A Policy Brief Involving Telemedicine

¶ … Policy Brief on Telemedicine

Overview of the Importance of the Issue

In today's healthcare environment characterized by a dearth of healthcare providers, increased prevalence of chronic ailments, and mounting healthcare expenses, telemedicine is a promising tool for improving healthcare delivery's efficiency. The necessity for telemedicine appears to be compounded further by the factors listed below:

A significant rise in the population of U.S.A -- a growth of up to about 363 million (i.e., 20%) is predicted from 2008 to 2030

Dearth of educated, licenced, and trained healthcare professionals

Growing global prevalence of chronic ailments, including diabetes, obstructive lung disease, and heart failure

Demand for effective care of home-bound, physically challenged, and aged patients

Adverse events, illness, and injuries at physician's offices and hospitals

Need for improving population and community health

Lack of health facilities and healthcare specialists in rural localities (Hein, 2009)

The above challenges may be addressed effectively through telemedicine. For example, telemedicine is able to maximize the utilization of available healthcare providers by enabling remote diagnoses, monitoring and treatment recommendations for patients residing in rural parts of America. Additionally, telemedicine ensures that patients' risk of contracting infections is reduced, by limiting or completely eliminating the need for patients to visit physicians' offices or hospitals for receiving health care (Hein, 2009).

Population Affected

Obstructive lung disease, heart failure, diabetes, and other chronic illnesses require treatment over a long-term, together with the services of several specialists. All this considerably increases their healthcare expenses. Patients suffering from the aforementioned chronic issues account for about 75% of overall healthcare expenditures. Extensive adoption of telemedicine will facilitate frequent vital sign monitoring and information gathering (rather than only during sporadic physician visits). Consequently, messages may, concurrently, be forwarded to the patient's treatment team, enabling potential early intervention (i.e., a visit to a doctor or hospital) in the event the patient's condition worsens. Telemedicine adoption for decreasing the number of emergency room and physician office visits is capable of resulting in improved compliance and convenience for home-bound and aged patients. By decreasing hospital/physician visit frequency through e-mails and remote monitoring, timelier patient intervention is possible, before acute patient care is needed (Hein, 2009).

Issue

The current business case for telemedicine's extensive adoption hinges upon acquiring acceptable reimbursement from any of the following important sources, namely: Department of Health and Human Services' CMS (Centers for Medicare and Medicaid Services), private insurers, and Medicare contractors at the state level. The latter are responsible for making most of the decisions pertaining to Medicare reimbursement and coverage (i.e., up to ninety percent of decisions). Organizations with any new services or products generally apply for state coverage, initially, mainly because if their service or product is covered by a contractor, the organization receives returns on its investment, potentially giving rise (later) to an advantageous CMS reimbursement and coverage decision. Organizations can alternatively pursue CMS coverage in the event they are not given enough reimbursement by contractors at the state level, or are denied coverage. But, if any procedure or technology is rejected by CMS, the option of receiving state-level coverage ceases to exist. One key complication of such an arrangement is: on account of limitations of contract language, CMS is unable to exchange reimbursement- and coverage- related information with contractors at the state level. Consequently, the barrier erected by prohibiting information interchange between state contractors and CMS hampers the adoption and diffusion of novel, innovative technologies (like those realized in the "telemedicine" concept) by healthcare organizations (Hein, 2009).

Recommendation

While hospitals, clinics, and physicians make the requisite expenditures for promoting telemedicine use (e.g., designing pilot projects, and developing required software and hardware systems), payers and insurers are these practices' main financial beneficiaries. The financial benefit/expense mismatch might explain why Kaiser Permanente, Veterans Administration, and other "closed" systems (acting as both insurer and physician) have widely adopted telemedicine's attributes (e.g., electronic health records or EHRs), whereas other systems were slow to implement them. Perhaps, if hospitals and doctors were offered incentives, larger investments in telemedicine software and hardware may ensue. This is supported further by a survey conducted in 2006, wherein healthcare providers were questioned with regard to chief barriers to EHR adoption (survey results may be applicable to telemedicine, as well). The survey reveals that capital investment and financial requirements, in addition to making a sound business case, currently represent the prerequisites for EHR adoption by physicians. Over 80% of participants stated that monetary purchase incentives and added payments were reasons for their delay in EHR implementation in their clinical practice (78% cited legal liability protection) (DesRoches et al., 2008; Hein, 2009).

Financial Impact