International Review of Psychiatry

ISSN: 0954-0261 (Print) 1369-1627 (Online) Journal homepage: www.tandfonline.com/journals/iirp20

Telepsychiatry: Benefits and costs in a changing

health-care environment

Maryann Waugh, Debbie Voyles & Marshall R. Thomas

To cite this article: Maryann Waugh, Debbie Voyles & Marshall R. Thomas (2015)
Telepsychiatry: Benefits and costs in a changing health-care environment, International Review
of Psychiatry, 27:6, 558-568, DOI: 10.3109/09540261.2015.1091291

To link to this article: https://doi.org/10.3109/09540261.2015.1091291

Published online: 20 Nov 2015.

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International Review of Psychiatry, 2015
VOL. 27, NO. 6, 558–568
http://dx.doi.org/10.3109/09540261.2015.1091291

REVIEW ARTICLE

Telepsychiatry: Benefits and costs in a changing health-care environment

Maryann Waugh1,2, Debbie Voyles1 & Marshall R. Thomas1,2
1
Colorado Access, Denver, Colorado and 2University of Colorado, Denver, Colorado, USA

ABSTRACT ARTICLE HISTORY

In the USA, the high cost and inefficiencies of the health care system have prompted widespread Received 1 July 2015
demand for a better value on investment. Reform efforts, focused on increasing effective, cost- Revised 28 August 2015
efficient, and patient-centred practices, are inciting lasting changes to health care delivery. Accepted 1 September 2015
Integrated care, providing team-based care that addresses both physical and behavioural health Published online
needs is growing as an evidence-based way to provide improved care with lower overall costs. This 19 November 2015
in turn, is leading to an increasing demand for psychiatrists to work with primary care physicians in KEYWORDS
delivering integrated care. Telepsychiatry is an innovative platform that has a variety of benefits to Telepsychiatry, Integrated
patients, providers, and systems. Associated costs are changing as technology advances and Care, Healthcare Reform,
policies shift. The purpose of this article is to describe the changing role of psychiatry within the Psychiatry, Costs, Value
environment of U.S. healthcare reform, and the benefits (demonstrated and potential) and costs
(fixed, variable, and reimbursable) of telepsychiatry to providers, patients and systems.

Introduction and benefit potential is growing. The following narrative

summarizes the environment of health-care reform, the
In the USA, the high cost and inefficiencies of the health
benefits and challenges of using telepsychiatry and the
care system have prompted widespread demand for a
current costs to providers, payers, and systems consider-
better value on investment. Reform efforts, focused on
ing using telepsychiatry to meet changing health-care
increasing effective, cost-efficient, and patient-centred
goals.
practices, are inciting lasting changes to health care
delivery. One such effort is care integration, defined by
the Agency for Healthcare Research and Quality What is the impetus for health-care reform?
(AHRQ) as care delivered by a team of primary care
Increasing costs
and behavioural health clinicians, who work with
patients and families to deliver systematic and cost- US health-care spending has been increasing at an
effective, patient-centred care for a defined population annual rate of over 3% per year to a total of $2.9 trillion
(Peek & the National Integration Academy Council, dollars spent in 2013. For over a decade, health-care
2013). Integrated care has led to widespread demand for expenditures have accounted for over 17% of the nation’s
increased access to psychiatric services and new models gross domestic product (Centers for Medicare and
of payment to reimburse providers for integrated care Medicaid, 2014). A 2014 report comparing the USA to
efforts. Telepsychiatry, a specific form of telemedicine, 10 other countries found that the USA has the most
uses videoconferencing technology to connect psych- expensive health-care system in the world, but consist-
iatrists to distally located patients, physicians, and other ently ranks last on the majority of performance indica-
health-care providers for an array of services including tors, including quality and efficiency of care (Davis et al.,
assessment, diagnosis, medication management, and 2014). These conditions have led to calls for sweeping
therapy (American Psychiatric Association, 2015). The health-care reforms. While the specifics of every reform
telepsychiatry literature includes demonstrated economic effort remain to be determined, ‘. . .the drive for the
and care quality benefits to patients, providers, and reformation of healthcare financing and delivery in the
payers (Shore, 2013), and within the changing health- United States is unquestionably happening, and will
care environment, the array of innovative opportunities continue to evolve’ (Nordal, 2012, p. 535).

