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Suggested Citation:"5 Telehealth and Payment." Institute of Medicine. 2012. The Role of Telehealth in an Evolving Health Care Environment: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13466.
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5

Telehealth and Payment

A panel of experts discussed issues related to telehealth and payment. This included a look at Medicare policy for coverage of telehealth services, especially for rural Medicare beneficiaries; the challenges of traditional payment models for telehealth; the perspective of private payers; and innovations in payment. The following sections reflect the individual speaker’s comments and reflections.

MEDICARE

Jeff Stensland, Ph.D.
MedPAC

A recent study of rural health care from the Medicare Payment Advisory Commission (MedPAC) looked at Medicare and telehealth to get an understanding of how far it is expanding, why it is expanding, what is promising, and what has been disappointing. In health care, all stakeholders strive to increase patient access and to improve the quality of care. However, while some (e.g., government, payers) want to constrain costs, others (e.g., providers) want to make a profit. All of these desires need to be met in order for telehealth to expand.

Medicare seeks to improve access to care for isolated beneficiaries. About 7 percent of rural Medicare beneficiaries travel an hour or more to receive care. Telehealth could improve access for these beneficiaries. However, Medicare only covers certain services for rural beneficiaries via

Suggested Citation:"5 Telehealth and Payment." Institute of Medicine. 2012. The Role of Telehealth in an Evolving Health Care Environment: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13466.
×

interactive videoconferencing between the beneficiary at a certified rural site and a distant practitioner.

Medicare Policy

Between 1999 and 2001, there was a big shift in Medicare policy. The initial payment policy required two providers (one with the patient at the originating site and one at the distant site for consultation), and the payment was split (75-25). There was little telemedicine at that time in part because of the lack of profitability. In 2001, the requirement for a provider at the originating site was removed. In addition, payment was changed so that the distant provider received the entire payment (according to the fee schedule rate), and a separate payment was added for the originating site—currently, $24. For the distant provider, this payment is equal to what it would make in a face-to-face visit, even though the costs may not be the same. It is important to note, however, that now the total payments are higher. Any discussion of expanding telemedicine widely must consider how much more those visits will cost the taxpayer, not only on an individual basis, but on a number of visits.

Telehealth in Medicare Today

Today, telehealth services are not used much in Medicare. Medicare only pays about $6 million annually for telehealth services. In 2009, about 14,000 beneficiaries had one or more telehealth visits. In 2009, there were about 40,000 telehealth visits, but less than 30,000 bills from the originating site. In part this may be because the originating site was in a patient’s home, which is not a recognized provider site under Medicare.

In 2009, only 369 practitioners provided 10 or more telehealth services to Medicare beneficiaries, and most of these were mental health services. There are many possible reasons for these low usage rates. For example, extra time may be required for the telehealth visit. Some specialists (e.g., dermatologists, cardiologists) may think their income will be higher by performing procedures during that time. They may already be so busy with face-to-face patient loads that they do not perceive the need to add more patient populations. Also, any additional administrative cost might be another hindrance.

Psychologists, psychiatrists, and clinical social workers accounted for 49 percent of the health care professionals who provided 10 or more telehealth services in Medicare. Physician assistants, nurse practitioners, and clinical nurse specialists accounted for 19 percent of the practitioners, and family medicine and internal medicine physicians accounted for 7 percent. This is somewhat surprising since telehealth is largely promoted as a mo-

Suggested Citation:"5 Telehealth and Payment." Institute of Medicine. 2012. The Role of Telehealth in an Evolving Health Care Environment: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13466.
×

dality to receive specialty care. Nephrologists accounted for 4 percent of practitioners and 22 percent were “other” practitioners, such as cardiologists, neurologists, and dermatologists.

Promising New Telehealth Uses

One promising new use of telehealth is telepharmacy. Telepharmacy might be especially important to improve access to and quality of care for critical access hospitals that do not have a pharmacist on staff, or for towns with less than 1,000 people that cannot support a freestanding pharmacy. Additionally, this would not cost the insurer any extra money. MedPAC interviews with individuals running telepharmacy programs found that none of the pharmacies were receiving grant funds other than start-up funds. These programs made enough profit off the additional prescriptions they sold to cover the cost of the pharmacy technician located in the small town, and the additional cost of the consulting pharmacist.

Tele-emergency care and tele-ICU care represent other opportunities for a specialist to consult with another practitioner who is attending to a patient. For example, in some critical access hospitals, there is not a physician or registered nurse on-site. Tele-emergency care may provide that less-trained practitioner access to an emergency department (ED) physician who can help guide the practitioner to stabilize the patient.

