What is the Cost of Telemedicine?

Every employer knows it’s important to consider the full cost of any employee benefit program before signing up. But the cost of telemedicine isn’t always straightforward.

That’s because the cost of telemedicine varies greatly among providers, and the true cost — and true benefit — of telemedicine can oftentimes be difficult to calculate.

There are several factors to consider when evaluating the real cost of a telemedicine service:

Per employee per month (PEPM) fee
Employee, or member, co-pay or consultation fees
Engagement campaign costs
Usage limits, onboarding fees and other miscellaneous costs
Soft costs and soft benefits

Let’s take a look at these costs of telemedicine.

PEPM Fee

Many telemedicine providers charge a per employee per month (PEPM) fee, which can range from as low as $0.15 per employee to as high as $15 per employee. These plans might cover only the individual, or may also include their family as well.

Other telemedicine providers may use a “pay as you go” model, which only charges employers when an employee uses the plan. Under this model, an employer would pay a fixed fee of about $40-75 per consult.

But remember, telemedicine is only effective if employees actually use it instead of going to the ER or urgent care. This “pay as you go” model sounds great in theory, but the harsh reality is that the last thing an HR department needs is another benefit to manage and encourage their employees to use.

Plus, since any usage (even usage that doesn’t divert a visit, such as getting a medical question answered) costs the employer money, the employer is unlikely to push as hard to drive utilization.

It’s also important to remember the old adage: You get what you pay for. A telemedicine service with an ultra-low PEPM could have other hidden fees or doctor consult fees. We’ll explore why those are problematic below.

Consultation Fees

Ultimately, getting employees to use a telemedicine service instead of going to the ER or urgent care is a fundamental change in behavior. Any friction that is introduced will have a huge impact on any efforts to change people’s behavior.

Many telemedicine companies charge employees a consult fee or copayment when they use the service. This fee could range from $20 up to $79, according to one study.

These fees are often cheaper, if not much cheaper than going to the doctor’s office, ER or urgent care. However, a copay or consultation fee creates a barrier for employees who wish to use telemedicine. Instead, if the cost is comparable to going to an in-person doctor, they may go with what they know.

Asking people to try something new and pay, let’s say, $40 to talk to a telemedicine doctor is a risk. Plus, if it is unsuccessful, the patient would have to pay another $40 to go to urgent care.

Instead, it is recommended that telemedicine providers do not charge employees a consultation fee. Because the telemedicine service can save employers money from avoided visits to doctor's offices, urgent care clinics and ERs, they’ll want to encourage utilization among employees. Out-of-pocket consultation fees to use the service discourage utilization and result in lost savings.

Miscellaneous Costs

No one likes hidden fees, especially with a new healthcare benefit. Here are a few to watch out for:

Onboarding costs
Charges for engagement campaigns
Usage limits, or fees when many employees use the service
Extra charges based on the length of the telemedicine consultation

Many of these fees discourage employee use, and some actually charge employers when employees use the service often. Again, this defeats the cost-saving purpose of telemedicine: to avoid expensive ER and urgent care visits.

Soft Costs and Soft Benefits

Let’s first consider the soft costs of telemedicine: time. The last thing employers need is another time-sucking benefit to manage.

Consider the guidance a telemedicine service provides to help an employer get up and running successfully. Do they support the employer through the onboarding process? Do they provide customized employee engagement and communications to encourage use?

Telemedicine also has some big-time soft benefits for employees. For one, they don’t take time out of their day to go to the doctor’s office, and instead get a consultation quickly. This helps them feel better faster and allows them to avoid the frustration of waiting rooms, other sick patients and traveling to and from a clinic.