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California Telehealth Law Could Cut Costs by $1B, Report Concludes

California could achieve significant Medi-Cal cost savings by expanding telehealth services through legislation (AB 415) that Gov. Jerry Brown (D) signed into law earlier this month, according to a report prepared for the Center for Connected Health Policy, CMIO reports. Medi-Cal is California's Medicaid program.

The report itemized examples of spending reductions that the state could achieve as a result of AB 415.

Background on the New Law

Brown signed the measure, by Assembly member Dan Logue (R-Linda), on Oct. 7. It relaxes criteria for health care providers who want to offer telehealth services.

The law makes all licensed health care professionals eligible for participation and makes it easier for providers to offer telehealth services to Medi-Cal beneficiaries.

In addition, the law eases telehealth credentialing processes for hospitals (Pearson, CMIO, 10/19).

Key Findings

According to the report, AB 415 could result in a spending reduction of more than $1.3 billion annually for Medi-Cal through disease management programs that use electronic home monitoring systems for patients with diabetes and heart failure (CCHP release, 10/7).

The report also said that the state could save $2,500 over the lifetime of a patient with diabetes by using telehealth to detect retinopathy.

The report noted that although telehealth has been the subject of hundreds of studies, "the potential cost savings associated with telehealth have been the subject of less rigorous analysis relative to studies on its medical effectiveness."

Payers likely will choose to reimburse for telehealth "in areas where cost savings can be demonstrated" and discourage expansion of telehealth in areas where it has not proven to be cost effective, according to the study (CMIO, 10/19).

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