[House Hearing, 106 Congress]
[From the U.S. Government Printing Office]




      TELEHEALTH: A CUTTING EDGE MEDICAL TOOL FOR THE 21ST CENTURY

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                         HEALTH AND ENVIRONMENT

                                 of the

                         COMMITTEE ON COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 7, 2000

                               __________

                           Serial No. 106-144

                               __________

            Printed for the use of the Committee on Commerce


                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
67-112                     WASHINGTON : 2000



                         COMMITTEE ON COMMERCE

                     TOM BLILEY, Virginia, Chairman

W.J. ``BILLY'' TAUZIN, Louisiana     JOHN D. DINGELL, Michigan
MICHAEL G. OXLEY, Ohio               HENRY A. WAXMAN, California
MICHAEL BILIRAKIS, Florida           EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas                    RALPH M. HALL, Texas
FRED UPTON, Michigan                 RICK BOUCHER, Virginia
CLIFF STEARNS, Florida               EDOLPHUS TOWNS, New York
PAUL E. GILLMOR, Ohio                FRANK PALLONE, Jr., New Jersey
  Vice Chairman                      SHERROD BROWN, Ohio
JAMES C. GREENWOOD, Pennsylvania     BART GORDON, Tennessee
CHRISTOPHER COX, California          PETER DEUTSCH, Florida
NATHAN DEAL, Georgia                 BOBBY L. RUSH, Illinois
STEVE LARGENT, Oklahoma              ANNA G. ESHOO, California
RICHARD BURR, North Carolina         RON KLINK, Pennsylvania
BRIAN P. BILBRAY, California         BART STUPAK, Michigan
ED WHITFIELD, Kentucky               ELIOT L. ENGEL, New York
GREG GANSKE, Iowa                    TOM SAWYER, Ohio
CHARLIE NORWOOD, Georgia             ALBERT R. WYNN, Maryland
TOM A. COBURN, Oklahoma              GENE GREEN, Texas
RICK LAZIO, New York                 KAREN McCARTHY, Missouri
BARBARA CUBIN, Wyoming               TED STRICKLAND, Ohio
JAMES E. ROGAN, California           DIANA DeGETTE, Colorado
JOHN SHIMKUS, Illinois               THOMAS M. BARRETT, Wisconsin
HEATHER WILSON, New Mexico           BILL LUTHER, Minnesota
JOHN B. SHADEGG, Arizona             LOIS CAPPS, California
CHARLES W. ``CHIP'' PICKERING, 
Mississippi
VITO FOSSELLA, New York
ROY BLUNT, Missouri
ED BRYANT, Tennessee
ROBERT L. EHRLICH, Jr., Maryland

                   James E. Derderian, Chief of Staff

                   James D. Barnette, General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

                 Subcommittee on Health and Environment

                  MICHAEL BILIRAKIS, Florida, Chairman

FRED UPTON, Michigan                 SHERROD BROWN, Ohio
CLIFF STEARNS, Florida               HENRY A. WAXMAN, California
JAMES C. GREENWOOD, Pennsylvania     FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia                 PETER DEUTSCH, Florida
RICHARD BURR, North Carolina         BART STUPAK, Michigan
BRIAN P. BILBRAY, California         GENE GREEN, Texas
ED WHITFIELD, Kentucky               TED STRICKLAND, Ohio
GREG GANSKE, Iowa                    DIANA DeGETTE, Colorado
CHARLIE NORWOOD, Georgia             THOMAS M. BARRETT, Wisconsin
TOM A. COBURN, Oklahoma              LOIS CAPPS, California
  Vice Chairman                      RALPH M. HALL, Texas
RICK LAZIO, New York                 EDOLPHUS TOWNS, New York
BARBARA CUBIN, Wyoming               ANNA G. ESHOO, California
JOHN B. SHADEGG, Arizona             JOHN D. DINGELL, Michigan,
CHARLES W. ``CHIP'' PICKERING,         (Ex Officio)
Mississippi
ED BRYANT, Tennessee
TOM BLILEY, Virginia,
  (Ex Officio)

                                  (ii)



                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Berenson, Robert A., Director, Center for Health Plans and 
      Providers, Health Care Financing Administration............     6
    Burgiss, Sam, Project Director, Telemedicine, UTN Medical 
      Center at Knoxville........................................    50
    Davis, Sally, Program Director, Telehealth and Management 
      Development, Marquette General Health System...............    38
    Grigsby, Jim, Study Manager, Center for Health Services and 
      Policy Research, University of Colorado Health Sciences 
      Center.....................................................    70
    Patrick, Mary R., Director of Quality Improvement, Blue Cross 
      and Blue Shield of Montana.................................    60
    Reid, James, Director of Telemedicine and Network Services, 
      West Rural Telemedicine Consortium, Mercy Hospital 
      Foundation, on behalf of Center for Telemedicine Law.......    46
    Rheuban, Karen, Medical Director, Office of Telemedicine, 
      Professor of Pediatrics, University of Virginia Health 
      System, accompanied by Lisa Hubbard and Alexandra Bartley..    27
    Ross-Lee, Barbara, Dean, Ohio University College of 
      Osteopathic Medicine.......................................    53
    Tracy, Joseph, Director of Telehealth, University of Missouri 
      Health Sciences Center.....................................    43
Material submitted for the record by:
    Children's National Medical Center, prepared statement of....    85
    Thune, Hon. John R., a Representative in Congress from the 
      State of South Dakota, prepared statement of...............    84

                                 (iii)

  

 
      TELEHEALTH: A CUTTING EDGE MEDICAL TOOL FOR THE 21ST CENTURY

                              ----------                              


                      THURSDAY, SEPTEMBER 7, 2000

                  House of Representatives,
                             Committee on Commerce,
                    Subcommittee on Health and Environment,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:05 a.m., in 
room 2322, Rayburn House Office Building, Hon. Michael 
Bilirakis (chairman) presiding.
    Members present: Representatives Bilirakis, Burr, Bilbray, 
Bryant, Brown, Stupak, Green, Strickland, Barrett, and Capps.
    Staff present: Marc Wheat, majority counsel; Patrick 
Morrisey, majority counsel; Kristi Gillis, legislative clerk; 
Amy Droskoski, minority professional staff; and Bridgett 
Taylor, minority professional staff.
    Mr. Bilirakis. This hearing will come to order.
    My thanks to all of the witnesses who have taken the time 
to testify at this hearing on telemedicine and the role of 
technology in improving the quality of health care, and I also 
would like to particularly welcome little Alexandra Bartley, 
whose story will be shared with us today.
    We live in a time where every aspect of our life is being 
transformed and improved by the convergence of technologies. 
Today's hearing will focus on the union of medicine, 
microelectronics and communications which promises to improve 
the health of many Americans, especially patients in 
geographically remote and medically underserved areas.
    With more than a quarter of our Nation's elderly living in 
medically underserved areas, telemedicine could improve access 
to health care for many Medicare patients. This technology has 
significantly matured since 1997 when the first telemedicine 
Medicare reimbursement policies were signed into law, and I 
would like to add that Ron Wyden, who is now over in the 
Senate, formerly in the House, who had quite an interest in 
this subject. He and I spent many hours discussing telemedicine 
and, of course, some of the problems associated with it, which 
I guess we will get into here today.
    So now it is time for Congress to re-examine current 
policies that may unfairly frustrate the development of this 
promising health care delivery method. Significant barriers to 
reimbursement of these services currently exist. For example, 
only limited reimbursement is available in areas which face a 
shortage of primary care physicians. While telemedicine is 
perhaps more commonly recognized as a tool to increase access 
to specialty treatment, it can also play an important role in 
expanding access to primary care.
    I hope that this hearing will illuminate some of the 
shortcomings of current Medicare reimbursement policies, and 
again I want to thank all of our witnesses who have taken the 
time to share their expertise with us today.
    I apologize to my ranking member for starting without him, 
but Mr. Stupak was here, and I now yield to the gentleman from 
Ohio.
    Mr. Brown. Thank you, Mr. Chairman. I apologize for being a 
bit late.
    I would like to thank Dr. Berenson and our other 
distinguished witnesses and especially Dr. Ross-Lee from Ohio. 
It is nice to see you again. Thank you.
    I don't want to minimize the importance of this hearing. It 
clearly is appropriate and valuable for this subcommittee to 
become more educated about and to promote beneficial uses of 
telemedicine in the Medicare program. But we are taking up this 
issue in the context of further changes to the 1997 Balanced 
Budget Act. The fate of BBA changes likely will be determined 
over the next few years.
    Our jurisdiction over Medicare and Medicaid, particularly, 
Mr. Chairman, our sole jurisdiction over Medicaid, demands that 
we play a direct and active role in that process. This 
subcommittee has held hearings on the BBA, the Plus Choice 
program, Medicare prescription drug coverage. The value of 
those hearings, like the value of our discussion today, depends 
on what we do in response.
    I hope this hearing signals our commitment to participate 
fully and on a bipartisan basis in Medicare and Medicaid 
decisionmaking that will be critical to the providers and 
beneficiaries we represent; and in keeping with the 
beneficiary-oriented goals of this hearing, I hope this 
committee perceives this year's legislation not only as an 
opportunity to address inadequate reimbursement but as an 
opportunity to directly improve access and coverage for 
Medicare and Medicaid beneficiaries.
    Promoting telehealth in Medicare is just one of those 
issues, but it is important for several reasons. Not only can 
telehealth serve the best interests of Medicare beneficiaries, 
but Medicare coverage policy sets a precedent for private 
coverage.
    In his written testimony, Mr. Joseph Tracy from the 
University of Missouri makes a key observation. He said that 
telemedicine has not proven to be a vehicle for overutilization 
as some skeptics assumed it would be. Rather, it is serving as 
a vehicle for adequate utilization in medically underserved 
areas. He goes on to say that people living in these areas have 
as much right to Medicare benefits, obviously, as every other 
American. So Tracy has touched on a fundamental value in the 
Medicare program and the most compelling reason to support 
Medicare coverage for telehealth services, that Medicare is 
grounded in universality.
    The fundamental objective is to provide the same level of 
quality care to all beneficiaries, regardless of location, 
regardless of income, regardless of health status. In some 
areas of the country, meeting that objective is especially 
problematic. There are areas of Ohio, which has some of the top 
health care in the country, where residents are literally hours 
away from the kind of basic health care resources we take for 
granted, something that Dr. Ross-Lee knows a lot about in the 
part of State in which she is located.
    All 50 States have areas where the number and diversity of 
health care providers is limited by geography or poverty or 
both. That is where telehealth comes in. The blending of health 
care and telecommunications technology has enabled health care 
providers to deliver care in new ways to new populations in the 
United States and internationally.
    As we look at Medicare and telehealth, as we evaluate the 
impact of expanding coverage to include more providers and more 
services in more areas of the country and as we discuss other 
proposals like fees to help cover fixed costs, the fact that 
telehealth promotes access in a targeted population has bearing 
in two ways. The goal of equitable treatment for all Medicare 
beneficiaries should heighten our interest in promoting 
telehealth. The same goal should heighten our determination to 
know exactly what we are getting into when we change telehealth 
payment rules.
    When we expand access to underserved populations we should 
be careful to ensure that it is the proper care. Otherwise, we 
are simply creating a new inequity. Equity for Medicare 
beneficiaries must also be factored into the equation when we 
weigh the pros and cons of establishing a fee to cover the 
fixed costs associated with telehealth.
    I look forward, Mr. Chairman, to hearing from our witnesses 
on the opportunities, the risks and the variables that we 
should consider as we look to expanding Medicare coverage for 
telehealth.
    Mr. Bilirakis. I thank the gentleman.
    Mr. Stupak for an opening statement.
    Mr. Stupak. Thank you, Mr. Chairman, and thank you very 
much for holding this hearing and thank you for inviting Sally 
Davis from Marquette, Michigan, to testify on the second panel.
    Sally has been the director of telemedicine at Marquette 
General Hospital since the programs inception. Their program is 
the national leader and has really been a benefit to the Upper 
Peninsula by increasing the ability of people to receive 
quality health care from Mackinaw Island all the way up to the 
Keweenaw Peninsula.
    In areas like the Upper Peninsula, people are expected to 
travel hours and hours to find specialty care. If they need 
highly specialized care, that requires usually a trip to 
Marquette General hospital. But if they can't provide it then 
they must go to Detroit, Milwaukee, Minneapolis, St. Paul or 
the Mayo Clinic. It requires at least one overnight stay and 
hours of traveling.
    Telemedicine allows people in remote rural areas the 
ability to obtain first-rate health care without having 
traveled hours or days in a motel. Telemedicine allows people 
in Manistique, Michigan, to receive care from an expert, for 
example, in Mayo Clinic without ever leaving their community.
    I am convinced that telemedicine is the future of health 
care in rural areas. I want to hear the witnesses explain their 
programs in ways we can improve telemedicine. However, I would 
like to make two quick comments to my colleagues and to Dr. 
Berenson.
    First, Federal grant funding for the development of 
telemedicine networks is critical. Without this funding, many 
of the projects that we will hear about today would never have 
been started.
    Second, HCFA needs to update its method for reimbursing on 
telemedicine. As Sally will point out, the current rules 
require a physician to present the patients case to a 
specialist before the visit is reimbursed. Clearly, HCFA does 
not require the primary care physician to walk you into the 
office of a specialist before the specialist visit is 
reimbursed. Likewise, a visit between a patient in Michigan and 
a specialist in Minnesota does not require a physician to be 
present in Michigan. A telemedicine transaction should be 
reimbursed just the same as a face-to-face visit.
    Mr. Chairman, thank you again for holding this hearing. I 
look forward to the witnesses. Special welcome to Sally Davis, 
and I look forward to addressing the critical health care needs 
of rural America.
    I yield back the balance of my time.
    Mr. Bilirakis. I thank the gentleman for that; and I know 
that he particularly, more so than most of us, is interested in 
this subject principally because of the demographics of his 
district.
    Ms. Capps for an opening statement.
    Mrs. Capps. Yes. Good morning, Mr. Chairman, and I want to 
thank you also for holding this very important hearing this 
morning on an issue of great significance, I believe, to 
patients and providers across the country, telehealth. I also, 
along with my colleague Bart Stupak, represent a district that 
is predominantly rural; and, therefore, I am especially 
interested in the ways that this new technology can be 
utilized.
    Telehealth is an exciting new way to deliver health 
services to people in underserved areas. Patients are able to 
receive specialty care that is not found in their own 
community. Providers can now instantly share information that 
previously would have taken hours or even days to access.
    In my own district, Cottage Hospital in Santa Barbara has 
been home to a teleradiology facility for about 2 years now. So 
I went to them and found out exactly how this works.
    Teleradiology is a method of distributing digital 
diagnostic images such as X-rays, ultrasonography, magnetic 
resonance and radio isotopes through local area or wide area 
networks between remotely located facilities. A well-planned 
teleradiology system can be a cost-effective and time- 
efficient method that allows users to capture, transmit, store 
and review patient studies.
    In my own district a physician at a rural hospital such as 
Santa Ynez can now quickly and easily share images with Cottage 
Hospital in Santa Barbara, which is about 40 or 50 miles away, 
thus cutting down on travel time for patients and hastening 
their treatment regimen. In addition, providers can now sit at 
a computer screen and share images with patients, showing them 
a clear progression by easily clicking on present imaging and 
contrasting them with previously taken X-rays.
    Only 5 percent of hospitals in the country offer such 
teleradiology services right now, and I believe it is our 
responsibility here in Congress to work to expand this and 
other telehealth capabilities across the Nation. That is 
interesting to me that we look to the military as being one 
area that brought this technology forward to us, and now we 
can, I believe, in this legislative body work to make that 
information and technology available across the country.
    I understand that there are reimbursement issues 
surrounding telehealth, and I look forward to a discussion of 
how we can help to fund such groundbreaking technologies. And 
here, again, I believe it is our responsibility and those of 
the Federal agencies that we oversee to streamline our 
permitting processes and our funding processes to stay up to 
date with modern technology and not let that be the deterrent 
for really improved patient care, patient health and, in many 
instances, the difference between life and death.
    As a nurse I am always interested in new and innovative 
technology as the bottom line which will ultimately benefit 
patient care. I commend the Chairman for holding this hearing 
and look forward to an informative discussion. Thank you very 
much.
    Mr. Bilirakis. I thank the gentlewoman.
    Mr. Green.
    Mr. Green. Thank you, Mr. Chairman.
    I have no prepared remarks, but during our break I had the 
opportunity to be at the University of Texas medical branch in 
Galveston, Texas, which is about 50 miles from Houston and 
watched their telemedicine effort and the growth that they 
have; and it is a great example. A year ago I was at M.D. 
Anderson, a cancer center in Houston, and actually watched the 
telemedicine conference between M.D. Anderson in Houston and 
their facility in Orlando, Florida, and watched the doctors 
consult. The success we have, Texas Childrens Hospital and 
Texas Medical Center has the same capability.
    Also, during the break, Congressman Nick Lampson--actually, 
we used the telemedicine facilities to have a press conference 
or really a town hall meeting from the University of Texas in 
Houston Health Science Center with Galveston, with Beaumont, 
Texas, and also with Washington with a representative from 
HCFA.
    So the technology is there, and we just need to make sure 
that the reimbursement rates are there where you can, even 
though the doctors not physically there--and I know that is a 
problem across State lines and I would hope some of our 
witnesses today would recognize that and address that.
    Mr. Chairman, I don't know if she is here, but I would also 
like to welcome Dr. Barbara Ross-Lee, the Dean of Ohio 
University College of Osteopathic Medicine. Now, you are going 
to wonder why a Texan is doing that. I happened to be there for 
the graduation ceremony this last spring for my son-in-law, who 
by the way is practicing his internship in Texas, but a great 
university that is there in Ted Stricklands district.
    Thank you, Mr. Chairman.
    Mr. Bilirakis. I thank the gentleman.
    [Additional statement submitted for the record follows:]
 Prepared Statement of Hon. Tom Bliley, Chairman, Committee on Commerce
    Thank you, Mr. Chairman.
    I am pleased that the Health and Environment Subcommittee is 
holding this hearing today. Given our Committee's strong interest in 
both information technology and the delivery of high-quality health 
care to seniors, it is critical for us to examine the potential of 
telemedicine--a promising tool for the 21st Century.
    It is a sad fact that many of our seniors today lack adequate 
access to first rate medical facilities. Approximately 25% of seniors 
currently live in areas that are medically underserved. This country 
offers the best medical technology in the world, yet many seniors in 
rural and inner city areas don't have enough access to services.
    Today, we are examining one innovative delivery mechanism which may 
help. Telemedicine may not be a panacea to all of the access problems, 
but it could be an important first step.
    During this hearing, our Committee will look at barriers impeding 
the use of telemedicine in the Medicare Program. It is my goal to use 
this hearing to help refine legislation which may be advanced by this 
Committee during the final weeks of this session of Congress.
    Folks seeking access to the use of telemedicine face many barriers. 
However, I would like to focus on eight measures that I believe would 
immediately increase access to telemedicine services. I would 
appreciate it if our witnesses can focus their testimony on these 
issues as well as any other legislative barriers which hamper the 
development of telemedicine. These measures are as follows:

--Eliminating the provider ``fee sharing requirement;
--Eliminating the requirement for a ``telepresenter'';
--Allowing limited reimbursement for referring clinics to recover the 
        cost of their services;
--Expanding telemedicine services to non-metropolitan service areas;
--Making all providers eligible for HCFA reimbursement for services 
        delivered via telemedicine;
--Creating a federal demonstration project that permits telemedicine 
        reimbursement for ``store and forward'' consultations; and
--Permitting tele-home-care technologies to be used in prospective 
        payment system.
    Mr. Chairman, I believe that these changes would have an extremely 
positive impact on the delivery of health care to seniors, especially 
in rural and underserved areas. Without these barriers, rural patients 
may be able to travel shorter distances to ``see'' their specialists. 
Additionally, services provided to patients in home health care 
settings may prove more cost-effective to provide if performed through 
a telecommunications system.
    Mr. Chairman, the potential for linking information technology to 
the delivery of health care services holds great promise for our 
nation's seniors. This fall, our Committee can do a great deal to make 
that a reality.
    I look forward to hearing our witnesses speak on this important 
subject. Furthermore, I would like to welcome Karen Rheuban, the 
director of telemedicine at the University of Virginia. She has been a 
strong advocate for this new service in my home state and I would like 
to thank her for her work.

