Policy Tip Sheet: Telehealth Could Bring Savings to Medicaid in Tennessee

Published February 27, 2020


Telehealth—the use of information technology to remotely diagnose, treat, or monitor patients—can transform health care by making it more affordable and available. Unfortunately, government regulations (such as strict licensing standards) and inability to properly reimburse doctors providing telehealth services are preventing telehealth from becoming widely available.

Policy Solution

Many of the diseases that are the leading causes of death, including chronic illnesses like diabetes, heart failure, or hypertension are well suited to be monitored through telemedicine.

States should reduce regulatory barriers to telehealth providers. Some reforms lawmakers should consider include allowing practitioner-patient relationships to be established remotely and requiring health care payers, such as insurance companies, to provide reimbursements for telehealth services at the same rates as comparable in-person services.

A bill recently introduced in Tennessee, House Bill 1699, would lower some of the barriers blocking the expansion of telemedicine, making it easier for patients and doctors to utilize telemedicine to achieve these goals.

Additionally, the use of remote patient monitoring (RPM) to help manage chronic disease has been shown to improve health outcomes including: lowering baseline blood sugar levels for patients with diabetes, reducing mortality for patients with cardiac electronic implantable devices, lowering the readmission rate for patients with congestive heart failure, and decreasing hospitalizations, emergency room visits, and average number of bed days for military veterans with diabetes.

HB 1669 would make it easier to use telehealth services by giving patients more flexibility regarding on the locations where they may have a telemedicine visit. It also would ensure telehealth providers are reimbursed at the same rate as an in-person visit, placing a special focus on rural facilities.

The bill would also guarantee coverage for RPM, which is crucial because recent studies have found that RPM can dramatically improve health outcomes. One white paper from telehealth provider Validic found that RPM reduced 30-day readmission rates for congestive heart failure patients from 28 percent to 0 percent at a Massachusetts hospital.

In a 2018 study in the American Journal of Emergency Medicine, a group of physicians examined if and how telemedicine generates cost savings. The results found telemedicine reduced costs by diverting patients away from more costly care settings. “Net cost savings per telemedicine visit was calculated to range from $19–$121 per visit.”

Telehealth can have an especially positive effect on mental health treatment. A study from the American Journal of Managed Care found telehealth patients score lower for depression, anxiety, and stress. A 2018 study from the Agency for Healthcare Research and Quality also found telehealth is clinically effective.

Several states have passed or considered legislation unleashing the telehealth market so providers can employ this technology. In 2017, New Jersey and Vermont passed laws providing telemedicine payment parity. In Texas, rules were passed in 2017 that enable Texas practitioners to use telehealth services.

Policy Message

Point 1: Currently, 200 telemedicine networks with 3,500 service sites are in operation across the United States, and the number of telehealth providers is only expected to grow.

Point 2: Telehealth is popular with patients. For example, among telehealth patients receiving services on a mobile app, 80 percent preferred telehealth compared to a traditional in-office encounter, a 2016 study by West Monroe Partners shows.

Point 3: The U.S. Department of Veterans Affairs (VA) was able to reduce “the number of bed days of care by 25% and the number of in-hospital admissions by 19% using home-based video visits,” as noted in a recent VA study.

Point 4: Over the past year, the Centers for Medicare and Medicaid Services has increased the use of telehealth for Medicaid patients.