Once reserved for triaging acute care patients and filling care gaps in rural areas, telehealth is now being used regularly by nearly 50% of physicians to ensure that patients have access to care and to minimize exposure risk. This has caused a big adjustment from a clinical standpoint and in how telehealth services are reimbursed. With a solid understanding of how telehealth is being delivered and paid for—and the changes that might still be coming—pharmaceutical manufacturers could partner with providers to help ease the transition and ultimately improve patient care.


To understand how telehealth reimbursement functions today, let’s first look at the three pre-COVID-19 telehealth models:

  • Payer-contracted: Payers contract with an outside telehealth service, one with a distinct provider network, to address gaps in care (e.g., acute care triage and behavioral health services). This kind of service is often widely included across plans, although not always universally.
  • Payer-provider network: Payers leverage their own provider network to support some selected telehealth services.
  • Provider-initiated: Providers offer their patients a remote option for convenience. Few patients used the option before COVID-19, which could be attributed to a higher out-of-pocket cost compared to an in-person visit.

An expansion of telehealth capacity and utilization has occurred in all model types in response to COVID-19, and in some cases, the responses have resulted in the addition of a second model type on top of the first to provide patients and providers with more options. In the early days of the COVID-19 pandemic, CMS added new reimbursement telehealth codes and many payers increased reimbursement rates and waived fees for the treatment or evaluation of COVID-19 patients via telehealth services. While in the pre-COVID-19 world, telehealth visits typically were reimbursed at only about 40% to 70% of the reimbursement for in-person visits (and many plans didn’t reimburse telehealth services at all), today they’re generally reimbursed at parity with in-office visits.

ZS recently conducted qualitative interviews with payer organization leaders to get a better sense of how they’re adapting their telehealth policies in response to the COVID-19 crisis. As one national managed care organization leader told us, “We wanted to make sure that patients had access to their providers… We were reimbursing at the same rate that they would have face to face so physicians were encouraged to set up the telehealth capability.” Despite today’s enthusiasm for reimbursement of telehealth services, payers’ and providers’ current telehealth policies were mostly implemented in “crisis mode,” so they’re less likely to have long-term durability.

The commercial payers we spoke with didn’t have a clear sense of how and when healthcare services will return to “normal” or when the COVID-19 crisis will resolve. For example, the CMS telehealth codes are currently being reviewed, and as of yet, have an unknown future. Additionally, even if the codes remain, it’s unclear what services providers will be reimbursed for—and at what rate—after the crisis.


After the pandemic, some payers expect to roll back augmentations made to telehealth policies, while others expect to see a continuation of some elements of the telehealth expansion. Payer organizations with “payer-contracted” models that have encouraged a second “provider-initiated” model likely will eliminate incentives for providers to leverage the latter model post-COVID-19. In other words, payers don’t plan to continue to reimburse at the level of an in-person visit within their own provider network. In contrast, payers with “payer-provider” models predict some challenges in rolling back expanded reimbursement and see a potential role for a new model of care with remote provider availability and lower infrastructure overhead costs.


As payers weigh the options for their telehealth policies in a post-COVID-19 world, they plan to assess the impact of telehealth on cost of care and quality of care and gauge interest from providers and patients to maintain services. As the leader of a national managed care organization recently told us, “They are temporary additions, whether they will continue or not remains to be seen. A lot will depend on the quality of the telehealth services being delivered.”


ZS’s survey results indicate that payers plan to conduct cost analysis studies based on the changes made during COVID-19 to assess overall impact. On the topic of quality, payers expressed doubts that primary care visits, for example, can be conducted remotely with the same outcomes as a live visit. As a result, they see a broader need for standardized quality metrics. Many also believe an accreditation process for telehealth providers will be required to sustain the expansion.

The payer community’s telehealth policy response to COVID-19 was conducted in a “top-down” manner with a focus on urgent public-health needs, rather than through typical policy-making processes. It remains to be seen whether payers will appreciate the value of telehealth following the pandemic. In order to fully capitalize on cost-savings associated with telehealth visits, payers and providers may need to design a novel, remote care model, with lower provider overhead (lower cost of office and staff, which will ultimately be passed on to the payer). While possible, this approach could put existing brick-and-mortar healthcare facilities at risk if a substantial volume of patients selects the remote option. Incentives for patients also will need to be considered when building out new models of care. Pre-COVID-19 telehealth services were more costly for many patients, so patients may be asked to accept a higher cost burden post-crisis. Alternatively, it’s possible that employer groups who have seen success with telehealth during the pandemic may be willing to take on some cost-sharing to reduce employee absenteeism (e.g., taking time off work to go to the doctor).


In the end, we believe that most payers will continue to reimburse telehealth services through the “payer-contracted” and “payer-provider network” models. Use of “provider-initiated” telehealth is likely to decline as payers clamp down on reimbursement rates and providers hesitate to idle existing in-person capacity. Overall, we expect the “new normal” use of telehealth to be higher than what we observed pre-crisis, but lower than today. A widespread shift to a predominantly telehealth-driven healthcare model still appears to be far in the future.


For pharma manufacturers looking to engage with payers and providers, this has several implications.  On the payer side, we should help payers understand the value that telehealth visits and therapy initiation can bring to patients in order to reduce the chances for unnecessary management of our products in the future. As the sponsors of most clinical trials, life sciences manufacturers have a large role to play in generating the evidence to inform these evaluations. Additionally, there are many cases in which a patient can be managed by either a drug or a procedure and selecting the drug could both aid in the transition to telehealth and yield cost savings for the payer. For providers, the focus should be on helping them operate in a world where telehealth and in-person visits coexist to a degree never seen before. In each of these scenarios, there’s little existing practice or clinical evidence to lean on. Life sciences manufacturers can play a role in generating data, spreading best practices, and updating the myriad of partnership and service offerings we provide today to adapt to this new reality.