Correspondence: Maryann Waugh, Maryann.Waugh@coaccess.com, 10065 East Harvard Avenue #600, Denver, CO 80231, USA
ß 2015 Taylor & Francis
 INTERNATIONAL REVIEW OF PSYCHIATRY 559

Ineffective care delivery systems insufficient access to behavioural health care. The
majority of patients access behavioural health care
One major component of health-care reform is address-
through their primary care provider (Petterson et al.,
ing the growing realization that behavioral and physical
2014), with estimates for children as high as 85% (Holt,
wellness are interdependent and that individuals with the
2010). However, current fee-for-service models of repay-
highest health care costs are often those with co-morbid
ment disallow reimbursement for provider time spent in
physical and behavioural health diagnoses (Melek et al.,
co-consultation. This deters cross-specialist provider
2014; NAMI, 2003; Unutzer et al., 2012). ‘The relation-
interaction and incentivizes primary care physicians to
ship between physical and mental symptoms is. . .inex-
try to manage patients’ behavioural and physical health
tricable – inevitable. Systems of care that force the
symptoms, often beyond their scope or comfort, or refer
separation of ‘mental’ from ‘physical’ problems consign
their patients to behavioural health specialists with low
the clinicians in each arm of this dichotomy to a rates of follow up (Holt, 2010). For Medicaid and
misconceived and incomplete clinical reality that pro- Medicare patients, this issue is compounded by a limited
duces duplication of effort, undermines comprehensive- pool of behavioural health providers, psychiatrists in
ness of care, hamstrings clinicians with incomplete data, particular, who are reluctant to take on the challenges
and ensures that the patient cannot be completely and lower reimbursement rate of Medicaid/Medicare
understood’ (deGruy, 1996, p. 286). billing (Vo et al., 2015).

Ineffective cost containment efforts Increasing focus on value

Currently, policy and payment options serve to maintain These ineffective and inefficient health care practices are
separation of physical and behavioural components of associated with a low value on investment for patients,
wellness. National health care cost containment efforts of providers, payers, and society as a whole. They under-
the late 1970s included federal funding to develop mine the true intent of the health care system which is to
managed behavioural health-care organizations promote wellness, treat sickness, and support individuals
(MBHO); organizations acting as third-party payers and communities in establishing and maintaining posi-
using fees for service payments in a model designed to tive quality of life. The prevailing biomedical model has
reduce health-care costs through increased attention and been associated with major advances in the field of
management (Nordal, 2012). Initially these MBHOs medicine and life-saving strategies, but is not designed to
appeared successful, and national behavioural health pay heed to the interactive impact of psychosocial
expenditures decreased. However, decades of research dimensions such as behaviour, emotion, culture, family,
now demonstrate that decreasing expenditures were the for example (Smith, 2002). Health-care reform includes a
result of limiting patient access to services and reducing call for a bio-psychosocial approach that integrates
payment to providers. Further, the majority of remaining currently disparate process models into one holistic care
expenditure was administrative; with an inverse rela- model that can address all health determinants in an
tionship between administrative expenditures and qual- efficient manner. As technology helps to improve health
ity of patient care (Mendelberg, 2014). In addition to literacy, the consumer voice is furthering patient-defined
producing only spurious reductions in behavioural value including convenient and coordinated care access
health-care costs, limiting access to behavioural health (Bae, 2015).
care is associated with a significant increase in physical
health medical costs. In an economic analysis of
What are the benefits of telepsychiatry within
individuals enrolled in commercial, Medicare, and
the healthcare reform environment?
Medicaid plans, Melek et al. (2014) found that individ-
uals with a behavioural health condition typically cost The call for healthcare reform is being driven by
2–3 times as much as those without a behavioural health increasing costs, ineffective care delivery to include the
condition across both behavioural and physical cost separation of physical and mental wellness, and failed
categories. cost containment efforts. A growing body of research
links telepsychiatry to a variety of both cost and care
value benefits. A challenge to this line of inquiry- but an
Outdated payment models
asset to healthcare improvement- is the ever-changing
Despite current realizations regarding the fallacies of financial cost and rapid technological advances. The
cost containment through separation, outdated payment following sections describe current demonstrated and
models continue to promote care separation, and potential benefits that telepsychiatry may offer to
560 M. WAUGH ET AL.

