An estimated 96 percent of large employers offer telemedicine services to their employees. While independent services like Teladoc have been around for more than a decade, now most insurance providers offer their own telemedicine programs as an add-on service to employers.

Health plan sponsors have added these programs to combat the rising cost of emergency room and urgent care services. However, as employer adoption of telemedicine grows, it hasn’t become any easier to determine if the goal of reducing cost is being achieved. In fact, some research shows that telemedicine may actually be increasing health plan costs.

A recent study funded by the California Health Care Foundation and Harvard Medical School found that most telemedicine use is additional and not a substitute for a high cost event. The study found that around 90 percent of telemedicine visits would not have otherwise ended in an emergency room or urgent care visit. That means only 10 percent of telemedicine encounters replaced an emergency room or urgent care visit.

The study also found that many of the telemedicine visits resulted in an urgent care or emergency room visit that would not have happened otherwise. This is due to telemedicine consults often ending in a referral to an emergency room as a way to avoid potential liabilities on the part of the telemedicine provider. The findings suggest the standard approach to introducing and promoting telemedicine to the general employee population may result in less than desired outcomes.

Ultimately, it may be impossible to determine if telemedicine is increasing or decreasing costs for the plan, but at a minimum, it is time for plan sponsors to reset their expectations when it comes to offering telemedicine services to employees. 

Rather than scrap the idea altogether, plan sponsors may want to revisit program goals. If one is simply serving as a resource for employees with general health questions, there’s no evidence this will result in any cost savings and you might want to consider less expensive approaches to answer them. If it’s to reduce emergent healthcare use, then there still may be an opportunity.

Next, look at your data to determine if specific disease states, such as mental illness or diabetes, may be indirectly responsible for an inordinate amount of ER visits. If that’s the case, specific disease management programs offered by your insurance provider or independently may prove more effective in eliminating the source of this issue.

Finally, focus on increasing substitution rates. Savings from eliminating an unnecessary emergency room visit can be significant — about $1,000 to $2,000 for the plan and employee. This can be accomplished by shifting financial responsibilities within plan designs to further discourage emergency and urgent care usage and more actively communicating the practical benefits of telehealth.

Telemedicine remains a viable benefit solution for employees. But the key to unlocking savings is shifting the focus from general utilization to a substitution strategy. This transition is necessary for telemedicine to ultimately improve care, enhance the employee benefit experience, and reduce overall plan spend.