BILL ANALYSIS Ó
AB 2507
Page 1
Date of Hearing: May 4, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2507 (Gordon) - As Amended April 26, 2016
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill amends the definition of telehealth service, and
requires health plans and insurers to cover telehealth services.
Specifically, this bill:
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1)Allows a patient to consent to telehealth digitally
2)Specifies video and telephone communications are included in
the definition of telehealth.
3)Requires plans and insurers to include in its contracts
coverage and reimbursement for services provided to a patient
through telehealth to the same extent as though provided in
person or by some other means.
4)Requires plans and insurers to reimburse health care providers
for diagnosis, consultation, or treatment of the enrollee when
the service is delivered through telehealth at a rate that is
at least as favorable to the health care provider as those
established for the equivalent services when provided in
person or by some other means. Restricts enrollee and insured
copayments, deductibles, and coinsurance to be no more than
the amount that would apply to an in-person visit.
5)Prohibits plans and insurers from limiting coverage or
reimbursement based on a contract entered into between the
plan or insurer, and an independent telehealth provider.
6)Prohibits plans from altering the provider-patient
relationship based on the modality utilized for services
appropriately provided through telehealth, but specifies
utilization review is allowed.
FISCAL EFFECT:
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1)This bill has been amended since the California Health
Benefits Review Program (CHBRP) analyzed it. Original cost
estimates have been modified based on the amendments, and are
estimated as follows:
a) $25.6 million to Medi-Cal (GF/federal) and $2 million to
CalPERS (GF/federal/special/local).
b) Increased employer-funded premium costs in the private
insurance market of approximately $28.3 million.
c) Increased premium expenditures by employees and
individuals purchasing insurance of $22.7 million, and
additional total out-of-pocket expenses of $14.9 million.
2)Costs to the California Department of Insurance (CDI;
Insurance Fund) and the Department of Managed Health Care
(DMHC; Managed Care Fund) to verify plans and insurers comply
with this requirement, at a minimum of $50,000-$100,000 to
DMHC and $10,000 -$50,000 for CDI.
3)Additional state costs to DMHC and CDI are possible for the
following: 1) addressing additional disputes between plans and
providers about coverage and reimbursement; 2) addressing
additional consumer complaints and inquiries; and 3) issuing
regulations, if necessary to clarify how reimbursement and
coverage must be operationalized in contracts. The likelihood
and magnitude of these activities and costs are unknown.
4)Unknown state GF fiscal risk if this mandate is deemed to
exceed Essential Health Benefits (EHBs) as described in
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greater detail in "Essential Health Benefits," below.
COMMENTS:
1)Purpose. According to the author, this bill removes barriers
to health care services provided via telehealth and ensures
patient access, choice, and convenience. The author states
the modality, or how the service is delivered, should not
determine whether a service should be covered or reimbursed.
Furthermore, a fully developed and supported telehealth
infrastructure will provide California with economic and
social benefits by reducing the needs of patients to leave
their home or work to obtain health care services, helping to
maintain a healthy and productive workforce and overall
population, and using the same modern technologies California
is pioneering.
2)Background. Existing law defines "telehealth" as a mode of
delivering health care services and public health via
information and communication technologies to facilitate
aspects of a patient's health care, while the patient is at
the originating site and the health care provider is at a
distant site. Telehealth includes synchronous interactions,
such as live video consultations, as well as asynchronous
"store-and-forward" transfers, such as a radiologist at a
distant site reading an x-ray. Telehealth services are used
and often covered by insurance now, but there are limitations.
The fee-for-service Medicare program, for example, only covers
telehealth that uses an interactive audio and video
telecommunications system that permits real-time communication
between a distant site and the beneficiary at the originating
site (which must be a health care facility).
Existing state law prohibits plans from requiring in-person
contact for a health care service appropriately provided
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through telehealth, and also prohibits plans from limiting the
setting of services. However, it also indicates coverage is
subject to the terms and conditions of contractual agreements
between plans and providers. The law does not, however,
establish a patient right to access telehealth services or
explicitly require telehealth services to be covered-instead,
it prohibits certain requirements that could otherwise
restrict coverage of services provided through telehealth.
This bill instead requires contracts to include coverage for
services provided through telehealth to the same extent as
provided in person or by some other means, and it specifies
requirements related to reimbursement and patient
cost-sharing.
