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Fran Fields
Fran Fields is the market analyst for Feedback
Research Services, specializing in forecasts for emerging segments of the
health care industry.
In any business model for telemedicine, health care
professionals must be paid for providing teleconsultations. Reimbursement has
been a constant issue in recent years, with industry concerns focusing on the
levels and types of payments that are appropriate for government programs,
insurance coverage, and managed care plans. No one knows how much compensation
physicians and specialists are currently receiving throughout the United States
for their telemedicine-mediated services. Historically, there has been little,
if any, documentation for claims processing. Even in California (where
reimbursement legislation has been enacted for two years now), the first
telemedicine claims processed by the Department of Health Services were only
paid out in August 1998.
In the absence of real data, applying extrapolation
techniques to ATSP/Telemedicine Today survey results can provide preliminary
estimates of income potential. Rounded figures for teleconsultation volumes
have been used here. The fee amount is more speculative. A rate of $300 per
hour was cited on the New England Medical Center Web site in mid-1996, and this
figure is probably a good, conservative estimate for fees paid to specialists
for a single telemedicine consultation. Higher rates have been proposed by the
Health Care Financing Administration (HCFA), such as a $410 fee split between
consulting and referring physicians. It is more likely, however, that the types
of services reported in the survey were not typically first-time specialty
consults. Therefore, they would have involved a much lower aggregate average
charge (perhaps $100).
Using a conservative $100 payment rate per
teleconsultation, and rounded ATSP/TT numbers from the 1998 survey of
consultation activity among 139 U.S. programs in 1997, the following estimates
can be generated:
Teleconsultation Category # of Teleconsultations
Potential professional fees
Mental Health 7,400 $ 740,000
CARDIOLOGY
6,200
$ 620,000
Orthopedics 2,400 $ 240,000
Dermatology
2,300
$ 230,000
Ophthalmology
4,000
$ 400,000
Internal Medicine
2,000
$ 200,000
Other
17,400_
$ 1,740,000
Total:
41,700
$ 4,170,000
Teleconsultation Data: 1998 Report on U.S.
Telemedicine Activity, ATSP/Telemedicine Today, Portland, OR
(www.atsp.org). Also reported in Telemedicine Today, Vol. 6, no. 5, 1998
(5th Annual Program Survey: Consultation Activity in 35
Specialties).
Analysis: Feedback Research Services
This same methodology can also be applied to projected
total teleconsultations of 58,000 for 1998 (based on first quarter ATSP survey
data), resulting in an estimate of $5.8 million in professional fees.
For comparison, it is interesting to review
projections presented by HCFA in the December 4, 1997 Letter Report Prepared
for Al Gore, Jr., President of the Senate. Different criteria were used for the
HCFA calculations, but a reasonable expectation is that Medicare reimbursement
should represent a fraction of the total attributable to all telemedicine
consultations. Using payment method parameters specified in the Balanced Budget
Act of 1997 (not to exceed "current fee schedule amounts"), cost estimates of
$19.0 million were projected for 1999 for patients who are eligible according
to the proposed rules (e.g., those residing in Health Professional Shortage
Areas, etc.). If eligibility were extended to include patients in all rural
areas, the HCFA cost estimate for 1999 was calculated to be $270 million.
Based on the ATSP survey data and the analysis shown
above describing all known teleconsultations ($4.2 million in 1997 and $5.8
million in 1998), both HCFA projections appear to be extremely high. Even
applying $410 per teleconsultation (a "first-time specialty" rate) results in
an estimate of only $23.8 million for all teleconsultations projected for 1998.
Using a growth rate of 39% in 1999 (the same rate projected for 1998) generates
an estimate of 80,620 teleconsultations and $33.1 million (at $410 per
teleconsultation). For perspective, the HCFA projection of $19.0 million would
represent 57% of this $33.1 million forecast for 1999. Although there may be
discrepancies due to variations in methodologies and definitions, the Medicare
reimbursement numbers therefore seem inconsistent with total telemedicine
service volumes analyzed to date.
To obtain the "1998 Report on U.S. Telemedicine
Activity" contact: Pat.Wittenberg@atsp.org; 503/222-2406; www.atsp.org.
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