Telehealth and Medicare: Payment Policy, Current Use, and Prospects for Growth

Abstract

Evaluate the growth in various types of Medicare-paid telehealth services. There has been a long-standing hope that telehealth could be used to reduce rural patients' travel times to specialty physicians. Medicare covers telehealth services provided through live, interactive videoconferencing between a beneficiary located at a certified rural site and a distant practitioner. We analyzed 100% of telehealth Medicare claims for 2009 matched to individual patient ZIP codes and individual provider characteristics. Despite increases in Medicare payment rates for telehealth services, expansions of covered services, reductions in provider requirements, and provisions of federal grants to encourage telehealth, growth in adoption of telehealth among providers has been modest. Medicare claims indicate that only 369 providers had 10 or more Medicare telehealth consultations in 2009. Roughly half of the 369 were mental health professionals, and about one-in-five of the 369 were non-physician professionals (e.g., physician assistants and nurse practitioners). On balance, the strong areas of telehealth are mental health and, surprisingly, nonphysician professionals. The comparative advantage of mental health could be the verbal (rather than physical contact) nature of mental health care, and the comparative advantage of non-physician professionals could be their lower labor costs.