    Mr. Bilirakis. Dr. Robert Berenson is our first panelist. 
He is the Director of the Center for Health Plans and Providers 
with HCFA. Dr. Berenson, welcome to our committee again. It is 
always good to see you, sir. Please proceed and take all the 
time you might feel you need, but hopefully not exceeding 10 
minutes. Please proceed, sir.

  STATEMENT OF ROBERT A. BERENSON, DIRECTOR, CENTER FOR HEALTH 
   PLANS AND PROVIDERS, HEALTH CARE FINANCING ADMINISTRATION

    Mr. Berenson. Thank you, Mr. Chairman. And Congressman 
Brown, distinguished subcommittee members, thank you for 
inviting me here to discuss Medicare coverage of telemedicine 
which, as you pointed out, is an important issue and one that 
is a cutting-edge issue in terms of how we provide medical care 
to senior citizens and others in this country.
    I have provided written comments, and I just want to 
briefly summarize some of the high points.
    HCFA believes that telemedicine holds great promise for 
extending access to care in rural and other medically 
underserved areas. We understand that rural beneficiaries face 
unique challenges in accessing the medical care they need, 
particularly access to specialists. Helping them is a high 
priority for us, and we share the Secretary's personal 
commitment to promoting telemedicine where it is appropriate.
    We worked together with Congress in the Balanced Budget Act 
to move forward and expand coverage, but we did so cautiously. 
Strict limits were placed on what could be covered, where it 
could be provided and who could provide it. The caution was 
well intended because there was and even now remains very 
little published peer-reviewed scientific data available on 
when telemedicine or telehealth is medically appropriate. It is 
difficult to project potential cost implications, and there are 
potential program integrity issues that should be addressed 
proactively.
    But the result is that today telemedicine usage in Medicare 
has been limited, too limited. The field is moving very fast, 
and we are moving very slowly. And I actually read the 
testimony of all of the witnesses but in particular would point 
to testimony from Dr. Grigsby who points out that the 
technology that we basically tested and thought was going to be 
the basis for telemedicine, the interactive video consultation, 
is already somewhat outdated and the technology has moved much 
faster than we have been able to keep up. Our demos were based 
on a certain technology, and nobody came to the party, in 
essence.
    So we will have to figure out how to make policy judgments 
to some extent in the absence of bona fide scientific findings 
from good, peer-reviewed studies and at the same time remain 
cautious in this area because of quality as well as program 
integrity concerns that we will talk about.
    And we are continuing to conduct research, will modify our 
research given the constraints that your experts will talk 
about in the form of several demonstration projects that we now 
have ongoing.
    We want to determine which health care providers are 
clinically appropriate for telemedicine presentations. We want 
to explore the potential uses and abuses of ``store-and-
forward'' technology in which there is no real-time interaction 
between patient and provider, and we want to understand rural 
physicians' perceived barriers to utilizing telemedicine. This 
research is essential as we work to reach firm conclusions and 
make responsible recommendations.
    However, preliminary indications from our ongoing work 
suggest there may well be additional clinical circumstances 
beyond those paid under current Medicaid law where telemedicine 
is appropriate. There also may well be additional health care 
personnel, especially nurses, who are perfectly capable to make 
telemedicine presentations.
    Facility fees and fee splitting may warrant 
reconsideration, and we may want to reconsider new 
demonstration projects looking at telemedicine in underserved 
urban settings as well. And right now we have a unique 
opportunity to look at the use of telemedicine for home health 
services, especially in relationship to our anticipated for 
October 1 implementation of prospective payment for home health 
services.
    We will soon be compiling our findings in a report that 
will make firm recommendations, and we are absolutely eager to 
work with Congress as we proceed.
    I thank you for again holding this hearing, and I will now 
be happy to respond to questions. Thank you very much.
    [The prepared statement of Robert A. Berenson follows:]
 Prepared Statement of Robert A. Berenson, Director, Center for Health 
        Plans & Providers, Health Care Financing Administration
    Chairman Bilirakis, Congressman Brown, distinguished Subcommittee 
members, thank you for inviting me to discuss Medicare coverage of 
telemedicine. Telemedicine, with its ability to provide medical 
services via telecommunications systems, holds great promise for 
extending access to care in rural and other medically underserved 
areas. We understand that rural beneficiaries face unique challenges in 
accessing the medical care they need, particularly access to 
specialists. Helping them is a high priority for us. And we share the 
Secretary's commitment to promoting telemedicine where appropriate.
    To date, telemedicine usage in Medicare has been limited. The 
Balanced Budget Act (BBA) of 1997 expanded coverage options, but also 
included several restrictions that preclude telemedicine's use under 
conditions where it is commonly being used outside of Medicare. We are 
concerned that this is limiting the potential of telemedicine in 
Medicare. However, we also have a number of concerns regarding broader 
implementation of telemedicine. There is very little published, peer-
reviewed scientific data available on when telemedicine use is 
medically appropriate. It is difficult to project potential cost 
implications. And there are potential program integrity issues that 
should be addressed proactively.
    To help address these concerns, we are conducting extensive 
research and several demonstration projects. We are particularly 
interested in learning more about:

 specific clinical circumstances when telemedicine is medically 
        appropriate;
 which health care providers are clinically appropriate for 
        telemedicine presentations; and,
 the potential uses and abuses of ``store-and-forward'' 
        technology, in which there is no real-time interaction between 
        patient and provider.
    We are conducting demonstration projects specifically examining:

 the feasibility, acceptability, cost, and quality of 
        teleconsultation services;
 the potential role of telemedicine in diabetes management; 
        and,
 rural physicians' perceived barriers to utilizing 
        telemedicine.
    We also are consulting with academic and military experts who are 
using telemedicine in situations beyond those now allowed under the 
Medicare statute. We are working with other Department of Health and 
Human Services agencies, including the Health Resources and Services 
Administration's Office of Rural Health Policy and Office for the 
Advancement of Telehealth, as well as the Agency for Healthcare 
Research and Quality. In addition, the Department's Assistant Secretary 
for Planning and Evaluation has commissioned a study on assessing 
approaches to evaluating telemedicine, which should further enlighten 
our work.
    These efforts are ongoing, and we are not yet able to reach firm 
conclusions or make responsible recommendations. As mentioned above, 
there is very little published, peer-reviewed scientific data in this 
field, which makes our current research efforts all the more critical 
for determining how telemedicine coverage should be expanded. However, 
preliminary indications from our ongoing work suggest there may well be 
additional clinical circumstances, beyond those paid under current 
Medicare law, where telemedicine is appropriate. There also may well be 
additional health care personnel able, but not allowed under current 
law, to make telemedicine presentations. We will continue our 
telemedicine research efforts and compile findings in a report that 
will make firm recommendations on how the benefit should be expanded 
and what program integrity protections may be needed. We want to work 
with Congress as we proceed to develop the data necessary for 
responsible decisions about how to expand the use of telemedicine in 
Medicare.
    To further help us in all our efforts to better serve rural 
beneficiaries and providers, including the use of telemedicine 
services, we have established a Rural Health Initiative within our 
agency. This Initiative includes senior agency leaders and a direct 
rural contact staffer in each of our Regional Offices to increase and 
coordinate attention to rural issues and closely monitor how laws and 
regulations governing our programs affect rural beneficiaries and 
providers.
Background
    The BBA significantly expanded Medicare's authority to cover 
telemedicine. Previously, telemedicine coverage in Medicare was limited 
to situations in which no face-to-face contact between patient and 
provider is generally necessary; for example, in radiologic 
interpretation of x-rays. However, the BBA expansion continued to place 
strict limits on telemedicine coverage. For example:

 Telemedicine services may only be provided to a beneficiary in 
        a rural health professional shortage area (HPSA);
 Telemedicine services are limited to ``consultations'' for 
        which payment currently may be made under Medicare. This is a 
        key limitation, as the American Medical Association Physicians' 
        Current Procedure Terminology (CPT) defines consultation as a 
        ``face-to-face'' physician and patient encounter, meaning that 
        the patient must be present at the time of the consultation. 
        Therefore, a Medicare ``teleconsultation,'' is a medical 
        examination under the control of the consulting practitioner, 
        in lieu of an actual face-to-face encounter, that must take 
        place via an interactive audio-video telecommunications system;
 Only physicians or practitioners described in section 
        1842(b)(18)(C) of the Social Security Act may provide 
        teleconsultations. This also is a key limitation, as registered 
        nurses and other medical professionals not recognized as 
        practitioners under this section of the Medicare statute may 
        not receive payment for a teleconsultation, even though they 
        commonly serve as telepresenter outside of Medicare. Additional 
        health care professionals, such as clinical psychologists, 
        clinical social workers, and physical, occupational, or speech 
        therapists who are able to receive Medicare payment in limited 
        circumstances, but are not specifically listed in the statute 
        as Medicare providers, also are precluded from receiving 
        payment for teleconsultation; and,
 The law specifically prohibits payment for line charges or for 
        facility fees, and mandates that consulting and referring 
        practitioners share payments.
    On November 2, 1998, we published a final rule in the Federal 
Register implementing the telemedicine provisions of the BBA. The rule 
explains the geographic limits for reimbursement, the practitioners 
that are eligible to present patients and act as consultants, the 
teleconsultive services and technologies that are covered, and how 
payment will be made.
    Regarding the mandate that consulting and referring practitioners 
must share payments, the rule stipulates that 75 percent of the fee go 
to the consultant and the remaining 25 percent go to the referring 
practitioners. This split is based on the relative work for 
practitioners at both ends of the consultation and an inherent 
recognition that different consultations call for different levels of 
effort. As a result, the fee split reflects the projected level of new 
work done by each practitioner over the course of various 
teleconsultations.
    The rule also specifies that the eligible CPT codes for 
consultations that can be covered under the statute can be used for a 
number of medical specialties, such as cardiology, dermatology, 
gastroenterology, neurology, pulmonary, and psychiatry. We will cover 
additional consultations for the same or a new problem if the attending 
physician or practitioner requests the consultation, and if it is 
documented in the medical records of the beneficiary.
Telemedicine in Other Settings
    Outside of Medicare, telemedicine is being used in many 
circumstances not allowed under current Medicare law. Again, there is a 
paucity of published, peer-reviewed literature on the appropriateness 
of many of these uses. However, telemedicine is being used for much 
more than interactive consultations. These include evaluation and 
management services that are common in physician office visits, 
psychotherapy, pharmacologic management, sleep studies, physical and 
occupational therapy evaluation, and speech therapy.
    ``Store-and-forward'' technology also is being used in which there 
is no real-time interaction between patient and provider. Instead, a 
referring provider will examine a patient and then send a video clip or 
a photographic scan, along with the patient's medical record, to a 
distant consulting practitioner. The consulting practitioner will then 
review the file and make a diagnosis. Military and academic health care 
providers, in particular, are having apparent success with ``store-and-
forward'' for diagnosing dermatology cases. And it is being used for 
several other specialties, such as opthalmology, cardiology, nuclear 
medicine, and sleep.
    Also, outside of Medicare, telemedicine presentations are commonly 
made by health care professionals, especially registered nurses and 
licensed practical nurses, who are not allowed to make such 
presentations under current Medicare law. Some telemedicine programs 
use nurses for virtually all telepresentations, with generally high 
satisfaction ratings from both patients and physicians. And we are 
examining this through one of our demonstration projects where we are 
allowing registered nurses to make telemedicine presentations.
    In Medicaid, at least 17 States (Arkansas, California, Georgia, 
Iowa, Illinois, Kansas, Louisiana, Montana, Nebraska, North Carolina, 
North Dakota, Oklahoma, South Dakota, Texas, Utah, Virginia, and West 
Virginia) are covering telemedicine, often under circumstances not now 
allowed under Medicare law. States must satisfy Federal requirements of 
efficiency, economy, and quality in telemedicine coverage, but 
generally are encouraged to use the flexibility inherent in Federal law 
to create innovative payment methodologies for telemedicine. For 
example, States are not required to split fees as in Medicare, and may 
make separate reimbursements to both the referring physician for an 
office visit and to the consulting physician for a consultation. States 
also can cover network line charges, facility fees, technical support, 
depreciation on equipment, and other costs not allowed under Medicare 
law, as long as the payment is consistent with the requirements of 
efficiency, economy, and quality of care.
Current Research
    We recognize the potential benefits these additional telemedicine 
uses may offer in Medicare. But we feel compelled to proceed with due 
caution because of the paucity of published, peer-reviewed scientific 
literature on when and where these other uses are clinically 
appropriate. We also are concerned about the effect of telemedicine on 
quality or care, the potential for abuse, and the difficulty in 
establishing program integrity parameters without the kinds of solid, 
scientific, evidence we generally rely on in determining when a given 
service is medically appropriate.
    To address these outstanding concerns, we are conducting extensive 
research and demonstration projects, and developing a report that will 
include specific recommendations on how to expand the Medicare 
telemedicine benefit. To collect data on these issues, we have worked 
with telehealth projects receiving grant funding through the Office for 
the Advancement of Telehealth at the Health Resources and Services 
Administration. We also received data from the telemedicine directorate 
at the Walter Reed Army Medical Center and the Telemedicine Center at 
Ohio State University Medical Center.
    Also, in conjunction with the Agency for Healthcare Research and 
Quality, we have contracted with the Oregon Health Sciences University 
to evaluate several issues pertaining to Medicare coverage policy. 
These efforts have helped us understand how telemedicine is being used 
outside Medicare. This study involved an assessment of the clinical and 
scientific literature dealing with the cost-effectiveness of 
telemedicine, specifically looking into the areas of ``store-and-
forward'' technology, patient self-testing and monitoring, and 
potential telemedicine applications for non-surgical medical services.
    Within Medicare, we are conducting research demonstration projects 
to help us better understand telemedicine. We are working through 
Columbia University to conduct the Informatics, Telemedicine, and 
Education Demonstration Project, as required by the BBA. This 
randomized, controlled study will explore whether the use of advanced 
telemedicine technology improves clinical outcomes for diabetics in New 
York City and rural, upstate New York.
    Another demonstration to assess the feasibility, acceptability, 
cost, and quality of teleconsultation services involves 110 Medicare-
certified facilities in North Carolina, Iowa, West Virginia, and 
Georgia. It also includes a bundled payment rate that is negotiated to 
cover both the facility and physician fees for telemedicine services. 
Utilization of telemedicine in the project so far has been limited. And 
we are now considering whether to remove the bundled payment feature, 
which may be contributing to the low utilization levels, from the 
project. To better understand usage patterns, we also are examining 
rural providers' perceived barriers to telemedicine.
    We also are examining whether it is appropriate to provide payments 
for teleconsultation to beneficiaries in homebound settings. And we 
also are working with the Center for Health Policy Research at the 
University of Colorado to evaluate the impact of telemedicine coverage 
on access to, and quality of, care, and to analyze rural physicians' 
perceived barriers to telemedicine.
    A key concern for us as we work with Congress in exploring possible 
expansions is how to ensure that telemedicine is used appropriately. 
There is significant potential for over-utilization that would be 
difficult to monitor and prevent, since we have so little data to guide 
us in determining when telemedicine is, in fact, medically appropriate. 
``Store-and-forward'' technology, in particular, has the potential to 
substantially increase the number of consultations billed to Medicare 
without regard to medical necessity.
    Another key concern is the difficulty in projecting costs for 
telemedicine expansions. There are, as yet, no good data on the extent 
to which expanded coverage for telemedicine would increase claims. 
There are no reliable data on the extent to which additional claims 
would represent appropriate care that should be, but is not now, being 
delivered. And there are no reliable data on the extent to which 
expanded coverage would invite inappropriate claims or other abuse. The 
lack of data, as well as program and payment experience, in these areas 
warrants a careful, measured approach as we proceed. Issues such as 
scope of coverage and expansion of eligible areas need to be carefully 
studied and considered. And we need reliable evidence to determine when 
telemedicine is an appropriate substitute for services that 
traditionally require the physical presence of a patient.
Rural Initiative
    Telemedicine is only one part of our efforts to improve access and 
services for rural beneficiaries. We are redoubling our efforts to more 
clearly understand, and actively address, the special circumstances of 
rural providers and beneficiaries. Last year we launched a new Rural 
Health Initiative and are meeting with rural providers, visiting rural 
facilities, reviewing the impact of our regulations on rural health 
care providers, and conducting more research on rural health care 
issues. We are participating in regularly scheduled meetings with the 
Health Resources and Services Administration's Office of Rural Health 
Policy to make sure that we stay abreast of emerging rural issues. And 
we are working directly with the National Rural Health Association to 
evaluate rural access to care and the impact of recent policy changes.
    Our goal is to engage in more dialogue with rural providers and 
ensure that we are considering all possible ways of making sure rural 
beneficiaries get the care they need, including use of telemedicine. We 
are looking at best practices and areas where research and 
demonstration projects are warranted. We want to hear from those who 
are providing services to rural beneficiaries about what steps we can 
take to ensure they get the care they need.
    We have put together a team for this rural initiative that includes 
senior staff in our Central and Regional Offices and dedicated 
personnel around the country. The work group is co-chaired by Linda 
Ruiz in our Seattle regional office and Tom Hoyer in our central office 
headquarters in Baltimore. Each of our ten regional offices now has a 
rural issues point person that you and your rural provider constituents 
can call directly to raise and discuss issues, ideas, and concerns. A 
list of these contacts and their respective States is attached to my 
testimony.
Conclusion
    Telemedicine holds great promise for improving access to care, 
particularly for beneficiaries in rural and other underserved areas. 
Our ongoing research efforts should help address the lack of scientific 
data on its appropriate uses. That will help us understand whether and 
how current restrictions on Medicare coverage for telemedicine should 
be changed.
    We are very grateful for this opportunity to discuss our efforts to 
help rural providers and beneficiaries, and to explore further actions 
we might take to address their concerns in a prompt and fiscally 
prudent manner. I thank you again for holding this hearing, and I am 
happy to answer your questions.

