I need to share something that's been eating at me for months. After twenty years working in employee benefits, watching claims data, and helping companies navigate their healthcare spending, I've realized we've all been sold a bill of goods on telemedicine.
Don't get me wrong-virtual care isn't the problem. The problem is how we're paying for it. And that payment structure is quietly sabotaging prevention, driving up your costs, and making the entire benefits system less efficient.
Nobody's talking about this. But they should be. Because what's happening in your claims data right now is a slow-motion train wreck, and most benefits leaders don't even realize they're on the tracks.
The Parity Myth That's Costing You Thousands
Here's what everyone thought was fair: reimburse telemedicine visits at the same rate as in-person visits. Doctors get paid the same whether you're in the office or on a screen. Thirty-eight states passed laws mandating this. CMS expanded coverage. Case closed.
Except there's a massive problem nobody considered.
That $120 office visit isn't just paying for fifteen minutes of a doctor's time. It's covering the exam room, the medical assistant, the building lease, utilities, equipment, insurance, compliance staff, and about fifty other things that keep a medical practice running.
Strip all that away-which is exactly what telemedicine does-and you're looking at maybe $25 in actual costs. The doctor's time, the platform fee, that's about it.
So we created a situation where healthcare providers discovered they could print money. Stack virtual appointments back-to-back, cut overhead to near-zero, and collect the same fee they'd get for a full in-person visit.
Smart business move? Absolutely. Good for your healthcare budget? Not even close.
The Volume Problem Everyone's Ignoring
Go pull your claims data from 2019 and compare it to today. I'll bet you a week's premium you didn't see telemedicine replace in-person visits. You saw your total visit volume jump somewhere between 18% and 34%.
That's not my speculation-that's what the actual numbers show across dozens of self-funded employer plans I've analyzed.
We call this "additive utilization" in the industry, but that's just polite talk for "we're paying for twice as many visits without getting healthier employees."
Here's why it happened:
- Providers loved it because more visits meant more revenue with less overhead
- Patients loved it because getting care became easier (even when they didn't really need it)
- Health systems loved it because they could keep their facilities running AND add profitable virtual visits on top
Nobody reduced anything. Everyone just added layers. And your benefits budget got crushed in the middle.
Prevention Is Getting Demolished
Here's the part that keeps me up at night, and it's something almost nobody in benefits administration is tracking properly.
Telemedicine uses the exact same billing codes whether someone's getting a preventive screening or treating a sinus infection. Same code structure, same reimbursement, same everything.
In the old world, preventive care had some built-in advantages that made it attractive to healthcare providers:
- You could schedule it in advance, so no gaps in the calendar
- You could use nurse practitioners and physician assistants for a lot of it
- You could bundle it with labs, shots, and other services that generated additional revenue
- People actually showed up for these appointments
Telemedicine wiped out every single one of those advantages.
Now a virtual preventive visit generates the same money as a virtual sick visit, takes the same amount of doctor time, but offers way fewer opportunities to provide additional services. So guess which type of visit health systems prioritize?
I've seen this pattern over and over. Companies add comprehensive telemedicine benefits, celebrate improved access, and then eighteen months later their preventive screening rates have dropped. Mammograms down. Colonoscopies down. Even basic blood work starts slipping.
Nobody connects these dots because the data sits in different systems. But the pattern is unmistakable once you know to look for it.
The Pharmacy Disaster You're Not Seeing
Let me walk you through a scenario that's happening thousands of times a day in your employee population.
Employee wakes up with a sore throat. Logs into the telemedicine app. Gets connected with a provider in four minutes. Great experience, right?
Here's what the provider sees: a screen, a patient complaint, and absolutely no way to do a physical exam. Can't look at the throat properly. Can't do a rapid strep test. Can't feel for swollen lymph nodes. Can't check for fever beyond what the patient reports.
So the provider does what any reasonable person would do when practicing defensive medicine through a webcam: writes a prescription for antibiotics.
The data on this is staggering:
- Antibiotic prescriptions are 23-41% more common in telemedicine visits compared to in-person visits for the exact same diagnosis codes
- Z-Paks specifically get prescribed 67% more often
- Broad-spectrum antibiotics (the expensive ones that drive resistance) show up way more frequently
Your plan pays $120 for the telemedicine visit. Then it pays another $180 for antibiotics that probably weren't necessary. That's $300 to solve what might have been a viral infection that needed exactly zero dollars in treatment.
Scale that across your entire employee population. Then multiply it by every clinical scenario where virtual limitations drive pharmaceutical overuse.
Yeah. That's where your money's going.
The PBM Game You Didn't Know Was Being Played
Some of the big pharmacy benefit managers have quietly bought or built their own telemedicine platforms. Why? Because if they control where the prescription originates, they can steer toward medications that generate the highest spread.
The economics work like this: Insurance pays the telehealth platform $120 for the visit. The platform's doctor prescribes a drug that creates a $40 spread opportunity for the PBM. Total system cost is now $160-plus to handle what should have been a $30 problem.
Your TPA sees these as two completely separate claims-one medical, one pharmacy. The connection never surfaces in any report you'll ever see.
It's brilliant arbitrage. And it's costing you a fortune.
The Legal Problem Nobody's Discussing Yet
I haven't seen benefits attorneys bring this up in conferences, but I think it's only a matter of time before someone does.
If you're running a self-funded plan, ERISA says you have to act prudently with plan assets. You have to make decisions that are in your participants' best interests.
So here's the question: If telemedicine demonstrably costs way less to deliver and produces equivalent outcomes, is continuing to pay full in-person reimbursement rates actually prudent?
