The Patient Protection and Affordable Care Act (ACA), commonly known as Obamacare, affects not only how healthcare is paid for, but also how that care is provided. As the ACA shifts reimbursement structures to incentivize better patient care with more cost efficiency, hospital visits are replaced by telehealth. Driven in part by the ACA, the global telehealth industry is projected to grow to $4.5 billion in 2018, more than 10 times its 2013 revenue, according to a report from IHS Technology.
Telehealth has long been hindered by the way that private insurers, Medicare, and Medicaid pay for healthcare. Prior to the ACA, doctors were reimbursed for treatment provided, rather than by quality of care or patient outcome. Performing a costly surgery was rewarded with a high reimbursement; readmitting a patient resulted in higher costs and payments. Helping a patient remotely through telehealth, however, seldom resulted in high (or any) reimbursement, even though it could often provide a better experience for the patient.
The ACA is changing this system through reimbursement restructuring. Under the new regulations, medical professionals are paid for making sick patients healthy and preventing healthy people from getting sick, with less regard for the cost incurred by the treatment. This encourages efficient use of resources, which means minimizing patient hospitalization, as hospital care is far more costly than remote care. But telehealth isn’t just reducing costs: “Results from telehealth programs reveal sharp decreases in readmission rates and mortality rates,” notes IHS.
The ACA further promotes telehealth solutions by penalizing hospitals for high readmission rates. Approximately 20% of Medicare hospital patients are readmitted to the hospital within one month, according to Scientific American. This reflects poor care and is harmful to patients and costly for the system: Medicare patients alone incurred $17 billion each year prior to the enactment of the ACA on hospital readmission. Starting October 2013, hospitals are required to preempt these visits, in part by maintaining contact with patients through telehealth, or face severe penalties.