Telemedicine Reimbursement vs. Decreased Readmissions


The question of reimbursement is very, very important. But not as important as you might think.  As promised a couple weeks ago, we want to look more in depth at the third of our takeaways from the 2014 American Telehealth Conference…especially in light of new developments that have popped up in the news since then.

First, to  bring new readers up to speed:  There is absolutely no doubt about the importance of the reimbursement question.  Quoting myself from the 3 Takeaways piece: “There is very little legislation on this point, and what little there is varies from state to state.  Insurance companies haven’t fully come to grips with it either, often charging for telemedicine consultations as out-of-network (when they cover it at all) despite the much reduced costs to all involved.” How can we begin to roll out telemedicine/mHealth programs without a consistent framework?  How can I justify the cost of implementation, regardless of patient outcomes, to various boards or investors?

The answer is:  There areenough short term benefits that more than off-set the costs–many which may in fact be revenue positive–of implementation…even without reimbursement.  And, as we’d mentioned in the 3 Takeaways piece: Would Noah wait to see the first waves before building the ark?  Get all the policies and procedures in place so that when reimbursement becomes commonplace, you’re already riding the wave. I’m only going to discuss the first of these today, but let’s review all the bullets from  3 Takeaways and give each a few lines of explanation:

  • Decreased readmissions
  • Improved patient access
  • Non-clinical applications (e.g., registration kiosks or holding remote staff meetings)
  • Concierge/pay-per-use care models
  • Improved patient follow-ups
  • Improved provider satisfaction
  • Improved overall outcomes

I’m also going to add one more:

  • Decreased turnover


 Decreased Readmissions/Admissions.

This is a “Holy Grail” for many clinics and hospitals.  Telemedicine, by enabling self-care, diagnostics that can be done at home but read at the hospital, and even in-person (via video) consultations with patients, the costs of patient follow-ups goes down as does the number of readmissions.  The follow up and testing creates an environment for proactive care.  This holds up in study after study:  For instance, in one study, chronic heart failure patients using “home-based telemanagement” had 36% fewer readmissions over the course of a year than those without.  The mean cost of the readmissions for those using telehealth was also about 35% less.1  Either one of those numbers on its own is impressive, but together would almost certainly make up for any loss of reimbursement.  Okay, this study happened in Europe, where reimbursement tends not to create the same problems as in the US, but still…that’s an impressive outcome.

As reported just today (June 24) on EHR Intelligence, the US Department of Veteran’s Affairs, which has been a leader in telemedicine due largely to how many veterans live in rural and inaccessible areas, reports admissions reductions of 35%2–almost identical to the numbers in Europe.  Although the term “admissions” was used rather than “readmissions”, it appears to imply the same thing as the European study in this context.  As more data comes in, 35-36% may become a benchmark number by which to test program effectiveness.

Compelling evidence of how these reduced admissions translate into covering implementation costs comes from this Modern Healthcare blog post from 2013:

“Partners [Healthcare] has had 1,200 patients enrolled thus far in its Connected Cardiac Care Program since its launch as a pilot study in 2006. It has “consistently experienced an approximate 50% reduction in health failure-related readmission rates for enrolled patients,” according to the Commonwealth reporters, with an estimated savings in utilization of about $10 million.”3

Another translation of those costs was expressed by St. Vincent Health System, which claims it experienced a 100% return on investment within two months back in 2012!4

If you are a clinic or hospital where reducing readmissions could significantly reduce costs and also indicate better patient outcomes, then this certainly bears looking into.  And probably instituting as soon as possible.

The reasons for the reduced readmissions is fairly clear: Remote monitoring and/or remote physician/therapist consultations enable the hospital or clinic to provide preemptive care or feedback that reduces need for readmission.  It also means that minor issues that may present as major (say, heartburn being mistaken for a heart attack) can be screened out.  And lastly, the patients are kept ‘up’ and involved in their follow up treatment.  The environment and sense of responsibility to others (in this, whoever might be checking up on them) can increase the level of engagement with their own care.

The reasons for the reduced costs are fairly clear as well:  Fewer hospital/clinic beds required, fewer medications, fewer procedures, less food, etc.  In rural areas there are fewer trips made by both clinical staff and patients, less need of expensive emergency transport, etc.  Of course, there are costs for the implementing telehealth programs,  but these typically appear to be a lot less than the costs saved.  These may include data plans, software, cameras, specialty remote patient diagnostic equipment, etc.

When we return to this “Should we wait for Reimbursement” topic, we’ll probably tackle several of our 3 Takeaways bullets at at time.  However, I think this first one, Decreasing Readmissions, has enough merit, is so strong, that if readmissions are relevant to your hospital/clinic, it stands on its own.

1Giordano, A., et al. Multicenter Randomised Trial on Home-based Telemanagement to Prevent Hospital Readmission of Patients with Chronic Heart Failure.” International Journal of Cardiology 131.2 (2009): 192-199. Web. <>.
2Bresnick, Jennifer.VA Reduces Admissions by 35% due to Telemedicine Services. EHR Intelligence. Xtelligent Media, LLC., 23 June 2014. Web. <>.
3Conn, Joseph. Telehealth Reduced Readmissions, Hospital Days: Report.” Modern Healthcare. Crain Communications, Inc., 5 Feb. 2013. Web. <>.
4McCann, Erin. St. Vincent Telehealth Program Sees Reduced Readmissions, Big ROI.” Healthcare IT News. HIMSS Media, 22 May 2012. Web. <>.

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