    Mr. Bilirakis. Thank you, Doctor.
    Dr. Berenson, you have referred to them, virtually every 
opening statement has, the barriers to the use of telemedicine, 
particularly those involving Medicare but let us say barriers 
in general. You have worked with it, and I am sure you are 
familiar with many of those barriers. Can you share with us 
what some of those barriers may be, how they might be 
eliminated? Can some of them be eliminated administratively by 
HCFA? Will it take legislation to do that?
    This, I think we all agree, has the potential of being a 
tremendous health care delivery vehicle, particularly in the 
rural areas, Mr. Stupak's area and some others. So I think it 
is significant that we concentrate and focus on this area in 
addition to all the other things that we do, but we need some 
help from HCFA, too. We need some recommendations from HCFA in 
terms of certain areas where you might need us to act 
legislatively and what areas you can cover. Proceed.
    Mr. Berenson. I would defer to some of your other experts 
on some of the sort of culture of medicine barriers about the 
sort of willingness of physicians and other professionals to 
participate. But, clearly, there are some reimbursement issues 
that HCFA has or Medicare, the Medicare statute precludes or 
influences in a profound way, which deserve attention; and, as 
I indicated, we are about to issue recommendations on some of 
those changes.
    But, preliminarily, we would think that there could be an 
expansion beyond the BBA definition of a teleconsultation which 
has a fairly narrow meaning. It basically--and I think that 
meaning at the time made some sense or the intent, but the 
consultation, as defined in the AMA CPT manual, which we follow 
for our policy, makes it clear that a consultant doesn't have 
overall responsibility for the management of a patient. A 
consultant provides advice to the physician, and it makes some 
sense when you are dealing with somebody many miles away. At 
least initially it made sense to restrict to a consultation, 
because there would be a physician on the ground who ultimately 
was accountable.
    It turns out that many of the grantees who HRSA has funded 
to do telemedicine finds applications for telemedicine that go 
beyond just consultations, and we have not had a lot of 
billings for consultations. Some other kinds of evaluation are 
management services. Other specific kinds of services that are 
akin, for example, to radiology or EKG readings which have been 
done for a while perhaps in the area of pulmonary testing or 
sleep studies. I mean, there are some specific areas in the 
field that some of the people in the field might be ready for 
expansion in this area.
    We are limited again by the lack of either scientific peer-
reviewed studies or even consensus standards by the profession 
themselves, and I think some of the witnesses will point out 
that you have to get down into the details as to which kinds of 
services are fully amenable to this telemedicine where you 
don't need the patient and the practitioner in the same room 
and which ones would raise concerns.
    But, in any case, expanding the definition of consultation 
is one area that we think should be considered and clearly the 
area of presenter. The BBA contemplated pretty explicitly that 
there would be a physician presenting to another physician, and 
many of the grantees who use this, the Walter Reed Medical 
Center and others, Ohio State, who have active telemedicine 
programs find that RNs and LPNs in some situations are fully 
capable to make presentations, and the way----
    Mr. Bilirakis. Are they able to under the current law?
    Mr. Berenson. They are not able to under the current 
requirements, and the organization of health care in rural 
areas doesn't permit--another example is we have said that, and 
the law contemplated, that employees of physicians should be 
presenting, either the physician or employees. Well, it may 
well be that the RNs are at the hospital, that may be where the 
equipment is, and the personal physician may be somewhere else. 
We need to look for more flexibility in this area of 
presentation.
    Mr. Bilirakis. If you have a physician in point A 
presenting to a physician in point B, 2 or 3,000 miles away, 
are both physicians reimbursed by Medicare?
    Mr. Berenson. Right now, again, the law actually called for 
fee splitting, and I know there have been some concerns by some 
physicians about whether this might run afoul of Stark. When it 
is legislatively prescribed it really doesn't, but I think 
there is a perception problem. There is still an issue.
    Our systems were such that we said that the receiving 
physician would receive the fee and would have to somehow 
compensate the presenting physician. That is administratively 
cumbersome, doesn't happen very well, and I think we need to 
revisit this issue of the fee splitting. Both for conceptual 
and as well as practical reasons, it doesn't work very well, 
and I don't think it is really necessary, but especially if we 
expand----
    Mr. Bilirakis. Is that something that can be revisited by 
HCFA administratively?
    Mr. Berenson. Yes--no. As I understand it, the requirement 
for the fee to be shared is legislative. What we did 
administratively was not split the fee ourself and send the 
apportionment to each one. We asked the consultant physician to 
basically be responsible for sharing the fee with the 
presenting physician and that we do have authority over. But we 
want to look more broadly at whether we even need to do the fee 
splitting at all, although it is in the statute, especially if 
we move to expanding who the presenters are.
    Again, I think it is fair to say that we all moved 
cautiously, perhaps too cautiously, in the BBA, starting with a 
concept of a consultation with a physician in one room, a 
physician in a room somewhere far off, and it all made sense in 
that construct. As we expand services and recognize that there 
are other presenters who are fully capable of presenting I 
think we can change some of these rules that are barriers to 
the use of telemedicine.
    Mr. Bilirakis. Thank you, Doctor.
    My time has long expired. Mr. Brown.
    Mr. Brown. Thank you, Mr. Chairman.
    Dr. Berenson, as you said, there isn't much clinical 
evidence about the safety and effectiveness of telehealth 
services. Run through, if you would, so at least I better 
understand, I think other members of the subcommittee, the 
process--run through the process by which HCFA would gather 
evidence to expand services that only Medicare would pay for. 
If you would sort of run through that, how you gather the 
evidence, what evidence you will gather, how you make those 
final decisions based on congressional direction on what you 
will cover.
    Mr. Berenson. Yes. Well, we have a number of studies 
ongoing. In fact, it is the Office of the Advancement of 
Telehealth at HRSA that have a number of grantees, and we are 
systematically collecting information from them about their 
experiences. In fact, it is somewhat based on those 
experiences, as well, I should add, the Telemedicine Center at 
Walter Reed, the Telemedicine Center at Ohio State, and then 
working with researchers at Oregon State Medical Center. We are 
trying to compile what the findings are. So, for example, it 
turns out that most of the grantees do use telemedicine beyond 
just consultation for a couple of very specific visits, such as 
other medical visits and such as evaluation/management visits. 
But very few of them have expanded into some other areas that 
have been recommended by some.
    So we would sort of look at that experience, collect some 
consensus around those experiences, try to get some outcome 
studies, although that is very difficult. And, again, some of 
the experts you will hear are more familiar with the 
methodological barriers in doing those studies.
    We would also look to specialty societies themselves to 
begin to develop some standards and tell us what they are based 
on. Ultimately, coverage decisions might require us to submit 
the evidence to the new coverage process that HCFA does have 
with a panel of experts who do look at the evidence and do make 
judgments about coverage. I think it is fair to say that we are 
relatively early in this process of actually having good 
evidence to assure us that broad expansion is warranted.
    We are just putting again, as I said, the final touches on 
a report on some of these issues. For example, in the area of 
dermatology, which is one of the very promising areas where it 
makes sense that you need images, where experts in a place can 
look at an image and help make a diagnosis, well, it turns out 
for discrete lesions it seems to work pretty well. For diffuse 
lesions it is very difficult for a consultant somewhere else to 
look at even 6 or 8 images that have been provided and make an 
accurate diagnosis.
    So that is the kind of detail one needs to get into. It is 
hard to say it is going to be covered for dermatology or not, 
when in fact the clinical information is that for certain 
situations it is perfectly reasonable and for certain 
situations it is not. Mostly in medicine we rely on the 
profession itself to develop standards and to provide that kind 
of guidance.
    To date, you know, that is in its beginning stages. So at 
this moment we do have--again, I think we should be proceeding 
somewhat cautiously--so we want to expand these demonstrations, 
and I think it is reasonable, if we are focused on health 
manpower shortage areas in rural areas, to do those expansions 
that we had talked about and then look to see how that is 
playing out. I don't have a neat road map. All of that is sort 
of in play at the moment.
    Mr. Bilirakis. If the gentleman would yield maybe for a 
quick follow-up to that.
    Elections take place every 4 years. We don't know what is 
going to happen in November. If there is a change in 
administrations, for instance, or maybe even in the sense the 
same party controlling, God forbid, but--I had to say that. 
Forgive me, I had to say that. But my point is you have these 
studies taking place. Are they just interrupted right smack in 
the middle of the studies? I mean, do they continue--what 
happens from a practical standpoint? They are important 
studies.
    Mr. Brown. One reason not to change.
    Mr. Berenson. Clearly certain high-level policy calls can 
be put on hold when there is a change in administrations, but 
these studies are ongoing. They are committed. We are making 
some corrections, some improvements in some of these demos 
because we are not getting enough volume in the original 
construction of them.
    This is an opportunity to say one other thing. I actually 
was--I am sure you are aware that the President's proposal on 
Medicare reform included a modernization piece, and I actually 
had the privilege of chairing an activity this spring within 
HCFA to look at where we need to modernize. We talked centers 
of excellence and PPOs and other things like that. One thing 
that became very clear was that modern medicine wants to use 
new technology. When I was an internist practicing, I used the 
telephone; that is what was available, but actually, that is a 
form of telemedicine which I wasn't adequately reimbursed for.
    Right now I know that some physicians spend a third of 
their time on the Internet, and we need to figure out not only 
for rural underserved areas but for the basic functioning of 
the program how to incorporate some of these new technologies 
to improve efficiency, communication, quality, but it is very 
difficult in a fee-for-service construct. I mean, one of the 
reasons I am sure HCFA didn't reimburse me for telephone calls 
was that the cost of billing would be more than the 
reimbursement for a 2-minute phone call.
    So we in that process were looking at other funding 
mechanisms, other reimbursement mechanisms. Actually, these two 
activities need to come together, the specific focus on rural 
underserved populations and modernizing the program, and 
certainly my recommendation to the new administrator will be to 
give very high priority to both and see them related.
    Mr. Bilirakis. But you would anticipate, though, this 
continuing on?
    Mr. Berenson. These studies will absolutely continue, and I 
think part of the function of hearings like this is to give 
more vigor and light on some of these studies, and I think you 
have gotten some of our attention.
    Mr. Bilirakis. Thank you, Dr. Berenson.
    I appreciate the gentleman yielding the balance his time.
    Mr. Stupak.
    Mr. Stupak. Thank you, Mr. Chairman, a good segue into my 
questions.
    Doctor, would HCFA support congressional language 
supporting reimbursement in telemedicine in the same way that 
person-to-person transaction? I indicated before that you don't 
reimburse now unless your general doctor or your family doctor 
does the introduction. That is really a hindrance on 
telemedicine. Why do we need this introduction if we are trying 
to save costs and everything else? Would you support changes 
like that so it could be doctor to patient or I should say 
patient to specialist without an intervening doctor needing to 
be there?
    Mr. Berenson. I guess we will have recommendations in this 
report that is due soon, but it looks like many of the 
successful programs use RNs. I think we would be a little 
reluctant, at this point, to having the patients present 
themselves without any intermediary do the presentation, but I 
don't believe it needs to be a physician. So I think we are 
looking at an expansion for RNs and perhaps LPNs, in some 
circumstances, but that kind of modification we would look 
favorably upon.
    Mr. Stupak. What we are concerned about is there almost has 
to be a hand-off like to a specialist for every transaction. 
Couldn't there just be the recommendation from your physician 
to do it? And if you live three blocks away from Marquette 
General Hospital, it seems like you should be able to go there, 
get in telecommunication----
    Mr. Berenson. We would like to know if that works. I would 
be concerned about coordination of care in that kind of 
situation. In general, I mean if, in fact, there is a system 
where the consultant--the specialist knows exactly who the 
responsible physician is and provides a report as consultations 
tend to happen, I think we could be going in that direction. I 
think the first step would be to make sure it is safe and 
effective with nonphysicians, and we would look toward that 
other approach down the road.
    Mr. Stupak. I mean, I am sure you would agree that I just 
can't walk into Marquette General and boot up the telemedicine 
and start talking to guys in Mayo Clinic. It is just not going 
to work that way. I am going to have some kind of referral, 
some kind of code, access to get in. They are using their 
equipment all the time. I am sure they are just not going to 
let anyone do it. There would almost have to be that referral 
already established.
    What we are hearing is every time you want to do it, it 
can't be billed, this specialist time can't be billed. So we 
are going through this shell game just to get the money there, 
which seems like a lot of duplication----
    Mr. Berenson. There is no question that under the current 
system, we have very few claims for these services. It is not 
working right now so we would be looking to expand it. I would 
defer to some of the other witnesses about exactly how that 
could work.
    Mr. Stupak. Okay. Let me ask you this question and I know 
the Chairman started along these lines, and let me ask you this 
if I can. As I understand it, current Medicare policy does not 
allow certain practitioners, you mentioned nurses, to 
participate in provision of telehealth services. A number of 
witnesses on the next panel will mention how this limitation is 
hindering the spread of telemedicine in Medicare. What is the 
policy rationale for the limitation?
    Mr. Berenson. Again, I think it was an initial caution 
that--encaptured in the language of BBA that teleconsultations 
would be the initial focus of this activity. The fact that it 
explicitly talked about a fee-splitting arrangement suggests 
that the BBA contemplated that there would be two physicians 
involved, and I think it just was an initial caution in a new 
area where we appropriately should be concerned about patient 
safety. But I think the experience is such that we now probably 
can move off of that caution, but that caution is really 
captured in the BBA language.
    Mr. Stupak. And I think you said it well in your opening 
statement. The technology is moving so quickly, the cautions we 
have that probably make them sort of outdated. In order to have 
a remedy there, would you need a legislative fix or would rules 
and regulations within HCFA probably take care of it?
    Mr. Berenson. I believe we need a legislative fix for that; 
and, again, we would work with the committee on that.
    Mr. Stupak. And you certainly--and I am sure from your 
testimony you have sort of indicated RNs would be a logical 
place where we would start to allow them to participate in 
telehealth programs.
    Mr. Berenson. I think that is right.
    Mr. Stupak. Thank you, Mr. Chairman.
    Mr. Bilirakis. I thank the gentleman.
    So the recommendation from HCFA is that possibly LPNs, et 
cetera, ought to be--RNs, should be reimbursed and that there 
should be changes made to the bill?
    Mr. Berenson. Well, reimbursement is a separate issue. I 
think we are--and, again, it is a little awkward because we 
don't have our final report done, but at least the preliminary 
findings and where we are likely to come out--it hasn't been 
through the Department yet--is that our current restriction to 
physicians is too restrictive, and we should expand that. It is 
a different question about reimbursement to the presenter from 
a restriction as to who can present; that is a separate issue.
    Mr. Bilirakis. Ms. Capps to inquire.
    Mrs. Capps. Thank you for your testimony, Dr. Berenson. I 
am going to ask you to talk to us and give some discussion to 
the need for national standards in the provision of telehealth. 
We have standards in hospitals and nursing homes, but I can't 
resist beginning with some of the comments--responding to some 
of the comments you have made already in that you said that we 
are in a timeframe now where the progress and technology is so 
astronomical that by the time HCFA rules or Medicare makes--the 
rules are changed that it is already obsolete. And underlying a 
lot of my concern about where we are in health care now is this 
huge gap between the science advances and the regulating 
agencies that have always been conservative or have always been 
cautious and concerned about quality and program integrity but 
that the paradigms, the framework is so dramatically different.
    Before, you talked about a discrepancy in telephone use. We 
are talking about I think rather revolutionary changes in 
medicine and the gap, the lag results in almost a disconnect 
and that creates a climate in the practice where practitioners 
know the level of response to patients' needs that could be 
made and yet they are constrained by really an archaic--what is 
becoming an archaic system, and I wish--I mean, when you said 
that you are looking to specialists for coming with standards 
and they are not as forthcoming as you want, where are the 
incentives that can be given to practitioners to help to 
address this rather than seeing the whole process from 
Medicare's side as dampening and delaying and onerous, if you 
will, where they almost want to get out of it because they 
can't do what they know they are equipped and capable of doing? 
And I am talking not just about doctors but all kinds of 
practitioners.
    And I am looking for how we can help in the legislative 
body, because we are not the experts, and I submit that the 
experts are out in the field, and you are constrained--you as 
representing Medicare or HCFA--by the BBA. You talk about that.
    So maybe that is where I will stop my diatribe and let you 
respond. You said in response to the previous question, perhaps 
there is legislation required to give impetus for bridging some 