patients, payers, and providers within today’s reform and discomfort associated with patients seeking in-person
technology environment. treatment with mental health centres and providers. A
significant benefit of telepsychiatry is the ability to
increase access opportunities and utilization. This benefit
Demonstrated care efficacy
is realized by patients, providers, and payers by
To provide benefit and value to patients, providers, and eliminating costs associated with patient and provider
systems, telepsychiatry must first be established as an travel time and expense. An international body of
effective method of care delivery; and there is a large and evidence shows that more than 70% of the cost of a
growing body of research establishing telepsychiatry as patient and provider time and travel for a standard in-
on par with in-person care. Telepsychiatry has been used patient visit can be saved through the use of telemedicine
to accurately assess and diagnose, and effectively treat visits in rural and remote areas (Harley, 2006, Spaulding
mental health challenges across a variety of populations et al., 2010).
(Fortney et al., 2007, Parikh et al., 2014, Shore, 2013). Telepsychiatry has been associated with improved care
Documented rates of diagnostic accuracy and inter-rater access for often under-served populations such as
reliability are high, and the practice is associated with children (Ellington, 2013; Wood et al., 2012), rural
positive outcomes such as reduced rates of mental health residents (Saurman et al., 2014), and offenders (Deslich,
symptoms, shorter hospital stays, fewer hospital Thistlethewaite et al., 2013) as well as other specific
readmissions, and increased medication adherence subgroups such as adolescents, nursing home residents,
(Hilty at al., 2013). Telepsychiatry has been used to college students, immigrants (Deslich, Stec, Tomblin, &
effectively assess and treat a variety of behavioural health Coustasse, 2013) and veterans (Deslich, Stec, Tomblin, &
challenges including depression, schizophrenia, panic Coustasse, 2013; Fortney et al., 2015)). Further, some
disorder, post-traumatic stress disorder, and eating studies identified groups who found this modality
disorders, (Garcı́a-Lizana & Muñoz-Mayorga, 2010) preferable to in-person treatment (Parikh et al., 2014),
using a variety of modalities including cognitive behav- such as individuals with post-traumatic stress disorder or
ioural and group therapy. A country-wide telecare Asperger’s syndrome who preferred the sense of security
programme in Scotland served almost 8,000 people or distance allowed by a distally located provider and
with virtual care between 2006 and 2008. Indices of who were thus more likely to utilize access opportunities
efficacy include a reported £11 million in savings provided virtually (Shore, 2013).
associated with reduced emergency, inpatient, and in- Untreated behavioural health issues cost the USA an
home care needs, as well as quicker discharge when estimated US$100 billion or more in lost productivity
emergent services were needed (Stroetmann et al., 2010). each year (Insel, 2008). With a current dearth of
For realized efficacy, the modality must also be psychiatrists across the USA (Carlat, 2010), it is unlikely
accepted by, and used by patients. The majority of that traditional models of psychiatric service delivery can
studies found no significant differences between patients’ appropriately meet existing behavioural health needs or
reported satisfaction with treatment when delivered via optimize the cost-saving potential associated with appro-
videoconferencing versus face to face (Malhotra et al., priate, preventative behavioural health care. The research
2013). cited above indicates that virtual models of delivery,
however, do have the potential to increase care access. If
even a proportion of the population currently not
Demonstrated increase in care access
accessing behavioural health care at all, did gain
While research shows it on-par with in-person psychi- treatment access, there is a large potential economic
atric services in terms of treatment efficacy, other indices benefit to health-care payers, the US economy at large,
demonstrate the added value of the virtual care delivery and individual patients treated.
platform. Behavioural health care can only benefit
patients who actually use it. In addition to cost/payment
Other demonstrated economic benefits
issues, access to traditional behavioural health care may
be limited by patients’ physical or legal limitations to Some research shows that telepsychiatry is associated
travel (i.e. elderly or incarcerated people), prohibitive with local economic benefits beyond those directly tied
travel costs for patients (i.e. travel time, transportation to increased care access. Benefits cited for rural areas
costs, missed work, child care), prohibitive costs for include increased job productivity for both patients and
providers/payers to have providers’ potential treatment providers who can engage in treatment without the travel
time spent in travel, limited provider availability, costs of missed work, and patients whose symptom
particularly in rural areas, and stigma/personal alleviation allows more productive work days, more lab
 INTERNATIONAL REVIEW OF PSYCHIATRY 561

