Five forces driving telemedicine expansion in 2016

February 11, 2016

The telemedicine changes we have seen so far are nothing compared to what we’re likely to see in 2016.

The rise of telemedicine represents one of the biggest shifts in healthcare delivery over the last decade-but the telemedicine changes we have seen so far are nothing compared to what we’re likely to see in 2016.

Telemedicine is on the verge of rapid, widespread growth and adoption as the forces that have fueled its rise so far-mainly the growth of value-based care and patient convenient access- continue to gain momentum. Additional drivers are poised to push telemedicine’s expansion beyond what we’ve seen to date. The global telemedicine market is expected to expand at a compound annual growth rate of 14.3% over the next five years, eventually reaching $36.2 billion, compared to $14.3 billion in 2014.

These new drivers reflect broader forces at work: advances in telemedicine technology, evolution in legislators’ and regulators’ views of telemedicine, and providers’ and insurers’ relentless efforts to provide cost-effective care with high-quality results. This is amplified by the growing demand for convenience, innovation and personalized care among healthcare consumers around the world.

Here are five categories of forces propelling telemedicine’s continued expansion in 2016.

1. Reimbursement on the rise

Reimbursement issues have often been seen as the primary barrier to telemedicine implementation.  That is quickly changing. As plans find ways to get their arms around telemedicine and offer improved patient satisfaction and cost savings, they are opening doors to reimbursement options for their members.

For example, on the private side, Cigna has been covering care through telehealth provider MDLIVE for its self-insured employer customers since January 2014. UnitedHealthcare followed suit by announcing coverage for virtual visits to its self-funded employer customers, and will expand the benefit to individual and employer plans this year. Aetna, Anthem, and Humana are poised to offer comparable coverage.

On the public side, Medicare covers telehealth only in rural areas at qualifying originating sites, but adoption among various government programs is set to expand in 2016. For example, if the Medicare Telehealth Parity Act of 2015, currently making its way through the House of Representatives, becomes law, it will expand coverage to include other locations.

Next: International expansion

 

 

2. International expansion

Demand for telemedicine is pouring in from international markets as foreign citizens seek access to U.S.-trained physicians and their expertise, particularly in narrow and sub-specialty practice areas. According to the American Telemedicine Association, more than 200 academic medical centers in the U.S. already offer video-based consulting in other parts of the world. These relationships will deepen and stabilize in 2016 as providers and healthcare executives leverage telemedicine to access new patient populations and increase revenue, and as populations in emerging economies demand better healthcare services.

In 2016 the largest international driver of telemedicine will likely be collaborations between healthcare systems in the U.S. and abroad. For example, there’s the Zhengzhou International TeleMedicine Center (ZITC) in Zhengzhou, China-a partnership between UCLA Health and the city of Zhengzhou, which provides a clinically mutually beneficial relationship and also allows UCLA to expand its brand globally.

Telemedicine also gives U.S. medical researchers greater access to participant populations, enabling faster, larger, and more definitive clinical trials. Telemedicine allows researchers to easily reach patients with rare diseases, reducing time restrictions, access obstacles and costs in the process.

3. Momentum at the state level

In 2015 alone, more than 200 pieces of legislation related to telemedicine were introduced across 42 states. And while there is broad variation in approach and level of proposed coverage, as a whole states are considering four types of telemedicine delivery:

  • Synchronous audio and video: real-time audio-video, considered the “gold standard”

  • Remote patient monitoring (RPM): has no in-person equivalent; for patients with chronic illnesses

  • Asynchronous audio and video: also known as “store and forward,” is the electronic transmission of documents, images and pre-recorded videos

  • Interactive audio, as well as computer-assisted or message based communications.

So far 29 states and Washington D.C. have enacted laws, many of which took effect January 2016, ensuring some level of commercial insurance coverage for telemedicine.

Next: Retailer and employer expansion of healthcare

 

 

4. Retailer and employer expansion of healthcare

Demand for telemedicine services in the workplace will continue to rise in 2016, as employers and employees alike look to cut healthcare costs and expand access.

Faced with a projected 6% rise in benefits costs combined with a potential excise tax under the Affordable Care Act, businesses are embracing telemedicine as a means to hold the line on healthcare costs. Many employers have implemented onsite clinics, often incorporating telemedicine services, to reduce employees’ costly provider and ER visits. In fact in a recent Business Group on Health survey, 74% of employers planned to offer telemedicine services, up from 48% the previous year.

Meanwhile, retailers are realizing that consumers don’t mind paying for telemedicine services to gain more immediate access to a provider, even when insurance doesn’t cover the service. CVS is expanding its CVS Health digital properties and walk-in Minute Clinics, and receiving great feedback from patients. Target stores in California have begun implementing similar services.

Consumers’ acceptance of telemedicine is also reflected in the growing popularity of personal technology used to track health. More than half of U.S. consumers use the internet to track their health information, according to an Accenture study. This gives rise to many complicated legal issues surrounding privacy and security, but the industry has already made great strides in ensuring the services continue to be offered smoothly.

Next:The proliferation of accountable care organizations

 

 

5. The proliferation of accountable care organizations A massive increase in the use of telemedicine by Medicare Accountable Care Organizations (ACOs) is expected in 2016. ACOs are designed to improve the delivery of healthcare, increase cost savings, and share risks across various entities. They achieved success in many ways, but 2014 Centers for Medicare and Medicaid Services (CMS) data revealed that only 27%of ACOs increased quality and cost savings enough to qualify for financial incentives under the Medicare Shared Savings Program (MSSP). However, only 20% of ACOs have telemedicine programs in place.

These conditions are ideal for rapid, widespread telemedicine adoption. It’s clear the time is now for ACOs to take advantage of telemedicine in its various forms as a way to improve quality of care, monitor at-risk patients and achieve both short- and long-term cost savings. If that weren’t enough, CMS has protected telemedicine under the MSSP fraud and abuse waiver programs, paving the way for its use by ACO providers in ways not available to other systems.

With these economic, political and social forces pushing providers and payers to grow and adapt their business models, telemedicine is set for a breakout year in 2016. Smart health systems that have already implemented telehealth services are finding that it generates revenue, drives cost savings and improves quality of care and patient satisfaction. Expect those systems to push for greater telemedicine adoption, and other systems to join them in these game-changing efforts. 

Nathaniel Lacktman is a healthcare regulatory, compliance and business lawyer with a particular focus on telemedicine, telehealth and innovative healthcare arrangements and offerings in the U.S. and Internationally. A partner at Foley & Lardner LLP, he is listed in 2013, 2014 and 2015 Chambers USA: America's Leading Business Lawyers.