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CBO Analysis Highlights ROI Challenge Faced by Telehealth Bills

A CBO analysis of the CHRONIC Care Act of 2017 finds that an expansion of telemedicine services for stroke care would boost spending in the short term, but see benefits several years down the road.

Source: ThinkStock

By Eric Wicklund

- A Congressional Budget Office analysis of a bill that would expand telestroke services may have hit upon a common roadblock in the advancement of telehealth and telemedicine legislation: The government won’t always see a quick ROI.

The CBO’s report this week on the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017 (S.870) finds that federal spending would increase in the short term for telemedicine services tied to stroke care, then see a gradual reduction in costs over several years.

Among other things, The CHRONIC Care Act seeks to eliminate restrictions placed by the Centers for Medicare and Medicaid Services (CMS) on telestroke use in non-rural settings, beginning in 2019. The bill would allow healthcare providers to be reimbursed for services delivered by telemedicine to Medicare beneficiaries who’d had a stroke or were suspected of having one.

According to the CBO, the expansion of telestroke services in non-rural settings sought in the CHRONIC Care Act would cause increases in consultations, medications, treatment and post-acute care services during the 90-day period after hospitalization. That’s because more people would be treated through the telehealth platform and more people would likely survive.

But because Medicare does not cover long-term care, such as nursing home, assisted living or long-term remote monitoring, the federal government wouldn’t see a benefit in decreased use of those services. That benefit would be seen in state Medicaid plans and other non-federal health plans.

The benefits, the CBO estimate reported, would eventually trickle back to CMS through decreased Medicaid budgets and a reduction in healthcare services tied to stroke care.

“For a given cohort, CBO estimates that cumulative spending - including spending by nonfederal payers - would be reduced beginning in the fourth year after the telestroke consultation,” the report stated. “Federal spending would follow the same basic pattern but with a lag because much of the savings would accrue to nonfederal payers. [The] CBO estimates that federal spending would be reduced beginning in the sixth year after the telestroke consultation.”

According to the CBO, passage of SB 870 would enable healthcare providers to use telestroke services to treat an additional 8 percent of the estimated 550,000 annual strokes that affect Medicare beneficiaries in non-rural areas by 2027. The agency then estimated that expansion would increase direct spending by $180 million between now and 2027.   

The CBO analysis hints at a long-standing challenge to telemedicine expansion, in that the benefits are often measured over a long period of time and in terms of improved health and wellness. Those numbers aren’t easy to measure against a bill that would increase federal spending in the short term to expand telemedicine technology and reimburse providers for using the platform.

Overall, the CBO analysis of SB 870 was favorable, following a similarly positive preliminary cost estimate delivered in May.

Whether that affects the bill’s chances in Congress remains to be seen. Recent reports indicate it is stalled in committee, with legislators introducing several other telemedicine-friendly bills targeting Medicare payment reform in hopes that at least one will find its way to success.

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