3)CHBRP findings on medical effectiveness. CHBRP indicates that
the evidence related to medical effectiveness of telehealth
varies by modality. The scope of this bill applies to
virtually all diseases and conditions. Key findings include:
a) Live video: There is clear and convincing evidence
that these modalities are at least as effective as
in-person care for both mental health services and
dermatology. However, this evidence may not be
generalizable to live video usage in other specialty
areas.
b) Telephone: For the areas studied (e.g., mental
health), the studies of the effect of telephone
consultations on subsequent utilization are inconsistent.
Therefore, the evidence that medical care provided by
telephone compared to medical care provided in person is
ambiguous. Furthermore, it is unknown whether diagnoses
made using these technologies are as accurate as
diagnoses made during in-person visits.
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4)Essential Health Benefits (EHBs). The federal Patient
Protection and Affordable Care Act (ACA) requires health plans
offered in the individual and small group markets, both inside
and outside of health insurance exchanges, to offer a
comprehensive set of services termed EHBs. The ACA specifies
that if states require plans in the exchange to offer
additional benefits that go beyond the defined EHBs, then
states must pay the additional cost related to those mandates.
CHBRP found this coverage mandate does not interact with
EHBs, but there is disagreement. Plans dispute this finding,
indicating their belief that this bill requires them to cover
services they do not cover today. For example, they indicate
telephone transactions are currently not a covered service and
this bill mandates coverage for telephone services.
Proponents point out that services appropriately delivered by
telephone should be covered just like in-person visits, and it
is a change in modality of service delivery, not a new
benefit. It is unclear whether this mandate would be
interpreted to exceed EHBs, but if it were, there could be
significant unknown fiscal risk to the state.
5)Support. According to the sponsor, Stanford Health Care, this
bill seeks to fulfill the promise of telehealth and further
improves access to health care by ensuring that providers and
recipients of telehealth services have guaranteed coverage and
reimbursement for telehealth services that are physician or
practitioner-guided and retains patient choice. A number of
other health care providers also support this bill.
6)Opposition. Plans and insurers oppose this bill indicating
they have taken important steps over the last decade to
address the critical issues of increasing access to
innovative, quality health care products, and cost control
mechanisms that better allow individuals and small businesses
to obtain coverage in the private market. This bill threatens
the efforts of all health care stakeholders to provide
consumers with meaningful health care choices and affordable
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coverage options, and could exceed EHBs.
7)Staff Comments. This bill could be clarified and narrowed to
be clear about what services are covered, which would remove
any concern about exceeding EHBs as well as offer greater
ability to contain costs. As noted above, current law
prohibits plans from requiring that in-person contact occur
between a health care provider and a patient before payment is
made for the covered services appropriately provided through
telehealth, but makes this subject to the terms and conditions
of a contract between plans and providers. This reliance on
contractual agreements to determine the nuanced details,
processes, and circumstances under which reimbursement is made
offers greater ability for the plan to manage utilization and
costs.
At the same time, proponents raise legitimate issues like, for
example, allowing a person's normal primary care provider to
be reimbursed for performing a service like a normal office
visit for evaluation and management, through telehealth.
Currently, contracts may prohibit reimbursement for a
patient's primary care provider and only reimburse for
telehealth services through a centrally contracted telehealth
provider. It could be argued the spirit of the law implies
telehealth should be treated similarly to in-person visits,
and it is generally agreed that maintaining continuity of care
is beneficial for patients. But the current bill language
lacks key protections that could keep costs in check, and
applies to many visits that would not maintain continuity of
care from regular providers. For example, it does not require
the patient to be an established patient of the provider. It
appears to leave it in the provider's hands to decide when a
service is appropriately provided through telehealth, instead
of requiring this to be a contractual agreement. By removing
the contractual requirement, it is unclear whether a plan
would have recourse to deny reimbursement for a visit they
thought was not appropriate to provide through telehealth. It
does not ensure providers are not paid double for, say, a
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telephone visit that leads to an in-office visit. Finally,
CHBRP notes it is not clear that all telehealth services are
as effective as in-person services. A mandate to treat all
visits equally, inability to distinguish services based on
effectiveness, and a total reliance on the provider to decide
what should be reimbursed does not seem consistent with
promoting high-quality cost-effective care.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081