of this gap, and if you would address also--perhaps do that in 
the framework of how we can get standards there that can guide 
us.
    Mr. Berenson. That is a very sort of broad set of questions 
there.
    I guess what I am going to suggest is that medicine has 
always assumed a personal interaction. If you look at the AMA 
CPT definition of an office visit, it has three components. 
They are the history, the physical examination and medical 
decisionmaking; and a lot of doctors spend a lot of time 
valuing those various components. The personal, hands-on as 
part of a medical interaction has been considered necessary, 
but it may not always the case that that physical hands-on is 
necessary.
    There is also the potential for a surrogate doing the 
hands-on for somebody at some distance. So, No. 1 is really 
understanding when safety and quality can permit a nonface-to-
face encounter.
    Mrs. Capps. But haven't we moved--isn't it clear that we 
had moved past that?
    Mr. Berenson. In some areas we have.
    Mrs. Capps. I go to get a mammogram, and the person who 
gives it to me doesn't read it. I know that. I have to trust 
somebody else, and this is not telemedicine.
    Mr. Berenson. For some specific technologies we have. And I 
think one of the issues, and again I am not in the field, but I 
think there is some controversy about mental health visits with 
a psychiatrist, whether you need an actual physical presence to 
establish a relationship or whether it is just as effective to 
be doing it via telemedicine. And I think there is a 
particularly compelling case for underserved rural areas where 
the absence of the perfect may be nothing. I wanted to raise 
the issue that there are serious quality concerns, and I don't 
think it has gotten yet enough attention. I think the Congress, 
HCFA and organized medicine needs to tackle this at a little 
higher level.
    The other thing is serious concern about cost. One of the 
protections that we have for our cost problem is relying on is 
some cost associated with that face-to-face encounter. People 
don't frivolously go to the doctor, at least most people, and 
hang around for an hour or 2, and we rely to some extent in a 
fee-for-service environment for the fact that a visit is a 
physical encounter. If we make it very easy for communication 
back and forth, at any time, about any problem, although that 
potentially is improving quality, it potentially is no limit on 
associated cost.
    And so that is why, again, within capitated environments, 
within bundled global payment environments, it makes perfect 
sense and why I come back to home health as a perfect place to 
begin to understand it. In a fee-for-service environment, when 
you don't require a face-to-face encounter, the potential for 
astronomical increases in utilization is there, and we really 
need to understand and have some standards in place as to when 
it is appropriate and when it is not appropriate.
    Mrs. Capps. I grant you that. But just by your saying that 
the standard for care is the face-to-face encounter between the 
provider and the patient, I would submit that is almost 
nonexistent, even in highly served areas, because of the 
complexity of health care; and we need then to work together to 
figure out a different standard that will be embracing of what 
you--I know my colleague wants to jump in--but we have got to 
get this at some point because----
    Mr. Berenson. I think that is right, but at the same time 
one of the complaints patients do have is that they don't have 
enough time to talk to their physician.
    Mrs. Capps. That is another issue. That is another kind of 
issue. And I think we have got to--if we are looking at if HCFA 
calls face-to-face encounter the standard of care and how far 
are we from that, then I submit to you that we need to reframe 
the whole relationship.
    Mr. Berenson. HCFA is doing it, but it is the profession 
right now. The standard that the AMA and others have 
established is this face-to-face requirement. So we are doing 
this with other parties.
    Mrs. Capps. Yes. And then the profession has to be allowed 
to come up with different criteria.
    Mr. Stupak. And that is the point I was going to make. I 
think we need the professionals in helping us out, as opposed 
to HCFA and Congress trying to do it. I really think we need 
their input. Because I agree with some of the things you are 
saying, but, at the same time, we are making rules that affect 
them but we are not getting their input. And I know you 
practiced for a while. I am sure you would have some input in 
it, but I think we also need professions in there.
    Mrs. Capps. And we also need----
    Mr. Bilirakis. We are well over.
    Mrs. Capps. There has got to be----
    Mr. Bilirakis. We have gone over with everybody. Why don't 
you sum up, Lois?
    Mrs. Capps. All right.
    Mr. Bilirakis. You want to sum up?
    Mrs. Capps. I just want to say that delay also carries a 
price.
    Mr. Bilirakis. Mr. Bilbray to inquire.
    Mr. Bilbray. Thank you, and I appreciate my colleague from 
California pointing out, I guess the term is a lack of 
treatment sometimes is the worst treatment or at least it can 
be as lethal as the wrong type of action.
    Doctor, we can hold these hearings and we can talk about 
use of the technology and we can talk about all the 
opportunities out there, but if our structure does not allow 
utilizing new technology, if our bureaucratic barriers--if I 
may use a derogatory term--but let us just say our regulatory 
safeguards are such that innovative opportunities cannot be 
utilized, then all we are doing is sitting here and playing a 
nice game of what if, how great it could be, without actually 
providing the product to the consumer.
    I want to get back to this issue. What barriers can be 
eliminated by HCFA to be able to make not only the use of this 
approach possible but to encourage it when practical and when 
essential? And is HCFA predisposed to be able to change its 
procedures or modify its procedures or accommodate these new 
challenges and opportunities? I would like to know basically 
what barriers right now need to be eliminated so these 
opportunities can be utilized.
    Mr. Berenson. I think the couple that we have talked about 
include the definition in the BBA of a teleconsultation 
limiting the application to a fairly narrow set of services, 
and there can be an expansion to other kinds of medical visits 
and perhaps to certain other kinds of interactions that go 
beyond just consultations.
    We have also talked about eliminating the requirement that 
a physician have to be the presenter to another physician. I 
think we want to revisit the requirement for the fee-splitting 
arrangement and make it easier essentially for others to 
present and not have the----
    Mr. Bilbray. Is that fee-splitting arrangement part of the 
BBA agreement or is that part of your own HCFA internal----
    Mr. Berenson. Basically, the BBA required the fee 
splitting. We, for systems reasons, required the receiving 
physician to actually have to conduct the fee splitting, and 
that has created a barrier. So we could revisit that, but I 
think the more significant thing would be to relook at the 
requirement that there be the fee splitting in the first place.
    Mr. Bilbray. Doctor, my mother was an Australian tennis 
champion for years before World War II, and I grew up watching 
the ball be knocked on the other side of net and requiring the 
other guy to try to handle it. I have asked you what can HCFA 
specifically do, not what is Congress, and when I knock the 
ball back into your court, what can HCFA do to be able to 
eliminate the barriers to the utilization of this type of 
approach and what is HCFA willing to do?
    Mr. Berenson. I honestly have to say that we feel 
constrained by the statutory language in these few areas and 
would be happy to work to modify that. We need to change. I 
mean, obviously a lot of our future recommendations as to 
expansions in this area will be based on the results of our 
demonstrations and consultations with experts in the field, and 
we have learned that we have not been quick enough to modify 
some of the flaws in our demos.
    As I mentioned earlier, we were using a technology--
studying a technology that made sense at the time in 1997, but 
we have not adjusted quickly enough to the fact that the 
technology has left that or is leaving that behind to look into 
new areas. And there are specific recommendations that you will 
hear from Dr. Grigsby and others about the kinds of 
demonstrations that we should be doing, and we need to be doing 
that more quickly, but in terms right now of the changes that 
could be made or should be made I think we don't have the 
authority in most areas to do that ourselves.
    Mr. Bilbray. Okay. Then let us call each others bluff and 
we will try to see where your rulemaking could change 
internally, and if you would specifically, specifically 
identify where the changes need to be made to give you the 
flexibility to do what we are asking.
    And when we talk about the experts, I certainly hope my 
colleagues and you recognize that the experts are not just the 
medical providers and the people actually going to perform the 
services. As you said, we are behind the curve in technology 
again and again. Just about the time we think we are designing 
something for cutting edge, we realize that it is 2 years 
behind schedule even though we only worked on it for 6 months. 
I would really encourage that when we talk about professionals 
and experts that we talk about techies, talk about what is 
going to be the technical capabilities at the time we implement 
it so we are not always playing this catch-up.
    I would ask--go ahead, Mr. Chairman. I yield back.
    Mr. Bilirakis. Mr. Green.
    Mr. Green. Thank you, Mr. Chairman; and Dr. Berenson, I am 
glad you are here.
    I have a very urban district in Houston, and I have watched 
how telemedicine can help. Because the problem I noticed is the 
quality of care at our teaching hospitals, particularly in 
urban centers, is so much better. So you will have people who 
will literally pass by suburban hospitals because they want to 
go to the biggest medical center in the country in some cases.
    What I look at it for is telemedicine can also help us 
because not everybody can go to the Texas Medical Center, but 
if we have telemedicine to the suburban hospitals or the 
closest, so--because I have had experience of people who have 
not gotten the quality of care at a hospital that is--even 
though it is within 25 miles of a major medical center and they 
actually have to be transferred, which has caused other 
problems. So if we have telemedicine not just in the rural 
areas but in the urban areas and suburban areas, we can make 
sure the quality of care is available 20 miles from the M.D. 
Anderson or from a Texas Childrens Hospital. So we can utilize 
that, and so that is why it is just not applicable to rural 
areas.
    Following up on my colleague, Mrs. Capps, my wife had an 
experience. She was here during the summer. She teaches school. 
And former Governor Ann Richards mentioned to her you need to 
go get a bone density test because you are at the age because 
Ann had just had one and discovered she needed some medication. 
So my wife called the doctor, never saw the doctor, went in for 
the bone density test. Obviously, it showed she needed 
medication. The medication was prescribed, and then she 
received it. So real life is actually happening now even 
without. So that is, I guess, basic telemedicine. Because 
everything was on the phone, without having the consultation 
between two physicians. So it is not just mammograms. It is 
other things that are happening.
    I was noticing in your testimony that Texas and a number of 
States utilize Medicaid for telemedicine, and I know it is a 
little further along. Could HCFA look at the successes--
obviously, we also have some problems of how Medicaid may be 
reimbursed, but the successes of telemedicine and the Medicaid 
experience in the 17 States that we have had in to both 
rulemaking and also make suggestions to Congress on how we can 
change Medicare law to take advantage of the technology?
    Mr. Berenson. Yes. I think that in preparing for this 
hearing it became clear that we also didn't know enough about 
what private insurers were doing, as well as Medicaid agencies, 
and I think we need to do a better job of convening the other 
payers to see if we can't progress a little faster in this 
area. But, yes, there are experiences clearly in both sectors, 
Medicaid as well as the private sector, and in terms of dealing 
with this concern about overexpansion but at the same time 
getting the services out where they are needed. So we need to 
do that, yes.
    Mr. Green. I know right now Medicare only pays for the 
consultations. And, again, I have seen actually observing 
surgery and things like that that could help, and I understand 
the concern about cost, and we share that, too, because I mean 
every few years we have to deal with the expansion of Medicare 
to make sure it is still there for our constituents. What do 
you think that it would be for the cost of Medicare? Can you 
give us some kind of idea what such expansion would be on a 
cost basis, realizing we are the Commerce Committee and not the 
Appropriations Committee?
    Mr. Berenson. Again--and I should also say when we somehow 
get perceived as being too slow and too bureaucratic--we are 
aware that what we do which makes perfect sense in a health 
manpower shortage area, in a rural area, where there is no 
alternative, will often be looked at by others as a basis for 
expansion into other areas.
    I think we are quite confident that we can make significant 
changes that would apply in rural areas, at not a significant 
cost. There might even be a savings. There is no evidence of 
program integrity problems thus far in the rural areas. But 
what we are concerned about, and particularly on the cost side, 
is what would happen if these technologies that are not 
inherently limited to rural areas became the standard across 
the entire program. That is where we have concern. So to the 
extent that we are being perhaps a little too cautious in 
expanding in rural areas, it is because what we do there 
becomes the basis for expansion elsewhere.
    I don't have a number for you on the cost. I think if it 
were not done correctly and carefully, with standards in place, 
it could be a huge expansion and cost to the program if it went 
beyond the target, which are health manpower shortage areas.
    Mr. Green. Well, maybe that is my concern.
    Mr. Chairman, with just a little forbearance, I understand 
the rural application, but, again, I think we could look at 
some cost savings because the costs per bed at some of my 
suburban hospitals is much cheaper than the cost at a major 
medical center, but if you utilize the expertise at that 
medical center for the suburban hospital, again, 20, 25 miles 
away, it is not anywhere near rural, we could see some cost 
benefits to the Medicare program.
    Mr. Berenson. There could be, but there also could be just 
a great expansion in utilization. That is why, as part of this 
modernization activity that I talked to, we are looking at 
other reimbursement mechanisms, perhaps an administrative fee, 
to support telemedicine. That is not a reimbursement at a 
specific service level rather a some modified forms of a 
capitation payment system that provides a payment over a period 
of time where the practitioners themselves then determine what 
the utilization will be within that limitation.
    That is why in the home health example, where we will now 
be paying a 60-day episode fee to a home health agency for 
taking care of a beneficiary with a certain medical problem, we 
would encourage the agencies to provide an adjunct to the plan 
of care that the physician has signed off to by incorporating 
telemedicine into that whole plan of care. Again, inhome health 
the payment will essentially be predetermined, such that we 
have less concern about utilization. It may well be that we can 
expand telemedicine very broadly in a fee-for-service 
environment, but we are concerned about having the standards in 
place to determine how to do that.
    Mr. Bilbray [presiding]. The gentleman's time has expired. 
The gentleman from Tennessee.
    Mr. Bryant. Thank you, Mr. Chairman.
    I apologize to the witnesses, but we are on different 
schedules here. I have to come and go, and sometimes we are 
late. I appreciate you coming and look forward to your 
testimony, as well as the second panels testimony.
    I represent a very diverse district. It has urban areas and 
quite a bit of rural area, and I see telemedicine as being one 
of the solutions that will go to a major problem that we have 
in those areas of access to health care, and I have joined with 
the Chairmans bill in cosponsoring that bill. I think it is a 
good bill. I have questioned Mike Hash when he comes up about 
this, and he is going to get back with me and follow up with 
each other on this, and we have worked hard on this issue. We 
also have Dr. Burgiss from the University of Tennessee here 
today to testify on the second panel about what is happening 
there with telemedicine.
    So, with that said, I want to ask you a couple of 
questions; and I hear the bells going off for us to go vote, 
also. So we will probably get this in before we have to go, but 
if you could keep your answers relatively short in light of the 
bells.
    But it is my understanding that under the new health care 
Prospective Payment System, the PPS, home health care providers 
may use PPS dollars in the manner they believe most appropriate 
to improve the patient outcomes. Excepting that a telemedicine 
encounter is technically not a visit for the purposes of PPS 
payment, I assume then that the current policy allows a home 
health agency to spend PPS dollars to utilize telemedicine 
technology consistent with patient care standards. Is my 
assumption consistent with HCFA's view on this subject?
    Mr. Berenson. Yes, as long as the use of telemedicine 
services is consistent with the plan of care that the physician 
certifies. I don't think we would want telemedicine visits to 
substitute completely for the services that are specified in 
the plan of care, but there can be some minor substitution and 
certainly adjunct use of telemedicine in the context of a plan 
of care.
    As we get more experience with the effectiveness, 
physicians will then be more willing to sign off on plans of 
care that do have telemedicine visits, in some cases perhaps 
substituting with what would have been physical visits, but at 
this moment we think that the requirement for a set of services 
face-to-face should be maintained with the incentive now for 
the agencies to use telemedicine as an adjunct to those 
services.
    Mr. Bryant. In regard to the demonstration projects, I 
understand you are actually working on some now regarding 
telemedicine, and you may not have these figures, I don't know, 
and if you don't if you could late file this to your testimony 
today, but could you give me the statistics on how many claims 
have been submitted from these demonstration projects? You 
expressed concern about the potential cost. So I just wonder 
how many are actually being----
    Mr. Berenson. There are very few. I don't have the exact 
number on me. Remarkably few--and that has been one reason why 
we believe we need to rethink these demonstrations. We are in 
discussions to do that, as well as rethinking the narrowness of 
the application to teleconsultations because there have been 
very few. We will provide for the record the actual number.
    Mr. Bryant. I am getting inquiries here, but can you give 
me a ballpark figure, just an estimate before you submit the 
actual figures? Could it be as low as 19,000?
    Mr. Berenson. I think it is fewer.
    Mr. Bryant. Fewer than 19,000?
    Mr. Berenson. I think it is a couple of hundred for last 
year. I don't have the cumulative number. I think last year was 
perhaps 200 or something.
    [The following was received for the record:]

