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The Future of Telehealth After COVID-19

New Opportunities and Challenges

Before COVID-19, Medicare primarily covered telehealth services for beneficiaries living in rural areas, where there were far fewer medical providers, and patients were required to travel to designated sites, such as clinics or hospitals, to receive telehealth. Outside of rural areas, Medicare covered only a limited set of services via telehealth.

Once the pandemic took hold in 2020, Congress and the Trump administration greatly expanded telehealth services for Medicare beneficiaries, keeping their access to care as intact as possible amid stay-at-home orders and public fears about contracting COVID-19. Lawmakers passed legislation to temporarily enable all beneficiaries to access telehealth services from their homes and to allow Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) to act as telehealth providers.

At the same time, U.S. Department of Health and Human Services (HHS) Secretary Alex Azar issued temporary waivers that expanded the types of services that Medicare could provide through telehealth and reimbursed such services at parity with in-person care. All health professionals who were eligible to bill Medicare could now deliver their services via telehealth (including physical therapists, speech language pathologists, and occupational therapists). The secretary also waived Medicare’s licensure requirements and allowed providers to use popular technology platforms (e.g., Zoom, FaceTime, Google Meet) for telehealth, despite not being compliant with Health Insurance Portability and Accountability Act (HIPAA) rules for technology use. HHS expanded Medicare coverage for audio-only service (telephone visits without video) and waived the requirement that patients have an established relationship with a provider before receiving telehealth services.

Policymakers, however, tied these flexibilities to the federal COVID-19 Public Health Emergency (PHE). Now, as they contemplate the end of the PHE, they are faced with making decisions that will dictate the future of telehealth. Absent any changes, most Medicare beneficiaries will lose access to telehealth services unless they live in rural areas or enroll in Medicare Advantage.

In this report, the Bipartisan Policy Center releases findings from extensive telehealth research and Medicare data analysis to inform pragmatic policy decisions that can create a path forward for telehealth policy—policy that will continue to be evidence-based and will promote better outcomes for Medicare beneficiaries and value for the Medicare program.

The impact of telehealth

Dramatic policy changes during the pandemic paved the way for a huge increase in the utilization of telehealth services—from less than 1% of Medicare services before the pandemic to a peak of more than 32% of Medicare claims in April 2020 (leveling off to between 13% and 17% by July 2021). In the first year of the pandemic, 44% of continuously enrolled Medicare fee-for-service beneficiaries had a telehealth visit, accounting for more than 45 million visits.

The significant expansion of telehealth disproportionately increased access to care in urban communities. In addition, tele-behavioral health services can address problems associated with the paucity of behavioral health providers and help patients overcome the stigma related to these services, especially in more rural, tight-knit communities. In 2021, more than one-third of Americans (37%) lived in areas with shortages of mental health professionals.

Since the onset of COVID-19, HHS’s Centers for Medicare and Medicaid Services (CMS) has allowed the use of audio-only services—telehealth without live video. At least 29 state Medicaid programs now reimburse providers for delivering audio-only services. Older, rural, poorer, and minority populations are disproportionately affected by barriers to accessing telehealth services and have been more likely to rely on audio-only services during the pandemic. Among telehealth users, Black and Latino patients, along with individuals with lower incomes, had significantly lower access to video services. However, policymakers, payers, and providers raised concerns that audio-only visits were of lower quality and presented risks of overuse and fraud for the Medicare program.

As for the quality of care, early evidence suggests that services delivered through telehealth can be equivalent to in-person care for managing chronic diseases and treating behavioral health issues. Overall, patients and providers, including those in rural areas as well as Medicare beneficiaries, generally feel satisfied with the telehealth services they receive. Nevertheless, virtual care’s effectiveness varies depending on the medical condition.

The pandemic-related telehealth flexibilities also created opportunities for fully virtual providers who do not have brick-and-mortar locations to deliver services to Medicare beneficiaries and receive reimbursement. And their presence is growing: 2021 delivered record-breaking venture capital and private equity investments for digital health companies, driven in large part by telehealth investment. These alternative types of providers can expand Medicare beneficiaries’ access to services, but some stakeholders expressed concern that this kind of access could further fragment care and compromise patient care.

The pandemic-induced telehealth policy changes also affected costs for the Medicare program as well as beneficiaries. Providers used to be reimbursed for most telehealth services at a lower facility rate—like the reimbursement for providers who deliver care in hospital outpatient departments, rather than the higher rate for office-based services. The rationale for this disparity was that the delivery of telehealth largely resulted in lower practice expenses than in-person care. However, with the onset of the pandemic, Medicare began reimbursing all telehealth services, including audio-only visits, at parity with in-person care, and many state Medicaid agencies and private payers followed suit.

Provider reimbursement rates go a long way toward shaping cost effectiveness. Telehealth is less likely to be cost effective if its services are paid at parity with in-person visits. On the other hand, if payments for telehealth visits are too low, providers could stop delivering these services. Higher reimbursement rates also can result in increases in out-of-pocket spending for beneficiaries. Some stakeholders worry that individually paying for virtual interactions (e.g. phone calls, portal messages) using a fee-for-service model makes it less likely the technology will be cost-effective; value-based payment models may be better suited to reimburse virtual interactions, especially since health systems during the pandemic are seeing steady increases in the use of secure email and phone calls as a percent of total outpatient visits.

One question is the degree to which access to telehealth services substitutes for in-person care. That is, do patients have both telehealth and in-person visits for the same complaint, increasing the overall volume of health services, or do they simply replace their in-person visit with a telehealth visit? Because of telehealth’s ability to make care more accessible, the Congressional Budget Office (CBO) has historically projected that expansions in telehealth will increase health care spending; however, an individual’s clinical condition as well as how virtual care is being used by a provider are both key factors in determining the balance of substitutive versus additive care.

