“Free” Telemedicine Provided by Insurers Costs More Than You Think

4 Comments

With all of the hype around telemedicine over recent years, health insurance companies have begun to bundle these solutions with their existing insurance, marketing them as “free.”

Because most employers offer health insurance, health insurers have become the number one provider of telemedicine solutions. This sounds great – the more people with access to telemedicine, the better, right?

The problem is that no one is using these solutions. After all, nothing in life is free, and the telemedicine embedded in health insurance plans is no exception.

Costs are built into existing premiums and copays.

Health insurance companies are trying to turn a profit. There’s nothing wrong with that, but buyers need to understand that no health insurance company would simply give a product away for free. Typically, a health insurance company pays a very small per-employee-per-month fee, anywhere from $0.15 to $0.20 cents, to the telemedicine provider. These costs, and any other internal administrative costs, that the health insurance company incurs to offer telemedicine are built into premiums.

There are additional copays and fees

While the upfront cost to employers may be hidden, the costs for end users are hard to ignore. For each consultation, employees and their covered families will have an expensive copay or fee. This fee can be anywhere from $20 to $60. These payments are split between the telemedicine provider and the insurance company.

That is not the only other cost – there may also be an excess utilization fee in the fine print. This means that if more than a certain number of consultations are placed, the employer will be charged an additional fee. This is on top of the consultation fee they are already getting for each visit.

How can a provider accurately market this as free when it is so expensive to actually use the solution?

Missed savings opportunity

Employers should also factor in missed opportunity costs. Telemedicine embedded in health insurance plans have average utilization rates around 1 to 3%. That’s it. By comparison, some other telemedicine providers have average utilization rates as high as 40%.

These telemedicine providers may cost more upfront, but you should get back what you pay for it in reduced medical costs and employee productivity.

For example, one emergency department visit can cost upwards of $700. So, every time an employee uses telemedicine instead of the emergency department, this money is saved. Multiply that by all of the employees and the savings can really add up.

If an employer is self-insured, this is direct savings for their bottom line.

If an employer is not self-insured, the savings are little less direct. If an employer uses a telehealth solution that does not generate an insurance claim, over time, fewer claims means smaller health insurance premium increases. Employee productivity should also increase due to less missed work and financial stress.

Don’t Skimp on Telemedicine

Telemedicine can be a valuable benefit – with the right provider. But like most things in life, you get what you pay for. So look twice at the “free” telemedicine imbedded in your health insurance plan.

These telemedicine solutions not only aren’t free – higher premiums, costly copays, and excess utilization fees – but they also provide little real benefit. Employers and employees deserve telemedicine solutions that work. It may cost a little more upfront, but the health care savings and increased productivity more than make up for it.

ABOUT THE AUTHOR

Larry Jones is CEO of TelaCare a national telemedicine company. Since starting the company in 2009, he has led TelaCare to its position today as one of the fastest growing telehealth companies, achieving significant growth in revenue, membership and telehealth utilization. He has become one of the foremost leading technology experts and healthcare technology strategists. Mr. Jones recently released his new book; The Truth About Telehealth available on Amazon.

4 Comments

  1. I didn’t even know I had telemedicine through my insurance. After reading this article I logged on to Anthem and found that I do. I am amazed they didn’t make me aware of it and i was even more frustrated that is costs more than my deductible to use it.

  2. Dennis Peacock on

    I feel like I learn something new everyday. I didn’t know that telemedicine was embedded into insurance products. I will have to look more into this and see what I have through Cigna. Thanks for the education!

  3. Chad Kingery on

    Another great article of Truth. Some of the TeleMedicine offered in these coverage’s are nurse hotlines which can not diagnose or prescribe. Employers should really understand what the definition of telehealth is in their plan and the utilization of it to minimize renewal cost.

    Great Job Larry keep the education coming!

  4. Tobin Purslow on

    I am constantly amazed at the fact that we have all this discussion concerning the cost of telemedicine but no discussion on the actual quality of the product the end user is receiving. I contend that telemedicine is extremely expensive simply in the fact that you are receiving a far inferior product. A telemedicine visit is little more than a fancy phone consultation. You get no physical exam, there are no vital signs. The primary tenant of good medicine is the physical exam including vital signs. What telemedicine has done is to attempt to do away with brick and mortar clinics to cut costs. The next step is to get rid of the medical provider. The data currently being collected will be used to design voice prompted algorithms that will walk patients through a treatment plan. All in the name of convenience and cost savings. In all the discussions regarding telemedicine I see very little input from the medical providers espousing the quality of telemedicine. I have personally spoken to these medical providers and every one of them has serious concerns regarding the quality of healthcare being delivered.
    Telemedicine may ultimately get to a point of delivering decent healthcare but this will require the ability of the medical provider to better assess the patient’s vital signs. In it’s current rendition telemedicine is simply poor healthcare and any money a patient pays for it is too much.

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