Remaining Questions

Early on, the reduction in patient travel times was considered a motivator for telehealth adoption. An interesting research question would be to look at the trade-offs between the physician’s time and the patient’s time. For example, if telehealth technologies add time to the physician’s work time, either through technical difficulties or administrative requirements, physicians may resist adoption of the technology. This could be compared to how patients (and their employers) value time as it relates to travel time. However, today, the greater motivator for telehealth adoption is probably more about improving quality of care than saving time. Another area for research is to assess reasons why providers have abandoned the use of certain telehealth technologies. Medicare has 12 years of claims data for every physician who has provided telehealth services. Some questions might include, Did you think it did not work? Were the administrative barriers too big? Was it cutting into profitability? Knowing more about why things failed could ultimately lead to more adoption of these technologies.

Suggested Citation:"5 Telehealth and Payment." Institute of Medicine. 2012. The Role of Telehealth in an Evolving Health Care Environment: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13466.
×

TRADITIONAL PAYMENT MODELS AND REGULATION

Karen E. Edison, M.D.
University of Missouri Health System

As part of the Medicare, Medicaid, and SCHIP1 Benefits Improvement and Protection Act of 2000,2 constraints were put on the expansion of reimbursement for telehealth in the Medicare program in order to get the legislation passed. Today those constraints are prohibiting the further expansion of telehealth. Both Medicare and Medicaid place constraints on the types of providers that can deliver telehealth services (e.g., licensure and credentialing requirements), the allowable originating sites, and the eligible services. For example, Medicare reimburses for live, interactive telehealth if the patient is in a nonmetropolitan statistical area. It also covers S&F telehealth in Alaska and Hawaii. Medicaid covers live, interactive telehealth in 45 states and S&F services in 16 states. Fifteen states have laws that mandate private payers cover telehealth, but many private payers are covering these services even without mandates. Additionally, meaningful use requirements place some additional pressures on telehealth.

Barriers

Fears

One barrier to the coverage of telehealth is the fear of liability for medical malpractice. Many community health centers and critical access hospitals are afraid to let remote providers see patients who are not already patients within those facilities. This is largely because as far as Medicare is concerned, care is provided where the patient is, not where the provider is. The centers and hospitals worry they will be liable for these new patients. There are other unfounded fears in telehealth. For example, early on, many were fearful of fraud and abuse, which did not come to pass. Furthermore, some independent providers fear being replaced by larger network practices. Health care for most Americans is a local or regional effort of providers who refer based on relationships. Telehealth will not replace these needed providers.

______________

1 State Children’s Health Insurance Program.

2 Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, P.L. 554, 106th Cong., 2nd sess. (December 21, 2000).

Suggested Citation:"5 Telehealth and Payment." Institute of Medicine. 2012. The Role of Telehealth in an Evolving Health Care Environment: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13466.
×

Definitions

The definition of rural (see Chapter 4) as it relates to payment is another barrier. Variations in the definition can lead to patients falling in and out of coverage due to changes in whether, by definition, the patient is considered to live in a rural area. Additionally, many definitions include consideration of the proximity of urban areas. Restriction of telehealth coverage to rural populations alone may prevent some Medicare beneficiaries who are unable to travel from receiving necessary care merely because they live within a certain distance of an urban area.

Credentialing and Privileging

Originating site hospitals can accept the credentialing and privileging decisions of the distant site hospital. However, hospitals have to change their bylaws to allow for such credentialing by proxy. Alternatively, applying for privileges at each originating site can be very costly and time consuming for telehealth providers.

Potential Solutions

Instead of restricting telehealth coverage to specific patient populations, providers, sites of care, and services, Edison suggested that telehealth should simply be treated the same as in-person care. If you drive to see a doctor, the care is delivered where that doctor is; just because technology takes you there should not be any different. Agreement that the service is provided at the location of the provider would solve many problems, including some privileging and credentialing issues, licensure issues, and fears of liability.

Edison said the major barrier to the widespread use of telehealth technologies is the traditional reimbursement model, which lacks incentives for providers. Many physicians already have full schedules and receive higher reimbursement for procedures than for consultations. Others see telehealth as a mission-based activity to serve the underserved. Also, health care professionals lack training and mentoring in telehealth. Overall, Edison said, many things can support the adoption of telehealth, such as provider payment reform, integrated care, meaningful use, and a mature electronic health information exchange environment.

