As we have explored a number of times on this blog, telemedicine has gone mainstream.  The more recent development is that employers seem to be paying more attention now. The numbers speak for themselves. A recent Towers Watson study focusing on employers with at least 1,000 employees concluded that U.S. employers could save up to $6 billion per year if their employees routinely engaged in remote consults for appropriate medical problems instead of visiting emergency rooms, urgent care centers, and physicians’ offices.

Attitudes towards telemedicine more generally in the United States also have undergone a significant shift:

  • 74 percent of consumers would use telehealth services given the opportunity;
  • 76 percent of patients prioritize access to care over the need for human interactions with health care providers; and
  • 70 percent of patients are comfortable communicating with their health care providers via text, e-mail, or video, in lieu of seeing them in person.

Just as significantly, telemedicine is increasingly viewed as an efficient and cost-effective care delivery vehicle, due to several factors: i) a health care system transitioning from fee-for-service to one where reimbursement is closely tied to quality and patient outcomes; ii) an increase in the use of integrated delivery models such as accountable care organizations and medical homes; and iii) the relative ubiquity of sophisticated health care technologies.

Employers, in particular, are paying close attention to developments in telemedicine for another reason: the looming “Cadillac Tax.”  Starting in 2018, a 40 percent excise tax will be imposed annually on health plans with premiums exceeding $10,200 annually for individuals and $27,500 annually for families. Given this impending tax, employers are looking for efficient ways to cut their employee health care costs. Telemedicine has become an extremely viable option for several reasons:

  • Many employees hesitate to take time off work and to pay the copayments associated with physicians’ visits, particularly for ailments perceived as minor.
  • Many employees forego physician visits entirely, causing relatively minor health issues to sometimes escalate into costly conditions.
  • Although some employers have established onsite clinics where employees can receive sick care and preventive care services, there are high costs associated with creating these clinics.

According to the Towers Watson study, only about 20 percent of U.S. employers offer telemedicine services to employees today, but nearly 40 percent of employers surveyed said that they plan to offer access to such services in 2015, while 33 percent are considering offering access to telemedicine services within the next three years. It is clear to see why. Effective use of telemedicine services could eliminate 15 percent of physician office visits, 15 percent of emergency room visits, and 37 percent of urgent care visits. This all results in significant savings to employers that cover any part of the costs of their employees’ health care.   Employers considering the inclusion of telemedicine services in their employee benefit offerings should pay attention to some significant, but not insurmountable, legal and regulatory issues implicated by the use of telemedicine. In brief, those issues include:

  • Licensure: State licensure laws are a major stumbling block to the interstate practice of telemedicine. With limited exceptions, providers must be licensed in every state in which they intend to practice medicine (location of patient and the provider), and each state has its own licensure requirements. This tension creates a patchwork of inconsistent laws. The Federation of State Medical Boards has developed an Interstate Medical Licensure Compact that would facilitate license portability and the practice of interstate telemedicine. Mid-level practitioner organizations are working on their own compact proposals.
  • Physician-Patient Relationships: Among the factors required by states to establish a physician-patient relationship is an evaluation or examination of the patient by the treating physician. This is especially important when the treating physician is prescribing medications for the patient. States have different requirements that must be met in order for a proper examination to have occurred.
  • Privacy & Security: Numerous privacy and security issues are implicated by the use of telemedicine technologies, including compliance with federal and state privacy and security standards, data management, data sharing (and management responsibility for such sharing) with other providers, and data storage.
  • Medical Liability: Adapting existing principles of medical malpractice liability to telemedicine is a challenging task, especially regarding what constitutes the applicable “standard of care.”
  • Fraud & Abuse: Telemedicine arrangements must comply with federal and state health care fraud and abuse laws, including anti-kickback statutes and/or physician self-referral prohibitions.

Employers seeking to access the telemedicine market must carefully assess the legal and regulatory requirements, and limitations, of any potential arrangements.