    There were 298 claims filed through the end of the second 
quarter, 2000 under the Telemedicine Demonstration Project.

    Mr. Bryant. One final question. I think Mike Hash said 
this, and I understand you may have said this also, that HCFA 
is going to be releasing recommendations on changes that should 
be made to this issue of telehealth, telemedicine. Can you tell 
me specifically when we can expect those recommendations from 
HCFA?
    Mr. Berenson. Well, it is anticipated for this fall. I 
don't know whether prior to adjournment or not. I mean, 
unfortunately, it is in a clearance process. The areas that we 
will be addressing, some of them I have talked about today. One 
is the expansion of services beyond teleconsultations, and we 
are likely to be recommending an expansion to certain other 
kinds of services. We will be making some comments about store-
and-forward technology, and we will be talking about 
presenters. I don't have a specific date for you.
    Mr. Bryant. Just for the record, we may well be celebrating 
Christmas with you here before the adjournment----
    Mr. Berenson. I have heard that.
    Mr. Bryant. [continuing] which we all hope is not the case. 
I also want to clarify that the 19,000 figure should have been 
$19,000 rather than 19,000 claims. So if you could give us a 
dollar amount and the actual number. I yield back my time.
    Mr. Bilbray. Yes. Gentlemans time has expired.
    Gentleman from Ohio will be recognized before we adjourn 
for the vote.
    Mr. Strickland. Thank you, Mr. Chairman.
    Doctor, you mentioned this clearance process, and one of 
the frustrations that I have had with HCFA--and I am not sure 
it is HCFA's fault. There may need to be a legislative remedy. 
But I reflect back on my colleague, Representative Capps', use 
of language. She used words like ``archaic system'', ``lag'', 
``slow'' and so on. My personal experience with HCFA has been 
that these words are appropriate.
    I don't want to lay blame, because the blame may rest up 
here instead of with HCFA, but it seems to me that there is 
legitimate reason to be concerned about the slowness with which 
HCFA responds to legislation, to rulemaking, to clearance and 
the like. Do you know if this is a concern within HCFA itself 
and if there are any efforts under way to try to modernize or 
update the system or is, in your judgment, legislation required 
to reform this agency and some of the processes within the 
agency in order for it to be appropriately responsive to modern 
needs and situations?
    Mr. Berenson. I am aware of one particular situation that 
you are involved with where we have been very slow. We 
obviously are concerned about it. It is, I think, a more 
complex question, and I am probably not the appropriate person 
to address it.
    I think to some extent there are requirements associated 
with the Administrative Procedures Act and FACA and some other 
things. But part of it is, on an issue like this one, there 
would be quality of care concerns, program integrity concerns, 
payment concerns, and at least our process right now permits 
all the parties who are responsible for those different areas 
to weigh in. On important reports we also need to go through a 
departmental clearance process which in some cases is where 
some of the lag comes. It is of concern to me for sure, and I 
don't have a facile answer for you.
    Mr. Strickland. I understand that, but I guess what I come 
back to in my own thinking is the fact that--I mean, we can and 
have in the past made major national decisions regarding war 
and peace in a relatively compressed period of time because we 
considered it important or essential to do so; and, as I say, I 
am not--you know, I don't want to lay blame at the feet of this 
agency, because I am not sure that is where the appropriate 
problem is, but it seems to me that as a Congress and as a 
committee we ought to be concerned about how this agency is 
able to carry out its responsibilities in a timely fashion. And 
what we are talking about here in terms of telehealth is, you 
know, I think is a good example of how we cannot allow 
ourselves to be bogged down for years with arcane procedures 
while the technology is escaping those who most truly need it.
    Mr. Berenson. I appreciate that. I would take the 
opportunity to make one point, however, which is that, and I am 
the head of the Center for Health Plans and Providers which is 
essentially the payment side of Medicare--both the payments to 
Medicare+Choice plans and all of the payment policies to 
hospitals and physicians and others. On a number of issues we 
are 1 or 2 persons deep. If something else comes along, 
something else literally gets put on the shelf for months at a 
time. We have fewer employees now than 20 years ago.
    So I am not coming here requesting a massive expansion. I 
do think one of the issues in some of these areas is simply 
resources and staff and contracting authority to be able to 
move as quickly as I think this particular topic deserves, and 
we have to continually make tradeoffs on which we are going to 
do first, and I do think that is serious concern.
    Mr. Strickland. Thank you, Mr. Chairman, and in view of our 
time, I will yield my time.
    Mr. Bilbray. Thank you. I appreciate the gentleman from 
Ohio for yielding; and we will thank you very much, Doctor, and 
dismiss you at this time.
    We would call up the next panel. We are going to go vote, 
so it gives you time to set up. And I appreciate the patience 
of everyone. I apologize. It is a procedure that we all live 
with. Thank you, Doctor.
    [Brief recess.]
    Mr. Bryant [presiding]. We are going to restart the 
hearing, and Chairman Bilirakis will be delayed a little bit. 
So we are going to move forward with the introductions.
    Mr. Strickland from Ohio is not back yet from the vote but 
would like to more formally introduce Dr. Ross-Lee whom I 
believe is from Ohio.
    Ms. Ross-Lee. Yes.
    Mr. Bryant. We will interrupt whatever stage we are at that 
point if it is not too disruptive to allow him to do that, but 
for now I am just going to begin from my left and introduce 
very briefly the witnesses.
    We have Dr. Karen Rheuban, who is Medical Director, Office 
of Telemedicine, and a professor of pediatrics at the 
University of Virginia--with the University of Virginia Health 
System in Charlottesville. Welcome.
    We have Mr. Joe Tracy, I don't see where--all right. I am 
not going right to left here. Well, I will introduce Mr. Tracy 
anyway. He is the Director of Telehealth at the University of 
Missouri Health Sciences Center in Columbia, Missouri. Welcome 
to you.
    And Ms. Sally Davis here, Program Director at Telehealth 
and Management Development, Marquette General Health System in 
Marquette, Michigan, Upper Peninsula, near what is the name----
    Mr. Stupak. Now, I know why you are the substitute 
chairman.
    Mr. Bryant. Tryout, actually. Okay. These Michigan names 
get me every time.
    Mr. Jim Reid is here. He is Director of Telemedicine and 
Network Services with the Midwest Rural Telemedicine Consortium 
with Mercy Hospital Foundation, and he is testifying on behalf 
of the Center for Telemedicine Law which is located here in 
Washington, DC.
    And then the gentleman I referred to in my statement, Dr. 
Sam Burgiss, who is the Project Director of Telemedicine at the 
University of Tennessee Medical Center in Knoxville, actually, 
and the other end of the State from where I live.
    And we will reserve--Dr. Ross-Lee is here, of course, 
there; and she will be more formally introduced later by our 
colleague from Ohio.
    Let me jump back. Dr. Rheuban, you have a patient here, and 
we have Ms. Lisa Hubbard, you are here, and this beautiful 
young lady next to you is Alexandra Bartley, and she is the 
patient.
    Mr. Rheuban. That is correct.
    Mr. Bryant. Great, welcome. Good to have you here.
    Also, in finishing up the introductions very quickly, Ms. 
Mary Patrick is here. She is Director of Quality Improvement 
with Blue Cross and Blue Shield of Montana in Helena, Montana.
    And Jim Grigsby, who is Study Manager with the Center for 
Health Services and Policy Research at the University of 
Colorado Health Sciences Center from Denver, Colorado, and 
welcome to you, also.
    If we could, I think each one of you, 5 minutes.
    We will begin with Dr. Rheuban.

    STATEMENTS OF KAREN RHEUBAN, MEDICAL DIRECTOR, OFFICE OF 
 TELEMEDICINE, PROFESSOR OF PEDIATRICS, UNIVERSITY OF VIRGINIA 
   HEALTH SYSTEM, ACCOMPANIED BY LISA HUBBARD AND ALEXANDRA 
    BARTLEY; SALLY DAVIS, PROGRAM DIRECTOR, TELEHEALTH AND 
MANAGEMENT DEVELOPMENT, MARQUETTE GENERAL HEALTH SYSTEM; JOSEPH 
 TRACY, DIRECTOR OF TELEHEALTH, UNIVERSITY OF MISSOURI HEALTH 
   SCIENCES CENTER; JAMES REID, DIRECTOR OF TELEMEDICINE AND 
  NETWORK SERVICES, WEST RURAL TELEMEDICINE CONSORTIUM, MERCY 
HOSPITAL FOUNDATION, ON BEHALF OF CENTER FOR TELEMEDICINE LAW; 
SAM BURGISS, PROJECT DIRECTOR, TELEMEDICINE, UTN MEDICAL CENTER 
 AT KNOXVILLE; BARBARA ROSS-LEE, DEAN, OHIO UNIVERSITY COLLEGE 
 OF OSTEOPATHIC MEDICINE; MARY R. PATRICK, DIRECTOR OF QUALITY 
  IMPROVEMENT, BLUE CROSS AND BLUE SHIELD OF MONTANA; AND JIM 
 GRIGSBY, STUDY MANAGER, CENTER FOR HEALTH SERVICES AND POLICY 
    RESEARCH, UNIVERSITY OF COLORADO HEALTH SCIENCES CENTER

    Ms. Rheuban. Thank you.
    Mr. Chairman, distinguished members of the subcommittee, I 
would like to express my gratitude to the Commerce Committee 
for this opportunity to represent the University of Virginia 
Health System today. My name is Dr. Karen Rheuban, and I am a 
pediatric cardiologist at the University of Virginia where I 
also serve as Medical Director of the Office of Telemedicine 
and as Associate Dean for Continuing Medical Education.
    I am pleased to introduce Ms. Lisa Hubbard of Honaker, 
Virginia, and her daughter Miss Alexandra Bartley, who are here 
to share with the committee their personal experience with 
telemedicine services provided to Alexandra in a rural 
community health center in Southwest Virginia.
    For those who reside and work in and around Washington, DC, 
it might seem difficult to imagine that amongst the many 
counties of adjacent Virginia, those of mountainous Southwest 
and Western Virginia are home to some of our Nation's most 
medically underserved, geographically isolated and 
socioeconomically disadvantaged citizens.
    In Virginia, as in other rural States, it is not unusual 
for patients to travel 5 to 7 hours to receive medical or 
surgical consultative services if they seek medical attention 
at all. When one considers the cost of lost wages, overnight 
stays, food and automotive expenses, it is clear that this 
travel imposes great burdens on our rural families.
    In an effort to enhance access to a broad range of services 
not locally available, in 1996 the University of Virginia 
committed considerable internal resources to the development 
and establishment of a telemedicine program. We faced the 
significant barriers of high telecommunications costs, 
expensive clinical workstations, nonreimbursement and 
nonfamiliarity and/or lack of acceptance of advanced 
technologies by many patients and physicians.
    From the inception of our program we have provided clinical 
services without charge to patients for whom no reimbursement 
was available. We developed contractual relationships such as 
our correctional telehealth program to allow us to recoup many 
of our overhead costs. We successfully petitioned Virginia 
Medicaid for a waiver of their policy of nonreimbursement. 
Despite the prevailing policies of nonreimbursement by the 
private sector, we continue to offer telemedicine consultative 
services to all our citizens and have turned no one away.
    In 1997, with Federal and other grant funding, we 
established the Southwest Virginia Alliance for Telemedicine. 
This partnership has established five operational telemedicine 
sites, and we are in the process of installing two additional 
facilities, all in medically underserved counties of Southwest 
Virginia to date, our Office of Telemedicine has facilitated 
more than 2,200 clinical encounters, linking remotely located 
patients with UVA consultants representing 24 specialties and 
subspecialties. Our network now consists of 20 remote sites in 
the Commonwealth of Virginia.
    We consider the services provided by telemedicine to be an 
extension of our traditional mode of health care delivery. 
Through these linkages we have saved the lives of infants and 
adults by providing timely diagnostic services and therapeutic 
intervention.
    Last week, through a telemedicine linkage, a UVA 
dermatologist diagnosed a life-threatening case of a flesh 
eating streptococcal skin infection that had been thought to be 
a case of shingles. We have diagnosed an infection in the heart 
of a gravely ill adult patient whose diagnosis had eluded local 
primary care practitioners. We have identified and offered 
immediate treatment to an infant with a rare and complicated 
congenital heart defect who would have died without immediate 
intervention. We use these same networks to provide health 
professional and patient education.
    Much like our experience, most large-volume telehealth 
programs are those that provide reimbursable correctional 
telehealth services or are located in States wherein 
legislative mandates have directed third party reimbursement. 
Currently, inmates in our Virginia correctional facilities have 
access to higher quality specialty care than do many of our 
other tax-paying citizens.
    These technologies with such vast potential to improve the 
health of our citizens still face considerable barriers to full 
deployment. We are thankful to the Congress for enacting the 
1996 Telecommunications Law, following which we have witnessed 
the barrier of high telecommunications costs fall substantially 
with competition. In 1995, we were quoted a rate of $5,872 per 
month for a T1 line linking our hospital to a hospital in 
Southwest Virginia last month, we leased that same T1 line for 
$775 per month. We thank the Commerce Committee for that. 
However, without relief of the obstacle of limited 
reimbursement, full deployment of these technologies will not 
occur.
    Virginia Medicaid has willingly endorsed reimbursement for 
consultations and follow-up visits. Much like the Department of 
Corrections, Medicaid, as a payer, funds the transportation of 
patients. Astonishingly, the patient transportation budget of 
Virginia Medicaid for fiscal year 2000 exceeded $53 million.
    The Balanced Budget Act of 1997, with provisions for 
reimbursement of telehealth services to Medicaid recipients, is 
a step forward but falls short in its implementation. As they 
establish reimbursement policies, many third party payers 
follow closely the parameters established by HCFA. Legislation 
before Congress offers further steps toward the achievement of 
these goals.
    Amongst the HCFA rules for reimbursement viewed to be an 
obstacle include the following: Location of the remote site 
from which the consult is originated. HCFA rules allow Medicare 
to reimburse telemedicine consults only when the residence of 
the patient or the location of the workstation falls within a 
primary health professional shortage area. The Federal 
classification of a primary HPSA does not take into account the 
distribution of specialist physicians in that region. We 
believe that all Medicare patients should have access to 
consultative services via telemedicine when deemed appropriate 
by their primary care provider, issues of licensure 
notwithstanding.
    Fee splitting. Nowhere else in clinical practice does the 
consulting physician share the fee for a clinical encounter 
with a referring physician. HCFA rules require that the 
consultant paid by Medicare split the fee 75/25.
    Reimbursement rates. Reimbursement should be at standard 
Medicare rates to the consulting practitioner. When divided 
with the remote referring practitioner, the lower fee and 
greater administrative burden is a disincentive to 
participation in telehealth programs.
    Broader range of reimbursable CPT codes. Reimbursement 
should also include a broader range of CPT codes to include ENM 
codes rather than just consultation codes. It is also an equal 
hardship for patients to travel many hours for a follow-up 
appointment as it is for an initial encounter. In the case of a 
post-operative visit, travel may be more difficult for a 
patient recovering from surgery than for the initial 
consultation.
    Almost done. Telepresenter requirement----
    Mr. Bryant. I notice you are reading quickly here.
    Ms. Rheuban. It is our experience that the referring 
clinician need not be in attendance during a telemedicine 
encounter. When a patient travels to receive care from a 
consultant, the referring health professional does not travel 
along with the patient. A broader range of providers should 
receive reimbursement for telehealth encounters.
    And, last, remote site fee. Despite a reduction in costs, 
many small rural clinics and hospitals are still unable to 
afford the capital expenditures and ongoing telecommunications 
costs inherent in the establishment and maintenance of a 
telemedicine facility. We believe that Medicaid and if possible 
Medicare should fund a small infrastructure fee to offset a 
portion of the overhead of the rural telemedicine facility. 
Alternatively, the patient receiving services could fund a 
component of that expenditure in the form of a small co-pay 
determined on a sliding scale.
    On behalf of the University of Virginia, we thank the 
subcommittee for holding this hearing and for considering 
additional legislation that may abolish other barriers to the 
full deployment and utilization of telehealth technologies.
    Thank you.
    [The prepared statement of Karen Rheuban follows:]
Prepared Statement of Karen Schulder Rheuban, Professor of Pediatrics, 
Medical Director, Office of Telemedicine, Associate Dean for Continuing 
        Medical Education, University of Virginia Health System
    Chairman Bilirakis, Distinguished members of the subcommittee, I 
would like to express my gratitude to the Commerce Committee for this 
opportunity to represent the Office of Telemedicine of the University 
of Virginia Health System at this subcommittee hearing on reimbursement 
for telehealth services. My name is Dr. Karen Rheuban and I am a 
pediatric cardiologist at the University of Virginia where I also serve 
as Medical Director of the Office of Telemedicine and as Associate Dean 
for Continuing Medical Education. I am pleased to introduce Mrs. Lisa 
Hubbard of Honaker, Virginia, who has agreed to share with the 
Committee her experience with telemedicine and its role in the care 
provided to her daughter, Alexandra Bartley.
    For those who reside and work in and around Washington D.C., it 
might seem difficult to imagine that amongst the many counties of 
adjacent Virginia, those of mountainous southwest and western Virginia 
are home to some of our nation's most medically underserved, 
geographically isolated and socioeconomically disadvantaged citizens. 
In Virginia, as in other rural states, it is not unusual for patients 
with complex medical problems to travel five to seven hours to receive 
medical or surgical consultative services, if they seek medical 
attention at all. When one considers the cost of overnight stays, lost 
time from work, the high cost of gasoline and other automotive 
expenses, this travel imposes great burdens on these families. For more 
than thirty years, in an effort to enhance access to a broad range of 
clinical and educational services not locally available, University of 
Virginia faculty have traveled throughout the Commonwealth to provide 
on-site medical care to patients and educational programs for health 
professionals. In 1996, to further enhance access to these clinical and 
educational services, the University committed considerable internal 
resources to the development and establishment of a Telemedicine 
program. We faced the significant barriers of: a. High 
telecommunications costs; b. Expensive clinical workstations; c. Non-
reimbursement for telehealth services by payers; and d. Non-familiarity 
and/or lack of acceptance of advanced technologies applied to health by 
many patients and physicians.
    At the inception of our program, we provided clinical services 
without charge to patients for whom no reimbursement was available. We 
simultaneously began to develop contractual relationships and other 
strategies to allow us to recoup many of our overhead costs. Despite a 
persistent climate in Virginia of nonreimbursement by the private 
sector for telehealth services, we continue to offer these services to 
all our citizens, and have turned no one away, regardless of financial 
or insurance status.
    In 1997, with Federal funding through the Department of Commerce 
NTIA Technology Opportunities Program, the USDA Rural Utilities Service 
Telemedicine and Distance Learning Grant Program, state funding through 
the Virginia Healthcare Foundation, an appropriation by the General 
Assembly and with donations from Bell Atlantic, Sprint and GTE, we 
established the Southwest Virginia Alliance for Telemedicine. This 
partnership has established five operational telemedicine facilities 
and we are in the process of installing two additional facilities, all 
in medically underserved counties of SW Virginia (Appendix A). None of 
our grant funds reimburse clinical consultative or educational 
activities; rather they fund within the network, infrastructure, 
technology and telecommunications costs.
    To date, since fiscal year 1997, our Office of Telemedicine has 
facilitated more than 2200 clinical encounters (Appendix B), linking 
remotely located patients with consultants representing 24 specialties 
and subspecialties (Appendix C). Of those encounters, since January 
1999, when Medicare began authorizing reimbursement for telemedicine 
services, we have seen only 22 Medicare eligible beneficiaries and of 
these consultations, only 10 were eligible for reimbursement under 
current HCFA rules.
    Our network currently consists of 20 remote sites in the 
Commonwealth of Virginia (Appendix A). We consider the services 
provided via telemedicine to be an extension of our traditional mode of 
health care delivery. We consider our office, an electronic clinic.
    We have used these networks to provide the following services not 
locally available: a. Care of patients with HIV/AIDS and/or Hepatitis 
C, b. Interpretation of remotely obtained pediatric cardiac 
ultrasounds, including life-saving initial assessments of neonates with 
critical cardiovascular disease, c. Tele-dermatology consultations, d. 
Cervical cancer screening and oncologist guided cervical biopsies, e. 
Telepsychiatry services--including consultations for hearing impaired 
patients by the Commonwealth's only sign language capable psychiatrist, 
f. Postoperative care following corrective surgery for congenital 
defects to children such as Alexandra, g. A collaborative Tumor board 
linking our Cancer Center faculty with physicians at a remote community 
hospital, h. Hundreds of hours of patient education for people 
suffering from diabetes, i. Health professional education to aid remote 
community hospitals and practitioners meet JCAHO, OSHA and state 
licensure mandates, j. Educational programs for project Headstart 
personnel by our developmental pediatricians, and k. Educational 
programs for high school students interested in a career in the health 
professions.
    Through our telemedicine linkages, we have saved the lives of 
infants and adults by providing timely diagnostic services and 
therapeutic interventions. Last week a dermatologist diagnosed a case 
of a ``flesh eating'' streptococcal skin infection that had been 
thought to be a case of shingles. We have correctly diagnosed an 
infection in the heart of a gravely ill adult patient whose diagnosis 
eluded local primary care practitioners. We have identified and offered 
immediate treatment to an infant with a rare and complicated congenital 
heart defect, who would have died without immediate intervention.
    As reported by the Association of Telehealth Providers, in 1999, 
Virginia was ranked fourth in the nation in terms of numbers of 
telemedicine consultations. In reality, much like our experience, most 
large volume telehealth programs are those programs that provide 
reimbursable correctional telehealth services, or are located in states 
wherein legislative mandates have directed third party reimbursement. 
Currently, inmates in our Virginia correctional facilities have access 
to higher quality specialty care than do many of our other tax paying 
citizens. As an example, the faculty of the University of Virginia and 
those of Virginia Commonwealth University provide expert HIV/AIDS care 
to Virginia inmates via telemedicine. The survival rates and viral 
loads of our incarcerated populations have recently been reported to be 
significantly better than that of patients similarly affected in the 
non-incarcerated population. This is primarily because through our 
correctional telemedicine program, inmates have access to AIDS experts 
and they receive regular follow-up care.
    These technologies with such vast potential to improve the health 
of our citizens still face considerable barriers to full deployment. We 
are thankful to the Congress for enacting the 1996 Telecommunications 
Law. We have witnessed one barrier, high telecommunications costs, fall 
substantially with the appearance of competition. For example, in 1995, 
the University of Virginia was quoted a rate of $5872/month for a T1 
line linking our hospital to a community hospital in Southwest 
Virginia. In the year 2000, real competition has arrived, even to the 
most remote regions of Appalachian Virginia. Last month, we leased that 
same T1 line for $775/month. Similarly, videoconferencing workstations, 
high-resolution cameras and other peripheral devices are now very 
affordable. However, without relief of the obstacle of limited 
reimbursement, full deployment of these technologies will not happen.
    Virginia Medicaid has willingly endorsed reimbursement for 
consultations and follow up visits, regardless of the geographic 
location of the patient or the workstation, as long as the facility is 
authorized to bill Medicaid. Much like the Department of Corrections, 
Medicaid, as a payer, funds the transportation of patients. The 
transportation budget of Virginia Medicaid patients for fiscal year 
1999-2000 exceeded $53 million dollars. Reimbursement has been 
authorized by Medicaid for a broad range of services to include 
telehealth services provided to children eligible for the Children's 
Health Insurance Program. They have also authorized reimbursement for 
innovative programs that address specific local clinical needs. For 
example, in the Lenowisco Planning District, there are no gynecologic 
cancer specialists. In conjunction with the Scott County Health 
Department, we have established a program to provide telehealth 
facilitated cervical cancer screening.
    The Balanced Budget Act of 1997, with provisions for reimbursement 
of telehealth services to Medicare recipients falls short in its 
implementation. Even for those services for which Medicare 
reimbursement is available, the terms as established by HCFA are in 
need of modification. Without a major revision of the rules adopted by 
HCFA, telehealth programs will fall short of the goal of enhancing 
access to quality healthcare for all our citizens. As they establish 
reimbursement policies, many of the third party payers follow closely 
the reimbursement parameters established by HCFA for Medicare 
beneficiaries. Legislation before this Congress, to include SB 2505, 
Telehealth Improvement and Modernization Act of 2000, and HR 4841, 
Medicare Access to Telehealth Services Act of 2000, are steps towards 
the achievement of these goals.
  relevant issues for reimbursement for services provided to medicare 
                             beneficiaries:
Location of remote site (site of origination of the consultation):
    We believe that all patients should have access to services deemed 
appropriate by their primary care provider--issues of licensure within 
the state notwithstanding. HCFA rules allow Medicare to reimburse 
telemedicine consultations only when either the residence of the 
patient or the location of the workstation falls within a primary 
health professional shortage area. Unfortunately, the federal 
classification of a HPSA does not take into account the distribution of 
specialist physicians in that region. A community may not be eligible 
for HPSA classification because of its numbers of primary care 
practitioners; yet that very region may have no specialist physicians 
available to serve as consultants when needed. For some patients who 
reside in counties that do not qualify as a HPSA or medically 
underserved area because of relative to proximity to a nearby city, 
geographic, medical or other socioeconomic considerations may preclude 
access to clinical services.
Fee splitting:
    Nowhere else in clinical practice does the consulting physician 
share the fee for a clinical encounter with a referring physician. HCFA 
rules require that the consultant, paid by Medicare, split the fee with 
the referring physician 75%/25%. Such a policy may be viewed as a 
violation of federal anti-kickback statutes, is cumbersome to 
administrate, and for most hub sites will be difficult to implement.
Reimbursement rates:
    Reimbursement should be at standard Medicare rates to the 
consulting practitioner. When divided 75%/25% with the remote referring 
practitioner, the lower fee and greater administrative burden is a 
disincentive to participation in telehealth encounters for the 
consultant physician.
Broader range of reimbursable CPT codes:
    Reimbursement should also include a broader range of CPT codes 
rather than consultation codes (99241-99275). It is an equal hardship 
for patients to travel many hours for a follow-up appointment as it is 
for an initial encounter. In the case of a postoperative visit, travel 
may be more difficult for a patient recovering from surgery than for 
the initial consultation. As long as the referring and specialist 
physicians deem the technology adequate to provide the service, we 
believe that all visits reimbursable under traditional Medicare 
provisions should be reimbursable when provided via telemedicine 
technologies.
Telepresenter requirement
    It is our experience that a referring physician, nurse practitioner 
or physician's assistant need not be in attendance during a 
telemedicine encounter. When a patient travels to receive care from a 
consultant, the referring health professional does not travel to 
participate in that encounter. We believe any licensed healthcare 
professional acting under the instructions of the referring health 
professional or the consulting health professional to be effective 
telepresenters at remote sites, and that the decision as to the 
necessity for a telepresenter should be left to the referring or 
consulting practitioner. In our correctional telemedicine program, 
licensed registered nurses have proven themselves to be valuable 
telepresenters. For mental health encounters, with their attendant 
sensitive issues of confidentiality (and the lack of a need for 
technical support inherent in the use of medical peripheral devices) we 
do not believe personnel other than the patient and the consultant 
mental health provider need be present.
Eligible provider
    A broader range of providers should receive reimbursement for 
telehealth encounters. Any licensed health professional eligible for 
traditional Medicare reimbursement should be considered eligible for 
reimbursement of services provided via telemedicine.
Remote site fee
    In the absence of federal or grant funding, small clinics and 
hospitals are least likely to afford the capital expenditures and the 
ongoing telecommunications costs inherent in the establishment and 
maintenance of a telemedicine facility. We believe that Medicaid, and 
if possible, Medicare should fund a small infrastructure fee to offset 
a portion of the overhead costs of the rural telemedicine facility. 
Alternatively, the patient receiving services could fund a component of 
that expenditure in the form of a small co-pay determined on a sliding 
scale ($5-$20). In the former model, programs such as Medicaid stand to 
save transportation dollars; in the latter model, it is the patient who 
saves the expense of travel to the consultant.
    Despite all the limitations outlined above, since FY 1997, the 
Office of Telemedicine of the University of Virginia has facilitated 
>2200 clinical encounters with patients in the Commonwealth of 
Virginia. We have saved lives by providing timely diagnostic services 
and therapeutic recommendations to patients of all ages. We have used 
our linkages to provide patient education, health professional 
education, and teacher training and even courses for local high school 
students.
    On behalf of the University of Virginia Health System, and other 
academic medical centers dedicated to providing outreach to patients in 
need, we thank the Commerce Committee and the Congress for enacting 
legislation that has created competition in the telecommunications 
marketplace. We also thank the Subcommittee on Health for considering 
additional legislation that may abolish other barriers to the full 
deployment and utilization of telehealth technologies that could 
enhance access to quality healthcare for all our citizens.

