Does Telehealth Increase Spending?

A new study suggests that direct-to-consumer telehealth may increase access to care but does not decrease spending.

Direct-to-consumer telehealth offers patients access to a physician via telephone or videoconferencing. Health plans and employers generally view telehealth as a way to replace visits to the physician’s office or emergency department (ED) with less expensive virtual visits. Furthermore, patients who use telehealth visits can avoid time and travel costs associated with making a physical trip to the clinic. Telehealth utilization has been steadily increasing over the last few years. In 2015, there were a reported 1.25 million direct-to-consumer telehealth visits, and a recent survey of large employers revealed that 90 percent of them plan to offer a direct-to-consumer telehealth option to their employees in 2017.

However, a study recently published in Health Affairs found that the vast majority of telehealth visits represented new use of medical services, which may increase overall health care spending. The researchers analyzed commercial claims data on over 300,000 patients from 2011 to 2013 to investigate utilization and spending patterns for acute respiratory illnesses. They found that per episode spending was indeed lower for telehealth visits, which cost $79 on average compared to $146 for physician office visits and $1,734 for ED visits. On the other hand, only 12% of the telehealth visits examined were substitutions for physical visits, while the remaining 88% of telehealth visits represented new utilization. Overall, the cost savings from substitution were outweighed by the increase in new utilization, which increased spending by $45 per person on average.

Since telehealth services are less expensive per episode, they have the potential to be cost-saving, as long as a greater proportion of visits are substitutions for physical visits. Health plans may consider increasing patient cost sharing for telehealth visits in order to prevent overutilization. They may also focus on encouraging high users of ED care to utilize lower cost telehealth services.

Nevertheless, the researchers emphasize that cost is only one metric of several that should be used to assess the value of telehealth services. Even if telehealth services do not save money in the long run, they may provide other benefits such as employee satisfaction. Additionally, an increase in utilization may be a net positive for patients with certain undertreated conditions, such as diabetes or mental illness, or for underserved populations with limited access to primary care.

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