An Issue Paper Prepared by the National Rural Health Association-February 1998


This issue paper presents the National Rural Health Association's (NRHA) position regarding telemedicine. It does this by defining telemedicine, examining its history, exploring current applications relevant to rural communities, and then suggesting policy positions at both the national and state levels that will encourage the best use of this technology to support rural practitioners and patients. We would note at the outset, however, that telemedicine is in no sense a potential solution to the short-age of primary care providers in rural communities and should not be promoted as such.



Telemedicine refers to the use of electronic communication technologies to provide clinical care. This ranges from using the fax or telephone to share information through the transmission and evaluation of still images, such as radiographs or pictures of wounds, to fully interactive video conferences. The term "telehealth" is sometimes used to refer to a broader group of health-related activities. Telehealth is defined as the use of these technologies to support health professions education, community health education and continuing education for health professionals, in addition to clinical applications. The focus of this issue paper, however, is on the provision of clinical care and/or the provision of patient-specific consultative support from one clinician to another using electronic communications technologies.



The idea that doctors might treat patients without being in the same room with them is not new. Likewise, doctor-to-doctor consultation does not require physical proximity. Stretching the definition of "treatment," Dr. Sigmund Freud's letters to his patients might be examples of treatment at a distance. Since the dawn of the information age to the present, doctors have been giving patients and each other advice by telephone. At a more technically sophisticated level, the astronauts from the earliest Apollo missions in the 1960s have had their bodily functions electronically monitored by NASA physicians.

In the early 1970s, as satellite transmission became more available, a number of pioneers in telemedicine began putting together systems to link physicians with often very remote clinics. One such effort supported Indian Health Service practitioners in Arizona and another reached the wilds of Alaska. In many ways, these programs did essentially what telemedicine advocates are trying now to do again. They brought specialty consultation and treatment to people who would not otherwise have access to such care. There is, however, an important difference between then and now-that difference is cost.

These early efforts foundered in part because they were immensely expensive to operate. Without generous grant support, it was not economically feasible to use satellite transmission to support rural health care beyond the "demonstration project" phase, and telemedicine efforts all but vanished. In the intervening years, however, a number of events have occurred that have led to renewed interest in the area, and reductions in communication costs leads the list.

In the meantime, significant enhancements to the delivery of health care services through electronic communication technology were being vigorously developed, tested and implemented in two specific fields. The U.S. Department of Defense undertook a major investment in, and continues to utilize, telemedicine technology for use with combat and isolated military personnel. In the civilian sector, criminal justice systems began to utilize long-distance telemedicine technology to deliver medical consultation and treatment services for prison inmates in distant prisons primarily as a means to reduce ballooning medical costs due to the dramatic increase in prison populations. Both of these fields have developed significant enhancements to both the technological and medical service components of the telemedicine field, now more easily transferable to civilian use.

Regarding costs, satellite technology has dropped in cost sufficiently to allow its use by at least some health care delivery systems. However, a second development is more important by far. The creation and increasingly wide dissemination of broad band telephone networks has made telemedicine an economically feasible undertaking for individuals and institutions interested in trying it. It also has created a market driven incentive for communications companies to be helpful in such efforts. In a similar way, the hardware and software that are used in these applications are growing less expensive. Most of the telemedicine systems currently in place or in development use this ground-based technology.

From a specifically rural perspective, the cost differential for communications services between urban and rural areas has been an inhibiting factor. The Telecommunications Act of 1996, however, contains important provisions that, once fully implemented, will alleviate this problem. In May 1997, the Federal Communications Commission (FCC) adopted the Universal Services Order, through which rural health care providers are ensured access to communications services at rates comparable to their urban counterparts. This is a broad-based objective that includes, but is not limited to, health applications. It should have the effect, however, of encouraging the development of telemedicine services.

