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Economy & Jobs

Deregulation Sparks Dramatic Telehealth Increase During the COVID-19 Response

6 minute read

Encouraging private-sector solutions through targeted deregulation and public-private partnerships is a critical part of the Trump Administration’s COVID-19 response. This approach has successfully expanded testing development, healthcare capacity, and the use of telehealth. Telehealth has grown as the United States continues responding to COVID-19’s challenges, leading to public health benefits.

Telehealth allows patients to connect remotely with medical professionals. Because of advances in smartphones and remote diagnostic testing capabilities, its use recently started to increase. But more comprehensive telehealth adoption was limited due in part to issues with internet access, HIPAA requirements, State licensing laws, provider liability, quality standards, and reimbursement arrangements.

This dynamic changed at the Federal level under President Trump’s deregulatory healthcare agenda. To allow for reforms that support the government’s response to COVID-19, the Secretary of the Department of Health and Human Services (HHS) declared a public health emergency on January 31, 2020. Because of this declaration, and shortly after the President declared a national emergency, the Centers for Medicare & Medicaid Services (CMS) released guidance on March 17 that allows Medicare to pay for telehealth services provided across the country. And just last week, CMS released a new toolkit to help States bring this important benefit to other vulnerable populations through Medicaid.

Concurrently with CMS’s Medicare guidance, the HHS Office for Civil Rights announced it will exercise its enforcement discretion and not impose penalties against covered healthcare providers for noncompliance with the HIPAA Privacy, Security, and Breach Notification Rules in connection with the good-faith provision of telehealth. This change allows patients and providers for all types of healthcare to connect over non-public facing video platforms such as Skype, Zoom, and FaceTime during the national emergency. These policy changes followed a 2018 Department of Veterans Affairs regulation that expanded veterans’ healthcare access to include telehealth and earlier CMS policies to allow virtual check-ins.

Data show that telehealth utilization is increasing because of new flexibilities for the provision of Medicare telehealth services and potentially because of HHS’s policy change that allows providers to use popular video platforms to connect with patients. Additionally, the recently enacted Families First Coronavirus Response Act, as amended by the CARES Act, requires group health plans and health insurers to waive cost sharing for COVID-19 testing and any related provider visits to administer such testing, including telehealth visits. Furthermore, the recent increase in telehealth utilization makes sense, as Federal policies have encouraged alternatives to in-person interaction and there is a need to decrease demands on the healthcare system. While it is difficult to separate whether the surge in telehealth is primarily driven by patients’ and providers’ shifting preferences due to COVID-19, the CARES Act, or private insurance reimbursement policies echoing Medicare’s change, all of these factors more than likely contributed to telehealth’s growth.

As the figure below shows, from March 14 to April 1, daily telehealth claims for upper respiratory infections using ICD-10 diagnosis codes from private insurance increased nearly 12 times from the daily average over the previous month. Upper respiratory infections were chosen for examination because this diagnosis label best represented COVID-19-related illnesses prior to the introduction of a diagnosis code for COVID-19 on April 1.

Telehealth’s recent growth coincides with a significant reduction in urgent care and hospital outpatient services utilization since March. Although data are not available to clearly demonstrate that patients who would have sought care in urgent care and hospital outpatient departments used telehealth services instead of in-person care, additional options can help patients meet their healthcare needs in a time when public health officials are recommending social distancing, including avoiding crowded healthcare waiting rooms, and when many people may feel unsafe receiving in-person care. In other words, telehealth may have helped slow the spread of COVID-19 by facilitating social distancing.

The figure also shows that the use of hospital emergency room and hospital inpatient care for upper respiratory illnesses has remained relatively steady, even with an increase in COVID-19-related upper respiratory illnesses. By lowering demand for in-person care, telehealth has helped the United States healthcare system avoid exceeding capacity during this national emergency. Importantly, telehealth can also reduce the negative health outcomes that come from delaying non-COVID-19 care for conditions that require urgent attention.

Beyond aiding the Administration’s COVID-19 response, telehealth has the potential to expand quality healthcare to individuals with limited access to physical services, including some rural Americans, those who are disabled, and elderly patients who have difficulty traveling. Additionally, telehealth can cut overhead costs and reduce the overall time it takes to seek medical expertise for diagnoses and treatments. With many States temporarily waiving or permanently repealing restrictions on the practice of telehealth across State lines, the benefits of this type of care will likely continue after the COVID-19 pandemic.

HHS continues prioritizing further telehealth adoption, and launched a government portal on April 22 that gives information to providers seeking to deliver telehealth and patients searching for these services. That same day, HHS, through the Health Resources and Services Administration, awarded $150 million to rural hospitals to support, in part, the expansion of telehealth. Another $11.5 million was awarded to the Nation’s 14 Telehealth Resource Centers (TRCs) to provide expertise and customized telehealth technical assistance throughout the United States and its territories, while also acting as a clearinghouse for telehealth research. With these new funds, TRCs will be able to provide hands-on technical support in areas such as equipment acquisition, payment policy, system design, and licensing and credentialing.

The rapid increase in telehealth likely benefited public health during COVID-19. However, this and other hypotheses need further analysis so that policymakers can design the best telehealth framework for post-COVID-19 healthcare. Further analyses should examine clinical and insurance data to determine if certain treatments are not appropriate for telehealth and instead require in-person evaluation. Other topics for future evaluation include determining what problems telehealth poses to combating fraud and promoting program integrity, along with the economic and budget ramifications from increased telehealth use.

Regardless of these remaining important questions, President Trump’s embrace of telehealth is one example of using targeted deregulation to allow the private sector to complement the Federal Government’s COVID-19 responses. The rapid growth in telehealth shows how this technology can help the American healthcare system meet patients’ needs during a national emergency. While telehealth’s immediate benefits are clear, it may also offer long-term promise by increasing healthcare access and providing higher-value care.