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Walmart's MeMD versus Amazon Care: The race to invest in telehealth

Walmart's acquisition of MeMD is an investment in omnichannel access to care that directly competes with traditional providers.

Susan Morse, Managing Editor

Photo: Geber86/Getty Images

Walmart's announcement last week that it would acquire telehealth company MeMD to provide virtual care nationwide for primary, urgent and behavioral healthcare is a bigger deal than Amazon's March rollout of its virtual primary care services, according to consultant Paul Keckley of The Keckley Report.

"I think it's a strategic play. I think it's bigger than Amazon," Keckley said. "Amazon does not have the bricks to accompany the clicks. They don't have the presence that Walmart has."

Walmart Health is acquiring MeMD for an undisclosed price in a deal expected to close in months, should it pass regulatory approval. 

Keckley believes there will be pushback on the acquisition and possibly court challenges from those who view the move as infringement, but thinks that Walmart probably has regulatory approval in its corner.

Walmart has a broad underserved population base, which will be to its regulatory advantage. The question will boil down to how Walmart can effectively manage costs at a discount, Keckley said. This fits perfectly with Walmart's business plan.

MeMD, founded in 2010, provides on-demand, online care for common illnesses, injuries and behavioral health issues. The service complements in-person care at Walmart Health centers.

"MeMD's mission fits perfectly with Walmart's dedicated focus to help people save money and live better, and now we can impact millions more by being part of Walmart," the company said by released statement.

"Today people expect omnichannel access to care, and adding telehealth to our Walmart Health care strategies allows us to provide in-person and digital care across our multiple assets and solutions," said Dr. Cheryl Pegus, executive vice president, Health & Wellness for Walmart. 

WHY THIS MATTERS

Walmart's move is the latest foray by a non-provider into traditional provider care. 

The mega-retailer is a threat because it has a strong digital platform to help customers manage their health and also manage their food through their neighborhood markets.

Other players wanting a piece of the provider pie through telehealth are Amazon Care, Transcarent for the self-insured market and insurers. Cigna's MDLive, which is part of its Evernorth portfolio, helped propel the insurer to strong first quarter results.

Transcarent, headed by Livongo founder Glen Tullman, is betting on consumer's desire to chat by app.

Amazon Care, which promises virtual care in all 50 states starting this summer, puts the big tech firm directly in the healthcare services business.

Hospitals and physician practices are at a crossroads on what to do about telehealth post-pandemic. 

Providers are currently getting payment parity for a telehealth visit, but there is uncertainty moving forward whether that will continue. 

Prior to the COVID-19 pandemic, insurers paid 20-40% less for a telehealth visit than for an in-person visit.

CFOs have digital health priorities that include telehealth, but hospitals must also have the cooperation of doctors.

"Walmart doesn't," Keckley said.

With this competition, hospitals will be forced to move into telehealth, whether they are paid at parity or not.

Keckley, who works with healthcare executives, believes providers will integrate telehealth into operations one clinical program at a time. To do nothing means being left behind.

"I think this time, the train has left the station through the pandemic, the [American] Rescue Plan and relief funds," Keckley said. 

Telehealth has particularly made inroads in behavioral healthcare, which "has always been touted as the gap in the system," Keckley said.

Insurers see telehealth as a way to help members manage chronic conditions, as in the shake-up $18.5 billion merger between telehealth platform Teladoc and chronic care management program Livongo last year.    

WHAT'S HAPPENING TO MAKE TELEHEALTH HAPPEN

Congress has numerous bills and proposals under consideration for the future of telehealth payments once the public health emergency ends and the waivers put into place by the Centers for Medicare and Medicaid Services expire.

The main question is over concern of potential overutilization as consumers visit the doctor both virtually and in person. There are also questions over geographic barriers, interstate licensure and establishing a national framework for multistate employers.

While only a few states have their own payment parity laws for telehealth, payment parity is now the focus of numerous state bills, according to Health Affairs

"Payment parity is particularly important for small practices and those located in underserved communities, who may not have the financial means to offer telehealth if reimbursement is substantially lower," Health Affairs said.  

During a House Ways and Means Health Subcommittee hearing on April 28 entitled "Charting the Path Forward for Telehealth," panelists debated the parity question.

Ellen Kelsay, president and CEO of the Business Group on Health, which represents employers, said the focus is on telehealth utilization and that everyone should exercise caution to determine when in-person rather than virtual care is more medically appropriate.

"We cannot ignore cost," Kelsay said. "How it might increase costs over time. A telehealth visit is often followed by an in-person visit for the same purpose."

Dr. Thomas Kim, chief behavioral health officer for Prism Health North Texas, said telehealth is not a replacement or an additive to traditional care. Payment should be made at the same rate, he said.

Dr. Ateev Mehrotra, associate professor at the department of healthcare policy at Harvard Medical School, said he would advocate to pay for virtual visits at a lower rate. Provider costs for telemedicine visits are lower, and payment should reflect that, Mehrotra said.

Subcommittee Chairman LloydDoggett said, "With CMS telehealth waivers currently extended through years' end, we need a plan in place to assure no abrupt suspension. Though recognizing the great promise of telehealth, the Medicare Payment Advisory Commission last month noted that our understanding of the impact of telehealth is largely limited to data and experience covering only a few months."

MedPAC has recommended that Congress initially provide a limited extension to permit additional time for gathering evidence about the impact of telehealth on access, quality and cost, he said. 

"While pay parity between telemedicine and in-person care has spurred rapid adoption, we must evaluate that impact on Medicare spending and ensure a telemedicine appointment is not duplicating an in-person visit," Doggett said.

A bipartisan group of 50 Senators has reintroduced the CONNECT for Health Act. 

American Telemedicine Association CEO Ann Mond Johnson said, "The telehealth cliff is looming, casting much uncertainty and concern for the health and safety of Medicare beneficiaries, and the sustainability of our already overburdened healthcare system. By ensuring Medicare beneficiaries do not lose access to telehealth after the COVID-19 public health emergency ends, the CONNECT ACT would protect seniors from the telehealth cliff. We urge Congress to recognize telehealth as a bipartisan, commonsense solution and speedily advance comprehensive policy that will allow permanent access to telehealth and virtual care." 

THE LARGER TREND

Telehealth came into its own during the height of the pandemic.

CMS granted Medicare waivers to cover 144 telehealth services during the public health emergency. The agency waived geographic areas, site restrictions, expanded the services and increased tech options. 

"Though some providers say it adds costs and unnecessary services, most think telehealth savings can be significant if integrated in care management effectively and geographic restrictions lifted," Keckley said in The Keckley Report

The bigger question, according to Keckley, is where healthcare delivery is going, when care is increasingly being provided outside of the physician's office or hospital and insurers no longer remain in the traditional insurance business.

"This [Walmart] deal symbolizes the widening gap between healthcare's future and its past," Keckley said. "Walmart aspires to be a major player in its future."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com