Telemedicine—the use of telecommunication and information technology to provide health care at a distance—is rapidly growing. And, projections are for more growth—estimated at 18.5% per year for the next few years.

Telemedicine is becoming more widely accepted, in part, because it holds out the promise of significant cost savings. But telemedicine is promising for other reasons—monitoring individuals to reduce the rate of readmission following a hospitalization, providing better care to individuals with limited mobility, monitoring key clinical measures for patients with certain chronic conditions, and the longer term potential to help reduce the projected shortage of physicians.

To date, there has been very limited focus on the potential impact of telemedicine on Medicare. Medicare allows telemedicine only for those in rural areas and only in specific situations.

However, this may be changing. A new report, written by Retiree Health Choices’ president, Dale Yamamoto, assesses the potential savings to Medicare from telemedicine. The report, “Assessment of the Feasibility and Cost of Replacing In-Person Care with Acute Care Telehealth Services” was sponsored by The Alliance for Connected Care, an advocacy group formed to expand the use of telemedicine. Based on this report, telemedicine may offer savings of between $21-$64 per “visit.” The range reflects a variety of different assumptions, such as whether the ease of access will increase utilization of services. Although these savings may not seem significant, when applied to 40 million Medicare beneficiaries, the savings could be in the billions of dollars (or, stated differently, could reduce the cost of Medicare Part B by around two percent.)

Medicare should not embrace this technology simply to save money. The impact of telemedicine on quality must also be assessed. This study should get some attention for a very promising new way of delivering care to Medicare beneficiaries.