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The Keckley Report

Telehealth at a Crossroad: Atrophy or Accelerate?

By February 28, 2022March 1st, 2023No Comments

President Biden will deliver the State of the Union address tomorrow. Its focus will be the Russia Federation invasion of Ukraine, inflation and lessons learned from the pandemic thus far. Understandably, the litany of issues in the U.S. health system will get scant attention.   One of those is telehealth.

Two new reports frame the issue (Detailed findings in Industry Insights below):

·        Comparing changes in attitudes about the usefulness of telehealth, McKinsey concluded that consumers value telehealth and virtual care significantly more than their physicians. And the gap is widening.

·        Trilliant found that only 25.6% of consumers actually used telehealth during the 2-year pandemic and “the total addressable market for telehealth is <1% of the health economy…and declining.” Post-pandemic, utilization is leveling off and trending down as in-person visits become the norm.

Though the methodologies of these two studies differ, the conclusions are consistent: lacking significant change, telehealth use will continue to shrink. That’s problematic across the industry, especially for technology dependent insurtechs (i.e. Clover, Bright Health, Alignment Health et al), primary care start-ups that leverage virtual care aggressively (i.e.Clover, Alignment Agilon Health, Cano Health, Oak Street, One Medical, ChenMed et al) and category killers that offer telehealth platform services to health systems and payers (i.e. Teledoc, Amwell et al).

Last Thursday, AMA President Gerald Harman, MD, a Family Physician, delivered a speech titled “America’s Twin Pandemics – Defeating COVID-19 and Rebuilding Trust” via livestream from the National Press Club on the second anniversary of the first Covid death reported in the U.S.

He observed that “Sadly, COVID-19 isn’t the only pandemic we are fighting in America. The other pandemic is a profound loss of trust in the advice of experts, including doctors and scientists, to help us make sense of what’s happening and make informed decisions about our health.” He offered 5 strategies to restore confidence including “the rapid expansion and integration of telehealth and remote patient care has been a lifeline during this pandemic … not only for patients but for struggling physician practices during periods of intense lockdowns.”

Tideland Health, Harman’s practice in Pawley’s Island, SC, offers virtual care services as do 70% of practices per AMA’s website, but that doesn’t square with the findings of these studies. In fact, outside primary care and mental health, physician uptake for telehealth services has been disappointing. Clearly that’s problematic to mainstreaming telehealth across the system and vexing to private investors that pumped $30 billion in digital health solutions last year.

Two explanations for the downward trend in telehealth utilization are widely offered: 1-the increased risks associated with inaccurate or incomplete information exchanged between a patient and physician virtually and/or compromised personal health information, and 2-lack of adequate reimbursement by payers. Each is valid. Per ONC, technology issues associated with interoperable information exchange are near resolution. Per HIMSS, ATA and other trade groups, patient protections and design inventions that mitigate PHI compromise are comfortably in place. Per AHIP, private insurers are increasing reimbursement for virtual care and e-health transactions where benefit design allows and state medical boards agree. But still, telehealth seems at a critical crossroad: it’s either the key to a digital health transformation that engages patients and their caregivers effectively OR it’s a temporary vestige of the pandemic that’s past.

My take

Promoters of telehealth tout the inclusion of the Telehealth Modernization Act of 2021 (HR 1332) in the second Cures Act hoping its provisions continue after the Public Health Emergency ends, but that’s not enough. For telehealth to achieve its optimal impact, all physicians and care teams must be its primary proponents to consumers–not just early adopter primary care providers in risk-based contracts (like Medicare Advantage) and mental health providers able to charge “what the market will bear” for their virtual-care services. 

It requires a full-court press by large employers and private health insurers to require meaningful virtual care coordination by the hospitals and physicians with whom they contract is essential. It requires adding specific measures of telehealth/virtual care use effectiveness in provider scorecards and CMMI’s alternative payment models. It necessitates consumer education about telehealth, virtual care and e-health to stem disinformation and prompt inquiry to their caregivers. Lacking these, adoption will be incremental and utilization suboptimal.

Few question the efficacy and effectiveness of well-managed telehealth services integrated in care management. Ironically, it’s one of the few technology-enabled interventions in healthcare delivery that consumers understand and value. Allowing telehealth to atrophy speaks more to the reluctance of some physicians to embrace technology until they feel they are adequately paid and protected than anything else. At one level it’s understandable, but it’s frequently an excuse for clinicians unwilling to embrace technology enabled care.

