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Will the CBO Give Telemedicine a Fair Shake?

Advocates say the Congressional Budget Office has been dismissive of projected savings in telemedicine-themed bills. Others say they're just being cautious. Both theories could soon be put to the test.

By Eric Wicklund

- With Congress soon to see proposed legislation that would allow more Medicaid coverage of telehealth services, some are wondering if those bills will get a fair shake from those in control of the purse strings.

According to a recent story in Politico, the Congressional Budget Office, created 40 years ago to put a price tag on proposed legislation, has historically overestimated the cost of healthcare-related bills, including the Affordable Care Act, Medicare Part D and the Balanced Budget Act. And they aren’t expected to change that pattern any time soon.

“They tend to overestimate the cost of this legislation because they’re trying to be conservative, so you are not sticking the federal government with liability it didn’t anticipate,” Dan Mendelson, chief executive of the D.C.-based healthcare consulting firm Avalere Health, told Politico.

That’s not a good sign for telemedicine advocates.

In 2001, the CBO anticipated that telemedicine services would cost the nation’s Medicare budget some $150 million over the next five years. But according to the Center for Telehealth & eHealth Law, such services have only cost the program $57 million – in 14 years.

The CBO is well aware of the criticism. In a July 29 blog post that followed several days of contentious Congressional hearings, officials said it’s difficult to predict how Medicare coverage for telemedicine services would affect the budget.

“If all or most telemedicine services substituted for or prevented the use of more expensive services, coverage of telemedicine could reduce federal spending,” they wrote. “If instead telemedicine services were mostly used in addition to currently covered services, coverage of telemedicine would tend to increase Medicare spending. Many proposals to expand coverage of telemedicine strive to facilitate enrollees’ access to healthcare. Therefore, such proposals could increase spending by adding payments for new services instead of substituting for existing services.”

In their defense of the budget-estimating process, the CBO officials followed the same argument that the Agency for Healthcare Research and Quality would make in a report issued this month – that not enough studies have been done to prove telemedicine’s value.

”Because Medicare coverage of telemedicine is limited, CBO does not have extensive data that would help project how expanding such coverage would affect federal spending in the Medicare program,” the blog post concluded. “CBO’s analysis would benefit from having the results of new and well-designed academic studies examining how introducing telemedicine services would affect healthcare spending in the Medicare population. The results of a demonstration project conducted in the fee-for-service Medicare program could be especially valuable in light of the particular challenges of controlling spending on new benefits in that program.”

With that in mind, the CBO is expected to see another telemedicine bill quite soon. Sen. Brian Schatz (D-Hawaii) is expected to submit a bill before the end of the year that would enable healthcare providers to use telemedicine technology in new, alternative payment programs overseen by the Centers for Medicare & Medicaid – including telestroke programs covered by Medicaid Advantage.

That bill and the Telehealth Innovation and Improvement Act, recently submitted by Sens. Gary Peters (D-Mich.) and Cory Gardner (R-Colo.), have officials at the American Telemedicine Association hopeful that Washington will finally come around to supporting – and paying for – telemedicine.

During a webcast earlier this month, Gary Capistrant, the ATA’s senior director for public policy, and Jonathan Linkous, the organization’s CEO, said Schatz’s bill in particular would compel the CBO to take a good hard look at telemedicine – something it hasn’t really done since making the initial estimation of the technology’s costs in 2001.

They might not like what they hear, though.

“CBO’s bias is, it is pretty sure people are trying to get a free lunch,” Phil Joyce, a public policy professor at the University of Maryland who wrote a 2011 book on the CBO, told Politico. “So it tends to be skeptical of claims that something is going to save money unless it has been proven that it will, which creates a potential bias against new technologies or new approaches.”

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