Evaluating Telehealth

Executive Summary

Why Did We Write This Report

Telehealth—the use of remote audio and/or video technologies to provide health care services—has been promoted as having the potential to provide more cost-effective treatments, support patient self-management, increase patient convenience and compliance, and alleviate access problems, particularly in underserved areas such as rural communities. Prior to the COVID-19 pandemic, various legal, regulatory, and logistical barriers—such as limited public and private insurance coverage; inadequate broadband coverage in some areas; lack of cross-state licensure; and patient characteristics that impede telehealth adoption such as age, computer literacy, and education—limited the expansion of telehealth. Many of these barriers were relaxed or eliminated during the pandemic.

Congress is currently debating whether to permanently or temporarily extend flexibilities for telehealth services that it enacted during the pandemic. States and localities are also considering extensions of pandemic-era flexibilities. This paper provides lawmakers with the information they need in considering the future of telehealth. It reviews the evidence from before, during, and after the pandemic to see how telehealth has been utilized and how its adoption affects access to, as well as the cost and quality of, health care.

What We Found

Telehealth usage rose rapidly early in the pandemic, partially offsetting a steep drop in in-person visits. But in-person visits quickly rebounded and telehealth utilization dropped off. Both types of visits have returned to nearly pre-pandemic levels in most fields of medicine. Total telehealth utilization remains above pre-pandemic levels. However, this is primarily due to mental and behavioral telehealth services, which more than offset the decline in in-person visits early in the pandemic and remained much higher than pre-pandemic levels. Overall mental health claims jumped during the pandemic and have remained well above prepandemic levels.

Despite the expectation that telehealth would be particularly important in rural areas and across state lines, it was more heavily utilized in urban areas and rarely for interstate services—with the possible exception of mental health and substance abuse treatments. The evidence on whether telehealth delivers quality equivalent to in-person care is limited, with subjective measures often substituting for objective outcomes. Telehealth appears most useful and accurate in areas of medicine where physical examination is less important, such as mental and behavioral health.

Telehealth quality is likely non-inferior to in-person care in most other medical areas, particularly when used for follow-up visits of established patients rather than initial consultations. However, there was troubling evidence of overprescription of antibiotics for inappropriate indications at telehealth visits. This could increase side effects and population-wide antibiotic resistance. While patients largely seemed satisfied with telehealth, some physicians worried they could not conduct adequate physical examinations via telehealth. Many physicians also believed that in-person visits offered a better personal connection and improved physician-patient relationship compared to telehealth.

Despite claims that telehealth would cut costs, increased telehealth availability and utilization likely increased health care spending. Telehealth can decrease patients’ and providers’ travel costs and time. Yet several pre-pandemic studies suggest that telehealth usage largely supplements rather than replaces in-person services, which would increase costs. Unfortunately, there is limited information from during the pandemic on telehealth payment rates, the additive versus substitutive effect of telehealth versus in-person services, and downstream spending for different types of telehealth services. What is available suggests that the total number of outpatient visits probably increased as in-person visits generally returned to pre-pandemic levels and as telehealth visits rose and then declined but remained elevated over pre-pandemic levels.

Over time, the number of consistent telehealth users appeared to be small, and they used large amounts of telehealth services. Patients who continued to utilize telehealth generated more claims per person as time went on, a finding that was particularly strong for mental health services. Most of the overall increase in claims was in mental health services, where claims nearly doubled between 2019 and 2023, an increase that is entirely attributable to expanded telehealth claims.

Fraud, waste, and abuse in telehealth increased with the increased use of telehealth during the pandemic. But no studies indicate that telehealth is uniquely vulnerable to fraud, waste, and abuse or that these occur more commonly in telehealth than in in-person services.

Why It Matters

Increased access to telehealth played an important role as an alternative source of care in the opening months of the pandemic when in-person visits were limited by official regulations and by patients’ reluctance to risk in-person contacts. It will likely be an important safety valve for care in future emergencies and for providing access to highly specialized services that are available in just a few places.

Nevertheless, outside of mental and behavioral health (including for substance use disorders), telehealth did not continue to be heavily utilized—even during a period of unprecedented regulatory permissiveness. This suggests that patients and providers do not find telehealth as attractive relative to in-person care as many policymakers had predicted. Cost-effectiveness remains an open question. And there are lingering questions regarding the quality of telehealth versus standard in-person visits in many areas of medicine.

Policy Suggestions

Congress and state and local governments should resolve the questions raised in this paper before greenlighting a permanent expansion of telehealth in government programs that could trigger increased and possibly wasteful spending.

While the proposals currently under consideration in Congress are aimed at extending telehealth flexibilities for Medicare, they have broader policy implications. Private insurers and state Medicaid programs often follow Medicare’s lead on coverage policies. Congress should direct CMS or another agency to determine if the increase in telehealth utilization, which has been particularly large and persistent for mental health services, represents costly overutilization or is meeting previously unmet needs while providing health-enhancing services at a reasonable cost.

Congress has already made many of the measures taken to facilitate mental and behavioral telehealth services permanent but should be prepared to revisit permanent authorization if investigations document wasteful overutilization. It should not make telehealth flexibilities outside of mental health permanent until the risks of overutilization, increased costs, and decreased quality can be properly assessed and ruled out.

Temporary extensions should be coupled with requirements to conduct research into the quality and cost-effectiveness of telehealth and strict controls to limit fraud, waste, and abuse. Private insurers which bear the risk of overutilization and increased costs—including Medicare Advantage plans—will remain free to provide access to telehealth and could provide important information on telehealth quality and costs.

Read full study at Paragon Health Institute