Natasha Thomas, Policy Intern

In Colorado, we are seeing more ways for consumers to access health care services, from walk-in clinics, to urgent care centers, to virtual medical visits, to costly free-standing emergency rooms (which were not included in the study). A recent national study provides insights into how consumers are using these new delivery models.

Walk-in retail clinics are located in drug stores and retail chain stores such as CVS and Wal-Mart, where routine primary care is usually provided by nurse practitioners rather than by doctors. For many individuals, retail clinics are convenient because they have more accessible locations, lower wait times, and are open longer and on weekends as compared to doctor offices. Retail clinic visits are cheaper than going to doctor offices or emergency departments because charges are lower and fewer tests are performed.

Telehealth services are virtual visits with health care providers by phone, text, mobile app, video, or Web. This allows you to consult with a doctor from anywhere there is a mobile or wifi connection. Telehealth services were created to provide quicker and cheaper access to medical care, especially for people who live in remote areas or places where primary care providers are few in number.

A research study by RAND Corporation published in the March 2016 edition of Health Affairs found that retail clinics and telehealth services actually increase medical spending. The study compared how many times these services were used as increased use of medical care (new utilization) to how many times these services were used as substitutes for more expensive options.

Researchers found that when it came to illnesses such as the common cold, sinus infections, and urinary tract infections that have a low severity, most people who sought medical care at a retail clinic would have stayed home had the option of a clinic not been available. The study suggests that while visiting retail clinics is less expensive than going to doctor offices, people are using medical services when they normally would not have and are therefore increasing their medical spending.

According to the study, people whose visit to a retail clinic substituted a visit to a higher-priced setting saved $21 a year. However, this savings is offset by an average of $35 a year when people visit retail clinics for new medical services they normally would not have utilized had the option not been available. Therefore, the overall spending increase due to the availability of retail clinics is $14 a year per commercial insurance enrollee.

The study also found that total annual spending was $45 more per enrollee for people who used telehealth for treatment of acute respiratory illnesses as opposed to those who visited a doctor for the same conditions. This is because 88% of people who utilized telehealth services for these conditions reported that they would not have gone to visit a doctor otherwise, which is considered new utilization. And people who get a consult via a virtual appointment may be more likely to schedule an in-person follow-up appointment, which increases the cost of treating that condition because now they have paid for two doctor visits for the same episode of illness as opposed to one.

First of all, the study used data collected before the Affordable Care Act, which gave millions of once-uninsured Americans health care coverage and access to a range of copay-free preventive services. Secondly, the study does not take into account that retail clinics and telehealth services provide a source of health care for people who for whatever reason could not access such services before. The study looked at consumers with “generous commercial insurance,” which excludes people who are enrolled in high deductible health plans, Medicare or Medicaid plans, or are underserved or uninsured.

The availability of retail clinics and telehealth services provide these aforementioned populations with access to cheap medical care options, so the increase in costs associated with new utilization is worth the higher increase in Americans’ access to medical care. The problem lies not in the fact that retail clinics exist, but that they are often located in higher-income urban and suburban areas, where medically underserved communities are not. The purpose of the retail clinics was to be a solution to shortages in primary care providers in underserved communities, but that is not how it has played out. This echoes Colorado’s recent experiences with free-standing emergency rooms, which have largely been located in higher-income areas.

The study used Teladoc’s definition of direct-to-consumer telehealth, which includes consults via telephone. However, most state policies and industry groups do not include phone conversations in their definition of telehealth because there is low reimbursement for this type of service and phone calls are considered a standard supplement to patient care, not a clinical encounter. Also, a 2014 research study found that acute respiratory illnesses only account for about ¼ of conditions treated using telehealth. These factors suggest that the RAND Corporation study may not be generalizable to all direct-to-consumer services.

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