and pharmacy work for local agencies who may have dollars or temporary grant funding. Conversely, tele-
previously lost business to labs and pharmacies near medicine platforms are becoming increasingly easy and
distal providers, and potential cost savings for hospitals affordable to implement. Hardware needs are being
that can outsource only for hours of mental health replaced by cloud-based platforms that operate on
services needed via telepsychiatry instead of maintaining standard and affordable devices such as laptops, tablets,
an on-site, salaried psychiatrist whose full or part-time and smartphones (Shore et al., 2014). Telepsychiatry
employment needs may not meet population needs pilots allow primary care practices to access and budget
(Whitacre et al., 2009). for an amount of psychiatric time that is aligned with
A 2007 study found that telehealth was a far more need, while avoiding costs associated with practice office
cost-effective alternative to in-person behavioural health space and psychiatrist time and travel. They also allow
research with a rural population. Shore et al. (2007) evaluation to measure value on investment and refine
found over $12,000 in potential savings from reduced integration practices prior to making long-term funding
psychiatrist time needed to conduct structured clinical decisions, and conduct research with representative
interviews with 53 adult Native American participants. patient and practice samples that include potentially
These results represented savings calculated using 2005 disparate (i.e. rural and urban) populations.
information for typical salaries/hourly rates, as well as Fortney et al. (2007) reported that only a quarter of all
2005 data for telehealth technology/infrastructure costs. primary care practices had on-site mental health prac-
The discussion noted that these costs had dropped titioners, and that small practices were unlikely to ever
substantially during the 2-year study period, and were afford them. They noted that unless collaborative/
likely to drop even further in coming years. It is likely integrated care models could be adapted for small
that a current replication would find even larger cost practices, the majority of patients nationwide would
savings associated with virtual versus in-person data not benefit from these superior care models. Fortney and
collection, given increasing salaries and decreasing colleagues conducted a randomized trial of telemedicine-
technology costs since 2005 – a theme consistent based collaborative care for depression and found that a
across all older telehealth research. virtual model was an effective adaptation. VA patients
Telepsychiatry also has demonstrated value in pro- had improved depression symptoms with both in-person
vider-to-provider consultation and in psychiatric educa- and virtual psychiatry in primary care settings.
tion for psychiatrists, primary care and other medical A comprehensive 2013 review of telemental health
professionals and students (Malhotra et al., 2013). Again, found indices of efficacy across a continuum of virtual
by reducing the need for professional or student travel, a collaborative and integrated care models including:
virtual platform allows psychiatry experts to provide store-and-forward, emergency room virtual psychiatric
face-to-face consultation and teaching to distally located consultation, medical home with virtual in-home psych-
students and peers. iatry, primary care clinics with direct care, and provider-
to-provider psychiatric services (Hilty et al., 2013).
Opportunities to pilot new models of integration
Opportunities to magnify professional impact
As previously described, there is widespread recognition
of the need for integrated behavioural and physical There is an ongoing dearth of psychiatrists in the USA
health care, but limiting payment structures. Currently, with estimates that supply outweighs demand by about
Accountable Care Act incentive dollars and grant 45,000 (Carlat, 2010; Konrad et al., 2009). New models of
funding are being used to pilot integration models care are designed to magnify the impact of existing
(Korda & Eldridge, 2012) including those that bring psychiatrists through ongoing consultation with primary
behavioural health services into existing primary and care and paediatric providers. The Massachusetts Child
emergency care settings. These models often include a Psychiatry Access Project has successfully used tele-
pay-for-performance component; for example, a phonic consultation to support primary care providers in
Washington State initiative funded a consulting psych- ensuring timely access to mental health services for 95%
iatrist, a case manager, and other behavioural health of all young people in the state (Holt, 2010) and other
providers as available to primary care settings, and made states are following this model. While telephonic support
25% of funding to providers and clinics contingent on has improved the participating providers’ abilities and
quality metrics that included improvements in depres- confidence in managing medications and referring to an
sion scores (Unutzer et al., 2012). Adding in-person inventoried array of community services, telepsychiatry
psychiatry, however, is particularly costly, and often has the potential to take this model even further. When a
unsustainable within the constraints of limited incentive primary care and psychiatric provider can meet with a
562 M. WAUGH ET AL.

