Telepsychiatry's Untapped Potential: When Will It Pay to Deliver?


Telepsychiatry has been hailed as the future of psychiatry. Proponents have claimed that it can reduce costs and allow access to difficult-to-reach patients. What are the promises and pitfalls of this new technology?

Psychiatric Times

January 2005


Issue 1

Telepsychiatry holds the promise of providing a link between urban areas with a high concentration of psychiatrists and rural areas in dire need of specialists to provide consultations to clinicians and direct services to patients. Widespread adoption of telepsychiatry programs would allow specialists to consult on care to geriatric patients, children, prison populations, military veterans and others groups with access problems.

The technology continues to improve, and equipment costs have dropped dramatically in recent years. Video conferencing equipment that cost $30,000 three years ago now costs about $10,000. However, making the connection is not as easy as it might seem. The technology's potential remains largely untapped, in part, because payors are reluctant to embrace it. Consequently, many programs end when their grant funding ends.

The growth of telemedicine is very hard to follow, William Tucker, M.D., told Psychiatric Times. Tucker is director of the New York State Office of Mental Health (OMH) Telepsychiatry Project. Although the trend is clearly burgeoning, almost as many programs close as open. The problem is that almost all programs start on grants that include salaries. And when the grant runs out, so does the salary support, Tucker said.

The OMH Telepsychiatry Project, which is located at the New York State Psychiatric Institute in New York City, is unique in that all its staff and consultants are on salary with OMH or Columbia University's College of Physicians & Surgeons. In over three years, the program has provided about 200 consultations to 12 rural mental health clinics and 12 correctional facilities, drawing upon the expertise of about 94 psychiatrists. Each consultation takes about 90 minutes, Steven E. Hyler, M.D., project coordinator for the OMH program, told PT.

The consultant meets initially with the requesting clinicians. That is followed by a patient interview. Consultants then present their findings in a discussion with the requesting physicians.

For the last two years, members of the OMH project have offered a course in telepsychiatry at the American Psychiatric Association's annual conference. Both years it generated considerable interest and sold out, Tucker said. "People see very quickly the potential of the medium."

Telepsychiatry attracts three groups of people, said Tucker, who is deputy chief medical officer for OMH and an associate clinical professor of psychiatry at Columbia University. The first group includes a small number of psychiatrists in private practice who are interested in setting up systems in their offices for patients who can afford to buy their own hookups. A patient can buy a workable low-end camera recording system for as low as $1,500.

Large health care systems, such as those for state prisons in Illinois and Iowa, are the second group and are turning to telepsychiatry to address the problem of recruiting psychiatrists to live in the small towns where prisons are located. They want to provide direct telepsychiatry services from urban areas, Tucker said. They have a definite need and a definite idea in mind about how they want to use this technology.

A third group comprises university-based specialists such as child psychiatrists. They often receive requests from clinics throughout their states to provide consultations in their areas of expertise. These systems would be partially funded by the university and partially by the state.

The APA has also expressed interest in telepsychiatry as a possible solution to the types of work force shortages in rural areas that have prompted New Mexico and Louisiana to establish laws allowing psychologists to prescribe medications, Tucker said.

Success in New York

What has given the OMH project staying power, according to Tucker, is that its staff are salaried employees, who devote part of their workday to running the system, and consultants affiliated with Columbia University who offer consultations free of charge.

The OMH program began in November 2000 with funding from the U.S. Department of Agriculture, which has a distance-learning and telemedicine grants program, and a double-matching grant from the OMH. By the end of 2000, the telepsychiatry project had about $335,000 to work with, enough to connect a total of 12 sites to the host site at the New York State Psychiatric Institute--nine county clinics, two state-operated outpatient clinics and a small hospital in the upstate town of Potsdam that had its own equipment but needed access to consultants for its substance abuse unit.

The project team and state officials were also interested in delivering consultations to state prisons, and the state Department of Corrections agreed to link to the OMH system through equipment it already possessed for other telemedicine consultations. That partnership began in January 2001, and the project has been conducting consultations at 12 state prisons ever since.

The program also serves as a teaching tool for the faculty at Columbia University. "We have a library of teaching tapes unlike basically anything in the world of usual and unusual psychopathology," he said.

But the OMH project is a high-end system that would not be easy to replicate. It has access to a large faculty at Columbia University who are willing to provide consultations for free. And the program is not a direct-service model, which allows it to avoid some of the complications with follow-up that can occur when providing services directly to the patient.

Cost Issues

"The biggest hurdle is who's going to pay for this," Hyler said. Current procedural terminology (CPT) codes for telepsychiatry exist, "but I don't believe that anyone is paying for this yet."

The Center for Medicare & Medicaid Services (CMS) currently allows for reimbursement of telemedicine under Medicare for rural areas that meet the agency's stringent criteria. Any increasing willingness on the part of Medicare to reimburse telemedicine services would likely result in a growing acceptance of such services by third-party payors.

