CBO Responds to Questions About Telemedicine

Question: Would expanding Medicare coverage for telemedicine increase or decrease federal spending? Whether expanding Medicare coverage for telemedicine services would increase or decrease federal spending is difficult to predict, but doing so depends on two main considerations:

• The payment rates that would be established for those services
• Whether those services would substitute for (or reduce use of) other Medicare-covered services or would be used in addition to currently covered services.

Given the substantial interest in proposals related to telemedicine, CBO has prepared a discussion which further describes the issues that arise in defining a telemedicine benefit and how CBO estimates the budgetary effects of those proposals. How CBO Estimates Effects on Spending: CBO seeks to incorporate information from a variety of sources when estimating how proposals to expand telehealth or telemedicine services that Medicare covers might affect the budget. Those sources include available data about the costs of covering similar services and the results of academic studies investigating how telemedicine affects health care spending. In particular, CBO considers the evidence about spending on telemedicine services in Medicare itself, in the Department of Veterans Affairs, and in the Medicaid program. CBO also considers evidence about the use and effects of telemedicine in Medicare Advantage plans (private plans delivering Medicare’s benefits) and other private health plans. In doing so, the agency accounts for the potential differences in benefit management between private and public plans noted above. CBO also consults experts who help the agency understand how telemedicine may affect health care spending.