Looking at the chart below, it’s tempting to take the drop in telehealth volumes from March 2020 to June 2021 as a sign that telehealth is on its way out.

But the more significant difference isn’t in comparison to peak volumes—it’s from pre-pandemic volumes to now. While telehealth used to represent a tiny proportion of care, it’s hovered around 10% of all care since September 2020. It’s important to recognize the magnitude of that jump on the chart below—an increase of almost 1000% from December 2019 to December 2020. We would never have believed in January 2020 that a tenth of all health care would be delivered virtually within a year. This is a promising sign that telehealth is here to stay, at least in some capacity.

Telehealth’s impact on overall utilization—whether it’s substitutive (replaces in-person visits) or additive (in addition to in-person visits)—will have far-reaching implications for future regulation and reimbursement decisions. Payers worry that telehealth access will increase total health care utilization and increase spending. If that’s the case, then it’s unlikely that payers will continue to cover telehealth as they have during the pandemic. Luckily, we found that telehealth has not appeared to increase overall utilization.

It’s difficult to determine telehealth’s long-term effects on utilization as the pandemic is still affecting health care patterns. However, the influx of data over the past couple of years reveals some emerging trends.

Evaluation and management

An increase in telehealth has not led to an increase in overall utilization. As in-person visits plummeted during March-May 2020, the rise in telehealth volumes helped offset some of the loss. Even now as telehealth utilization is higher than pre-pandemic volumes, total utilization is similar to what we saw prior to the pandemic.

This data suggests that patients are replacing in-person visits with telehealth visits, and are not following virtual visits with additional, unnecessary in-person care.

Psychiatry

Telehealth had a substitutive effect in psychiatry: the rise in tele-psychiatry visits did not lead to increase in overall volumes and was instead offset by the decline in in-person visits. The stability of overall volumes is an encouraging sign that telehealth can provide much needed access to behavioral health services without increasing overall costs.

Some may find it surprising that overall behavioral health utilization remained stable. Intuitively, it would make sense that telehealth’s convenience along with the increased demand for behavioral health services during the pandemic would lead to a jump in overall visits. We’ve heard one of the major reasons for this stagnation is the limitation in providers’ capacity. Even though behavioral health care is easier for patients to access, providers still have limited capacity and can’t take on an infinite number of patients.

Physical therapy

Telehealth volumes have not had a substantial impact on overall physical therapy volumes. While telehealth allowed some patients to keep their physical therapy visits during the pandemic, they made up a small proportion of overall volumes. Again, this shows that telehealth can be an option for patients who prefer or need virtual care without necessarily leading to more visits and increased costs.

Each service line we evaluated saw distinctly different telehealth volume trends in the months following their initial spikes during the Covid-19 lockdown. We see the highest uptake in service lines that lend themselves to virtual modalities—both because patients have accepted telehealth as a suitable alternative for in-person care and leaders see an opportunity for future reimbursement. As always, we recommend evaluating telehealth opportunity differently based on the types of services rendered.

Evaluation and management

By far, the largest share of overall telehealth volumes fell within the Evaluation and Management (E&M) service line. More specifically, the lion’s share of those volumes fell in the overall high-volume office evaluation codes. At their peak, telehealth volumes represented a third of all eligible volumes. Since their decline in the summer and fall of 2020, E&M volumes have plateaued, maintaining a constant presence far above pre-pandemic levels, around 10-12% of eligible volumes. The pandemic proved that these visits can viably be conducted virtually, and E&M will continue to be an area for further telehealth investment.

Psychiatry

One of the most newsworthy trends in the rise of telehealth has been the staying power of tele-psychiatry. This was most stark at the peak of pandemic lockdown, with around 50% of eligible volumes performed via telehealth. But more striking is how those initial telehealth volumes have continued to grow, now maintaining 53-57% of all eligible volumes.

Virtual psychiatry has clearly become the medium of choice for many patients and providers. Because mental health diagnoses can happen virtually, the entire care journey can take place in a virtual setting, helping to establish virtual as the “standard” setting. We’ll likely see continued growth in the tele-behavioral space.

Physical therapy

The most interesting story came with physical therapy, where almost 5% of eligible volumes were performed via telehealth during lockdown—up from zero pre-pandemic. As one may expect, these volumes dissipated following lockdown. While it was possible to conduct some physical therapy services via telehealth, it looks like there won’t be significant uptake in the near future. The most obvious driver of this trend is patient and provider preference, given the hands-on nature of physical therapy. On top of that, note that physical therapy only became eligible for telehealth temporarily during the Covid-19 public health emergency, meaning that provider organizations are not incentivized to invest into these services.

Many analyses we see across the industry evaluate telehealth volumes against all provider volumes. That approach will muddle results by including services, and their volume trends, that are irrelevant to conversations around telehealth. At best, it distorts the effect of telehealth’s uptake—at worst, it could lead you astray in evaluating your opportunities for investment.

For one, trends look overly harsh when telehealth utilization is compared against all volumes. The peak in telehealth volumes during lockdown will appear higher as many in-person services were delayed or avoided, and the subsequent drop seems lower as overall volumes picked up. This makes telehealth’s uptick during lockdown look like a flash in the pan, rather than a long-lasting shift in care dynamics.

Most importantly, there will always remain services that can only happen in-person. You can be led astray by unrelated trends if you include those volumes in your assessment of telehealth opportunity. Look only at codes with potential to be performed—and paid—via telehealth modalities to ensure you have an accurate understanding of your potential opportunity.

In our analysis, we evaluated volumes based on CMS’s telehealth-eligible CPT code list. In your assessments, you also may consider the services that other payers in your market will reimburse for telehealth.