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Medicare cost crunch raises questions in telehealth debate

Telemedicine advocates are battling twin fears about potentially higher spending and fraud — concerns they call unfounded

A hospice patient in Maine checks his blood oxygen levels on his tablet in 2019. Advocates are trying to capitalize on pandemic-fueled momentum to expand telemedicine for Medicare recipients.
A hospice patient in Maine checks his blood oxygen levels on his tablet in 2019. Advocates are trying to capitalize on pandemic-fueled momentum to expand telemedicine for Medicare recipients. (Brianna Soukup/Portland Press Herald via Getty Images file photo)

Telehealth advocates are struggling to allay lawmakers’ fears about increased Medicare costs as they seek to capitalize on momentum from the pandemic’s shutdown on in-person care.

Expanding telemedicine is a rare unifying force among industry giants that want to broaden digital health for the entitlement program’s 61 million enrollees. But telehealth advocates are battling twin fears about potentially higher spending and fraud — two concerns they call unfounded.

Medicare’s trust fund, which pays for inpatient hospital care, is expected to start running dry in 2026, according to the 2020 annual trustees’ report. The outlook has sobered lawmakers who last year lifted a number of Medicare restrictions under the Department of Health and Human Services in response to the COVID-19 pandemic.


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Most of those waivers expire once officials end the public health emergency, which gives Congress a limited window to act.

Lobbying efforts are focusing on three bills. The first measure, from Sens. Tim Scott, R-S.C., and Brian Schatz, D-Hawaii, would remove restrictions limiting most Medicare patients from accessing telehealth services outside of rural areas or from their home. The second, also sponsored by Schatz, would eliminate restrictions on rural areas and patient homes but require rulemaking to establish other originating sites.

The third bill, by Rep. Mike Thompson, D-Calif., and other House telehealth advocates, would also waive the rural and home restrictions while giving CMS the authority to designate new eligible sites, like a clinic, library or other community establishment. The bill would also extend the current waivers to 90 days past the public health emergency and give HHS authority to implement waivers in future health emergencies. 

Lawmakers in both chambers are starting to move, but signs point to a limited extension of current flexibilities as the most likely outcome. The health panels of both the House Ways and Means and the Energy and Commerce committees recently held hearings on the topic, and Senate Finance Committee leaders are also having discussions.

The enthusiasm is tempered by cost concerns stemming from the Congressional Budget Office’s historical view that telehealth increases the use of services and therefore spending. The HHS Office of Inspector General also stepped up enforcement against telemarketing schemes involving medical equipment, lab tests and prescription drugs last year, which totaled billions in losses to Medicare and patients.

Ways and Means Health Subcommittee Chairman Lloyd Doggett, D-Texas, voiced those concerns during a hearing on April 28. Doggett plans to introduce a bill temporarily extending the current waivers to allow experts to further study the data, in line with recommendations from the Medicare Payment Advisory Commission. He also voiced support for requiring in-person visits for orders of expensive medical equipment or tests.

“With Medicare representing the primary subject jurisdiction of this health subcommittee, we are the stewards of Medicare with a special responsibility to protect both vulnerable beneficiaries and taxpayers from telehealth fraud schemes,” Doggett said in his opening statement. “Schemes which predated the pandemic and are not all that dissimilar from fraud that has impacted traditional health care delivery.”

Subcommittee ranking member Devin Nunes, R-Calif., a telehealth supporter, noted at the hearing that there are still barriers to change to overcome.

“We know the Congressional Budget Office has historically scored telehealth bills at cost. We must also be vigilant for waste, fraud and abuse. And we must realize that while telehealth expands access to care for many people, some seniors, though, face obstacles such as a lack of access to a reliable internet connection,” he said. “If we work together, these are all challenges we can overcome.”

Advocates’ argument

Advocates of expansion point to recent data as evidence that virtual care does not add significantly to the nation’s spending on medical care because it mostly replaces visits that would otherwise happen in person, and they say law enforcement is confusing telemarketing scams with legitimate telemedicine companies. Lawmakers’ hesitation to accept their arguments is dampening hopes of a broader overhaul.

“We have great frustration with our inability to convince lawmakers with evidence and data and experience that telehealth is not uniquely subject to fraud, nor is it going to cause over-utilization,” said Krista Drobac, executive director of the Alliance for Connected Care.

One survey from hospital giant Ascension found that just 14 percent of telehealth patients would have done nothing if a virtual visit were not an option. Survey data that the Alliance for Connected Care collected from other health systems show that the number of overall services remained largely flat throughout the pandemic, even as doctor’s offices reopened.

Advocates also argue that telehealth’s potential cost savings are ignored. Telehealth can keep people out of the emergency room and decrease the likelihood of no-shows, which means patients are more likely to follow care plans and stay healthy. 

“We know that it’s preventative care,” said Kyle Zebley, director of public policy at the American Telemedicine Association. “That means you’re going to forgo more expensive care down the line.”

But Congress must take its cues from the CBO, which predicts that expanded access will mean more services and more spending. Most recently, CBO estimated that a bill removing rural and home restrictions for mental health would increase spending by $1.65 billion over 10 years. A similar version was in the fiscal 2021 spending law but added a provision requiring a doctor to have seen the patient in person within the previous six months. Removing that requirement is now a priority for lobbying groups.

The pandemic also created unique circumstances that may not reflect how telehealth will be used when life returns to normal, said Ateev Mehrotra, associate professor at Harvard Medical School.

“Americans are appropriately a little nervous about getting care right now,” he testified at the Ways and Means subcommittee hearing.

Telehealth advocates are facing more battles in the multilayered debate over costs. Doctors want pay parity between in-person and virtual care, warning that lower pay rates could induce more telehealth usage if patient cost-sharing is lower than for in-person visits. 

Advocates also want CMS to pay for telephone calls to reach patients without access to video calls, which raises further debate about whether underserved patients could be stuck with voice-only phone calls as their only care option.

Congress is currently debating a substantial infrastructure investment in broadband, which is crucial to expanding telehealth access to underserved communities. Medicare provisions could hitch a ride in an infrastructure bill, but advocates are eyeing a year-end spending bill as a more likely opportunity.

“If we don’t get Congress to act and the public health emergency ends,” Zebley said, “we’re going to go speeding off what we’re calling the telehealth cliff.”

This report was corrected to describe a bill by Sen. Brian Schatz accurately.

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