Some California physicians will be paid for online advice

Blue Shield of California's decision to pay doctors for answering patients' questions electronically means more insurers could follow suit.

By Tyler Chin, amednews staff. Nov. 25, 2002.

At least one large health plan will reimburse physicians for online consultations after a Stanford University researcher reported that insurers could save more than $1 per member per month by doing so.

Blue Shield of California plans to begin paying HMO- and PPO-contracted doctors for online consultations in the first quarter of 2003, said Jeffrey Rideout, MD, president of the plan's CPS Foundation. Details remain to be worked out, including how much to pay, said Dr. Rideout, the health plan's former chief medical officer now in charge of its online consultation project.

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Few insurers offer to reimburse physicians for online consultations, which include answering patient questions or treating them over the Internet. But the Stanford study, funded by San Francisco-based Blue Shield of California and ConnectiCare Inc., a Farmington, Conn.-based HMO, may give cost-conscious insurers a signal that paying for online consultations could yield greater savings down the line. The study is believed to be the first effort to measure return on investment to insurers from an online communication system.

"My guess is there will be significant movement in the next two years," said Michael J. Barrett, senior analyst at Forrester Research. "The heart of this is that the payer will conclude that it can pay less for an electronic visit than for an in-person office visit. For the payer this is a matter of getting the health care delivered via a cheaper medium."

The Blues plan and ConnectiCare helped test a secure messaging system from RelayHealth Corp., paying $20 per online consultation involving minor, nonurgent matters. Doctors and patients also used the Web-based system to communicate with each other regarding requests for refills, lab results, appointments, referrals and other transactions. The test involved 282 physicians and nearly 4,000 patients.

ConnectiCare, unlike Blue Shield of California, is being more deliberate about reimbursing for online consultations. The plan is expanding its pilot because it wants to gather more data, said Paul Bluestein, MD, the HMO's chief medical officer. The early results of the study are promising but Blue Shield of California provided the bulk of the data for the study, he said.

Surveying the landscape

Laurence Baker, PhD, assistant professor in the Dept. of Health Research and Policy at Stanford University, analyzed and compared the health care spending patterns of 2,274 patients who had access to the RelayHealth service -- the treatment group -- to those of 3,390 patients in a control group. Dr. Baker separately reviewed claims of the two groups for the 12-month period before the RelayHealth service became available and for an 11-month period ending Feb. 28, 2002, during which it was available.

While health care spending for office visits by the control group was flat from one period to the other, the treatment group on average spent $1.87 less per member per month on office visits, Baker said. The study found that the Web visits cost insurers 33 cents per member per month, meaning that insurers netted $1.54 in savings per month per member.

Although Dr. Baker is still analyzing three additional months of claims data, through May 31, 2002, he and Blue Shield of California expect the preliminary finding that online communication systems can yield substantial savings to insurers will hold up. That means that the Blues plan could potentially save more than $3 million a month once its 2 million members are eligible for online consultations.

Meanwhile, 63% of physicians who participated in the project said they were likely to continue using the system from RelayHealth, and 56% said they preferred to handle patients' nonurgent health care needs over the Internet versus at the office.

Michael Good, MD, a family physician in Middletown, Conn., said that the online system offers him a way to be paid for medical advice that he previously dispensed over the phone for free. It also saves time for him and his staff because it lets him shift requests for referrals, refills, lab results and appointments from the phone to the Web, he said.

For example, scheduling an appointment takes his staff two minutes online compared with 10 to 12 minutes over the phone, said Dr. Good, who is part of ProHealth Physicians, a 160-doctor primary practice based in Farmington.

"What I find is that I have less messages at the end of the day and I don't feel as pressured and rushed when I'm in the office seeing patients because it's just a lot quicker for me to answer three or four online messages than it is for me to make three or four phone calls," he said.

Another benefit of using an online communication system is that it provides doctors better documentation than telephone-based encounters, Dr. Good said.

"From a [liability] point of view these online communications are much better because they show exactly what the patient asked and then there's a permanent record of what advice we gave. There's none of this he-said-she-said business that happens over the phone," he said.

Dr. Good thinks the system will eventually let him and four other colleagues see more patients at their office. That hasn't happened yet because only a small number of the practice's active patients -- 1,000 out of 12,000 -- signed up to use the RelayHealth system, he said. And fewer than half of those patients are comfortable using the Internet for online visits, he added.

Unlike Dr. Good, however, the University of California Davis Health System said its doctors were able to see more patients because they were able to shift to the Internet patients who previously would have called or come into the office.

"Our data suggest that productivity per day and per visit has statistically gone up significantly," said Eric Liederman, MD, a general internist and the UC Davis health plan's medical director for clinical info systems. "What we're assuming is happening is that low-level E&M [evaluation & management] office visits are being moved to the Web, freeing up that time for higher-level office visits, which means sicker patients."

As a result, the Sacramento-based health plan is rolling out the RelayHealth system to an additional 110 primary care physicians at its own cost, Dr. Liederman said.

Other players

Emeryville, Calif.-based RelayHealth makes money off transaction and monthly licensing fees. RelayHealth competes with Medem, a company partly owned by the AMA, and MyDocOnline Inc., owned by Aventis Pharmaceuticals.

Edward Fotsch, MD, Medem's CEO, said he wasn't surprised by the results of the survey but did not plan to use it to market the company's services to insurers.

Medem doesn't believe insurers will pay for online consultations anytime soon, Dr. Fotsch said. Plus, Medem's business model targets physicians, unlike RelayHealth's, which targets insurers.

Approximately 10,000 physicians have signed up to offer online consultations to their patients through Medem's network, Dr. Fotsch said. Most of them are charging $25 per consultation. Medem collects and sends the payment to doctors after subtracting its $2.50 fee per consultation.