patient together, patients can receive more accurate and themselves. Leveraging virtual care delivery platforms,
immediate diagnoses. Further, with regular ‘grand psychiatrists can access a wider net of economic
rounds’-type consultative/educational opportunities and opportunities (Colbow, 2013) that could otherwise be
visual case studies, telepsychiatry can improve the ability limited by commute constraints or a geographically
of other providers to make accurate diagnoses and dispersed client base. Psychiatrists leveraging virtual
effectively manage a larger proportion of their patients platforms may also be able to increase billable hours by
with co-morbid behavioural and physical health opening patient no-show appointment windows for on-
symptoms. demand treatment or consultation sessions. Psychiatrists
This is of great benefit to patients whose holistic care who participate in primary care home or other integrated
quality improves, to primary care providers who gain care settings will have even more economic opportunities
support in meeting complex patient needs, and payers, to provide direct and team-based treatment under
whose costs decrease when patients receive appropriate payment waivers and as new means of integrated care
preventative care (Stroetmann et al., 2010; Unutzer et al., reimbursement develop. While institutions like the VA
2012). Part of the true innovation of this model is that it have expanded regulation to allow cross-state care
not only improves the ability of non-psychiatric pro- provision, and states like Massachusetts have imple-
viders to support integrated health of a larger proportion mented similar changes for primary care (Zur, 2014),
of their patient populations, but it also serves to triage state-specific licensing requirements, including the costs
mental health needs; driving those with the most severe of dual licensure and two sets of regulatory burdens may
and persistent needs to direct psychiatric care (Hilty, still challenge cross-state care provision (Adler, 2011). In
2013). In this way telepsychiatry magnifies professional general, however, virtual integrated settings give psych-
impact and allows more psychiatrists to operate at the iatrists great latitude to work from home offices in any
top of their professional scope. In their randomized trial geographic location, and provide greater flexibility for
report, Fortney et al. (2013) theorized that the improved part-time scheduling options. Integrated care may also
outcomes for patients at clinics with virtual telepsychia- open doors for psychiatrists to practise in more
try access were in large part because of team-based care specialized and preferred niches such as geriatrics,
models in which psychiatrists focused most of their psychosomatic medicine, or substance use (Thomas
limited availability on assessment and care planning, et al., 2014.) In tandem, these benefits are likely to
with direct care for only the most difficult cases. Nursing engage and retain a more diverse and professionally
staff provided ongoing follow-up and encouragement for satisfied professional cohort and incentivize them to
patient adherence to multi-component care plans. This work with the primary care community in new and
team-based model allows for improved population innovative ways.
management, and benefits psychiatrists who derive
professional satisfaction from focusing expertise on the
Opportunities to impact team-based care delivery
most difficult cases.
perspectives
Store and forward, or asynchronous telepsychiatry, is
another innovative virtual opportunity to magnify pro- The biomedical model has dominated US healthcare
fessional impact. A 2012 retrospective cost analysis practice and has contributed positively to US health
found that in instances of sufficient scale, asynchronous indices. However, the limitations of the biomedical
telepsychiatry was more cost effective than both in- model have initiated a paradigm shift to a broader
person and real-time telepsychiatry. Cost savings came conceptualization of health and disease, to include
from lower cost providers (licensed clinical social behavioural determinants (Association of American
workers/nurse practitioners) completing standardized Medical Colleges, 2011; Johnson, 2013). Psychiatrists
patient histories and allowing psychiatrists to efficiently are typically trained to look at bio-psycho-social deter-
use time for analysis and care planning (Butler & minants of health and are primed to contribute this
Yellowlees, 2012). valuable, multi-dimensional perspective to a primary
care practice. This is well-aligned with the US Institute of
Health Improvement’s Triple Aim of improved patient
Expansion of professional opportunities
experience of care, improved population health, and a
Telepsychiatry implementation has financial benefits to reduced per capita health-care cost (Case, 2014)
both patients and health care payers in terms of reduced Conversely, psychiatrists may begin to develop enhanced
travel, increased access to preventative care, and reduced population health perspectives with regard to screening
need for emergent care (Vo et al., 2015). It also offers for and preventing behavioural health conditions
financial and non-financial benefits to psychiatrists (Thomas et al., 2014). It is anticipated that as
 INTERNATIONAL REVIEW OF PSYCHIATRY 563

Table 1. Telepsychiatry costs.

Cost type Inclusions
Fixed Videoconferencing technology – Codec or cloud-based
Variable Connectivity – Meeting minimum bandwidth requirements
Hardware – Codec equipment, desktop/laptop computer, tablet, or smartphone
Clinic space – Originating and distant sites
Personnel – Scheduling/check in, at originating site
Opportunity Potential discrepancy between billable hours and service hours
Reimbursable Private payers – Reimbursing in 25 states; parity Laws in 16
Medicare – Reimbursing for limited services in rural areas
Medicaid – State-specific policies; reimbursing in 48 states

