Telehealth reimbursement parity spurs insurer concerns of overutilization

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Telehealth has undergone a radical transformation during the course of the COVID-19 pandemic. In a little more than 14 months, it has evolved from a niche offering that allowed patients to see clinicians while keeping socially distant to becoming a big part of the future of healthcare. 

Telehealth was a viable service before the pandemic, but it was reimbursed at lower rates than in-office visits. There were geographical restrictions that placed strict parameters on where a patient could access virtual healthcare services – as well as where a clinician could treat them. It was, in a word, limited.

Now, with many of those restrictions lifted at least temporarily, hospitals, insurers and patients are starting to see some of the downstream effects, and all parties are wondering how virtual care will look, and what it will be like, when the pandemic is finally in the rearview mirror. 

Already the industry is seeing utilization change as a result, and payment parity is on both payers' and providers' minds. 

THE BENEFIT OF VIRTUAL BEHAVIORAL HEALTH

Dr. William Lopez, national director for virtual care at major insurer Cigna, said virtual care offered a pathway for its customers to seek care and was something the company actively encouraged, particularly for mental health services. Before the pandemic, he said, virtual visits made up just over 1% of all professional office visits that allowed for them. Today, they make up nearly 25%. This shift is expected to continue, with a recent survey finding that 75% of Americans see a future of healthcare at home. 

"Virtual care has played a particularly important role in addressing mental health during the pandemic," said Lopez. "There was also a sharp increase in the use of outpatient behavioral health services, which rose by 27% compared to pre-pandemic levels. In fact, the growth of virtual health has put behavioral care within reach of more people, with over 60% of behavioral health customers conducting virtual sessions. Given the ease, convenience and accessibility of virtual care – and the additional privacy that virtual behavioral healthcare offers – we expect virtual care to remain in high demand post-pandemic."

Given patients' increased comfort with virtual consultations, more people than ever are requesting access to telehealth. That, said Lopez, could create a risk of overutilization post-pandemic, but is on Cigna's radar and is a consideration as the insurer continues to evolve its reimbursement and benefits approaches.

CONCERNS OF OVERUTILIZATION

The potential for overutilization and its financial costs is a long-term concern for Cigna and for all insurers. 

There's an increasing call for some of telehealth's flexibilities, which were advanced in the CARES Act, to continue on a permanent basis, and this could have the downstream effect of costing private insurance companies more money.

Compensation for providers is typically based on factors such as the time spent with the patient or how complicated and risky the exam is to perform. The CARES Act mandates that telehealth visits be paid for at the same rate as in-person visits for those insured by Medicare. Most private insurers followed suit, paying providers for telehealth visits at the same rate as in-person services.

Health insurers want to redefine healthcare provider state licensing requirements, according to Reuters. They also ask to be able to design their benefits and offerings based on the needs of their members.

Insurers are asking policymakers for reimbursement flexibility and permission to use utilization management tools. The numbers highlight the rationale behind this request: In March 2020, private insurer claims for telehealth rose more than 4,000% compared to the year prior, rising from 0.17% to 7.52%. 

THE FINANCIAL EFFECT

According to The Wall Street Journal, some big insurers are pulling back some of their telehealth coverage for non-COVID-19-related issues. UnitedHealthcare, for example, rolled back policies last fall that waived copays and other fees for non-coronavirus appointments. Anthem BlueCross BlueShield extended coverage through the end of 2020, but only the first two sessions are free for the consumer.

Adding to the complication is that different insurance plans and state-funded Medicaid plans have different rules for which treatments they cover. That means some patients are paying more, and costs are becoming confusing. Patients may end up with a surprise bill, or delay care altogether due to cost.

Still, insurers aren't feeling the pinch quite yet. Most are just anticipating it. If anything, profits among the major insurers are largely up. This was backed up by a Kaiser Family Foundation analysis released this month showing that, in 2020 at least, gross margins were higher and medical loss ratios were lower than in 2019. Loss ratios in the Medicaid MCO market were lower in 2020 than in 2019 or 2018.

Medicare Advantage insurers that fall short of required loss ratio requirements for multiple years face additional penalties, including the possibility of being terminated. To avoid this risk, KFF anticipates that some MA insurers with loss ratios below 85% may take the opportunity to offer new or more generous extra benefits, such as gym memberships and dental or vision benefits, which are popular and help to attract new enrollees. 

For Medicaid managed care organizations, given the options that states have to modify payments and risk-sharing agreements during the pandemic, plans may not be left with unexpected surpluses, or fail to reach their state's medical loss ratio threshold this year.

Waiving out-of-pocket costs for telehealth and COVID-19-related services had the effect of increasing medical loss ratios and lowering margins. An earlier analysis published on the Peterson-Kaiser Health System Tracker found that nearly 90% of enrollees in the individual and fully-insured group markets were in a plan that waived cost-sharing for COVID-19 treatment at some point during the pandemic. About 40% of enrollees in these markets were in plans that offered some form of premium credit or reduction in 2020. 