Several other factors have contributed to the rebirth of interest in telemedicine. The widespread availability of personal computers is a factor of great importance-more and more people, including doctors, are less and less put off by computers, and computers lie at the heart of these systems. Also, the use of teleconferencing by business has spurred development of the technology that is now being explored for clinical applications. Finally, specialists continue to be located largely in urban cities, while many patients reside in rural areas of the country. Getting them together is a recalcitrant problem that this technology may help to solve.



Currently, there are telemedicine projects using video conference technology in various stages of development or implementation in at least 40 states and the District of Columbia. While all of these projects include clinical care as a part of the mission, other activities, such as continuing education, absorb much of the network time. While a few projects have been developed entirely with institutional funds, in most instances these efforts are heavily supported by federal grants from agencies such as the Office of Rural Health Policy (ORHP) in the Department of Health and Human Services (DHHS). State funds and contracts-for-service support many projects as well. An explicit expectation of federal funding, and an expectation implicit in most other funding, is self-sufficiency at the end of the grant support. This hope for self-sufficiency is generally based on the assumption that clinical services provided over these networks will ultimately be reimbursed by third-party payers, including Medicare and Medicaid.

At this time, however, telemedicine services are generally not reimbursed, although exceptions to this rule are growing in number, particularly in the Medicaid arena. Currently, 10 states offer reimbursement through Medicaid for some telemedicine services. For some time, Medicare and some other payers have reimbursed for still image technologies such as telepathology and teleradiology, for which it can be argued that the service being performed at a distance is identical to that which could be performed were the patient and physician proximal. For such services, Medicare is currently a payer, as are some commercial vendors and Medicaid in some states. Such services may be of value to rural communities, but they account for a small fraction of the potential quantity of clinical transactions that telemedicine might provide. Progress in attaining reimbursement for this broader range of services is being made, but at a rate that the NRHA believes to be unnecessarily slow.

A number of demonstration projects involving reimbursement for telemedicine services through Medicaid and Medicare are currently underway. Looking first at Medicaid: "The Health Care Financing Administration (HCFA) has not formally defined telemedicine, and Medicaid law does not recognize telemedicine as a distinct service. Still, Medicaid reimbursement for services furnished through telemedicine applications is available as an optional cost-effective alternative to direct consultations or examinations, or as an element of many other Medicaid covered services" (HCFA Policy Summary, Sept. 13, 1996).

Currently, at least 10 states use Medicaid funds to pay for telemedicine services. In doing so, they must meet the usual Medicaid requirements for efficiency, economy and quality of care. Modified current procedural terminology (CPT) codes have been developed in some states to cover these services, while others have developed new codes to identify telemedicine services. In general, states have wide latitude in defining telemedicine services that can be reimbursed. California and Texas recently enacted legislation requiring third-party payers, including Medicaid, to reimburse for telemedicine services.

With regard to Medicare: "Vice President Al Gore and Department of Health and Human Services Secretary Donna Shalala on October 7 announced two initiatives that will further expand the federal government's support of telemedicine. One initiative directs HCFA to reimburse the five Medicare demonstration projects that were selected in 1993 and 1994" (Association of American Medical Colleges [AAMC] Washington Highlights, Oct. 10, 1996). Work on these demonstration projects is continuing. The recently enacted bill on portability, sponsored by Sens. Edward Kennedy, D-Mass., and Nancy Kassenbaum, R-Kan., contains language requiring the HCFA to complete work on the creation of guidelines for reimbursement for telemedicine. Finally, the Balanced Budget Act of 1997 requires that the HCFA establish reimbursement mechanisms for telemedicine services delivered to health professions shortage areas (HPSAs) by Jan. 1, 1999, and authorizes $27 million to fund demonstration projects in telemedicine.

The debate concerning reimbursement for telemedicine turns on the joint issues of clinical efficacy and cost effectiveness. The current literature on these two subjects is woefully lacking, and a recent Institute of Medicine (IOM) report lays out an agenda for correcting this. The report was commissioned by the National Library of Medicine (NLM) and lays out an agenda for studies to evaluate the efficacy of telemedicine in a variety of clinical contexts and geographic locations. Both video-interactive and lower cost, still-image methodologies are to be focused on in these studies. The NLM will invest $42 million over the next few years in 19 demonstration projects it has funded, designed to contribute to meeting the objectives of the IOM report.

