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Community Health Centers and Telehealth: A Cost Analysis Report & Recommendations

2015 | PHI's Center for Connected Health Policy

Community Health Centers have historically played a vitally important role in providing health care to underserved and uninsured communities. In California, these community health centers, (CHC) which include federally qualified health centers (FQHCs) and rural health centers (RHCs), serve as the safety-net for the most vulnerable populations in the state. In 2013, there were 129 FQHCs in California, many with multiple sites. With resources already stretched to meet current demands, CHCs in California are now facing unprecedented challenges as a result of the passage of the Affordable Care Act (ACA) and Medi-Cal expansion (California’s state Medicaid program).

Download the brief.

Telehealth technologies could potentially offer valuable solutions for meeting these new demands, yet these tools are significantly under-utilized across the state for a number of reasons, and the clinical and financial benefits are still not well understood by the CHC community. With the support of a grant from the Blue Shield of California Foundation (BSCF), the Public Health Institute's Center for Connected Health Policy (CCHP) undertook a study to better understand the true costs and potential revenue sources for telehealth care. For this study, five CHCs across the state with demonstrated experience in the use of telehealth for their client population were selected. To design and conduct the financial analysis of these CHCs, CCHP engaged the services of Milliman, Inc., one of the nation’s leading actuarial firms. CCHP’s policy brief summarizes the actuarial study as well as other barriers that impede CHCs from achieving sustainable telehealth programs.

The financial analysis conducted by Milliman revealed that the telehealth programs are not self-sustaining as they are currently operated. The telehealth programs examined in this study were being subsidized with grants or other CHC resources. The study found that several factors existed that contributed to this unsustainability including:

  • The complexity of the billing and reimbursement rules applicable to telehealth delivered services and FQHCs/RHCs present ongoing challenges to sustainability.
  • Telehealth programs cannot be sustained as an isolated cost center especially if the program is low volume.
  • Shortages of providers and low Medi-Cal reimbursement rates lead to difficulty in securing services and/or lead to contractual arrangements that are not favorable to the CHCs.
  • Data systems, including interoperability, EHR transition, and moving to managed care encounter data reporting are barriers to tracking telehealth-related services and costs.
  • Inconsistent use of modifiers for coding telehealth-related claims and encounters can cause difficulties in tracking use.

The issue brief provides a series of recommendations to CHCs to help telehealth programs achieve sustainability and to policymakers who can help create an environment that will assist these entities in this goal.