailments without the need to use paid—or unpaid—time off to see a physician. While technological advances and consumer-driven demand have been drivers for telemedicine’s expansion, state and federal legislation and regulation are broadening to keep up with demand, and increase access.

Legislation and regulation

telemedicine legislation united states capitol building

State vs. Federal Legislation and Regulation

Although telemedicine knows no boundaries, individual states are predominantly responsible for creating laws regulating the use and access of telehealth. This can cause complications because regulations are confined to state boundaries. For instance, legislation for California only applies to California. To add to the confusion, if a provider is located in California, but the physician on its network is caring for someone in New York, the provider must adhere to New York law.

Without a federal framework, beyond HIPAA privacy laws, healthcare or telehealth providers are at a disadvantage, and physicians are vulnerable to malpractice “without a clear and consistent standard for remote care.” This regulatory framework creates a barrier to more widespread adoption.

Provider Pricing and Parity

Generally, when it comes to billing for telemedicine, private payers are following the lead of the U.S. Centers for Medicare & Medicaid Services (CMS); however, billing decisions ultimately depend on the payer. While there is a decent amount of legislative guidance for the appropriate use of Current Procedural Terminology (CPT) and Healthcare Common Procedure Coding System (HCPCS) codes, and GT modifiers for Medicare, it’s less clear for private payers. Because regulation is state-by-state, some states don’t require private payers reimburse for telemedicine services, while others limit coverage to specific third-party telemedicine providers. And some states lack regulations, thereby enabling insurers to limit, deny, or reduce coverage for services based on the health professional’s choice of a delivery platform.

Telemedicine’s Turning Point

The good news is that the majority of private payers provide coverage for telemedicine. However, the what, when, and by how much varies; this is where state parity laws come in. The Parity Law, which is passed by individual states, requires “private payers to reimburse telemedicine care in the same way they would for in-person care.” State-by-state, the parity law is passing, driving telemedicine growth as physicians and providers are reimbursed equally regardless of the method of care. This is great for telemedicine because when pricing parity exists, providers are more incentivized to invest in telemedicine technology and infrastructure—in turn, enabling telemedicine to be offered to a greater number of patients.

In 2018, telemedicine experienced shifts in state and federal policies, which fueled massive growth for commercial and government reimbursements. That year, states continued introducing parity reimbursement laws, and more payers added telemedicine to their benefits. These advances continued throughout 2019. As of May 2020, 37 states have passed Parity Laws, and two have proposed or pending laws. As regulatory barriers continue to drop, telemedicine is advancing, and employers & employees are benefiting.


telemedicine covid19 increase

As a result of the Novel Coronavirus (COVID-19) pandemic, telemedicine has experienced prompt bipartisan state and federal regulatory changes to remove policy barriers for telemedicine utilization. To reduce COVID-19 exposure, and for screenings, “even the most tech-adverse physicians and patients are opting for remote consultations when possible.”

On March 6, 2020, Congress passed The Coronavirus Preparedness and Response Supplemental Appropriations Act that included funds allocated for the expansion of telehealth services. This has brought about the rapid development of telemedicine to bridge the gap between physicians and patients, especially COVID-19 symptomatic patients. Patients can stay at home and communicate with physicians through virtual channels, helping reduce the spread of the virus. Telemedicine is also enabling consistency of care for routine or acute visits of non-COVID-19 patients. And now, many are predicting that COVID-19 will catalyze considerable regulatory changes. Some are forecasting the normalization of telemedicine as a supplementary method of care for traditional medicine.

For instance, according to Jefferson Health, telemedicine use has dramatically increased since the rise of COVID-19. The hospital has moved many of its outpatient appointments to telemedicine visits for triage and to avoid non-COVID-19 patient exposure. From just a few telemedicine visits in early March, Jefferson Health was serving 500-600 telemedicine visits per day as of March 23, 2020. Telemedicine is hitting an all-time peak to address disease exposure concerns. In a post-COVID-19 world, telemedicine could reduce in-person clinic visits and become an expected employee benefit.

telemedicine HIPAA compliance relaxed

As a result of COVID-19, the federal government is reducing enforcement and waiving penalties for HIPAA violations against health care providers. Before the public health emergency, health care providers were required to utilize HIPAA-compliant video conferencing software. But due to COVID-19, health care providers are now authorized, in good faith, to use non-public facing video communications tools such as Apple FaceTime, Facebook Messenger video chat, Google Hangouts video, Zoom, or Skype. Public-facing communications applications such as Facebook Live, Twitch, and TikTok are still not permitted to be used for telemedicine. This federal HIPAA relaxation shouldn’t affect state laws and regulations regarding the protection and security of health information.

The Private Insurer Response

Although the majority of regulatory changes have come from the Centers for Medicare and Medicaid Services, private insurers are also making commitments. Before COVID-19, coverage for telemedicine varied from payer-to-payer and was dependent on the plan. In response to COVID-19, several health insurance plans, including Aetna, BlueCross, BlueShield, Cigna, among others, have announced that they will make telehealth more widely available or will offer telemedicine services for free. Private insurer commitments range from providing zero co-pay telemedicine visits regardless of reason, removing or waiving cost-sharing, to implementing pricing parity. Ultimately, health insurers are working to incentivize members with free virtual visits, intending to keep patients out of hospitals.

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Renee Sazci

Renee Sazci

Renée knows that the healthcare industry is complicated. With so many options, choosing the right path can be unnecessarily complex. At Lively, she employs storytelling to make it easier for you to make informed healthcare and financial decisions. When she's not writing, she's flexing her green thumb.

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Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.



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