Who Will Pay for Telemedicine?

Since the invention of the telephone, patients, and physicians have been calling one another. For most of the 140 years since Alexander Graham Bell, physicians did not even think of charging patients or insurance companies for advice given over the phone. Charges were reserved for in-person, hands-on, in closed rooms, first in patients’ homes and later in the physicians’ offices.

The advent of the smartphone changed all that.

In only a few years, the smartphone opened a world of possibilities beyond Mr. Bell’s wildest imaginings. Today, this nearly ubiquitous device can be used to substitute for most of the traditional office visits, including some parts of the physical exam. There was only one problem:

Who was going to pay for these visits?

The medical billing system long ago created codes that allowed physicians to coordinate care over the phone and allowed them to bill for the time spent. Whether an insurance company would pay for that billing code was another issue entirely. Furthermore, many physicians are almost genetically resistant to treating patients over the phone, to the point that, even today, many physicians will not renew prescriptions based on a phone call with a patient.

The result of practical conservatism on the part of physicians and the stubbornness of insurance companies was that telemedicine never really got off the ground. That is, until COVID-19.

The COVID-19 crisis was the impetus behind an enormous increase in the number of Medicare Advantage (MA) supplemental benefits focused on telemedicine. Before the pandemic, 58% of plans offered telemedicine benefits. In 2021, that number ballooned to 94%.

This shift in funding occurred in considerable measure because utilization of telemedicine spiked sharply during the COVID-19 crisis. Virtual office visits became especially popular with members of Medicare Advantage (MA) plans. These patients, mostly elderly with chronic conditions, are the group at the highest risk of hospitalization and death from COVID-19. In 2021, with many states maintaining social distancing rules, substantial numbers of MA beneficiaries took advantage of expanded telemedicine benefits.

Beyond 2021, it remains to be seen if the telemedicine reimbursement policies will remain in place. The early indications are that health plans appreciate the cost savings of telemedicine, and patients appreciate the convenience. Physicians may be forced to go with the flow, even if they must do so reluctantly. Other physicians and health plans are riding the telemedicine wave to develop innovative ways to improve outcomes for their patients.

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