[GRAPHIC] [TIFF OMITTED] T7112.001

[GRAPHIC] [TIFF OMITTED] T7112.002

[GRAPHIC] [TIFF OMITTED] T7112.003

    Mr. Bryant. We let you have that extra 2 minutes only 
because you brought Miss Bartley with you. Let me warn you, the 
rest of you haven't done that.
    Ms. Davis--Ms. Hubbard, you have a statement? Okay. Great. 
Thank you. I am just ignoring you all around today, aren't I?

                    STATEMENT OF LISA HUBBARD

    Ms. Hubbard. That is all right.
    Mr. Chairman and members of the subcommittee, I would like 
to thank the U.S. Congress for inviting me to come here today 
to tell you about my daughter Alex and how we feel about the 
use of telemedicine to help provide care to the citizens of 
rural America. My name is Lisa Hubbard and I live in Honaker, 
Virginia, a small community in Southwest Virginia. My daughter 
Alex is 5 years old, and she is a kindergarten student at 
Honaker Elementary.
    When Alex was born, we noticed she had what looked like a 
small scratch on her right check. A few weeks later, we were 
told that it was a hemangioma, a blood vessel tumor on her 
face. The hemangioma grew and grew until it nearly covered her 
entire cheek. She also had a cleft palate.
    When Alex was 6 months old, we were referred to Dr. Kant 
Lin, a pediatric plastic surgeon at the University of Virginia. 
There was no doctor in our area who was qualified to treat our 
daughter. Alex and I made our first trip to Charlottesville, a 
6-hour drive each way.
    Dr. Lin decided that he would first try to shrink the 
hemangioma with conservative treatments, with oral steroids. 
That meant we had to come to Charlottesville once per month for 
him to look at the tumor. When that didn't work, he decided to 
inject steroids directly into the tumor, which meant we had to 
come every other week. Finally, he decided that surgery was the 
only solution. Sometime after her surgery, a telemedicine 
workstation was installed at the Thompson Family Health Center 
in Vansant, Virginia. We made our first visit to Dr. Lin over 
telemedicine linkages.
    Our trips to Charlottesville were very difficult for Alex 
who was, of course, as an infant still in diapers and bottle 
fed. The trips were very difficult for me as well, both 
financially and emotionally. I usually had to make this long 
trip with my daughter alone. I had to find the money for a 
hotel room, gas and food, plus I missed 2 days of work and pay 
because, as you can imagine, sick time and vacation time 
disappear pretty quickly.
    It cost me more than $100 to make the trip, not to mention 
my lost wages of $80 a day. Sometimes we only saw Dr. Lin for a 
brief visit so that he could look and measure the hemangioma. 
We drove all that way for such a short visit with her surgeon.
    The telemedicine program has provided a wonderful service 
to rural patients and families such as ours. Instead of driving 
12 hours round trip, we now only travel 40 minutes round trip 
to the Thompson Family Health Center in Vansant, Virginia, to 
receive the same wonderful care from Dr. Lin.
    Alex is currently enrolled in the Aetna Insurance Program, 
but it does not cover the services provided through 
telemedicine. The University of Virginia provides a sliding 
scale fee program for indigent patients, but we do not qualify 
for that program. If the University charged me for Dr. Lin's 
fee, it would cost me $150 since Aetna will not cover this 
visit. Thankfully, the University has waived this fee for me, 
but if I made the long drive to Charlottesville facing the 
hardship and expense of that trip, Aetna would reimburse Dr. 
Lin, but I would be forced to bear the expenses of traveling to 
see him.
    There are so many other rural citizens who face these same 
difficulties in receiving care from qualified specialists. I 
hope that the U.S. Congress will consider enacting legislation 
to make it easier for us to do so through the use of 
telemedicine. Thank you very much.
    Mr. Bilirakis. Thank you, Ms. Hubbard.
    Alexandra, are we going to hear anything from Alexandra? 
Would you like to say anything to us?
    Ms. Bartley. Thank you for having me.
    Mr. Bilirakis. Thank you for being here.
    Ms. Sally Davis is a Program Director for Telehealth and 
Management Development with Marquette General Health Systems. 
Ms. Davis, welcome. Please proceed.

