Cost Impact of Telehealth: A National Analysis of COVID-19 Data

Background: The exponential growth in the use of telehealth during the pandemic underscored the need to quantify how telehealth impacts overall health care costs. While the pandemic inhibited access to in-person care for all Americans, access to care will remain challenging for some populations. Objective: We sought to assess the cost-benefit of telehealth by reviewing a data set of 1.4 million telehealth encounters across the United States performed between February and September 2020. Methods: A retrospective analysis used data from six large health systems and one state Medicaid agency. The economic model considered both direct and indirect costs. Results: Building upon a report published in 2021 by the Centers for Telehealth and eHealth Law, this article presents an analysis of the six states with the highest telehealth encounters within the data set. The study revealed significant cost savings. Telehealth was associated with a reduction in costs ranging from $445,000 to $33 million for Medicare and $155,000-$181 million for Medicaid, except for one metropolitan area. Cost savings were based on the most frequent diagnoses: behavioral health, cancer, heart disease, pulmonary conditions, and endocrine disorders. Limitations: The use of encounter data prohibited the analysis of a patient's longitudinal use of telehealth. Each encounter was treated as a unique observation. While the data set represented telehealth use across the nation, some states were over-represented while others were under-represented, based on available data. Finally, for the six health systems, data was restricted to the regions covered by the health system. As such, in some states, most encounters take place in metropolitan areas. Conclusion: Telehealth can generate significant cost savings, particularly within the Medicaid program, by increasing access to health care452244 services, especially for conditions directly impacted by provider shortages within geographic proximity to the patient.