Finally, the availability of communications infrastructure in rural communities remains a limiting factor. Even with passage of the Telecommunications Act of 1996 equalizing costs of services, its effects can be felt only in communities where these levels of service are present; this, in turn, is dependent on the activities of communications companies in infrastructure development. Of particular concern is the "last mile"; that is, once high bandwidth communication reaches a rural community or county seat, smaller, outlying locations may still remain functionally isolated.



Currently there is an ongoing process of experimentation, evaluation and implementation of telemedicine applications in many urban and rural locations around the country, and the advocates for these technologies are numerous and enthusiastic. However, a patchwork of funding mechanisms is to be found, and reimbursement for such services is currently the exception rather than the rule. The efficacy of these methods has not been fully demonstrated and the communications infrastructure that supports them is not universally available. Finally, the potential effects of their widespread implementation on the health care delivery system are unknown, although some potentially comparable data are available from the experiences of the Department of Defense and various prison system applications.



Looking at the current activities in telemedicine as a whole, the NRHA believes that these technologies hold promise for improving access to health care services for rural patients. Accordingly, the association favors initiatives designed systematically to evaluate these methods, to encourage the development throughout the country of the communications infrastructure that supports them and to encourage implementation of telemedicine programs that enhance rural health care. Specific NRHA policy positions are as follows.


  1. The NRHA supports funding for telemedicine evaluation studies that build on the framework outlined in the IOM report, Telemedicine: A Guide to Assessing Telemedicine in Health Care, which emphasizes the need for careful study of patient outcomes and quality of care. The particular needs of rural providers should animate a significant percentage of these studies, and a review of the NLM-supported projects suggests a fair representation of rurally oriented projects.
  2. The NRHA supports Medicare, Medicaid and commercial vendor reimbursement for telemedicine services for which there are reasonable demonstrations of efficacy and cost effectiveness. The standards of efficacy and cost effectiveness to which telemedicine services are held should not, the association believes, differ materially from those of other clinical services. The association applauds the inclusion in the Balanced Budget Act of 1997 of provisions for Medicare reimbursement for telemedicine services to HPSAs and would urge that this be extended to all areas outside MSAs.
  3. The NRHA applauds passage of the Telecommunications Act of 1996 and the FCC's regulations requiring equal and cost-competitive access to communications infrastructure for rural communities. Such infrastructure, while essential to the practice of telemedicine, also is a critical element in rural economic development in general. Equitable access to such infrastructure should be a national priority. The NRHA believes that the status of infrastructure development, particularly vis a vis the "last mile," should be continuously monitored to ensure that rural communities and practitioners, in fact, have the access the law envisions. Should infrastructure development lag, other incentives to encourage dissemination should be encouraged.
  4. The NRHA believes that an appropriate balance between protection of local health infrastructure and increased access to regional or national provider resources should be a goal in the development of telemedicine systems reaching rural communities. Accordingly, the association supports careful study of the implications of current state licensing laws on telemedicine practice across state lines and urges the Agency for Health Care Policy Research (AHCPR), the ORHP, the HCFA or other appropriate federal agency to commission such a study.
  5. The NRHA recognizes the need for professional consistency and standards, particularly in the delivery of quality health care services. Therefore, the association strongly encourages the development and implementation of nationally accepted definitions of telemedicine services and delivery mechanisms, minimum national standards for delivery and quality, national and cross-state acceptance of licensure for professionals delivering telemedicine services, and standards for inter-connectivity of technology require for the delivery of such services. Telemedicine, as it stands today, is controlled by both federal laws and regulations as well as by the laws of the 50 different states. Nationally accepted definitions and standards would greatly increase the practical applicability, particularly to rural areas across our nation.