Report: California could realize big savings from expanded telehealth

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Numerous California healthcare associations and organizations helped craft and pass the Telehealth Advancement Act of 2011, signed into law Oct. 7 by Gov. Jerry Brown. Among the groups leading the charge was the Center for Connected Health Policy (CCHP), which released a report Sept. 30 that highlighted the potential cost savings to be realized from an expansion of telehealth in the Golden State.

The new law—AB 415—relaxes requirements for providers who wish to offer telehealth services, going so far as to make all licensed healthcare professionals eligible for participation. It also widens the path for providers to offer such care to Medicaid patients and makes telehealth credentialing easier for hospitals, according to a statement from the California Telemedicine and eHealth Center.

The authors of the CCHP report, Matthew Newman and Trisha McMahon of the Blue Sky Consulting Group, itemized examples of cost savings California now stands to realize, including:

  • “For each diabetic patient examined for retinopathy via store and forward telemedicine, state cost savings would total nearly $2,500 over the patient’s lifetime … due to early detection of retinopathy and reduced disabling blindness.”
  • “In a 2009 study, researchers found that the around-the-clock trauma and emergency management telemedicine network prevented 17 unnecessary transfers and saved an estimated $104,852 in transfer costs alone. The model built by [Eric] Pan et al. [in “The Value of Provider-to-Provider Telehealth,” Telemedicine Journal, June 2008] estimated that a national expansion of telehealth could save $537 million annually by avoiding such emergency transports.”
  • “Applying the average cost reduction finding from the research, we calculate that telehealth for home monitoring of heart failure patients has the potential to produce savings in the Medi-Cal program of up to $929 million annually.”

In their report's conclusion, the authors allowed that educated projections are not the same as hard promises.

“Although telehealth has been the subject of hundreds of studies, the potential cost savings associated with telehealth have been the subject of less rigorous analysis relative to studies on its medical effectiveness,” they wrote. “Analysis of the fiscal effects of telehealth are complicated by the fact that telehealth is a rapidly evolving area of health care, with technological innovations arriving at a rapid pace and technology costs falling as equipment and information transfer costs are lowered throughout the economy.

“Given this rapid pace of change, it is not surprising that a consensus has yet to emerge on the cost-effectiveness of telehealth overall. Nevertheless, studies do point to areas of potential cost savings. And, given that AB 415 does not mandate specific reimbursement rates for telehealth services, it is likely that payers will choose to reimburse telehealth services more generously in areas where cost savings can be demonstrated while discouraging expansion of telehealth (via lower reimbursement rates or refusal to pay for technology costs) in areas where it has not proven to be cost-effective.”

To read the full report, click here.