BPC’s response

The temporary policy changes to expand telehealth, and the increased utilization that resulted, raise a series of questions about whether policymakers should make these changes permanent. What types of services should remain accessible via telehealth beyond the PHE? Under what circumstances? And how should reimbursement work?

The Bipartisan Policy Center began an extensive effort in April 2021 to develop evidence-based federal policy for the effective use of telehealth beyond the PHE. To study the issue and develop recommendations, BPC pursued a multipronged approach that included:

  • A targeted literature review of more than 200 documents, including peer-reviewed articles and published government and industry reports;
  • A Medicare fee-for-service analysis of telehealth utilization data before and during the pandemic;
  • Almost two dozen in-depth stakeholder interviews with providers, provider associations, payers, federal agencies, technology leaders, consumer advocates, and policy experts;
  • A national consumer survey on telehealth usage; and
  • An expert digital health advisory group to help inform policy recommendations.

BPC assessed telehealth’s impact on patient access to care and analyzed quality, outcomes, and cost. We also balanced often competing goals to develop recommendations for the Medicare program. For example, valuing beneficiaries’ access to care can directly affect overall utilization; conversely, maintaining a high bar on quality care can present barriers to broadly expanding access.

BPC’s findings

Policymakers and health care experts emphasize the need to systematically examine the impact of telehealth utilization in normal—that is, non-PHE—times. More research will help providers and policymakers identify which telehealth interventions provide positive health benefits for patients, versus those which have little-to-no clinical value. Nevertheless, the dramatic increase in telehealth usage during the pandemic has proved instructive, and policymakers should draw lessons and take certain steps based on that experience.

For starters, Congress and the Biden administration should extend most of the telehealth flexibilities for Medicare beneficiaries for two years after the end of the PHE, and formally evaluate their impact. Researchers should evaluate the benefits of hybrid (in-person and virtual) care models for primary and specialty care, including for which conditions and specialties it is most effective, further evaluate full telehealth flexibilities in the context of value-based payment models, and rigorously assess the quality of audio-only care.

Throughout this report, BPC recommends targeted adjustments to the current telehealth flexibilities; all recommended changes are in response to emerging evidence on benefits versus risks and to stakeholder concerns. This approach would enable beneficiaries to maintain their access to telehealth services while minimizing risks to patients and the Medicare program, as well as provide time for policymakers to continue to review and assess the evidence.

BPC believes the administration and Congress should maintain access to telehealth for Medicare beneficiaries regardless of their location or medical diagnosis. This will ensure that equitable access to health care continues across populations with different conditions. Telehealth policies should also include strong protections to ensure that beneficiaries understand their telehealth benefits, that they are protected against misuse that could undermine the quality of their care, and that their health information is private and secure. This protection includes requiring providers to see patients in-person or having the ability to send patients to in-person care when necessary.

Providers participating in value-based payment models have the financial incentive to use telehealth only when it is cost effective; as a result, they are incentivized to adopt higher-value uses of telehealth in their practices. Providers in Alternative Payment Models (APMs) with two-sided risk should have maximum flexibility to use telehealth with their patients—including the flexibility to use audio-only visits and establish virtual-first relationships with specialists. Medicare already allows flexibility for providers participating in APMs to bill for telehealth services, and the Center for Medicare and Medicaid Innovation (CMMI) should allow current telehealth flexibilities in all new models where providers are participating in two-sided risk.

After the onset of COVID-19, telehealth was essential in maintaining beneficiaries’ access to services. Importantly, primary care composed about 39% of telehealth visits in the first three quarters of 2021, while primary and behavioral health care combined made up about two-thirds of telehealth visits for the study population during that period. BPC recommends that telehealth access to primary care and behavioral health services continue with minor adjustments post-PHE. While tele-behavioral health access is permanently authorized beyond the PHE, tele-primary care is not and will end with the current temporary flexibilities. Additionally, if further evaluation supports it, CMS could consider limiting other tele-specialty care to existing patient-provider relationships, except for rural areas and providers participating in APMs.

The pandemic underscored the critical importance of internet connectivity for people needing to access work, school, or health care, among other things. People who live in rural or frontier communities without sufficient broadband, or who cannot afford or use the technology needed for video visits, should continue to have access to audio-only services; however, this access comes with new risks to quality and costs.

In 2021, almost 1 in 5 telehealth services were delivered to Medicare beneficiaries via telephone, and this figure was likely an underestimate because of provider miscoding. BPC interviewed several primary care providers serving predominately vulnerable populations who expressed concern with the quality and efficacy of audio-only visits for new patients. Once the PHE ends, policymakers should place new restrictions on audio-only services, including requiring that providers should deliver care only over the phone for patients with whom they have an existing treatment relationship. The decision for a phone visit should be patient-directed, not the result of a provider limitation.

The Consolidated Appropriations Act of 2021 made access to telemental health services for Medicare beneficiaries permanent. However, the legislation also included a provision that required beneficiaries to see their provider in-person at least six months before accessing the telehealth benefit. There is much evidence to support the effectiveness of telemental health services. Congress should eliminate the requirement for in-person visits for telemental health services, which creates an undue burden on those who cannot access behavioral health providers in-person.

Finally, Medicare should leverage its current process to refine reimbursement rates for telehealth after the PHE to better reflect the effort and expenses for the type of care delivered. The more Medicare pays, the higher the beneficiary out-of-pocket spending for telehealth services. Policymakers should end broad payment parity between telehealth and in-person care, which may help retain telehealth providers participating in Medicare, but which also may overpay such providers relative to their costs.

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