Telehealth, a form of “virtual healthcare” where diagnosis and treatment are delivered remotely through the use of technology (typically via telephone or video chat), is becoming an increasingly popular element of the US healthcare landscape.
Employers and insurers are attracted to telehealth by its relatively low cost as compared to traditional healthcare. For patients, online doctor and therapist visits can eliminate common impediments to seeking care, such as difficulties getting time off from work, securing childcare, and finding transportation. For those patients in rural areas, telehealth may also provide quicker and more convenient access to specialized care.
Many physicians are embracing telehealth in their practices because it allows them to boost revenue through more efficient use of time and a reduction in overhead. It also enables them to keep patients in the practice who might otherwise seek care in an urgent care center or retail health clinic.
As the popularity of this form of healthcare grows, so does the number of telehealth vendors in the employee benefits marketplace, some of them promising incredible savings to employers who implement their plans. It is important to put the role of telehealth in an employee benefits program into perspective. The cost of a telehealth visit cannot be compared to the “average” cost of service under an employer’s existing plan because not all traditional care can be replaced by telemedicine (especially those services at the high end of the cost scale). Telehealth is still less expensive than those services at the low end of the scale that it can replace, but the savings are not as great as some vendors claim, so employers and their brokers should budget conservatively. For an in-depth discussion of the costs and savings associated with telehealth, see the Medicare Payment Advisory Commission (MedPAC) March 2018 report regarding telehealth services and the Medicare program.
Dollar savings from telehealth programs, though, are not the only reason why an employer may choose to add this benefit to its overall plan design. Recruiting and retention is also an important factor to consider. As telehealth programs become more popular, more of an employer’s competitors are likely to offer them, and more employees are beginning to expect them.
For an employer who is considering offering a telehealth option to its employees, there are some important choices to be made. First, which service model will be offered? Second, will telehealth be offered as a stand-alone benefit or integrated into the existing group health plan?
The two most common service models being offered today are fee-for-service and capitation. With a fee-for-service model, each visit with a provider incurs a cost. The employee pays a portion of the cost in the form of a copay or coinsurance and, therefore, must provide payment information before the visit can begin. Under the capitation model, the employer pays a per-employee-per-month (PEPM) fee and there is no “per visit” cost to the employee or the employer. Utilization under the capitation model would be expected to be higher because there are no barriers to service in the form of cost sharing. However, because the substantial cost of the capitation model is paid up-front, the savings over traditional office visits must be significant enough to justify the program.
Offering a stand-alone telehealth program can benefit a larger group of employees because it can be made available those who decline or are ineligible for the employer’s medical plan. However, a stand-alone benefit increases the compliance burden on the employer because it will have to meet separate requirements under federal laws such as ERISA, COBRA, the ACA, IRS rules governing HSAs, and HIPAA. This means separate Form 5500 filings, separate summary plan descriptions (SPDs), separate COBRA notices, and more.
When telehealth is integrated into the existing plan, no separate filings or notifications are necessary, but employers must be wary of violating the requirements of the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). Under MHPAEA, group health plans that provide mental health or substance use disorder benefits may not impose less favorable conditions or more stringent limits on those benefits than they do on medical and surgical benefits in the same classification. Depending on its terms, a group health plan that covers telehealth services for medical and surgical conditions may also have to cover telehealth services for mental health and substance use disorder in order to comply with MHPAEA.
No one choice is right for all employers, but for those who are considering adding telehealth to their benefit offerings, it’s important to be aware of compliance issues, set realistic expectations for dollar savings, and focus on the impact an expanded benefits package can have on recruiting and retention.
