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.