How Telemedicine Has Impacted Medicare Utilization, Spending, and Quality of Care

In response to the ongoing policy debate about whether to continue payment for telemedicine visits after the COVID-19 pandemic, researchers found that patients receiving care from health systems in the highest quartile of telemedicine use had modest increases in office visits, care continuity, and medication adherence, and decreases in emergency department (ED) visits, compared with patients of health systems in the lowest quartile. These changes were also accompanied by a 1.6% increase in health care spending.

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The researchers aimed to understand the association between greater use of telemedicine and costs and quality across health systems, in this study published in Health Affairs.¹

“Given concerns that telemedicine’s convenience will lead to more visits, the relatively small increase in visits that we observed was surprising,” they wrote.

Telemedicine has been associated with reduced health inequities and improved patient access to care, with 74.4% of physicians reporting that telemedicine was used in their medical practices in 2022, according to a report by the American Medical Association.²

In the current study, the researchers measured the total number of outpatient visits (both telemedicine and in person) per person per year and by modality (telemedicine and in person) to determine the share of each patient’s visits at their assigned primary care provider and health system.¹ Additionally, the researchers measured hospital admissions and ED visits to understand if telemedicine improved quality of care and discouraged the need for acute care.

To assess telemedicine’s impact on drug adherence, the researchers focused on metformin and statins to illustrate medication classes used in chronic disease treatment. Furthermore, the researchers measured total spending and subcategories of spending according to health system setting and services, including Medicare and out-of-pocket payments adjusted for inflation using the Medical Consumer Price Index.

The primary outcome was a difference-in-difference regression analysis, with yearly averages measured for each patient in the prepandemic period in 2019 and the pandemic period between 2021 and 2022.

Approximately 5.5 million beneficiaries with continuous enrollment in traditional Medicare were identified in 2019 and assigned to 1 of 576 health systems.

In 2020, patients with Medicare receiving care at health systems in the highest quartile of telemedicine use had 2.5 (26.8% of all visits) telemedicine visits per person compared with 0.7 (9.5% of all visits) telemedicine visits per person among patients in the lowest quartile of telemedicine use.

Between 2021 and 2022, patients with Medicare in the highest quartile had a 2.2% increase of 0.21 total outpatient visits per patient per year, a 2.2% decrease of 14.4 annual non–COVID-19 ED visits per 1000 patients per year, a 1.6% increase of $248 in per patient per year spending, and increased adherence for metformin and statins, relative to patients in the lowest quartile.

No clear differential changes were observed in hospitalizations or preventive care.

However, the researchers noted several limitations to the analysis. First, the changes observed may have been impacted by time-varying confounders. Second, the analysis was restricted to the traditional Medicare population. Third, because the study outcomes were measured from 2021 to 2022, ongoing waves of COVID-19 illness may have affected health care–seeking behavior.

Despite these limitations, the researchers believe the study provides context to the ongoing debate by policy makers on whether to continue broad telemedicine coverage with respect to a 1.6% relative increase in cost and the clinical benefits of the changes observed in visits, care continuity, and adherence.

“Policy makers have signaled that they are willing to accept small increases in spending due to telemedicine,” wrote the researchers.

Given the improvements observed in health care access and quality, particularly among individuals with chronic conditions, combined with a small increase in spending, the researchers believe it will be difficult to justify a return to restricting telemedicine payments for patients with Medicare.

References

1. Nakamoto CH, Cutler DM, Beaulieu ND, Uscher-Pines L, Mehrotra A. The impact of telemedicine on Medicare utilization, spending, and quality, 2019–22. Health Aff (Millwood). Published online April 17, 2024. doi:10.1377/hlthaff.2023.01142

2. Henry TA. 74% of physicians work in practices that offer telehealth. American Medical Association. December 20, 2023. Accessed April 25, 2024. https://www.ama-assn.org/practice-management/digital/74-physicians-work-practices-offer-telehealth