                    STATEMENT OF SALLY DAVIS

    Ms. Davis. Thank you. I have a hard act to follow.
    Mr. Chairman and members of the subcommittee, thank you for 
paying attention to telehealth, especially as it pertains to 
the delivery of health care in rural areas.
    I am an employee of Marquette General Health System, a 352-
bed regional referral center in Michigan's Upper Peninsula; 
and, as Congressman Stupak has been pointing out, we are a very 
rural area.
    The 15 counties of the Upper Peninsula span a distance east 
to west of over 300 miles. It takes 6 hours to drive from one 
end to the other--and that is in good weather--and we cover two 
time zones. Our population density is just 19 people per square 
mile, and in some counties it drops as low as six people per 
square mile. In the middle of the peninsula sits Marquette. We 
are not a large city by any means, only 22,000 people, yet we 
have a regional referral with specialists whose skills parallel 
those found in any metropolitan area.
    When people want to come to access our specialty care, they 
need to drive up to 3 hours per one-way visit. When residents 
of the Upper Peninsula need to access subspecialty care outside 
of the jurisdiction of Marquette General, they travel distances 
such as Ms. Bartley. It is not unusual for people to spend 18 
hours of drive time two ways, hotel room, 2 days off from work 
and, of course, the other expenses that are incurred during 
travel for a subspecialty appointment of 15 or 30 minutes.
    Marquette General Health System, along with 15 other 
independent community hospitals, make up the Upper Peninsula 
health care network. Six of our network members are Critical 
Access Hospitals. Another soon will be. Every county in our 
region holds health professional shortage designation on a 
partial basis. That is significant when it comes to the current 
HCFA regulations for telemedicine reimbursement.
    Our telehealth network began in the fall of 1994 with a 
focus on professional education and a commitment to community 
usage. Administrative applications were quickly incorporated 
and are now a major application of our system. Clinical 
applications began that first year but have progressed much 
more slowly due to the same barriers that mirror other 
telehealth programs.
    At present, we are a 23-site network. Our utilization runs 
48 percent education, 30 percent administration, 11 percent 
clinical and 11 percent community usage. During the upcoming 
year we are expecting tremendous growth in a lot of the areas 
that other telehealth programs are moving in.
    But I have traveled here not to speak of our program as 
much to show my support of your interest in telehealth and to 
encourage actions that can increase access to health care. My 
comments center around grant programming and reimbursement.
    The Upper Peninsula telehealth network has accomplished a 
great deal in our last 5\1/2\ years, and we are very proud of 
the impact we have had on health care efficiencies in our 
region. Yet we would have accomplished none of this, not even 
attempted telehealth programming, if it were not for Federal 
grant funding.
    Our six critical access hospitals with their 15 acute care 
beds and an average daily census that would be a challenge to 
even the most creative financial mind would not have been able 
to justify the capital outlay. Yet our telehealth network has 
provided its contribution to the improvement of the bottom line 
for these hospitals.
    I urge you to continue telehealth grant programming so that 
other rural areas can reap the same benefits. Until these 
technologies are routine within the delivery of medical care 
and until transmission costs are reasonable and equitable, such 
funding is needed. Federal grants have supported the pioneers 
who are testing theories, identifying barriers and are paving 
the roads around these barriers. We have made much progress, 
but there is still work to be done.
    Second, there is a very important issue of reimbursement. I 
mentioned previously that every county in our area holds 
partial HPSA designation. We should be the ideal candidates to 
access the current HCFA standards. Yet we have not. We did not 
come to that party, as Mr. Berenson said. Why? For the same 
reasons that are listed here in your memo from the health team 
that came out, for the same reasons I have put in my written 
testimony and as in the written testimony of other members who 
are testifying here today. Like us, most of the telehealth 
programs do not use the right limitations in reimbursement.
    What needs to be accomplished is patient access to 
providers without the requirement of telepresenters, the 
elimination of fee sharing and adequate compensation for the 
delivery of services and increase in the scope of providers to 
include all those currently eligible for reimbursement by HCFA, 
the inclusion of store-and-forward technologies, access for 
patients not residing in HPSAs, and the support of home health 
telemedicine.
    The model programs have come a long way in discovering 
telehealth systems that work in appropriate applications. 
Telehealth is an evolving norm and is making the difference 
between access and no access to care. Unfortunately, it will 
never leave the evolving stage until practitioners and services 
are reimbursed appropriately.
    Yesterday, I sat through some of the Firestone hearings and 
listened to your colleagues question why some of the deaths and 
some of the injuries were not prevented. I suggest to you that 
access to health care through telemedicine is still a life and 
death matter, and I appreciate your concern for all of those 
rural health patients who will need to access specialty care in 
the future, patients such as my parents who live in a community 
of less than 2,000 people, who are in their mid-eighties, who 
have multiple health problems, who are unable to drive and 
whose specialty care is an hour and a half away.
    Thank you.
    [The prepared statement of Sally Davis follows:]
  Prepared Statement of Sally Davis, Program Director, Telehealth and 
        Management Development, Marquette General Health System
    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to serve as a witness today regarding telehealth as it 
pertains to rural health care. During my presentation you will hear 
about the geographical area I represent, the accomplishments of our 
telehealth network, the challenges we still face, and, most 
importantly, how you can affect the further deployment of telehealth in 
rural areas of the United States.
    I am an employee of Marquette General Health System--a 352-bed 
regional referral center. I initiated our region's telehealth network 
during my tenure as the director of education for our institution, and 
continue to serve as the director of telehealth.
    Our area is very rural. Although the majority of the Michigan's 
population and economy resides in its well-recognized lower peninsula, 
Michigan also includes a second peninsula to the north. The fifteen 
rural counties of the Upper Peninsula total an area of 16,452 square 
miles. Its east west distance of over 300 miles includes communities in 
two time zones, and is home to approximately 314,134 people. That's a 
population density of 19 people per square mile. In some counties the 
density drops to 6 people per square mile. It takes six hours to travel 
from one end of the peninsula to the other. That's if the wildlife 
stays off the roads and the weather conditions are good. We are known 
for our severe weather, particularly the kind that closes roads during 
the wintertime.
    In the middle of the peninsula, sitting on the shores of Lake 
Superior, is Marquette. We're not a large city by any means (22,000 
people) yet we have a regional referral center with specialists whose 
skills parallel those found in any metropolitan area. To access 
specialty care, our patients drive up to three hours one-way. When 
residents of the Upper Peninsula need sub-specialty care beyond the 
services available at Marquette's regional referral center, they travel 
to Detroit, Ann Arbor, Mayo Clinic or Milwaukee. A normal drive to seek 
quaternary care is an 18 hour round trip, most often taken over a two-
day period. That's 18 hours of drive time, at least one night stay in a 
hotel, two days off from work and meal expenses for a 15-30 minute sub-
specialty appointment.
    My organization, Marquette General Health System, along with 15 
other independent community hospitals and health care institutions make 
up the Upper Peninsula Health Care Network. Six of our network members 
hold Critical Access Hospital (CAH) designation. A seventh CAH hospital 
is anticipated within the next year. Every county in our region holds 
partial Health Professional Shortage Area (HPSA) designation. We 
believe in the independence of the communities, the benefits derived 
through the synergy of working together, and the connectivity to 
quaternary care centers for those times when services cannot be 
provided at the local or regional level.
    Our telehealth network began in the fall of 1994 with a focus on 
professional education and a commitment to community usage. 
Administrative applications were quickly incorporated and are now a 
major application of the system. Clinical applications began the first 
year, but have progressed much more slowly due to barriers that mirror 
other telehealth programs: lack of reimbursement, the need for 
dedicated staff to promote clinical usage, the complexities of 
developing systems to accommodate the applications, and the need for 
technologies to be conveniently located for practitioners.
    At present, we are a 23-site network with systems in critical 
access hospitals, community hospitals, the regional referral center, 
and rural health clinics. Our utilization runs 48% education, 30% 
administration, 11% clinical, and 11% community usage. During the 
upcoming year we anticipate tremendous growth. We will add sites, 
increase the number of systems, focus on clinical applications, add 
home health telemedicine in three counties, and merge Internet Protocol 
with ISDN transmission.
    Administrative applications provide direct travel savings and go 
far beyond the often recognized convenience for CEOs and directors. The 
ability to meet on a regular basis, and involve more of the key people, 
has propelled our regional health care network partners toward our 
goals faster, and on a greater scale, that anticipated. Video 
conferenced meetings have proven to add efficiencies to the health care 
systems in our region.
    With education we bring improved knowledge and skills to the 
isolated rural practitioners that would otherwise have to spend 
extended time away from their patients to acquire necessary credits for 
relicensure. We also increase the number of health care staff able to 
participate in continuing education. This education of professionals is 
essential for the community confidence in their small, struggling 
hospitals. Through our educational programming we also provide support 
group services to individuals who reside in communities without the 
critical mass to maintain their own support group services. And we 
bring health care information to rural residents who cannot otherwise 
access the information needed to manage their diseases. Ontonagon is a 
County with 5% of their population diagnosed as having diabetes. It was 
also a county without outpatient diabetes and nutrition education until 
such services became available through our telehealth network. The 
skills of the providers, the emotional support in dealing with chronic 
diseases, and the information necessary to control an individual's 
diabetes--all are important components of improving health care that 
often go unmeasured.
    Our clinical applications allow rural residents to visit their 
specialty provider when a specialist is not available locally. Patient 
visits are available for cardiothoracic surgical follow-ups, 
enterostomal/skin therapy, neonatology, psychiatry, psychology, 
pediatrics, social work, obstetrics, oncology, physical therapy and 
nutrition. Telehealth encounters often mean the difference between 
getting care in a timely manner or waiting for care beyond an 
acceptable time limit. Physician to physician consultations take place 
when a diagnosis needs to be confirmed or when the need for a patient 
transfer is in question.
    I have traveled here not to speak of our program as much as to show 
my support of your interest in telehealth and to encourage actions that 
can increase access to health care through telehealth technologies. My 
comments center around grant programming and reimbursement.
    The Upper Peninsula Telehealth Network has accomplished a great 
deal over the past 5\1/2\ years. We're very proud of the impact we have 
had on health care in our region and the model that we provide for 
other rural areas. Yet we would have accomplished none of this--
wouldn't have even attempted a telehealth program - without federal 
grant support. The Upper Peninsula does not have a major research 
university with a medical focus within our boundaries. Nor do we have a 
large multi-hospital corporation for which the cost justification of a 
telehealth network comes easier. We are simply a group of small, 
independent health care organizations dedicated to bring the best 
health care to our residents. Our six Critical Access Hospitals with 
their 15 acute care beds and an average daily census that would be of 
concern to even the most creative financial minds, would not have been 
able to justify the initial capital outlay. Yet, the telehealth network 
has provided its contribution to the improvement of the bottom line for 
these hospitals.
    I urge you to continue telehealth grant programming so that other 
rural areas can provide improved access to care. Until these 
technologies are a routine within the delivery of medical care, and 
until transmission costs are reasonable and equitable, such funding is 
needed. Federal grants have supported the pioneers who are testing and 
proving the applications that improve access to care. The model 
programs throughout the United States have tested theories, identified 
barriers, and are paving the roads around these barriers. We have made 
much progress, yet there is still work to be done.
    Secondly, there's the very important issue of reimbursement. As I 
mentioned, eleven percent (11%) of our applications are what we 
consider clinical/medical connections. I am confident that this number 
would be higher if reimbursement was more available. Although we have 
received grant support, our history does not include the rural 
telemedicine grant program through the Office for the Advancement of 
Telehealth. To date, our practitioner incentive payments have been 
restricted to a few consults for children with special health care 
needs. Thus, our medical applications are reliant on contractual 
arrangements, bundled services, and the pioneering spirit of 
practitioners willing to forgo payment.
    I mentioned previously that every county in the Upper Peninsula 
holds partial HPSA designation. This is important since, under the 
current HCFA rules, only those patients residing in HPSA areas can be 
telemedicine beneficiaries. Ours should be an ideal network to access 
practitioner reimbursement through the current HCFA guidelines, yet we 
have not pursued this avenue. The reason we haven't is that the current 
regulations don't reflect practice and efficiencies. Our applications 
are not unlike other telehealth programs:

 The person who presents the patient to the specialist is most 
        often a nurse, or in psychiatric cases a social worker. In some 
        situations, such as nutritional counseling for diabetic 
        patients, there is no telepresenter in the room with the 
        patient. Most often there is not a need for the patient to be 
        presented by another physician, physician assistant or nurse 
        practitioner for quality care to occur. In fact, an RN with 
        special training in chemotherapy administration is usually more 
        qualified to present a patient for pre chemotherapy assessment 
        than is the patient's family care doctor.
 The 75/25-fee split is not attractive to the consulting 
        practitioner. Not only is the consultant providing expertise at 
        a reduced rate, the billing/fee sharing process is cumbersome.
 Some of the services we provide, or would like to provide, 
        involve practitioners that are eligible for HCFA reimbursement 
        but are not eligible under the telehealth bill.
 Some of the services we want to provide involve store and 
        forward technology, which does not qualify for HCFA telehealth 
        reimbursement. Yet this technology works very well in specialty 
        areas where the patient does not need to be present.
    Like us, most of the telehealth programs do not utilize the 
technologies to their fullest because of the limitations in 
reimbursement. What needs to be accomplished is patient access to 
providers without the requirement of telepresenters, the elimination of 
fee sharing and adequate compensation for the delivery of services, an 
increase in the scope of providers to include all those currently 
eligible for reimbursement by HCFA, the inclusion of store and forward 
technologies, access for patients not residing in HPSAs, and the 
support of home health telemedicine.
    It's not those of us who sit here before you as witnesses that need 
reform in the reimbursement of telehealth and the assured continuation 
of the technology within the routine. As an administrator, I'm far more 
removed from the actual patient experience than I want to be. For you 
as policy makers, it must be more so. Yet what you do here at the 
nation's capital connects so tightly to very personal and highly 
emotional experiences. What you do is for Emma who can now have her 
dialysis monitored by a nephrologist at a hospital two hours away. It's 
for the expectant mother whose closest obstetrical service is 87 miles 
away. It's for five month old Rena who was born with just one finger on 
each hand and one toe on each foot, so she can be assessed for 
corrective surgery by her pediatric hand specialist 500 miles away.
    The use of telehealth technologies allows for safe, efficient and 
effective delivery of health care. The quality is assured through the 
normal structure and function of health organizations and practitioner 
guidelines. Contrary to some earlier predictions, there has not been 
abuses of the systems and technology. These facts have been proven by 
the current telehealth programs--most of which our government has 
financially supported.
    The model programs have come a long way in discovering telehealth 
systems that work and appropriate applications. Telehealth is an 
evolving norm and is making the difference between access and no access 
to care. Unfortunately it will never leave the evolving stage until 
practitioners and services are reimbursed appropriately. Your 
committee's time and attention today is crucial for those of us 
struggling to provide access to care through telehealth technologies. 
And it is critical for the future patients who will receive care via 
this technology. Thank you for the attention to this issue and for your 
efforts toward increased access to care through telehealth.

    Mr. Bilirakis. Thank you very much, Ms. Davis.
    Mr. Joe Tracy is Director of Telehealth for University of 
Missouri Health Sciences Center, Columbia, Missouri. Mr. Tracy, 
welcome. Please proceed, sir.

                    STATEMENT OF JOSEPH TRACY

    Mr. Tracy. Thank you. Mr. Chairman and committee members, 
it is an honor to be here today to speak to you on the topic of 
telehealth. Thank you for this opportunity.
    I have been the director of the Missouri Telehealth Network 
at the University of Missouri Health Science Center since 1995, 
its very beginning. Our network has provided services to rural 
patients from newborns to the frail elderly. We have seen 
approximately 2,000 cases and multiple medical specialties via 
the interactive video network, and we have conducted and 
interpreted over 1,600 teleradiology exams.
    Our program is based on the reality that telehealth is not 
a new or different medical service but it is simply a new way 
to deliver standard services to people in underserved areas. 
Policies that discourage telehealth do not deprive these 
communities of some exotic treatment but of the day-to-day 
health care most Americans take for granted.
    Patients are the main beneficiaries of telehealth. They 
receive standard specialty care that is not typically found in 
or near their community. Studies at the University of Missouri 
indicate that about 25 percent of these patients would not have 
received care until some later time, if at all, if telehealth 
were unavailable. Even when patients would have received their 
care anyway, using telehealth reduces their travel costs. 
Travel savings for our patients in our rural network average 
approximately $40 on automobile travel alone for every 
telehealth visit.
    In terms of some of our patients, I remember a newborn with 
serious heart problems that was kept alive with the help of 
telehealth by a very good but nervous rural physician until our 
helicopter arrived. I remember a frail elderly woman in a 
nursing home whose health severely limited her ability to 
travel. She was able to see her doctor in a room down the hall 
instead of taking a 4-hour round trip and possibly returning to 
the nursing home with other problems brought on by the stress 
of travel.
    As the committee knows very well, rural hospitals and 
clinics are struggling to stay alive. A small hospital that can 
offer a wide range of specialty telehealth services is stronger 
and more likely to survive. A rural doctors office where 
patients can see their specialist in one of the exam rooms via 
telehealth is more likely to hold onto those patients. 
Telehealth is not only good for patients but it is also good 
for rural doctors and hospitals.
    Telehealth will not be mainstreamed unless the many 
problems associated with the current laws and regulations 
relating to Medicare reimbursement are resolved. Medicare 
reimbursement alone will not make telehealth an automatic 
success, but the lack of Medicare reimbursement will most 
certainly mean failure.
    Some of these reimbursement barriers seem to reflect the 
fear that telehealth will result in overutilization of health 
care. Experience in several dozen telehealth projects 
nationwide has made it very clear that this fear is 
unwarranted. But there is an even more basic reason to reject 
this approach. What is being prevented by the barriers is not 
overutilization but adequate access to health care for 
Americans living in rural or other underserved areas. People 
living in those areas have as much right to Medicare benefits 
as any other American and allowing them to use telehealth to 
exercise that right should not be considered an extraordinary 
benefit.
    There is no doubt the current laws and rules for Medicare 
reimbursement have effectively prevented the submission of 
claims to HCFA. Our most recent nationwide study of telehealth 
networks indicated that 15 of 21 networks responding did not--
and I want to repeat that--did not submit a single claim for 
telehealth between July and December 1999. This is explained by 
several problems with the laws and regulations on telehealth. 
One is the assumption that telehealth usually involves two 
clinicians, a rural provider with the patient on one end and a 
specialist on the other. But our research indicates this only 
happens in 6 percent of cases. Whether by telehealth or in 
person a primary care provider does not have the time to be 
present when the patient sees the specialist. If that is 
required for telehealth, telehealth will simply not happen.
    Another problem is that HCFA reimbursement is currently 
limited to services delivered in federally designated health 
professional shortage areas or to patients who reside in those 
areas. HPSAs are defined by a lack of primary care, while 
telehealth usually provides specialty care. A rural community 
with sufficient primary care can still be without the specialty 
care that telehealth could provide.
    I want to finish now by focusing on the most controversial 
and problematic regulation and that is fee sharing. If a 
telehealth claim is filed and subsequently paid, the current 
rules mandate that 25 percent of the specialist fee for that 
telehealth visit must be sent by the specialist to the 
referring provider. In nontelehealth cases, this type of fee 
sharing would be a Federal crime. Doctors cannot pay other 
doctors for referrals, and they are reluctant to do something 
via telehealth that would be illegal in person, no matter what 
I tell them.
    The language regarding fee sharing must be removed from the 
law and regulations. HRSA's Office for the Advancement of 
Telehealth, NIH's National Library of Medicine and several 
other Federal agencies have made a large financial commitment 
to the development of telehealth throughout the country. I 
think we would all hate to see that investment wasted.
    I sincerely hope that you will continue the effort to pass 
new legislation and correct the problems associated with the 
current laws and regulations. Thank you.
    [The prepared statement of Joseph Tracy follows:]
Prepared Statement of Joseph Tracy, Director of Telehealth, University 
         of Missouri Health Sciences Center, Columbia Missouri
    It is an honor to be here today to speak to the committee on the 
topic of telehealth. Thank you for this opportunity.
    I have been the Director of the Missouri Telehealth Network at the 
University of Missouri Health Sciences Center since its beginning in 
1995. Our network has provided services to rural patients ranging from 
newborns to the frail elderly. We have seen approximately 2000 cases in 
multiple medical specialties via the interactive video network and have 
interpreted over 16,000 teleradiology exams.
    Our program is based on the reality that telehealth is not a new or 
different medical service but is simply a new way to deliver standard 
services to people in underserved areas. Policies that discourage 
telehealth do not deprive these communities of some exotic treatment 
but of the day-to-day health care most Americans take for granted.
    Patients are the main beneficiaries of telehealth. They receive 
standard specialty care that is not typically found in or near their 
community. Studies at the University of Missouri indicate that about 
25% of these patients would not have received care until some later 
time--if at all--if telehealth were unavailable. Even when the patient 
would have received the care anyway, using telehealth reduces their 
travel costs. Travel savings for patients in our rural network average 
approximately $40 on automobile travel alone for every telehealth 
visit.
    We have had many experiences that bring these patient benefits down 
to earth. I recall a newborn with serious heart problems kept alive, 
with the help of telehealth, by a very good but scared rural physician 
until the helicopter arrived. A frail elderly woman in a nursing home--
someone whose health severely limited her ability to be transported--
was able to see her doctor in a room down the hall instead of taking a 
4-hour ride to our facility. These benefits were not created by some 
wonderful new treatment, but by the kind of every-day access to 
standard care that telehealth can bring to underserved communities.
    As the committee knows very well, rural hospitals and clinics are 
struggling to stay alive. A small hospital that can offer a wide range 
of specialty telehealth services is stronger and more likely to 
survive. A rural doctor's office where patients can see their 
specialists in one of the exam rooms via telehealth is more likely to 
hold onto those patients. Telehealth is good for rural doctors and 
hospitals.
    However, telehealth will not be mainstreamed unless the problems 
associated with Medicare reimbursement are resolved. Many of these 
problems are related to the BBA of 1997 and HCFA's interpretation of 
the act. Medicare reimbursement alone will not make telehealth an 
automatic success, but the lack of Medicare reimbursement will most 
certainly mean failure.
    Some of these reimbursement barriers seem to reflect the fear that 
telehealth will result in over-utilization of health care. Experience 
in several dozen telehealth projects nationwide has made it clear that 
this fear is unwarranted. But there is an even more basic reason to 
reject this approach. What is being prevented here is not over-
utilization but adequate health care for rural Americans and those 
living in other underserved areas. People living in those areas have as 
much right to Medicare benefits as any other American. Allowing them to 
use telehealth to exercise that right should not be considered an 
extraordinary benefit.
    There can be no doubt that the current laws and rules for Medicare 
reimbursement have effectively prevented the submission of telehealth 
claims to HCFA. Our most recent nationwide study of telehealth networks 
indicated that 15 of the 21 networks responding did not submit a single 
telehealth Medicare claim between July and December 1999.
    This is explained by several key problems with current laws and 
regulations on telehealth. One is the assumption that telehealth 
usually involves two clinicians, a rural primary care provider with the 
patient and a specialist at the other end. Our research indicates that 
this occurs in less than 6% of cases. Whether by telehealth or in 
person, a primary care physician does not have time to be present when 
the patient sees a specialist. If that is what is required for 
telehealth, telehealth simply will not happen.
    Another key problem is that HCFA reimbursement is currently limited 
to services delivered in a Federally Designated Primary Care Health 
Professional Shortage Area (HPSA) or to patients who reside in those 
areas. HPSAs are defined by a lack of primary care, while telehealth 
usually provides specialty care. A rural community with sufficient 
primary care can still be without the specialty care telehealth could 
provide.
    I want to finish now by focusing on the most controversial 
regulation and that is fee-sharing. If a telehealth claim is filed and 
subsequently paid the current rules mandate that 25% of the 
specialist's fee for the telehealth visit must be sent by the 
specialist to the referring provider. In non-telehealth cases, fee-
sharing would be a federal crime. Doctors are understandably reluctant 
to do something via telehealth that would be illegal in person, no 
matter what I tell them. This barrier is a bit subtler than the others, 
but it is a serious problem.
    HRSA's Office for the Advancement of Telehealth, NIH's National 
Library of Medicine, and several other Federal agencies have made a 
large financial commitment to the development of telehealth throughout 
the country. I think we would all hate to see that investment wasted. I 
sincerely hope that you will continue the effort to pass new 
legislation correcting problems with the 1997 BBA and HCFA's 
interpretation of that act.

