Telepsychiatry Services Cut Hospitalization Rates Without Raising Overall Costs

Outpatient telepsychiatry care was associated with lower inpatient hospitalization rates and fewer emergency department admissions while maintaining comparable costs to Medicaid, according to a study published today in JAMA Network Open.1

Access to timely psychiatric care remains limited, with most psychiatrists not accepting Medicaid.2 Given the significant societal and economic costs of untreated mental illness, the researchers emphasized the importance of adopting a timelier care model, particularly for Medicaid enrollees, who face the lowest reimbursement rates of any major insurer.3

Evidence suggests that telepsychiatry consultation services in emergency departments can reduce unnecessary psychiatric hospitalizations and lower costs.1 The researchers noted that a successful example of timely, evidence-based psychiatric care in Medicaid patients could encourage wider payer adoption of this model and promote a broader shift toward value-based contracting.

To explore this, they conducted a cross-sectional analysis using 2022 Medicaid data to examine the costs and outcomes associated with timely outpatient telepsychiatry care delivered by Frontier Psychiatry in Billings, Montana, one of the largest psychiatric care organizations in the Intermountain West.

Timely outpatient telepsychiatry care for Medicaid enrollees was associated with lower hospitalization rates and comparable overall costs, supporting its potential role in value-based care models. | Image Credit: Nattakorn - stock.adobe.com

The researchers cross-referenced CMS Transformed Medicaid Statistical Information System Analytic Files, Demographic & Eligibility, and Claims databases with the clinic’s data. With these databases, they created 2 groups: a group of all Montana Medicaid patients using any of the outpatient clinic’s mental illness services in 2022 (telepsychiatry clinic patient group), who were propensity score-matched with Medicaid patients not using the services (control group).

The primary outcome was mean per member per month (PMPM) costs to Medicaid. Meanwhile, the secondary outcomes included inpatient care quality outcomes: annualized hospitalization rate, the proportions of those hospitalized experiencing 30-day and 90-day readmissions, the proportion of admissions from the emergency department, and short hospital stays of less than 3 days.

The study included 2686 patients using the outpatient telepsychiatry clinic’s services (mean [SD] age, 30.55 [14.67] years) and 2686 propensity-matched controls (mean age, 31.37 [15.92] years). Across the categories examined, the overall PMPM care costs were similar between patients using the outpatient telepsychiatry clinic’s services ($685.5; 95% CI, $632.9-$738.2) and those in the control group ($734.0; 95% CI, $645.7-$822.3) over the study period.

However, PMPM costs to Medicaid were higher for professional services for the telepsychiatry clinic patient group ($464.0; 95% CI, $443.4-$484.5) vs the control group ($388.4; 95% CI, 368.1-$408.7). Meanwhile, PMPM costs to Medicaid for inpatient hospitalizations were lower among patients using the outpatient telepsychiatry clinic’s services ($201.6; 95% CI, $146.2-$228.7) compared with those in the control group ($260.6; 95% CI, $220.2-$341.5).

Regarding care outcomes, the telepsychiatry clinic patient group had a 38.0% lower mean annualized hospitalization rate (274.3 hospitalizations per 1000 patients; 95% CI, 237.1-311.6 hospitalizations per 1000 patients) than the control group (442.6 hospitalizations per 1000 patients; 95% CI, 396.5-488.7 hospitalizations per 1000 patients). Of these hospitalizations, patients using the outpatient telepsychiatry clinic’s services had a 17.9% lower rate of admissions from the emergency department than controls (47.7% vs 58.1%).

In contrast, the rates of 30-day readmissions (9.8% vs 11.7%), 90-day readmissions (19.2% vs 21.1%), and inpatient short stays (16.7% vs 15.2%) did not differ significantly between patients using the outpatient telepsychiatry clinic’s services and those in the control group.

Lastly, the researchers acknowledged their study’s limitations, including that it was observational. Because of this, the results cannot be used to causally link the use of telepsychiatry services and patient-level cost or quality outcomes. Despite these limitations, they expressed confidence in their findings.

“It is our hope that the findings we report here spur increased investment in, and access to, pragmatic and timely outpatient psychiatric treatment for some of our nation’s most vulnerable patients,” the authors concluded.

References

1. Havlik JL, Ghomi RH, An N, Budhiraja P, Arzubi ER. Medicaid costs and outcomes for patients treated in an outpatient telepsychiatry clinic. JAMA Netw Open. 2025;8(5):e258558. doi:10.1001/jamanetworkopen.2025.8558
2. Carlo AD, Basu A, Unützer J, Jordan N. Acceptance of insurance by psychiatrists and other physicians, 2007-2016. Psychiatr Serv. 2024;75(1):25-31. doi:10.1176/appi.ps.202100669
3. Catarino A, Harper S, Malcolm R, et al. Economic evaluation of 27,540 patients with mood and anxiety disorders and the importance of waiting time and clinical effectiveness in mental healthcare. Nat Ment Health. 2023;1(9):667-678. doi:10.1038/s44220-023-00106-z