Supplemental health industry for small companies: Challenges and opportunities
Small companies in the supplemental health products market need to understand the unique challenges these products present in order to compete effectively.
Telehealth, as a modality of delivering healthcare services, is growing in terms of acceptance and adoption. There are a few key drivers for this dynamic: (1) consumer demand for convenient access to care; (2) availability of lower-cost telehealth technologies; (3) clinician comfort and willingness to provide certain services remotely; and (4) evolving payment models that seek to incentivize value and better population health.
Evolving payment models reflect the need to mitigate perverse incentives for the unnecessary healthcare utilization, waste, and inefficiencies inherent in a volume-based payment system such as fee-for-service Medicare. Both private and public sector purchasers, such as Medicare, state Medicaid programs, and employers, are in the midst of testing and scaling alternative value-based models. Even though the current administration is scaling back on mandatory alternative payment models, voluntary initiatives are still underway and being expanded.1 Under these payment models, there are opportunities for telehealth adoption to the extent it encourages efficiencies in the system. Examples include:
Next Generation Accountable Care Organization (ACO) initiative: Allows participants to take on greater financial risk, as well as potential savings, than those in current Medicare ACO initiatives. Next Generation ACOs agree to be accountable for beneficiaries assigned to them and meet certain quality targets.
Medicare Advantage Value-Based Insurance Design (VBID) Model: As of January 1, 2017, this model allows Medicare Advantage (MA) plans and Medicare Part D plans in seven states3 to test various structures of enrollee cost-sharing and plan design elements to encourage use of high-value clinical services. In 2018, an additional three states will be added to test the VBID model.4 MA-VBIDs are able to design benefits for enrollees in certain clinical categories: diabetes, congestive heart failure, chronic obstructive pulmonary disease (COPD), past stroke, hypertension, coronary artery disease, mood disorders, and combinations of these categories.5 Beginning in 2018, CMS will allow benefits design for enrollees with dementia and rheumatoid arthritis as well.6
State Medicaid alternative payment models: A number of states are implementing alternative payment models for their Medicaid populations.
Commercial ACOs:There are a variety of commercial ACO arrangements organizing health systems, physicians, and payer partners to align payments incentives with the care delivered to specific populations.
Cost savings and efficiency gains under alternative payment models are driven by delivery system transformation and successful population health management initiatives. Telehealth has the potential to boost the impact of population health-management initiatives while improving access and convenience of healthcare delivery.
Telehealth’s potential is not lost on investors and employers. In 2016, companies that were focused on telehealth technologies received about $287 million in venture capital funding, a substantial increase from less than $100 million in 2013.17 A recent employer survey indicated almost 64% of employers offered telehealth services in 2016, and by 2018, 92% of employers are expected to offer telehealth services to employees as a low-cost alternative to emergency room or physician office visits for nonemergency health issues.18 Additionally, almost a quarter of employers offered telehealth services for behavioral health in 2016, and by 2018 an additional 41% are expected to offer telebehavioral health services. An earlier version of the same survey found telemedicine has the potential to deliver close to $6 billion in savings to U.S. companies.19
Such high expectations must be calibrated. To conduct appropriate return on investment (ROI) evaluations, telehealth solutions and programs should be designed to consider the purpose of the solution. In general, we think of telehealth solutions for one of three primary purposes: improve access to specialty care, support care management, or provide nonemergency acute care services.
|Purpose||Improve access to specialty care||Support care management||Provide nonemergency, acute care|
Patient at rural health center has video visit with remote ophthalmologist
Patient has in-home video visit with remote psychiatrist
Patient with CHF uses in-home scale, blood pressure monitor, and pulse oximeter that feeds data to remote care manager
Diabetic patient uses glucometer that sends data feeds to care manager
Employee with UTI has a video visit with a physician and receives prescription for ciprofloxacin
Parent with child having acute sinusitis has video visit with nurse practitioner and receives prescription for fluticasone and OTC remedies
For example, a telehealth program designed to increase access to behavioral health should be expected to increase the total use and costs of behavioral healthcare services delivered to a given population. However, a robust evaluation of the potential return on investment should consider the total cost of care for healthcare services provided to a given population, including those which may have been avoided.
Studies assessing the impact of telehealth solutions designed to support care management functions such as post-discharge mobile device tools, wearables, or devices for home monitoring, should consider the chronic condition or care management program these technologies are intended to support. Robust evaluations should consider the care management program’s effects on the utilization and costs associated with the target population.
By design, telehealth programs intended to provide convenient access to a limited set of nonemergency, acute care services are expected to increase the use of those services. Vendors such as Teledoc, American Well, and Doctors on Demand typically offer 24/7 video visits for common symptoms that may require consultation with an advance care practitioner or a physician. Examples include urinary tract infections (UTIs), skin issues and rashes, diarrhea and vomiting, and cold and flu symptoms such as sinusitis, or bronchitis. These services are not designed to substitute for an ongoing relationship with patients’ primary care providers but rather to provide an alternative to urgent care or emergency department visits for nonemergency conditions. Robust evaluations of the potential return on investment should consider whether telehealth services merely drive up total use and cost of healthcare for a given population, or whether they successfully replace other, more costly services such as emergency care or urgent care visits. A recent study evaluating patterns of utilization and spending among patients with commercial insurance and acute respiratory illness found a relatively small proportion (12%) of telehealth visits were substitutes for face-to-face visits, and approximately 88% of telehealth visits were new utilization, with a resulting $45 annual increase in healthcare spending per telehealth user.20
Health insurers, purchasers, and investors will look to properly designed evaluations to assess return on investment and metrics related to utilization, costs, access, and quality of care.