How the ACA Is Driving Telehealth

Virtual medical visits are growing due to the Affordable Care Act (ACA) and a rising prevalence of chronic conditions, according to an analysis from Frost & Sullivan. The market is expected to achieve a compound annual growth rate of 17.8% from 2015 to 2021. Telehealth virtual visits are gaining traction among health plan providers, payers, and employers for non-emergency conditions, such as allergies, colds, ear aches, upper respiratory infections or skin conditions. Telehealth is also attractive to parents who want to avoid dragging young children to a pediatrician. Some services focus on providing second opinions by specialists. Doctors’ and patients’ familiarity with desktop and mobile video services is driving telehealth. Since early adopters are satisfied with the services, providers are encouraged to establish telehealth services for behavioral health and other specialized therapeutic areas.

Teladoc, American Well, MDLive, and Doctor on Demand are the four major competitors attempting to build a virtual telehealth service on a national scale. Each company believes that telehealth virtual visits will become a preferred method of seeing a doctor or behavioral health professional over the next five years. As companies pursue diverse business models and strategies, they have vastly different ratios of video visits to phone calls or secure messaging. Numerous smaller participants are focusing on specific geographic areas or medical specialties.

Study Looks At the Effectiveness of Health Policies


The Health Care Cost Institute (HCCI) released six policy briefs that look at how national and state policies affect health care costs and utilization. Researchers looked at commercial claims data for more than 50 million insured Americans. The following are Key findings:

  1. Provider consolidation drives up spending on cancer treatment: The consolidation of outpatient practices drove significant increases in cancer treatment spending. Hospital outpatient departments and their affiliated clinics were able to charge insurers additional facility fees. Consolidation also increased the use of more expensive medicines and other outpatient care components.
  2. Unrestricted access to physical therapy reduces opioid use and lowers costs: Seeing a physical therapist as the first point-of-care for lower back pain reduces potentially costly services later on, including emergency department visits and use of prescription opioids. Patients who sought physical therapy first for lower back pain had significantly lower costs, including out-of-pocket costs, for physician, outpatient, hospital, and pharmacy care compared to patients who saw another type of provider.
  1. Nurse practitioners push down the price of primary care: Prices for primary care services fell 1% to 4% in states that allowed nurse practitioners to treat patients without a supervising physician. However, spending on health care increased. Higher total health care costs may be a result of increased volume in services, which may stem from increased access to care.
  2. Designing insurance benefits to incentivize patients to choose low-priced providers for colonoscopies can lead to savings of 8.5% per procedure: Medical spending would decrease by approximately $95 million per year if just three health insurers-Aetna, Humana, and UnitedHealthcare, adopted a reference-based payment program for colonoscopies. These estimates were modeled on the health care savings of the California Public Employees’ Retirement System (CalPERS).
  3. Reimbursement for telehealth services is nearly 40% lower than non-telehealth care: Telehealth claims submitted by primary-care providers have increased from 1,246 claims in 2009 to 2,558 in 2013. But they continued to be reimbursed at lower rates. While many states permit reimbursements for telehealth services, only seven states have passed laws that mandate reimbursement parity between telehealth and non-telehealth care.
  4. Mental Health Parity law has a limited effect on access to mental health services: The Mental Health Parity and Addiction Equity Act (MHPAEA) has had little to no effect on access and use of mental health services for patients with depression, bipolar, or schizophrenia.

CVS Explores Telehealth

CVS Health is exploring collaboration among telehealth providers, retail pharmacies, and retail clinic providers. CVS is working with three telehealth companies: American Well, Doctor On Demand, and Teladoc. As well as offering telehealth physician care online, CVS Health will explore enabling MinuteClinic providers to consult with telehealth physicians. This would expand the scope of care offered at MinuteClinic. In addition, MinuteClinic will explore serving as a site for in-person exams to facilitate telehealth medical visits.

Andrew Sussman, M.D. of CVS Health said, “We have the opportunity to partner with telehealth organizations in the care of patients at home. In doing so, CVS Health will add value for patients, clients and health plans by improving access to low-cost quality care. During our initial phase of exploration, we learned that we could deliver excellent quality care and that patients were extremely satisfied with the care provided.”

MinuteClinic data recently published in the Journal of General Internal Medicine showed that 95% of patients were highly satisfied with the care they got, the ease with which telehealth technology was integrated into the visit, and the timeliness and convenience of their care. He added, “With the increased demand for patient…as a result of the…Affordable Care Act, the primary care physician shortage, aging of the population and epidemic of chronic disease, telehealth gives us the opportunity to offer high quality care to an expanded group of patients in a variety of convenient and cost-effective locations.”

How Telehealth Could Save Big Money for in Medicare

Telehealth can help achieve savings in the Medicare program, according to an actuarial study by Alliance for Connected Care. The study found that 83% of telehealth visits require no additional follow-up care. Replacing in-person acute care services with a telehealth could save the Medicare program $45 per visit. “Reimbursing for telehealth will not increase Medicare expenditures; it will provide an easy alternative for beneficiaries to get quality health care. Telehealth can often replace an in-person visit to the emergency room or urgent care center and resolve the issue so no further care is needed,” said Dale Yamamoto of Red Quill Consulting.

Some Medicare Advantage plans have started offering telehealth services. Most seniors in fee-for-service Medicare lack access to telehealth services because of the restrictions in the Affordable Care Act. Generally, covered telehealth services must be provided in rural areas as determined by the Dept. of Health and Human Services (HHS). The Alliance says that telehealth can play a critical role in meeting the primary care needs of the incoming influx of Baby Boomers. For more information, visit Alliance for Connected Care.

Last Updated 10/20/2021

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