BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 2507


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          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