How federal reimbursement policies may inhibit health tech innovation

Current federal reimbursement policies for health IT could be stifling development and innovation of new tools, according to a Bain Capital investor.

In a commentary published to TechCrunch, Thomas Hwang, who analyzes investments in the healthcare sector, says decisions by the Centers for Medicare & Medicaid Services "shape how entrepreneurs and investors size up market opportunities;" to that end, he says, the agency has been too timid when it comes to implementing reimbursement policies for technology such as telemedicine.

"Payment matters," Hwang writes. "So to lack reimbursement is, effectively, not to exist at all."

The Centers for Medicare & Medicaid Services added seven telemedicine billing codes to the 2015 Medicare physician fee schedule and six for 2016.

What's more, additional coverage of telehealth and post-discharge home services were announced as tools that will be made available to providers participating in Next Generation Accountable Care Organizations.

Additionally, bills introduced in the House and Senate in 2015 seek to expand the geographic regions for Medicare and Veterans Affairs reimbursement of telehealth, as well as the types of services covered.

The Congressional Budget Office's history of overestimating the cost of new Medicare services also has been identified as a hindrance to expanded telehealth coverage.

Hwang does give credit to CMS for its final rule on bundled payments for hip and knee replacement, published in November, calling the leniency practiced by the agency with regard to allowing the use of telemedicine and patient-engagement technologies "a first step" in the right direction.

However, he adds that such flexibility must become more widespread. "It would be difficult to overstate the long-term impact of this change," Hwang says.

René Y. Quashie, senior counsel in the healthcare and life sciences practice at law firm Epstein Becker Green, says he expects to see a rise in telehealth accreditation programs for organizing and providing online, real-time health services complying with certain standards in 2016. He also anticipates that employers will increasingly provide telehealth services to their employees in the coming year.

To learn more:
- read Hwang's commentary in TechCrunch

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