OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

sSB-467

AN ACT CONCERNING THE FACILITATION OF TELEHEALTH.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 16 $

FY 17 $

State Comptroller - Fringe Benefits (State Employees and Retiree Health Accounts)

GF, TF - Uncertain

See Below

See Below

Note: GF=General Fund and TF = Transportation Fund

Municipal Impact:

Municipalities

Effect

FY 16 $

FY 17 $

Various Municipalities

Uncertain

See Below

See Below

Explanation

There may be a fiscal impact to the state from requiring the state employee and retiree health plan to provide coverage for telehealth to the same extent as in-person services. The state plan does not currently provide telehealth services or have a telehealth reimbursement policy.1 The impact will depend on (1) the extent to which employees and retirees utilize telehealth services and the cost differential between telehealth and in-person services, (2) the impact of telehealth on total overall utilization of services covered by the plan, and (3) patient outcomes. 2 The bill prohibits a provider from requiring an insurer to reimburse the provider for technical fees or costs related to telehealth. Lastly, the bill establishes requirements for health care providers who provide services through the use of telehealth which do not result in a fiscal impact.

As of February 2015, there were 28,619 members in the state's Health Enhancement Program (HEP) identified as having one of the five chronic disease state's named specifically for the program. 3,4 Various case studies have suggested net health care savings from telemonitoring, primarily resulting from reduced hospital readmission, particularly for individuals with chronic diseases. It is important to note, it is uncertain from the following case studies what the upfront technology and personnel costs were and the time lag before a return on investment was realized through a reduction in overall health care costs.

Case 1: The Partners HealthCare program out of the Center for Connected Health did a study on their telehealth/telemonitoring program for individuals with cardiac disease and reported net savings over a seven year period of approximately $10 million for 1,265 patients (net savings per patient of $8,155).5 The Partners' program savings may not be representative of potential savings for commercial plans as the program included participants predominately enrolled in public programs (e.g. Medicare, Medicaid and the state's safety net program) who may have disproportionately lower health outcomes.

Case 2: The Veterans Health Administration (VHA) started its telehealth program as a multisite pilot program and as of 2010 had over 300,000 lives in its Care Coordination/Home Telehealth Program.6 The VHA reported cumulative net benefits of $3 billion since the program's inception in 1990. Savings are attributable to a reduction in redundant services and improved quality and health outcomes. The VHA program provides biometric information to remote monitoring care coordinators for individuals with various conditions, including heart failure, diabetes and Post Traumatic Stress Disorder (PTSD). The VHA reports annual costs per patient of $1,600.

The bill's telehealth coverage requirements may result in a fiscal impact to certain fully insured municipalities who do not currently provide the coverage specified in the bill. The coverage requirements may impact premium costs for the municipality when they enter into new health insurance contracts after January 1, 2016. Due to federal law, municipalities with self-insured plans are exempt from state health insurance mandates.

Lastly, many municipal plans may be recognized as “grandfathered”7 plans under the federal Affordable Care Act (ACA). It is uncertain what the effect of this mandate will have on the grandfathered status of those municipal plans.

For the purposes of the ACA the coverage provision included in the bill is not considered an additional mandate and therefore will not result in an additional state cost related to reimbursement for the mandate for those covered through the exchange plans.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

1 The state employee and retiree health plan is currently self-insured and therefore exempt from state health mandates. However, the state health plan has traditionally adopted all state health mandates. Total number of covered lives as of January 2015 was 208,745.

2 The State Innovation Model (SIM), which includes the state employee and retiree health plan, is reviewing telemedicine (which is similar to telehealth).

3 Source: Office of the State Comptroller, February, 2015.

4 The Revised SEBAC 2011 Agreement listed the following chronic disease state's for the HEP program: Diabetes (Type I and II), Asthma and COPD, Heart Failure/Disease, Hyperlipidemia, and Hypertension.

5 Source: Broderick, A., (2013). Partners HealthCare: Connecting Heart Failure Patients to Providers Through Remote Monitoring. Case Studies in Telehealth and Adoption; The Commonwealth Fund.

6 Source: Broderick, A., (2013). The Veterans Health Administration: Taking Home Telehealth to Scale Nationally. Case Studies in Telehealth and Adoption; The Commonwealth Fund.

7 Grandfathered plans include most group health insurance plans and some individual plans created or purchased on or before March 23, 2010.