psychiatrists gain a stronger presence within care teams, users run into questions and issues as they begin and
behavioural and physical health practitioners may continue to use the technology (TTAC, 2014).
strengthen each other’s expertise and inspire new ways Codec-based solutions require IT costs associated with
of preventing and treating health conditions and installation and device monitoring as well as dedicated
improving population wellness. This concept is aptly and trained staff to schedule connections between the
described in the following quotation: ‘Environments that two sites. In addition, there are costs of several thousand
are dense in connectivity offer particularly fertile habitats dollars per year for ongoing updates and maintenance of
for creation and growth’ (Thomas et al., 2014, p. 189). these systems. Cloud-based solutions usually have a
monthly or yearly fee for software. Cloud-based solu-
tions have no regular maintenance costs, no dedicated IT
What is the cost to implement telepsychiatry?
person is needed to run the Codec equipment, and
There is no simple summary of costs for telepsychiatry. scheduling for cloud-based applications can be com-
Implementation includes fixed costs and variable costs; pleted by existing staff. Codec-based systems can take
costs may be borne by systems and/or providers, some several months to set up because of time needed to order
costs may be reimbursable depending on payer source, and install equipment, and schedule and hold technology
and some costs may be offset by increased business trainings. Cloud-based systems typically only take a few
opportunity. Table 1 provides a succinct summary with weeks to set up. Software download is usually completed
detailed text following. quickly, leaving only platform training and trouble-
shooting any wireless/network connection issues
(Telligen & GPTRAC, 2014).
Fixed costs
The primary advantage of Codec systems is reliability.
The National Telehealth Technology Resource Center Codec runs on a stable dedicated point to point
(TTAC) has regularly updated information regarding connection, not traditional Internet connections. It
telehealth technology and costs. The largest fixed demands a digital subscriber line (DSL) or T1 line with
telepsychiatry cost is the videoconferencing technology. bandwidth capability much higher than a traditional
These costs vary widely and technological advances have home or business Internet connection. Codec technology
led to less and less expensive options. Codec-based is not impacted by competing network users. Within a
technology solutions (devices/programs that encode and codec system, users can send large electronic health
decode digital information to enable streaming data) record (EHR) files back and forth while simultaneously
enable videoconferencing through analogue-to-digital transmitting high quality audio and visual data. he major
and digital-to-analogue translations for each end user. disadvantages of codec solutions are price and flexibility.
They historically cost upwards of $10,000. Current Codec has high costs associated with both service and
cloud-based solutions run off a laptop, use a web hardware, and is restricted to very specific locations and
camera and software, and are associated with costs as low system set-ups. Cloud-based solutions offer significant
as $500. Training is another fixed cost. Training involves advantages in cost and flexibility. Cloud-based solutions
the technical support service of an outside service, as well can leverage existing Internet connections and an array
as the time spent in non-billable activity as providers and of existing, inexpensive devices such as laptops, tablets,
administrators become familiar with the new technology and even smartphones. This flexibility and affordability
and altered clinical processes needed to incorporate the comes at the cost of some reliability. Network, and
new technology. It is likely that training may involve a wireless connections in particular, can have variable
decreasing, but ongoing technical support component as connection speeds and multiple users can mean
564 M. WAUGH ET AL.

