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Telemedicine is arguably the hottest trend in healthcare, with consumers more willing than ever to see a doctor remotely.

In a national study by The Alliance for Connected Care, polling more than 2,000 consumers, 64% said they would be willing to have a telehealth visit with their doctor via video.

The same study suggested that an average telehealth visit for acute care represents $126 in savings over an in-person visit.

Furthermore, research shows that patient issues are resolved 83% of the time during an initial telehealth visit.

Finally, more than half of doctors themselves are willing to see patients over video. Why then, haven’t more health systems and individual physicians incorporated this means of delivering care into their practice models?

It’s about the economics, and fortunately economics – mainly reimbursements – are becoming clearer every day.

Here are a few facts:


Fee-for-service Medicare reimbursement is dictated by four key areas: the patient setting, the type of technology, geography, and provider type. With nearly 50 million Americans enrolled, reducing costs is disruptive in all good ways.

Medicare requires that the patient setting, termed the “originating site,” be a clinical site such as a doctor’s office or hospital.

The Alliance for Connected Care estimates that choosing telemedicine visits over in-person treatment for acute care when medically appropriate would actually result in costs savings for Medicare—$45 per visit—a convincing argument for defining the patient setting more broadly

Medicare is quite forward-thinking when it comes to the technology, defining reimbursable telemedicine as “interactions between a healthcare professional and a patient via real-time audio-video technology”; this definition is in line with the model policy of the Federation of State Medical Boards (FSMB), which represents seventy state medical and osteopathic regulatory boards.

Today, Medicare only covers telemedicine when the patient is presenting from a defined rural area termed a Professional Shortage Areas or a county outside of a defined Metropolitan Statistical Area; that said, the Next Generation ACO initiative will remove these restrictions.

Regarding provider type, Medicare reimburses telemedicine encounters with physicians, nurse practitioners, psychologists, social workers, and dietitians, among others.

Forty-eight state Medicaid programs and the District of Columbia have some type of telemedicine coverage. However, Medicaid policies vary from state to state.

According to a report by the ATA’s, 24 states and the District of Columbia do not specify a patient setting as a condition for reimbursement, and 25 states recognize the home as an originating site. This means that many Medicaid patients do not have to travel to a traditional healthcare setting, allowing them to take advantage of the convenience afforded by telemedicine.

Commercial payers have been most aggressive in reimbursing for telehealth visits. Many national plans embrace this healthcare innovation and have been steadily broadening coverage through partnerships with telemedicine services companies. American Well, for example, now covers 50 million commercial lives for telehealth visits through 30 separate major health plans.

This is great news for doctors and the systems in which they work.

And today, 29 states and the District of Columbia have parity laws that mandate commercial payers provide comparable coverage and reimbursement for telemedicine services as in-person services. This is great news for providers!

We are excited about all the forward momentum around telemedicine, particularly the economic benefits that are driving a fierce determination to change the very face of medicine, through a new “facetime” for healthcare delivery.