How Payers of Health Care Are Using Telemedicine

By Jeremy Smerd

Apr. 9, 2009

In 2006, emergency room doctor Elliot Justin gave a young patient a diagnosis that sent the patient’s mother into a rage.

“I told her, ‘Your child is fine,’ ” Justin said.

What enraged the mother was not the cut on the child’s face, which required only a little antibiotic ointment, but the effort it took to come to that simple conclusion. The mother had spent her day trying to get some face time with a doctor, shuttling from her pediatrician’s office to an urgent care facility to, finally, an emergency room in New Jersey. Along the way she was told incorrectly that her child’s cut required the expertise of a plastic surgeon.

“The mother got angry because she had gotten run around,” Justin recalls. “Why couldn’t the she have just sent a JPEG of the kid’s face?”

Doing so could have saved her from taking a day off and from the expense of an emergency room visit. Justin’s solution was to create SwiftMD, a health care service that allows patients to see a doctor using online video within one hour of requesting an appointment.

Based in Bozeman, Montana, where Justin now lives, the company is part of a growing field of telemedicine, which refers to any health care delivered to patients using information technology. Not all telemedicine services provide remote access to doctors like SwiftMD does. Some simply use software to help patients monitor their illnesses. What separates telemedicine from health information Web sites is software that provides personalized feedback on a patient’s health. The goal is to use technology to provide more personalized, cost-efficient health care.

In some cases this means connecting patients with health care providers remotely or, when a doctor is not needed, using software to provide continual feedback about a person’s health—for example, their daily blood pressure or blood sugar levels. That highly customized information helps patients manage their health so they, and the employers who pay for their care, don’t have to spend money and time visiting a doctor.

“We must require patients to be their own primary care provider,” says Jay Sanders, a doctor who has been practicing the ever-evolving field of telemedicine since the 1960s.

Some Medicaid and Medicare programs, a few health insurers and a small but growing number of employers are paying for various forms of telemedicine. With billions more dollars budgeted for telemedicine—the exact amount has not been detailed—as part of the recently passed $787 billion stimulus package, the field is poised for wider acceptance as a means to provide medical care that is thought to be timely, convenient and cost-effective.

The idea of telemedicine—the transmission of medical care and information electronically—has long been envisioned. In a recent lecture in New York, Sanders made this point by showing a cover of a British newsmagazine, Radio News, that announced in its headline “The Radio Doctor—Maybe.” The cover shows a child on the edge of his bed, staring at what looks like a television, and sticking out his tongue. In the television’s picture, a doctor makes his diagnoses. The set seems to print out what looks like a prescription. The magazine was published in 1924, four years before the first television sets were sold.

Envisioning telemedicine, however, has been easier than putting the technology into practice—and reimbursing doctors for providing care like online or e-mail consultations. But as it has become easier to access the Internet than a doctor, the field has developed to the point where both private and public health care payers are beginning to reimburse doctors for online care.

Medicare, the single largest health care payer in the U.S., covers telemedicine in limited circumstances, often to allow patients in rural areas to access specialty care without having to go farther afield than their local hospital or clinic. The Department of Veterans Affairs has also pioneered telemedicine programs to help veterans manage chronic illnesses.

Health insurers Cigna and Aetna reimburse doctors for care given online using software from RelayHealth, an Atlanta-based health technology company. The Web-based software is designed to interview patients and then use their answers to pinpoint a diagnosis. RelayHealth is available to any patient of a doctor who uses the service in his or her practice. At Cigna, that totals about 15,000 doctors out of some 500,000; at Aetna, it’s about 6,000.

“Telemedicine isn’t necessarily our strategy,” says Ken Tarkoff, a general manager at RelayHealth. “Our strategy is to provide better connectivity in health care.”

RelayHealth is intended to help doctors’ practices run more efficiently. Lab results automatically populate a person’s electronic health record. The software’s design helps doctors offer feedback to a patient based on their lab results while automating common requests such as setting up appointments, paying bills and making medication refill requests, services that are free for the patient. Questions from a patient are automatically forwarded first to a nurse at the doctor’s practice, who analyzes the question before deciding whether to forward it to a doctor.