Telehealth is at a crossroad.



“Patients love telehealth—physicians are not so sure” McKinsey February 22, 2022

“Trends Shaping the Health Economy Series” Trilliant Health February 2022

“AMA President Gives Prescription to Fix Ailing Healthcare System” February 24, 2022

U.S. Telehealth Laws Interactive Maps Beazley

“Billing for telehealth during COVID-19” HHS

Billing is allowed on a state-by-state basis for asynchronous telehealth — often called “store and forward.” Asynchronous health lets providers and patients share information directly with each other before or after telehealth appointments


Industry Insights:

McKinsey report: consumers like telehealth, physicians not so much: “At the onset of the COVID-19 pandemic, both physicians and patients embraced telehealth: in April 2020, the number of virtual visits was a stunning 78 times higher than it had been two months earlier, accounting for nearly one-third of outpatient visits. In May 2021, 88% of consumers said that they had used telehealth services at some point since the COVID-19 pandemic began. Physicians also felt dramatically more comfortable with virtual care. 83% of those surveyed in the 2021 McKinsey Physician Survey offered virtual services, compared with only 13% in 2019.

However, as of mid-2021, consumers’ embrace of telehealth appeared to have dimmed a bit from its early COVID-19 peak: utilization was down to 38 times pre-COVID-19 levels. Also, more physicians were offering telehealth but recommending in-person care when possible in 2021, which could suggest that physicians are gravitating away from URL and would prefer a return to IRL care delivery.” Other findings:

·        While two-thirds of physicians and 60% of patients said they agreed that virtual health is more convenient than in-person care for patients, only 36%of physicians find it more convenient for themselves.

·        Most physicians say they expect to return to a primarily in-person delivery model over the next year: 62% said they recommend in-person over virtual care to patients. Physicians also expect telehealth to account for one-third less of their visits a year from now than it does today. These physicians may be underestimating patient demand. 40% of patients in May 2021 said they believe they will continue to use telehealth in the pandemic’s aftermath. 

·        Many physicians are turning away from the virtual operating model: 62% recommended in-person care in April 2021, up 5% since September 2020. As physicians evaluate their processes for 2022, 46% said they prefer to offer, at most, a couple of hours of virtual care each day. 29% would like to offer none at all—up 10% from September 2020. Just 11% would dedicate one full day a week to telehealth, and almost none would want to offer virtual care full time.

“Patients love telehealth—physicians are not so sure” McKinsey February 22, 2022

Trilliant analysis: telehealth market relatively small and declining:

·        25.6% of Americans (56 million) used telehealth during the two years of the pandemic.

·        Approximately 30M Americans (excluding self-pay and traditional Medicare) generated approximately 106M telehealth visits between January and November 2021. During the same months in 2020, approximately 38M Americans generated 114M telehealth visits.

·        In April 2021, in-person visits and total visits were 14.8% and 3.1% lower, respectively, than in April 2019. Telehealth visits in April 2021 declined 37% from April 2020.

·        Aggregate visit volumes for telehealth and in-person Primary Care visits in October 2020 were 7% lower than the volume of solely in-person Primary Care visits for October 2019. Primary Care visits for females aged 21-40 now exceed pre-pandemic levels, in part attributable to increased and sustained telehealth utilization. For the remainder of the population, Primary Care volumes remain below pre-pandemic levels with telehealth playing a minimal part in accounting for lost care.

·        Although a higher volume of patients accessed telehealth at the onset of the pandemic, a smaller share of patients (11.5%) is using audio-only services, and over 60% of patients used only audio/video telehealth in the 2020 and 2021 pandemic timeframe

·        Both before and after the onset of the COVID-19 pandemic, Behavioral Health accounted for the greatest share of telehealth visits. On average in 2021, 57.9% of telehealth visits were attributed to Behavioral Health diagnosis.

·        Behavioral Heath accounts for a greater share of a smaller number of visits over time. From March 2020 to November 2021, Behavioral Health telehealth utilization as a proportion of the total increased by 55%.

“Trends Shaping the Health Economy Series” Trilliant Health February 2022

Opioid settlement reached with J&J, distributors, Sackler family settlement unresolved: Johnson & Johnson (JNJ) AmerisourceBergen (ABC), Cardinal Health (CAH), and McKesson (MCK) finalized a nationwide $26 billion settlement over their roles in the opioid crisis, paving the way to distribute $26 billion to 46 state and local governments across the country.