competition for limited bandwidth. Video quality can equipment, and introduce them to the psychiatrist.
suffer under competing data transmission (Telligen & Before and after appointments, this time will be used to
GPTRAC, 2014). manage in-person and virtual appointment schedules for
While Codec and cloud-based solutions have their providers, work with the primary care provider for
own pros and cons, both offer secure, Health Insurance prescription management, and follow up with the
Portability and Accountability Act (HIPAA) compliant primary care prover and/or patient on psychiatrist
methods for virtual care delivery. recommendations. Personnel time is also needed to
document visit details into the patient primary care
records, or collect records from the psychiatrist to be
Variable costs
uploaded into the primary care electronic records
Connectivity is an ongoing variable cost. Some research- (Telligen & GPTRAC, 2014). The distal provider (i.e. a
ers recommend a connection speed of at least 50 psychiatrist located in an urban area providing telehealth
megabytes per second (Mbps) for telemedicine in general services into a rural primary care clinic) may also have
(Kayange & Yotham, 2014), and the American costs associated with personnel time and space. If this
Telemedicine Association (ATA)’s recommendation for psychiatrist is a full-time employee of, for example, a
telemental health in particular is a bandwidth of 384 community mental health centre, she or he may already
Kbps or higher for both upload and download. The ATA have office space and access to administrative time to
also recommends using the most reliable connection support scheduling and other administrative issues. If
available, i.e. ethernet, instead of a wireless connection, if this psychiatrist is a recently retired professional looking
available (ATA, 2013). Connectivity costs may or may to work part-time independently, she or he will need to
not be new depending on users’ existing wired/wireless ensure an appropriate private and professional space in
use and Internet service costs. The same holds true for which to provide services, as well as appropriate audio-
procuring and maintaining updated hardware. Many end visual and network technology.
users will have existing desktop or mobile devices that
are adequate for telemedicine use, while new hardware
Opportunity costs
may represent an additional start-up cost. As mobile
devices such as web books, tablets, and smartphones While telepsychiatry, as noted above, can help reduce
become more powerful and more affordable, hardware costs to providers and systems, these savings may not be
costs become increasingly negligible, further changing realized as quickly and cleanly in situations of new
estimates of costs and benefit. implementations as they are in pilot/evaluation situ-
Technology and hardware costs may be distributed ations. As providers and payers negotiate reimburse-
differentially across health care payers, providers, and ments, it may take time to arrive upon the most effective
patients. In some cases, payers and providers may and efficient way to achieve optimal provider availability.
collaborate to procure private or public grant funding for Payers may opt to pay for some number of hours of
initial start-up cost. In situations where telepsychiatry is virtual psychiatrist time per week, or they may seek full-
associated with a direct benefit to payers, payers may time availability for on-demand services, and these
cover initial start-up and/or ongoing technology costs. In arrangements may benefit or cost payers/providers
other situations it may be up to providers to cover costs with unused billed hours, or expected availability that
associated with hardware and or services. Patients who exceeds paid time. As noted previously, asynchronous
want to access telepsychiatry opportunities from their telepsychiatry situations may be a way to decrease
homes may also incur personal costs associated with opportunity costs by increasing billable hours for
hardware and/or internet connectivity (ATA, 2014; psychiatrists who can use missed appointments, or
Telligen & GPTRAC, 2014). other small segments of time to complete analysis and
Host site (originating site) costs will also vary based planning for previously collected patient histories (Butler
on existing space and clinical protocol prior to imple- & Yellowlees, 2012; CTRC, 2014).
mentation. Many sites elect to reserve a dedicated clinic
room for virtual provider-to-provider and direct patient
Cost reimbursement
care virtual interactions, and all sites need some site
personnel time for supporting platform use within likely In general, virtual service costs to the patient are the
changing clinical operations. Personnel time may be same as costs for in-person visits and providers can bill
needed to check patients into the clinic, collect and for, and receive reimbursement for allowable services at
document vital signs, collect signed consent forms for the same rate as in-person visits (AMD Global Medicine,
patient records, orient patients to the audio visual 2015). Currently, however, allowable services are still
 INTERNATIONAL REVIEW OF PSYCHIATRY 565

limited, they vary by private and public health- Survey respondents noted that in most instances,
care payers, and there are some restrictions about private payers either did not respond to these letters, or
patient location. Navigating if/what/how to procure responded with no requests for special coding. Claims
reimbursement for telepsychiatry services represents a were processed and paid using standard procedures.
time and effort cost to providers and determining and Three organizations were able to establish reimburse-
implementing allowable billing procedures within local ment for store-and-forward telemedicine procedures,
regulations. The majority of reimbursement information and seven were reimbursed for facility fees (AMD Global
is for telehealth overall; so the following information is Medicine, 2015). As of May 2015, 16 states have passed
designed as a starting point in estimating reimbursable telemedicine parity laws disallowing private payers from
telepsychiatry costs. Information is provided specifically refusing to reimburse allowable, billable services deliv-
for behavioural health and psychiatry as available. ered virtually, although confusions and barriers to
repayment still exist (Thomas & Capistrant, 2015).
Private payers
Medicare
Payment and reimbursement for telemedicine service
delivery is a major barrier to telemedicine adoption, and Under fee-for-service payment, Medicare pays for a
related policies are receiving increasing attention limited number of services furnished by a physician or
(Thomas & Capistrant, 2015). The ATA partnered with practitioner to an eligible beneficiary delivered via a real-
a private telemedicine provider (AMD) to study time, interactive audio and video telecommunications
perceived and actual reimbursement challenges across system. The eligible beneficiary must be located in a
the USA. They articulated the prevalent perceived formally designated Rural Health Professional Shortage
barriers to the acceptance and growth of telemedicine Area or a county outside of a Medicare-specified
as an assumption that private payers do not pay for Metropolitan Statistical Area. Eligible telehealth services
telemedicine, will resist paying if asked, and that further, are reimbursed no differently than in-person services,
private payer practices follow the lead of immutable including standard limitations based on licensure and
Medicaid and Medicare (CMS) reimbursement practices. service type. Claims are submitted using traditional
To test the validity of these assumptions, the ATA and billing codes with a telehealth modifier, and the
AMD jointly developed and deployed an in-depth phone originating site (patient location) may also submit a
survey of organizations offering billable telemedicine facility fee, currently a reimbursement amount less than
services. The survey asked organizations to describe any $25.00 per visit. Medicare provides a full list of telehealth
private payer reimbursement, policies and procedures reimbursable services (Centers for Medicare and
used when submitting telemedicine claims, and the Medicaid, 2015b). It is likely that limits may change
actions that led the private payer to reimburse. Out of over time to meet population demands and changing
141 telemedicine delivery services identified across the policies.
USA, 72 offered billable services, and 38 organizations Another important Medicare reimbursement consid-
located across 25 states were being reimbursed for these eration is the recent legislature that repeals Medicare’s
services by private payers. Blue Cross Blue Shield current and controversial physician payment algorithm.
(reimbursing in 21 states), not CMS (reimbursing in 18 The sustainable growth rate formula will gradually
states), was identified as the leader other private payers replace this fee-for-service formula with a payment
look to in deciding individual reimbursement policies algorithm based on measured care quality (Centers for
(AMD Global Medicine, 2015). Medicare and Medicaid, 2015a). The addition of this
The 38 organizations surveyed identified 100 unique value-based payment modifier means that providers
private payers who were reimbursing for telemedicine have an increasing shared fiscal stake in health outcomes,
services. They identified the following approaches as and as previously noted, a substantial proportion of
most successful in obtaining reimbursement: (1) Billing savings or cost is likely to come from the ability of
telemedicine services as ‘usual and customary medical providers and systems to effectively support the health
practices’, and avoiding the use of modifiers of other and wellness of the segment of their population with
special coding, and (2) Sending letters of intent to behavioural health challenges (Melek et al., 2014).
their private payers to notify them in advance that
telemedicine would be used in the normal course of
Medicaid
business, that claims submittal would follow existing
protocol and coding, and to encourage questions and The Centers for Medicare and Medicaid Services (CMS)
comments. recognizes telehealth as a cost-effective care delivery
566 M. WAUGH ET AL.