RelayHealth says its 21,000 doctors represent several million patients. Of those patients, a million are actively managing their online health records. The most active patients are those with chronic illnesses, Tarkoff says.

Doctors are paid when they provide care for a patient. Aetna pays doctors $30 for a Web visit; Cigna pays $35, compared with about $70 for an in-office visit. Patients pay their standard co-pay or co-insurance.

SwiftMD offers a similar capability, but rather than connecting a person to their primary care doctor, the service connects patients with doctors trained in emergency medicine who can provide care at times when a person’s doctor is unavailable. Unlike RelayHealth, SwiftMD’s doctors use Internet video to assess patients.

The company, which went live in February, has signed up its first customer, the New York City locals of the International Union of Operating Engineers. The union’s 9,000 members have use of the service, at a cost to the union of $120 per member annually, Justin says. He says that so far, doctors’ response times have averaged 12 minutes.

The software SwiftMD uses prompts doctors to follow widely accepted guidelines for how specific ailments, injuries and illnesses are to be cared for, which Justin says is a recipe for improving the quality of patient care and avoiding unnecessary medical expenses. It’s not meant to replace emergency care, but to help patients avoid unnecessary ER and office visits for everyday issues.

Justin says he is working to provide evidence of cost savings for his new service. Researchers say little data exists yet to conclusively determine whether telemedicine saves money and under what conditions.

Steven Shea, a professor of medicine in biomedical informatics at Columbia University, says telemedicine will most effectively manage chronic illnesses when patients receive care from a doctor they know who has access to their medical records. Shea says employers might be better off compensating doctors for telephone and e-mail consults rather than outsourcing that care to a third party. “There’s no doubt that the cheapest and best way [to get care] is for a patient to call their own doctor, even when the doctor is reimbursed for it,” Shea says.

A recent analysis by Veterans Affairs, however, showed that its home telehealth program produced major cost savings. The program was particularly successful in giving veterans in rural areas access to doctors and for helping to teach veterans to better manage their chronic illnesses.

The VA’s telehealth program cares for 35,000 veterans and is the largest in the world. The study looked at the health outcomes of 17,025 telehealth patients and found a 25 percent reduction in the number of days in the hospital and a 19 percent reduction in hospitalizations.

Boston-based data storage company EMC has embraced telemedicine to help its employees better manage high blood pressure, a key indicator of other potential health problems. Two years ago, with help from the Center for Connected Health in Boston, the company set up a program to see how far it could enable patients to manage their hypertension without the help of a doctor.

Using special blood pressure cuffs developed by the Centers for Connected Health that plug into a computer, 400 EMC employees volunteered to take their blood pressure three times a week. The information automatically populated an online health record, tracking the changes in a person’s blood pressure over time. The center’s software provided continual feedback that showed each individual how their blood pressure changed in response to circumstances in their life: changes in diet, stress at work, a good night’s sleep.

The feedback helped people change their behavior to produce the blood pressure levels they sought. Doug McClure, corporate manager for operations and technology at the Center for Connected Health, says the key to getting people to change is to constantly measure what you are trying to change, like weight, blood sugar or blood pressure.

“Want to lose weight?” McClure says. “Take a measurement regularly. It creates a contract with yourself about change.”

What McClure calls a feedback loop is meant to keep people engaged. It’s normal for blood pressure to go up and down; the important thing is to understand why and then change the patient’s behavior to produce the desired result.

Delia Vetter, senior director of benefits for EMC, says the company finished the pilot program in December 2008 and, with the help of health data management company Ingenix, is analyzing the results to determine whether the efforts improved people’s health and reduced health care costs.

She says she expects the recoup $2 for every dollar spent, and that even without the official analysis complete, her company’s efforts have been worthwhile and will continue regardless. Vetter says technology is more effective than plan design in changing people’s behavior.

“If you are getting medicine for free, how is that teaching you how to be a better health care consumer, and how to live a healthier lifestyle?” she says. “When you are providing education, constant reinforcement and new, innovative ways to manage their health, you keep on the forefront of their minds how to live a healthy lifestyle.”

Jeremy Smerd writes for Crain’s New York Business, a sister publication of Workforce Management.

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