Under the agreement, AmerisourceBergen will pay up to $6.1 billion, Cardinal Health will pay up to $6 billion, and McKesson will pay up to $7.4 billion over 18 years, while J&J will contribute up to $5 billion to the nationwide settlement over nine years. More than 90% of eligible governments — including 46 states — have agreed to participate in the deal.

The settlements require 85% of funds be allocated to programs that will help address the ongoing opioid crisis through treatment, education, and prevention efforts. The settlement will distribute funds based on population, adjusted for the proportionate share of the impact on communities. Initial deposits were put into escrow in 2021, and the first round of funding for many programs could be sent as soon as May.

Related: The mediator in the Sackler-family settlement filed a third interim report February 18 in which the Sackler families proposed paying between $5.5 million and $6 million to settle litigation about their role and their company, Purdue Pharma in opioid addiction epidemic. The original bankruptcy settlement was listed at $4.3 million.

“Johnson & Johnson, three pharma wholesalers finalize $26 billion opioid crisis settlement”  February 25, 2022“

“Sackler family owners of Purdue Pharma propose up to $6 billion opioid settlement” CNBC February 19, 2022

Study: ground ambulance payments increased 56% 2017-2020: Per the FAIR Health’s analysis, from $486 to $758. Ambulance operators’ sticker prices, before accounting for discounts negotiated with insurers, have risen 22% over the same period, and are now over $1,200. Medicare, however, kept its payments in check: Its average reimbursement for advanced life support ambulance rides increased by just 5%, from $441 to $463.

White Paper: “Ground Ambulance Services in the United States” Fair Health February 23, 2022

Study: healthcare M&A activity up significantly in 2021: Per PWC, As set forth in the below exhibit, the overall number of healthcare deals were up significantly in 2021 (56% for the 12 months ending November 15, 2021) compared to 2020. Deal value increased 46%, with the healthcare sector-wide mean enterprise value to earnings before interest, taxes, income, depreciation, and amortization (EBITDA) multiple reaching 15.2x in 2021. Overall deal value increases were driven by increases in managed care EBITDA multiples (up 2.9 to 16.6x) and in senior care (up 2.1 to 14.0x). EBITDA multiples decreased in the acute care, ambulatory care-rehab-dental, and lab-imaging-pharmacy subsectors, between 0.5 and 1.0x.

“Health services: Deals 2022 outlook” PwC,

Report: many SPACs face uphill battle for profitability: For the 262 SPAC mergers that were completed during 2020 and 2021, the average stock price on Dec. 31, 2021, was $8.70, considerably below the average price of more than $10 per share at which the stocks traded at the time of the merger. Only a quarter (65 out of the 262) traded above $10, although some were above $35 per share.

·        When comparing mergers with “experienced” and “non-experienced” SPAC sponsors at 30 days post-merger for the 2019-2021 cohort, the experienced group posted higher returns (-6%) compared to the non-experienced (-10%). The same goes for 7, 90, 180 and even 365 days post-merger, the report notes.

·        While median returns are nearly all negative, we’re still seeing that the “experienced” group is faring better (and even hits +3% a year post-merger).

“The SPAC boom hasn’t guaranteed winners” Axios January 8, 2022

Study: after leaving, re-enrollment in health plans high: In this longitudinal cohort study of 3 018 633 individuals, approximately 1 in 5 members disenrolled from a commercial insurer each year; however, among departing enrollees, approximately 1 in 3 returned to the insurer within 5 years. Detailed findings:

·        The individual market had the highest average monthly turnover rate of 3.4% compared with 2.1% in the group market.

·        December had the highest rate of external turnover, with 13.8% experiencing external turnover in the individual market and 6.9% of members experiencing external turnover in the group market.

·        14% of the members who left the insurer from an individual plan reenrolled with the insurer after 1 year, and 34% had reenrolled after 5 years.

·        Among members who left the insurer from a group plan, 12% reenrolled after 1 year and 32% reenrolled after 5 years. After 10 years, reenrollment reached 47% in the 2 markets. More than 80% of enrollees returned to the same line of business and within the same state, suggesting findings may generalize to smaller insurers.

“The findings of this study suggest that insurers can benefit from investing in members’ long-term health outcomes despite substantial short-term turnover rates.”