In the meantime, telepsychiatry programs must show that they are cost-effective in order to survive, Hyler and Dinu P. Gangure, M.D., wrote in "A Review of the Costs of Telepsychiatry," which appeared in the July 2003 issue of Psychiatric Services (54[7]:976-980). The decreasing cost of the technology will help make this happen, as will the sharing of telehealth systems among different medical disciplines.

Out of 12 studies published between 1995 and 2002 dealing specifically with the costs of telepsychiatry, seven demonstrated that telepsychiatry was worth the cost, Hyler and Gangure wrote. However, the studies used weak methodologies and lacked comparable data.

The authors for most of the studies also had a vested interest in the success of the programs they wrote about. And one study concluded that a lack of business plans made it difficult to determine whether any telepsychiatry program is cost-effective.

"We conclude that telepsychiatry can be cost-effective in selected settings," Hyler and Gangure wrote. "However, there is no assurance that any governmental or private health care agency will be willing to assume the cost."

The issue of cost depends on perspective, Hyler and Gangure pointed out in the literature review. Telepsychiatry can be less expensive for patients who no longer have to travel as far for treatment. Insurance companies, however, could find that their costs go up as the technology increases access to psychiatry services.

"Telepsychiatry's ultimate survival will depend on its finding its niche," Hyler and Gangure concluded.

The Need for Standards

In order for payors to embrace telepsychiatry, standards of practice must be developed that are reasonable, fair and replicable, Tucker said. The Center for Medicare & Medicaid Services provides small pots of money for telemedicine but is very reluctant to open the floodgates, he said. The agency does not want people putting up a shingle and billing away for telepsychiatry without being answerable for the quality of services they deliver.

The Joint Commission on the Accreditation of Healthcare Organizations continues to revise its telemedicine standards, and the APA has also expressed interest in developing standards specifically for telepsychiatry, Tucker said. Australia and Canada, where telemedicine enjoys widespread support from their governments, have standards for telemedicine services that could serve as templates to adapt to U.S. health care systems.

Right now, he said, a lot of ad hoc arrangements exist for telepsychiatry, such as a single child psychiatrist contracting with a school system in a closed-loop arrangement. Eventually, however, telepsychiatry systems will take off nationwide. It could happen as soon as three or four years, but it will require some established method of oversight. If certification standards were established, payors would be more likely to agree to reimburse the service.

Tucker said the OMH project has been approached by executives at managed care companies looking for ways to introduce a second-opinion program into rural parts of the state. While the project is prohibited from contracting with these types of companies, the overtures demonstrate that interest for these services does exist in the private sector.

But anyone looking for data to support adopting a telepsychiatry program might be hard pressed to find any.

According to a literature review appearing in the December 2003 issue of Psychiatric Services (54[12]:1604-1609), methodologically sound studies of telepsychiatry are infrequent, despite the rapid increase in information about the technology.

The authors of "Recent Advances in Telepsychiatry: An Updated Review" examined 68 studies published between March 2000 and March 2003. Overall, they found that the studies supported telepsychiatry as a useful means of conducting assessments and improving a patient's clinical status, but that "only a limited number of empirical studies have been reported over the past three years."

The review concluded that the field needs "reliable baseline data gathered before the implementation of programs, evaluation of clinical outcomes, randomized experimental design with appropriate control groups, cost analyses, and determination of the effectiveness and efficacy of telepsychiatry for specific patient populations."

Testing the Limits

The OMH project's one ongoing cost is for broad bandwidth phone lines. Telepsychiatry systems use Integrated Services Digital Network (ISDN) lines, which offer far more confidentiality and reliability than would an Internet connection and allow for television-quality video and audio. Because the OMH has purchasing power, the project pays only $104 a month for each ISDN line and a charge of only 16 cents per minute as a usage fee, so that a one-hour consultation costs less than $10.

The state has agreed to fund the cost of the lines to the 12 county sites indefinitely, and the state has picked up the tab for the bridge connector fee that links the OMH system to the prisons' telemedicine system.

The technical quality of teleconferencing systems is quite good, Hyler said, and is mostly a function of line speed rather than hardware. Each ISDN line operates at a speed of 128 kilobytes per second (KBps). Together, three lines give the user 384 KBps, which is more than adequate for full-motion video and flowing audio with minimal delay. Newer equipment would be able to achieve the same effect at 256 KBps, meaning that only two ISDN lines would be needed.

Eventually systems will be able to do the same thing with one ISDN line, which will make it much more affordable, Hyler said.

The OMH staff has been able to do neurological consultations involving movement disorders and full-scale IQ tests. "We're testing the limits of what can and can't be done."

Overall, patients respond well to the technology, he said. Given a reasonable introduction about the experience of talking to a doctor over a television set, patients do well, even when they have major mental disorders. And sometimes children and adolescents do better on the screen than in person.

After the first 30 seconds, it's like you're in the room, Hyler said.

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