Direct-to-consumer telehealth boosts spending through more utilization
While direct-to-consumer telehealth services may be increasing access to care through the availability of virtual care encounters, the potential cost savings from the technology is not being realized and is actually driving up healthcare spending by facilitating new care.
That’s the conclusion of RAND Corporation researchers who analyzed claims data for 300,000 beneficiaries enrolled in a health plan from CalPERS, a larger California public employee benefit organization that offered direct-to-consumer telehealth services to its members.
“We estimated that 12 percent of direct-to-consumer telehealth visits replaced visits to other providers, and 88 percent represented new utilization,” the researchers write in this month’s issue of the journal Health Affairs.
“Most visits turn out to be new visits,” rather than replacing what otherwise would be traditional patient encounters with clinicians, says Scott Ashwood, associate policy researcher at RAND and lead author of the study. And because so many of these visits are “new use,” on average it actually increases the time clinicians spent with patients, according to Ashwood.
In addition, researchers found that net annual spending on acute respiratory illness increased $45 per telehealth user. As result, the authors contend that “direct-to-consumer telehealth may increase access by making care more convenient for certain patients, but it may also increase utilization and healthcare spending.”
“The convenience is something that consumers are really responding to,” adds Ashwood. “Direct-to-consumer telehealth seems to be increasing costs for these conditions.”
Last year, RAND researchers reported similar findings about retail clinics—they estimated that 58 percent of visits to retail clinics for low-severity illnesses were new uses of medical services, rather than substitutes for visiting a doctor’s office or emergency department.
“Given that direct-to-consumer telehealth is even more convenient than traveling to retail clinics, it may not be surprising that an even greater share of telehealth services represent new medical use,” said Lori Uscher-Pines, co-author of the new report and a policy researcher at RAND. “There may be a dose response with respect to convenience and use—the more convenient the location, the lower the threshold for seeking care and the greater the use of medical services.”
“If you make care convenient, then people are going to use it,” concludes Ashwood. “Giving people access to care—by itself—isn’t bad. But, if you also want to save money, then you’re going to need to think creatively about how to do that.”
Ashwood recommends that insurers increase the cost of co-pays for telehealth services to make consumers “think twice about picking up the phone if they just have a sore throat.” He says another strategy could be to target specific populations such as encouraging people who are high users of emergency department care to use direct-to-consumer telehealth instead.