Fang et al “Trends in Disenrollment and Reenrollment Within US Commercial Health Insurance Plans, 2006-2018”JAMA Netw Open. February 24, 2022;5(2):e220320. doi:10.1001/jamanetworkopen.2022.0320


Regulatory Insights:

Direct Contracting becomes ACO REACH:  Last week, CMS announced it is replacing the Global and Professional Direct Contracting Model with ACO REACH (Realizing Equity, Access, and Community Health Model) and ending the Geographic Direct Contracting model (DC-GEO). Among changes from the GEO model are requirements that ACO REACH participants to develop a Health Equity Plan to address disparities, be provider-governed (at least 75%) and reduction of the quality withhold from 5% to 2%.

CMS will accept applications this spring for the first cohort of ACO REACH participants, which is slated to begin Jan. 1, 2023. Current GPDC participants can continue on in ACO REACH as long as they agree to meet all the new model’s requirements by the start date. The new model will continue through 2026.

Accountable Care Organization (ACO) Realizing Equity, Access, and Community Health (REACH) Model CMS February 24, 2022

Federal spending changes from 2019 to 2021: Total federal spending increased from $4.7 trillion in 2019 to $6.8 trillion in 2021(+45%). In that period, social security and Medicare spending was flat ($1.8 trillion) while assistance to individuals resulting from the pandemic relief funds increased from $355 billion to $1.4 trillion (+294%) and Medicaid payments increased from $448 billion to $537 billion (+20%).

US Department of Treasury

Judge rules in favor of providers in surprise medical bill dispute: Last week, Judge Jeremy Kernodle of the U.S. District Court for the Eastern District of Texas upended the arbitration process providers and insurers can use to settle out-of-network billing disputes by vacating key parts of the Biden administration surprise billing rule.

The rule required independent dispute arbiters pick the offer closest to the insurer’s median contracted rate, a provision that providers argued would lead to lower payments and unduly favored insurers. The judge agreed, ruling that that some parts of the interim final rule give too much power to insurers in the arbitration process and that HHS did not offer enough notice before it was implemented. The federal government is expected to appeal the ruling, five related lawsuits are pending in federal courts and the Biden administration could essentially restart the process if it issues a final rule.

“Overnight Health Care — Judge deals setback for surprise billing rules” The Hill February 24, 2022

Public health: New variant is more lethal: A more contagious subvariant of omicron, known as BA.2, is spreading and could become the dominant version of Covid. It’s now the top variant in at least 18 countries and rapidly spreading, representing 35% of all new cases that have been genetically sequenced worldwide, up from 10 countries and 21% of cases the week before, according to new data from the World Health Organization. In the U.S, BA.2 currently makes up 3.8% of genetically sequenced Covid cases.

CDC COVID-19 Variant Facts – Official CDC Site for COVID-19

Inaccurate pre-natal test results prompt FDA review: The Food and Drug Administration is asking Congress for more power to regulate prenatal tests that help identify genetic issues during pregnancy. The agency’s request came in response to a letter from nearly 100 Republican lawmakers who probed how the FDA was regulating these tests after a New York Times investigation found the five most common prenatal tests frequently provided inaccurate results.

FDA asks Congress for more power to regulate certain diagnostic tests, including prenatal screenings February 23, 2022

Study: during pandemic, social needs for housing, food assistance increased 20%:  services in this cross-sectional study, the prevalence of social needs during the early pandemic period (January to June 2020) was compared with the prevalence in a matched sample in a prepandemic period (January to June 2019) from Kaiser Permanente Mid-Atlantic States (KPMAS) health care system. Findings:

·        Pre-pandemic/early pandemic periods: the prevalence of transportation assistance need decreased [19.1%] vs. [15.5%]. The prevalence of housing or utilities payment, food payment or meal preparation, and medical services or medication payment assistance needs remained unchanged.

·        Mid-pandemic period: Between January to March 2020 and April to June 2020, the prevalence of transportation assistance need decreased [17.6%] vs [12.8%]. During this period, the prevalence of housing or utilities payment [9.9%] vs. [13.3%] and food payment or meal preparation [16.2%] vs. [20.0%] assistance needs increased. The prevalence of medical services or medication payment assistance needs remained unchanged.

Roblin et al “Comparison of Social Needs Among US Insured Adults Before and During the Early Phase of the COVID-19 Pandemic”JAMA Netw Open. February 252022;5(2):e2146700. doi:10.1001/jamanetworkopen.2021.46700