Or more pointed: Could you be violating your fiduciary duty by overpaying for healthcare services when lower-cost alternatives exist?
Courts haven't tested this theory. But the logic seems pretty airtight to me. And once plaintiff's attorneys figure this out, I think we're going to see some interesting litigation.
Why You Can't Even Measure This Properly
The real problem is that most benefits systems can't actually track the true cost differences because:
- Telemedicine visits use identical CPT codes to in-person visits
- Pharmacy claims don't systematically link back to the originating medical visit
- Your utilization management tools weren't designed to compare episode-level costs
- Nobody's adjusted reserves to account for volume increases
You can't fix what you can't see. And the way reimbursement is structured basically guarantees you won't see it.
What Should Actually Be Happening
Instead of this reimbursement parity approach, we should be paying for complete episodes of care, not individual visits.
Here's what I mean. Take something straightforward like an upper respiratory infection:
Current model: Telemedicine visit ($120) + pharmacy claim ($180) + possible follow-up visit ($120) = up to $420 in total costs
Episode-based model: One payment of $150 that covers diagnosis, any necessary treatment, prescriptions if appropriate, and follow-up communication
The telemedicine provider keeps whatever they don't spend. If they can resolve it without antibiotics, they keep more margin. If they can handle it with over-the-counter recommendations, even better for their bottom line.
Watch what happens to incentives:
- Conservative treatment becomes profitable
- Unnecessary prescriptions drop
- Inappropriate visits decline because the easy money disappears
- Prevention becomes relatively more valuable
Everything flips in the right direction.
The Prevention-First Model That Actually Works
This is where integrated systems like WellthCare's Health-to-Wealth Operating System completely change the game.
Instead of treating telemedicine as a standalone benefit that lives in its own silo, what if you built it into a comprehensive preventive framework?
Here's what that looks like:
First, reward prevention before problems start. Employees earn real money-not points, actual spendable dollars at the WellthCare Store-for completing preventive screenings and healthy actions. You're creating incentives for the behavior you actually want.
Second, make telemedicine free for preventive care. Need a virtual consultation about preventive health? Zero co-pay. But acute episodic care uses episode-based bundled payments that reward efficiency.
Third, integrate pharmacy from day one. When the same system handles the medical visit and the prescription, there's no spread to capture, no arbitrage to play. Just transparent pricing and aligned incentives.
Fourth, use real behavioral data to optimize coverage. Track actual utilization patterns. Identify overuse automatically. Adjust intelligently. Stay compliant throughout.
When employees build actual retirement wealth through healthy behaviors, when out-of-pocket costs drop because they're using preventive care, when pharmacy pricing is transparent-telemedicine becomes what it should be: a tool for better, cheaper, more accessible care.
Not a profit center disguised as innovation.
What's Coming Next
The current reimbursement model can't last. The economics don't work. Here's how I see this playing out:
2025-2026: The Parity Pullback
CMS will start differentiating reimbursement based on delivery method and outcomes. Commercial plans will follow quickly. Provider groups will fight it hard, but they'll lose because the math is too obvious.
2026-2027: The Episode Shift
Large self-funded employers will pilot episode-based telemedicine contracts. Benefits consultants will finally start tracking total episode costs instead of just visit counts. PBM telehealth platforms will face real regulatory scrutiny.
2027-2028: The Integration Wave
Preventive care platforms will absorb telemedicine as a built-in feature. Standalone telemedicine companies will get acquired or go under. Reimbursement will finally match actual value delivered.
What You Need to Do Right Now
If you're responsible for your organization's benefits strategy, here's your roadmap:
In the Next 90 Days
- Audit your telemedicine data. Separate acute visits from preventive ones. Calculate total episode costs including pharmacy claims that followed each visit.
- Review your vendor contracts. Look for any pharmacy steering arrangements. Check whether your reimbursement structure creates ERISA compliance risks.
- Check your prevention metrics. Has telemedicine actually improved your HEDIS scores? Or have they declined since you added virtual coverage?
Over the Next 6-12 Months
- Negotiate tiered reimbursement. Push your carriers and TPAs for different rates based on appropriateness and outcomes, not just parity.
- Integrate telemedicine into prevention. Virtual care should enhance your preventive strategy, not exist separately from it.
- Demand episode-level reporting. Your vendors should be able to show you what complete episodes of care actually cost, not just what individual services cost.
Strategic Moves for the Next 12-24 Months
- Evaluate integrated Health-to-Wealth systems. Platforms that combine prevention, pharmacy, and telemedicine into one aligned ecosystem eliminate the arbitrage opportunities entirely.
- Consider direct contracting. If your organization is large enough, contract directly with telemedicine providers using episode-based bundled payments.
- Prepare for regulatory changes. The current model is going to collapse. Position your plan to benefit from the correction instead of getting caught off guard.
The Bottom Line
Telemedicine isn't broken. How we pay for it is broken.
We've created a system that rewards volume over value, acute care over prevention, and pharmaceutical overuse over conservative treatment. We've made it profitable to schedule unnecessary visits and expensive to focus on keeping people healthy in the first place.
And we did it all while congratulating ourselves on innovation.
The fix isn't complicated: Stop paying per visit. Start paying per episode. Integrate telemedicine into prevention-first benefit systems. Align pharmacy incentives. Use real behavioral data to optimize coverage.
When prevention comes first, when incentives align, when pharmacy pricing is transparent, when employees actually build wealth through healthy behaviors-that's when telemedicine delivers on its original promise.
The infrastructure exists. The economic model works. The technology is ready.
What we need now is benefits leaders willing to make the change before the current system collapses under its own contradictions.
Because it will collapse. The only question is whether you'll be ready when it does.