Suggested Citation:"5 Telehealth and Payment." Institute of Medicine. 2012. The Role of Telehealth in an Evolving Health Care Environment: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13466.
×

PRIVATE PAYMENT

Manish N. Oza, M.D.
Wellpoint Comprehensive Health Solution

Health care is complicated. Finding a provider is challenging, wait times are long, and distance can be a barrier to accessing care. Telehealth models such as online care can be simple and fast. For example, video chat is enticing—it is user-friendly and accessible, as a patient is able to log on anytime from anywhere, which is something that consumers want. Patients should be able to quickly pick a trusted provider. Providers should be able to e-prescribe and order radiologic and laboratory tests that can be done before determining if a face-to-face visit is necessary. However, for a variety of reasons, not all providers are ready to embrace telehealth.

There are many incentives for covering telehealth. Telehealth has the potential for cost savings, but attention is also needed to ensure there is no abuse. It also has potential for increasing productivity because patients will not need to leave work for long periods of time to consult health care providers. These types of savings and increases in access are especially appealing to employers. The PCMH model creates incentives for providers to ensure their patients are not readmitted to hospitals or having unnecessary visits to the ED. Engagement of patients in disease management strategies is challenging, but providers might be able to work with their patients over the Internet to discuss health promotion and to reconcile medications. Additionally, there is consumer demand. According to Anthem’s market research, 74 percent of their consumers said they were likely to use online services. Payers need to prepare by finding the right providers who are ready to embrace these approaches, as well as having enough providers to meet this demand.

Healthcare in Your Hand was a pilot at Anthem, which leveraged case management via the web. The initial feedback was positive and engagement rates were higher than normal. The program highlighted some interesting challenges, such as the fact that members liked seeing the nurse’s image via video, but did not like the nurse being able to see them. Additionally, because many of these nurses worked from home, questions arose as to whether she needed to wear a uniform, or if a backdrop was needed to prevent patients from seeing into the nurses’ homes. These types of details are not considered until programs enter implementation phases.

Ultimately, payers want their members to be healthier and have the ability to access health care when and where they want, the way they want. One challenge is the integration of data (e.g., multiple devices monitoring vital statistics). Can all of this data be integrated into an electronic health record? Could researchers eventually mine that data for information on

Suggested Citation:"5 Telehealth and Payment." Institute of Medicine. 2012. The Role of Telehealth in an Evolving Health Care Environment: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13466.
×

metrics and quality? Other challenges include costs, determination of the types of services that are best served by the different telehealth modalities, and the potential for patients to “shop” for different providers until they get the exact care they want (e.g., prescriptions). Finally, many laws restrict the use of telehealth, such as states that require face-to-face encounters for writing prescriptions. Overall, we need to find the modalities that will save money and increase quality, and find the providers who are willing to embrace this kind of health care.

CENTER FOR MEDICARE & MEDICAID INNOVATION

Linda M. Magno, M.P.A.
Centers for Medicare & Medicaid Services

The existing health care delivery system is fragmented, uncoordinated, unsupportive of both physicians and patients, and ultimately unsustainable. In spite of this, we like to think we have the best care in the world because people come from around the world to be treated here. In particular instances you can find the best care in the world, but this is not true of the system as a whole. CMMI is charged to move toward a future delivery system that is more affordable and accessible, provides seamless and coordinated care of high quality, is person- and family-centered, and supports clinicians in serving their patients’ needs. CMMI looks for innovations that produce better care at the point of delivery through the identification and dissemination of best practices, better outcomes of care through incentives like measurement and public reporting, and lower total per capita costs of care through restructuring incentives to reward value over volume.

Typically telehealth includes encounter-based telemedicine (i.e., real-time encounters between patient and physician with each in a different location) and remote patient monitoring (i.e., the transmission of information about and from patients on an ongoing basis to his or her physician to permit ongoing monitoring and adjustment of care around one or more conditions). Myriad devices offer remote monitoring for things like vital signs, medication adherence, and detection movements (e.g., falls). In addition, there is an explosion of applications for smart phones and mobile devices. As these devices become more common and as the users of these devices age, there will likely be more demand for mobile health applications related to self-care management.

For reimbursement, we need to consider who the consumers are for all the information these technologies provide. Consumers include physicians, care delivery organizations (e.g., hospitals, home health agencies), patients, caregivers, and payers. Historically, Medicare does not reimburse providers for the specific tools they use to deliver care; rather, providers are

Suggested Citation:"5 Telehealth and Payment." Institute of Medicine. 2012. The Role of Telehealth in an Evolving Health Care Environment: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13466.
×

paid for the care they deliver. Payment models can create incentives that may discourage the use of better, cheaper, friendlier, and more accessible technologies.