option, and encourages states to use the flexibility limited to pilots and clusters of local providers. They
inherent in federal law to create innovative payment note limited mainstream use across Europe, and primary
methods for telehealth. Reimbursement options cur- uses relating to chronic disease treatment and monitor-
rently allow states to reimburse a provider at a distant ing, and growing interest in expansion of telehealth
site for a service, and reimburse an originating site opportunities (Stroetmann et al., 2010).
facility fee. CMS will also reimburse some related
costs like technical support, transmission charges,
and equipment as add-on costs in fee-for-service rates Implications for the future
or separately through administrative billing codes.
Health care reform continues to move towards inte-
Administrative costs must be linked to covered
grated care, value-based payments, and payment
Medicaid services (Medicaid.gov, 2014).
reforms, and telepsychiatry increases the flexibility and
Medicaid regulations give states the option to: cover
affordability of integration models, allows psychiatrists
telehealth or not; determine what types of virtual services
to expand professional/economic opportunities, and
to cover; set any geographic limitations, set limits to
participate in new team-based care practices, possibly
patient care delivery location (i.e. home, school, clinic),
ahead of the new policies that federal agencies have
and provider location/credentials. The CMS stipulations
announced will come. Telepsychiatry costs are continu-
are that providers are eligible and qualified according to
ally changing and must be carefully weighed against the
Medicaid statute and regulation; and that reimburse-
demonstrated and potential benefits associated with the
ments for telehealth services do not exceed Federal
ability to leverage this innovative opportunity.
Upper Limits (Medicaid.gov, 2014).
In May 2015, the ATA conducted a telemedicine gaps
analysis for reimbursement and coverage across the
Declaration of interest
USA. Their report is likely the most comprehensive and
user-friendly resource currently available regarding tele- M.T, is the CEO of Colorado Access, a non-profit organization,
medicine-related reimbursement (available at http:// of which AccesCare Technology and AccessCare Services are
subsidiary for-profit lines of business. These lines of business
www.americantelemed.org). At the time of their survey, provide telehealth technology and services respectively. As
48 states offered some level of telehealth reimbursement, such, he has a direct commercial interest in the promotion of
including some form of telebehavioural health. those specific products. As employees of Colorado Access,
Connecticut and Rhode Island are the only remaining M.W. and D.V. both have indirect commercial interests
states with no structure for telehealth reimbursement. in advancing the use of AccessCare Technology’s telemedi-
cine platform specifically, and AccessCare Services. The
The most common, Medicaid, covered tele-behavioural authors alone are responsible for the content and writing
health services including assessments, individual therapy, of the paper.
psychiatric diagnostic interview exam, and medication
management. Currently, 24 states do not restrict the
location of the patient during telehealth delivery, 25 References
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