The Tech Disconnect

By Monica E. Oss, Chief Executive Officer, OPEN MINDS

If digital transformation is essential to growth in health and human services–and in the first quarter of 2025 alone, digital health startups secured $3.0 billion in funding why is tech adoption in the field so spotty? My take—it has a lot to do with the reimbursement.

A recent analysis, Experiences Of Telehealth Reimbursement Policies in Federally Qualified Health Centers, is just one of many studies that point to the need for reimbursement changes to fully leverage technology in the health care system. “Although telehealth brings new opportunities to advance patient-centered care, there are serious challenges on the path toward equitable care because telehealth is not yet integrated into payment in a sustainable way.”

In this study of federally qualified health centers (FQHCs) in New York, there is Medicaid payment parity for video-based and audio telehealth services—but there is a different fee for in-person versus virtual services. For hospitals that charge facility fees, the differences are marginal. But for nearly all FQHCs, which bill a bundled prospective payment system (PPS) rate, the difference between in billing for in-person services versus virtual services is approximately one-third. And for FQHCs to bill the PPS in-person amount for telehealth, either the clinician or the consumer must come into the facility for the appointment.

The study had a couple of other interesting findings. One is that telehealth has reduced no-show rates at FQHCs—from 30% to 16%. And FQHC managers attributed high turnover rates for mental health clinicians to the reimbursement policies, because the clinicians were not willing to give up remote work.

In addition to spotty fee-for-service (FFS) reimbursement for telehealth, there are continued reimbursement challenges for services with substantial value propositions like tech-enabled diagnostics, remote monitoring, and smart homes. A move to performance-based contracting provides the financial impetus for expanded tech adoption in many cases, and the dampening effect of the reimbursement on tech adoption is evident in the numbers. Among specialty provider organizations, where the majority of reimbursement remains in FFS, the adoption of consumer health portals, medication management tech, and consumer engagement tech is under 60%.

This is likely to change, as technology becomes essential to competitive advantage and growth. Health plans will increasingly prefer provider organizations focused on whole person care models in integrated delivery systems to better manage their medical loss ratios. These whole person care models are most effective with value-based reimbursement. And those value-based care models cannot be successfully managed at scale without technology.

In the months ahead, technology adoption and data integration across the six key domains—electronic health record systems, hybrid service delivery, consumer engagement, value-based care management, human resource and financial management systems, and business analytics—will be increasingly critical to success. Growth in this evolving market landscape—integrated, value-based, and consumer-centric—is not possible without enhanced tech functionality.