CMMI looks at where innovations fit into the health care delivery system, whether the system is demanding these innovations, how prepared the system is to use the new information the innovations generate, and whether the innovations provide value. Some of the innovations CMMI has examined (e.g., remote monitoring) have not been well received by physicians because they get more information than they wanted or needed about their patients. The data were not useful in the way they were presented, or too many individuals were trying to provide information to the physician for different patients with different insurers. Therefore, the challenge is to find delivery and payment models that work together to create an environment in which telehealth services are both valued and reimbursed.

Early in 2012, CMMI awarded nearly $1 billion in cooperative agreements to 107 different projects to innovate health care delivery and payment models. Seven of these projects are focused on telehealth, such as to expand the use of daily monitoring or to increase the reach of intensivists. CMMI has the authority to take models that produce better care, better outcomes, higher quality, and lower costs; expand them in scale; and eventually shape CMS policy without getting specific legislation.

REACTION AND DISCUSSION

Moderator: Thomas S. Nesbitt, M.D., M.P.H.
University of California, Davis, Health System

An open discussion followed the panelists’ presentations. Nesbitt began the session by noting that broadening the use of telehealth is not just about creating better reimbursement models, but it is also about removing barriers for providers to take advantage of those models. Nesbitt added that payers may be moving ahead because of consumer demand, but that even when providers are paid to use telehealth, there are still barriers to finding providers willing to do so. Finally, Nesbitt stated that all the new and emerging payment models give hope for the great opportunities of telehealth. Audience members were then able to comment and to ask questions of the panelists. The following sections summarize the discussion session.

Care Coordination

One participant asked if telehealth might be a tool for care coordination, either in a fee-for-service payment system or a managed care plan. Stensland stated that MedPAC has been neutral with respect to whether

Suggested Citation:"5 Telehealth and Payment." Institute of Medicine. 2012. The Role of Telehealth in an Evolving Health Care Environment: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13466.
×

fee-for-service or managed care in Medicare is “better,” and that patients should be able to choose which plan they think works best for them.

Transforming Payment

One participant asked about the likelihood that the collection of data on cost savings would actually transform into new payment strategies. As an example of transformation, Magno noted that the Physician Group Practice demonstration essentially served as the platform on which the ACO program was built.

The participant added that telehealth should be regarded as a modality for delivering health care instead of arguing over whether payment should be for telehealth versus face-to-face consultation. Magno added that discussions often focus on the lack of payment for individual telehealth services or types of providers, or whether payment amounts are adequate. Instead, she said, the real challenge is to develop a health care delivery system that can create the necessary infrastructure and tools to deliver care that results in higher quality, better outcomes, and lower costs. Magno added that even with challenges of measurement, health care should be heading toward payment for outcomes rather than payment for the specific method (e.g., telemedicine vs. in-person visit). Nesbitt noted that this may be validated by the fact that both the Kaiser system and the VA are rapidly increasing the amount of telehealth they are doing within their capitated systems.

Another participant called for fundamental change in how we pay for health care, noting that the current system pays more for procedures and hospital-based care, and does not pay well for preventive care. Magno responded that existing Medicare policy is governed by constraints within statute, and that CMMI hopes that innovations can help shape changes in policy.

One participant asked about innovative payment models within fee for service that might create incentives for a specialist to use telehealth, especially given that there are not enough specialists to begin with and many are already too busy with their in-person patient load. He suggested that one solution might be to give extra points for telehealth in the value-based purchasing system. As a second possible solution, he asked about existing financial incentives for specialists to provide rural health care in person (e.g., loan repayment), and whether those same incentives could be translated for telehealth. Nesbitt agreed this could be a strategy. Edison commented that currently, these incentives are mostly for primary care providers.

Suggested Citation:"5 Telehealth and Payment." Institute of Medicine. 2012. The Role of Telehealth in an Evolving Health Care Environment: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13466.
×

Store and Forward Telehealth

Several participants pointed to the need for reimbursement of S&F telehealth. One participant noted that more than a quarter of states provide Medicaid reimbursement for S&F telehealth, as do most of the private payers, but that CMS has not progressed on coverage. He asked about strategies for moving forward, with or without CMS. Edison clarified that S&F was limited in statute because of budgetary concerns, but noted that worries of fraud and abuse have not been realized. She stated that S&F technology for teledermatology and diabetic retinal screenings is a “no brainer,” and that it is especially useful in PCMH models as a way of providing a quick and high-quality consult to the primary care physician. Magno asserted that CMS is open to testing new models of payment and delivery, adding that many issues need to be considered, including patient preferences and costs. Stensland indicated that partnerships are needed with multiple stakeholders, including CMS, private insurers, and those outside the fee-for-service system in order to learn what works best.

