ATA CEO, Jon Linkous: Paying for Telemedicine in the United States

“How do we get paid for telemedicine?”  This is one of the most common questions I’ve heard over my past 20 years in the industry.  Grants are fine for start-ups, but becoming self-sustaining and profitable requires an enduring stream of revenue.  Fortunately, there are multiple funding sources.  Even better, the streams are growing.  However, let’s start by sorting out a few facts.

Telemedicine is not monolithic.  The term is an umbrella covering many different types of services, serving different audiences and involving different players, technologies and applications, each with their own possible funding sources.  Leading examples include: remote primary and specialty services offered point-to-point or through a medical network; online web-based consultation services; consumer health applications using mobile devices, and; remote vital sign capture, storage and monitoring for patients outside of a hospital

Funding for telemedicine is almost always tied to the service, not the device or network.  Providers may pay for a video system or network application but such purchases are always dependent on the provider ultimately getting reimbursed for services delivered using the product.  An insurer or employer may pay for a personal device or application but only if they are assured that it will positively affect patient health.

Of the $2.8 trillion that constitutes healthcare market in the U.S., there are five primary sources that support almost all telemedicine.  All are rapidly expanding.

  1. Hospital and healthcare systems – Support comes from two areas.  First, managed care, health home and Accountable Care plans allow providers the flexibility to pay for and use telemedicine wherever it is warranted.  Almost 100 million Americans are now covered under these plans and the number is growing rapidly.  Second, a growing number of hospitals and health systems use core funds to support telemedicine between facilities to lower costs by sharing specialty services and increase revenue from expanded referrals.

  2. Private, public and employer insurers – Every large health insurer in the U.S. is expanding coverage of telemedicine.  Sixteen states currently mandate private insurance coverage and so far in 2013 thirteen more states have pending legislation (see http://www.americantelemed.org/docs/default-source/policy/state-telemedicine-legislation-matrix.pdf?sfvrsn=10)

  3. Federal Medicare - Medicare reimbursement is unlimited for remote imaging services.  Live consults are reimbursed for patients in rural areas.  In 2013 Congress is taking up several proposals to significantly expand this support.  (For details of current Medicare policies for telemedicine see http://www.americantelemed.org/docs/default-source/policy/medicare-payment-of-telemedicine-and-telehealth-services.pdf?sfvrsn=14)

  4. State Medicaid - Some Medicaid coverage is available in 44 states and so far this year three states are considering full support.  (For a breakdown of current telehealth payment policies for each State’s Medicaid program see http://cchpca.org/telehealth-medicaid-state-policy)

  5. Health services provided to beneficiaries directly by federal and state agencies – Governmental agencies such as the U.S. Veterans Administration, Department of Defense, Indian Health Service, federal and state and local corrections departments are active providers of remote health care.  This is rapidly expanding and increasingly relies on partnerships with non-governmental health providers.
Finally, a note about consumer-pay - As I have often stated, revenue rarely comes directly from the consumer.  Yes, consumers pay some or all costs of health insurance and provide co-pays for items authorized and partially paid for by an insurer. But except in rare circumstances, consumers in the U.S. do not pay out-of-pocket for healthcare products or services. For the past fifty years the percent of out-of-pocket spending on total healthcare has dropped from 45 to 10 percent.

To learn more – attend ATA’s 2013 Annual Meeting, May 5-7, 2013 in Austin, TX. The ATA 2013 program is focused exclusively on applications and services providing remote healthcare to patients and consumers. The meeting provides over 500 peer-reviewed presentations, over 300 exhibitors and 6,000 attendees. Register or exhibit at http://www.ata2013.org.

Regards,

Jonathan Linkous
Chief Executive Officer
American Telemedicine Association