Affordable Care Act medical loss ratio rebates in 2021 are expected to total in the billions of dollars for a third consecutive year. Individual and group market insurers expect to pay out $2.1 billion in rebates to consumers this fall based on their financial performance in 2020, 2019 and 2018. Most of these rebates – an estimated $1.5 billion – are accounted for by individual market insurers.

What all that means is that the pandemic's effect on health spending and insurers' financial performance in 2021 remains uncertain. Utilization has rebounded since the peak of the pandemic, and could rise further if pent-up demand spurs more patients to pursue services.

Cigna, for its part, has weathered the uncertainty gracefully up to this point, beating financial expectations during the first quarter of 2021 with a $1.2 billion profit. Its overall revenue reached $41 billion during the quarter, driven in large part by its Evernorth health services unit, which includes pharmacy benefit manager Express Scripts. The unit posted a 13% increase in revenue from the same time last year.

In its earnings report, Cigna projected 2021 adjusted revenue to be at least $166 billion, while the outlook for consolidated adjusted income from operations is at least $7 billion. The projections factor in potential complications from the pandemic.

"As we look at the impact of the COVID-19 environment, adoption has been greatly accelerated, and this is especially true with telehealth through the use of technology to enable coordinated care that can be fulfilled in the home," said Lopez. "We anticipate continued adoption and growth, not just from an affordability standpoint, but from a personalization standpoint.

"Post-pandemic, we will continue to develop robust clinical quality programs that ensure equal or better outcomes from virtual care as compared to equivalent in-person care."

PAYMENT PARITY

With all of these complexities, should payment parity for telehealth services continue? The answer is a complicated one.

A recent Health Affairs analysis examined both sides of the issue, and reasonable arguments against payment parity exist. Telehealth may require less clinical effort than an in-person visit, for example, and may also deliver less value. Importantly, telehealth may also have a greater potential for overuse.

Yet despite that concern, there's little compelling evidence suggesting that continuing payment parity after the end of the pandemic will lead to runaway healthcare spending. In an analysis of Blue Cross Blue Shield of Michigan claims from January through October 2020, telehealth rose from zero to about half of all outpatient visits at the start of the pandemic, but it settled at about 21% by October. 

While telehealth use is now 20 times higher than it was prior to the pandemic, the total number of weekly outpatient visits has not exceeded pre-pandemic levels. In other words, telehealth has served as a substitute for in-person care.

While fraud, abuse and overuse are valid concerns, they can be mitigated by aligning reimbursement for video and audio-only visits with the same evaluation and management billing and documentation criteria required for in-person visits, Health Affairs found. CMS can use separate modifier codes for video-based and audio-only telehealth to monitor and investigate outliers for overuse and abuse.

The recommendation for commercial insurers is to wait for enough data to accurately estimate telehealth's impact on access, costs and quality. In the meantime, they should continue payment parity after the public health emergency to allow the technology space to flourish in a more "normal" environment, according to Health Affairs. In short, telehealth has the potential to reduce overall healthcare spending and improve access and the patient experience. 

Lopez said Cigna remains committed.

"Throughout the pandemic, we've made sure all providers are reimbursed for virtual care at the same rates as in-person visits, and we've continued that commitment as the country recovers from the pandemic," he said. "This policy ensures permanent coverage of virtual care, giving customers continued access to their doctor in a virtual setting and coverage for common services performed virtually. It will also allow customers to select a new provider and to be seen virtually for new patient visits.

"We continue to evaluate the appropriate reimbursement level for virtual (care) post-pandemic, taking into account all of our stakeholders," he said.

HOW WE GOT HERE

Before the coronavirus ground the world to a halt, telehealth was primarily used in rural settings, and was seen as a way to provide access to those who lacked transportation or lived far away from the nearest hospital.

Flash forward to December 2020, when then Centers for Medicare and Medicaid Services Administrator Seema Verma said Congressional action was needed to keep telehealth from reverting to a rural benefit. That same month, CMS issued the 2021 Medicare physician fee schedule final rule and interim final rule, which clarified which telehealth services would be covered by Medicare, at least until the end of the year of the public health emergency, on a permanent or temporary basis.

During the public health emergency, CMS lifted the geographic restriction that beneficiaries must be located in a rural area, and permitted beneficiaries to receive telehealth services from their homes. It also allowed a broader range of providers to deliver telehealth services, such as physical therapists, occupational therapists and speech-language pathologists.

The agency also added coverage and payment for audio-only forms of telehealth, enabled rural health centers to serve as eligible distant sites, and expanded Medicare telehealth coverage to more than 100 additional services.

These changes were set to expire after the end of the public health emergency, but groups such as the Medicare Payment Advisory Commission recommended to extend telehealth flexibilities for a limited time so that more evidence could be gathered about its impact on access, utilization, quality and spending.

During one or two years of evidence gathering, Medicare should temporarily pay for specified telehealth services, regardless of a provider's location, and CMS should continue to cover newly-covered telehealth services and some audio-only care, MedPAC said in March.
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com