Site of Care

One participant argued that many challenges with licensure, credentialing, and reimbursement could be resolved if care was determined to occur at the site of the distant health care provider. He gave the analogy that telehealth is like driving to another state to see a provider who is licensed and privileged there.

Site Fees

Another participant asked what would be equitable for a site fee at the originating site. Stensland said it is difficult to determine an exact fee due to the need to balance many factors, such as increasing access and the value of an individual’s time (e.g., for travel). Edison added that meaningful use requirements will also have an impact, especially for the care of patients with complex health care needs. She stated that as the electronic health information exchange environment evolves, more consideration will be needed for how that should impact payment.

State-Based Payment Reform

One participant asked what could be done at the state level (e.g., policy, legislation) to encourage greater adoption of telehealth in a sustainable manner and whether there were any examples of workable payment models. Edison advised the participant to seek guidance from experts who have

Suggested Citation:"5 Telehealth and Payment." Institute of Medicine. 2012. The Role of Telehealth in an Evolving Health Care Environment: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13466.
×

already done similar projects in other states. Nesbitt shared that one challenge is that the different state-based stakeholders may have different missions, and that it may be difficult to get them together to enable legislation.

The Increased Costs of Telehealth

Stensland questioned whether telehealth could lead to increased costs, such as the replacement of a request by phone for a prescription refill with a billable consultation. Both Stensland and Oza suggested that telehealth might be better paid for as part of a per member per month payment, but Oza noted that physicians are skeptical about whether telehealth will increase or decrease their incomes. Oza added that is why they are starting with the PCMH, and using telehealth to increase capacity. Oza argued that if the incentives are aligned properly, telehealth can help physicians keep patients out of the ED.

Suggested Citation:"5 Telehealth and Payment." Institute of Medicine. 2012. The Role of Telehealth in an Evolving Health Care Environment: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13466.
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Suggested Citation:"5 Telehealth and Payment." Institute of Medicine. 2012. The Role of Telehealth in an Evolving Health Care Environment: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13466.
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Suggested Citation:"5 Telehealth and Payment." Institute of Medicine. 2012. The Role of Telehealth in an Evolving Health Care Environment: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/13466.
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The Role of Telehealth in an Evolving Health Care Environment: Workshop Summary Get This Book
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In 1996, the Institute of Medicine (IOM) released its report Telemedicine: A Guide to Assessing Telecommunications for Health Care. In that report, the IOM Committee on Evaluating Clinical Applications of Telemedicine found telemedicine is similar in most respects to other technologies for which better evidence of effectiveness is also being demanded. Telemedicine, however, has some special characteristics-shared with information technologies generally-that warrant particular notice from evaluators and decision makers.

Since that time, attention to telehealth has continued to grow in both the public and private sectors. Peer-reviewed journals and professional societies are devoted to telehealth, the federal government provides grant funding to promote the use of telehealth, and the private technology industry continues to develop new applications for telehealth. However, barriers remain to the use of telehealth modalities, including issues related to reimbursement, licensure, workforce, and costs. Also, some areas of telehealth have developed a stronger evidence base than others.

The Health Resources and Service Administration (HRSA) sponsored the IOM in holding a workshop in Washington, DC, on August 8-9 2012, to examine how the use of telehealth technology can fit into the U.S. health care system. HRSA asked the IOM to focus on the potential for telehealth to serve geographically isolated individuals and extend the reach of scarce resources while also emphasizing the quality and value in the delivery of health care services. This workshop summary discusses the evolution of telehealth since 1996, including the increasing role of the private sector, policies that have promoted or delayed the use of telehealth, and consumer acceptance of telehealth. The Role of Telehealth in an Evolving Health Care Environment: Workshop Summary discusses the current evidence base for telehealth, including available data and gaps in data; discuss how technological developments, including mobile telehealth, electronic intensive care units, remote monitoring, social networking, and wearable devices, in conjunction with the push for electronic health records, is changing the delivery of health care in rural and urban environments. This report also summarizes actions that the U.S. Department of Health and Human Services (HHS) can undertake to further the use of telehealth to improve health care outcomes while controlling costs in the current health care environment.

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