    Mr. Bilirakis. Thank you very much, Mr. Tracy.
    Mr. Jim Reid is Director of Telemedicine and Network 
Services with Midwest Rural Telemedicine Consortium, Mercy 
Hospital Foundation. He is here on behalf of the Center for 
Telemedicine Law out of here, Washington, DC. Mr. Reid, please 
proceed.

                     STATEMENT OF JAMES REID

    Mr. Reid. Thank you, Mr. Chairman and members of the 
subcommittee. I, as you have said, am Director of the Midwest 
Rural Telemedicine Consortium, the MRTC, based at Mercy Medical 
Center, Des Moines. It is a 45 node network serving hospitals, 
clinics and nursing homes in 30 communities in north and south 
central Iowa.
    As you said, I am also on the Board of Directors for the 
Center for Telemedicine Law here in Washington. The CTL is a 
nonprofit organization that focuses on legal and regulatory 
barriers to telemedicine. CTL has worked closely with 
telemedicine providers, policymakers and the public to analyze 
the effects and costs of current Federal and State telemedicine 
reimbursement policies.
    I should also indicate that I am physician assistant with 
10 years experience practicing family and emergency medicine in 
urban and extremely remote settings, and certainly I could not 
come before this committee without recognizing the support of 
this committee and its excellent staff that has been given to 
improving the PA physician team practice environment. So thank 
you for that.
    Since its beginnings in 1993, the MRTC has played an 
important role in efforts to evaluate the effects of 
telemedicine on health care costs, quality and access. In 1994, 
HCFA awarded its first telemedicine reimbursement demonstration 
grants to the MRTC. MRTC's participation in that demonstration 
has given us firsthand experience in dealing with impractical 
and restrictive reimbursement regulations, and it is largely to 
that experience that this testimony is prepared.
    I also couldn't help but note Dr. Berenson's comment that 
no one has come to their party. Frankly, we have been at their 
party for their 4 years, and the reason that no one else is 
coming is because they are only letting in people in checkered 
suits, and they are not serving any food.
    Well, having spent half my allotted time making 
introductory comments, I feel compelled to cut to the chase for 
you.
    As you know, Medicare currently has two payment processes 
in place for telemedicine services. The first established was 
the telemedicine reimbursement demonstration, of which my 
program is a part. The second involves the HPSA payment rules 
enacted by HCFA in response to the Balanced Budget Act of 1997. 
They are chillingly similar processes and equally ineffective 
in enabling the delivery of telehealth care services. In short, 
because of HCFA's overly narrow interpretation of the 
telemedicine provisions in BBA, Medicare reimbursement for 
telemedicine services has been limited in scope and 
unreasonably restrained. Frankly, these restraints are 
threatening the viability of many federally funded telemedicine 
programs across the United States.
    Congress can take five critical steps toward clarifying the 
intent of the Balanced Budget Act and increasing access to 
telemedicine services for America's seniors citizens. You asked 
Mr. Berenson for specific directives, what could be done in a 
regulatory fashion, what could be done statutorily. These are 
my suggestions in that regard.
    First, Congress should clarify the physicians providing 
direct care through telemedicine may receive payment for the 
evaluation and management services and medicine services 
routinely employed in telemedicine patient care. Because of 
their restrictive consultation-only rules, Medicare reimburses 
for just 12 out of hundreds of CPT codes. These 12 codes 
describe consultation services and assume that two 
practitioners will be involved in every telemedicine encounter. 
You have already heard the statistics on this from Mr. Tracy. 
Only a small percentage really require to two providers.
    Our own research shows that these 12 approved codes, the 
codes under which our demonstration is currently run, 
constitute only 5.6 percent of all outpatient codes, outpatient 
services reimbursed by Medicare, and they ask us why we don't 
have many patients in the study.
    HCFA is denying reimbursement for the vast majority of 
codes used in traditional and in telemedical patient care. 
Congress should act immediately to ensure Medicare 
beneficiaries have access to the full range of services 
available through telemedicine.
    Second, Congress should eliminate the requirement for a 
telepresenter. We have heard these comments before. HCFA rules 
require a patient be presented by a telepresenter which has 
been defined in my written comments. As stated, the great 
majority of telemedicine services provided involve only one 
provider and one patient at each end of the connection. 
Requiring two practitioners artificially inflates telehealth 
encounter costs, needlessly wastes medical resources and 
discourages patient access to telehealth services. HCFA should 
be directed to remove the current requirement for a 
telepresenter.
    Third, Congress should extend the Medicare reimbursement 
beyond HPSAs to all rural areas and medically underserved urban 
areas. Based upon Medicare expenditures for telemedicine 
services to date, there is absolutely no reason to be concerned 
about runaway costs. Congress should authorize Medicare 
reimbursement for telemedicine services provided to patients in 
all nonmetropolitan statistical areas and in urban HPSAs.
    Fourth, Congress should eliminate the cumbersome BBA fee-
splitting provisions. As previously stated, 94 percent of 
telehealth encounters only require one provider and one 
professional service payment. To require a treating 
practitioner to send a part of a payment to another provider is 
unrealistic, impractical and, frankly, impossible to implement. 
It is also perceived as an inappropriate inducement to 
services.
    Fifth and finally, Congress should ensure that home health 
patients can also benefit from telemedicine. Congress can 
accomplish this goal by expressly authorizing home health 
agencies to use PPS dollars for the deploying and use of 
telehome services.
    In summary, through MRTC and projects like it, we have 
proven that telemedicine technology has the potential to 
dramatically improve the lives of Americans who live in 
medically underserved areas. I can't think of a better example 
than we have had here today. We need your help to capture this 
potential and to put it to work for America's senior citizens.
    Thank you for the opportunity to share my thoughts with you 
on this very important topic, and later on as time allows I 
will welcome any questions you might have.
    [The prepared statement of James Reid follows:]
Prepared Statement of James Reid, Director, Midwest Rural Telemedicine 
                               Consortium
    Mister Chairman and Members of the Committee, my name is Jim Reid, 
and I am director of the Midwest Rural Telemedicine Consortium. MRTC is 
a 45 node telemedicine network that serves hospitals, clinics, and 
nursing homes in thirty communities in north and south central Iowa. 
Program offices are at Mercy Medical Center in Des Moines, Iowa.
    I also serve on the Board of Directors of the Center for 
Telemedicine Law, based here in Washington. The CTL is a non-profit 
organization that focuses on legal and regulatory barriers to 
telemedicine. CTL has worked closely with telemedicine providers, 
policy makers, and the public to analyze the effects and costs of 
current federal and state telemedicine reimbursement policies.
    I am particularly pleased to offer testimony before my own 
Congressman and a member of my hospital's medical staff. We appreciate 
Congressman Ganske's interest in and support for telemedicine.
    Since its beginnings in 1993, MRTC has played an important role in 
efforts to evaluate the effects of telemedicine on health care costs, 
quality and access. In 1994, the Health Care Financing Administration 
awarded its first telemedicine demonstration grant to the Mercy 
Foundation to fund MRTC. MRTC's participation in the Medicare 
Telemedicine Reimbursement Demonstration has given us first hand 
experience in dealing with impractical and restrictive reimbursement 
regulations and it is to that experience that this testimony is 
prepared.
    The success of MRTC in expanding access to health care and 
improving the quality of care available to medically underserved areas 
is a testament to the power of telemedicine to improve lives. But 
despite the successes of MRTC and projects like it, the potential of 
telemedicine to improve the lives of Americans is not being fully 
realized. While more than 25 percent of our Nation's senior citizens 
live in medically underserved areas, Medicare reimbursement for 
telemedicine services has been limited in scope and unreasonably 
restrained by HCFA's overly narrow interpretation of the telemedicine 
provisions in the Balanced Budget Act of 1997. The limits on Medicare 
reimbursement and narrow interpretation are threatening the viability 
of telemedicine projects across the United States.
    Congress can take five critical steps toward clarifying the intent 
of the Balanced Budget Act and increasing access to telemedicine 
services for America's senior citizens.
    First, Congress should increase access to telemedicine services by 
clarifying that physicians providing direct patient care through 
telemedicine may receive payment for the ``evaluation and management'' 
services and ``medicine'' services routinely employed in telemedical 
patient care. The BBA provided Medicare reimbursement for telemedicine 
consultations provided to residents of Health Professional Shortage 
Areas or HPSAs. Unfortunately, BBA language used the term 
``teleconsultation'' throughout. To HCFA ``consultation'' has a very 
specific meaning, which lead to their very narrow interpretation of 
Congress' intent in the BBA, and their promulgation of very limited 
telemedicine reimbursement rules which effectively discourage providers 
and patients from using telehealth technologies.
    Medical services are described and billed using Current Procedural 
Terminology (CPT) codes. Because of their restrictive 
``teleconsultation only'' rules, Medicare reimburses for just twelve 
out of hundreds of CPT codes--all of which describe consultation 
services and assume that two practitioners will be involved in the 
telehealth encounter. Those twelve approved CPT codes describe only 5.6 
percent of all outpatient Medicare services delivered in 1998 and 
totally ignore the reality that the majority of telemedicine services 
provided today are direct care visits involving a patient at one end 
and a provider at the other. HCFA is denying reimbursement for the vast 
majority of codes used in traditional and telemedical patient care.
    Through MRTC and projects like it, we have proven that telemedicine 
is an effective tool for providing direct patient care to patients in 
medically underserved areas. Yet, HCFA's restrictive policy prevents 
physicians from receiving Medicare reimbursement for direct telemedical 
patient care. Congress should act immediately to ensure that Medicare 
beneficiaries have access to the full range of telemedicine services.
    Second, Congress should increase access to telemedicine services by 
eliminating any requirement for a telepresenter. Current HCFA rules 
require patients be ``presented'' by a telepresenter who is either the 
referring practitioner--referring practitioner being defined by HCFA as 
a physician, PA, NP, nurse midwife, clinical nurse specialist, clinical 
psychologist or clinical social worker--or a direct employee of the 
referring practitioner who is one of the listed practitioners. This is 
an unduly restrictive requirement and totally ignores how medicine is 
practiced. A recent assessment of telehealth encounters conducted by 
the University of Missouri Health Sciences Center in conjunction with 
21 U.S. telehealth networks revealed that only 261 (5.9%) of 4,424 
telehealth encounters involved or required clinicians on both ends. 
Requiring two practitioners artificially inflates telehealth encounter 
costs, needlessly wastes medical resources, and discourages patient 
access to telehealth services. HCFA should be directed to remove the 
current requirement for a telepresenter.
    Third, Congress should increase access to telemedicine services by 
extending Medicare reimbursement to all rural areas and certain urban 
areas. The BBA limited Medicare reimbursement services provided to 
patients in certain rural areas underserved for primary care, MRTC's 
experience suggests that telemedicine services can also meet the needs 
of patients in other settings. Specifically, rural communities lacking 
access to specialty care and urban areas lacking access to both primary 
and specialty care can benefit from telemedicine technology. Based upon 
Medicare expenditures for telemedicine services to date, there is no 
reason to be concerned about runaway costs due to telemedicine 
reimbursement. To improve access to health care in all medically 
underserved communities, Congress should authorize Medicare 
reimbursement for telemedicine services provided to patients in all 
non-metropolitan statistical areas and urban HPSAs.
    Fourth, Congress should eliminate the cumbersome BBA fee-splitting 
provisions that were based on a misunderstanding of what constitutes a 
telemedicine encounter. When BBA was written, the authors believed that 
two physicians or other practitioners would participate in a 
``consultation.'' Consequently BBA provided a fee splitting arrangement 
to allow both practitioners to be paid out of a single fee. As 
previously stated, only one professional service payment is necessary. 
To require the treating practitioner to send a part of the payment to 
another provider is unrealistic, impractical, and impossible to 
implement. It also could be perceived as an inappropriate inducement to 
provide telemedicine services.
    Fifth, Congress should ensure that home health patients can also 
benefit from telemedicine. Congress can accomplish this goal by 
expressly authorizing home health agencies to use PPS dollars for the 
deployment and use of telehomecare equipment.
    Through MRTC and projects like it, we have proven that telemedicine 
technology has the potential to dramatically improve the lives of 
Americans who live in medically underserved communities. We need your 
help to capture this potential and put it to work for America's senior 
citizens.
    Thank you for this opportunity to share my thoughts with you on 
this important topic. I welcome any questions you might have for me.

    Mr. Bilirakis. Thank you very much, Mr. Reid.
    I am going to ask the gentleman from Tennessee to introduce 
Dr. Burgiss.
    Mr. Bryant. Thank you, Mr. Chairman.
    I am once again pleased to acknowledge Dr. Burgiss from the 
University of Tennessee at Knoxville, and we have a very 
significant family--well, a residency practice up there at the 
University of Tennessee at the other end of the State, and Dr. 
Burgiss is extremely well qualified. He is one of the--
certainly in Tennessee--one of the pioneers in telemedicine, 
and as mentioned, as we discussed beforehand, is also called 
upon to help with inquiries from around the country, and we are 
trying to focus those and his efforts more in Tennessee now so 
that we can get all the benefits that we can have from 
telemedicine in Tennessee. And thank you, Mr. Chairman, for 
that.
    Mr. Bilirakis. I thank the gentleman.
    Dr. Burgiss, please proceed, sir.

                    STATEMENT OF SAM BURGISS

    Mr. Burgiss. Thank you.
    Mr. Chairman and members of the committee, thank you for 
this opportunity to speak about the application of telehealth 
in home care. In addition to responsibilities I have with the 
University of Tennessee Medical Center Telemedicine Network at 
Knoxville, I am also the Chair of the American Telemedicine 
Association's special interest group in telehome care.
    The University of Tennessee telemedicine network began its 
telehealth program in 1995 with rural patients located in their 
communities receiving care from physicians and other providers 
located in our medical center. In April 1998, with a grant from 
the Office for the Advancement of Telehealth of the Department 
of Health and Human Services, the UT telemedicine network began 
providing care in patient homes using home care agency nurses 
located in their offices. We now have the capability of caring 
for patients using telehealth in over 100 homes in congestive 
heart failure, diabetes and other traditional home care 
services.
    As an example of this care, Ms. HY had a slow heart rate of 
approximately 40 beats per minute. On one occasion, the 
telehealth nurses in their office detected that Ms. HY's rate 
in her home was 26. 911 was called. Ms. HY received a pacemaker 
and has become more active.
    The lowest cost of health care can be obtained by providing 
the correct level of care at the correct time. To repeat, the 
lowest cost of health care can be obtained by providing the 
correct level of care at the correct time. Since care in the 
home has the potential to be the lowest cost when compared with 
assisted living facilities, nursing homes and hospitals, 
national laws and policies should support quality home care 
being provided cost effectively.
    Telehealth has the potential to reduce the cost of home 
care for suitable patients and conditions. Home care programs 
that have used telehealth provide homes with video conferencing 
and/or monitoring instruments. Video conferencing provides 
interactive audio and video between the patient and nurse, 
typically using standard home telephone lines. Monitoring 
instruments at the patient's home transmit data to a central 
station using the telephone line, or digital medical 
instruments can be viewed by the video.
    Home care by telehealth is typically provided by home 
health nurses and may also be provided by physicians located in 
their offices and consulting with patients in their homes.
    In a study of 14 patients having 444 telehome visits in 15 
months, patients reported the following: an increased sense of 
security that medical help was readily available, reduced 
confusion over medication use, time savings during the 
televisit, increased sense of being in control, increased 
personal attention from nursing staff, increased privacy, and 
quality of care same as or better than a traditional in-home 
visit. The cost saved for the televisit compared with a 
traditional visit averaged $49.33 cents per visit for nurse 
transportation and labor costs during travel.
    Costs of equipment for telehome care use can range from 
less than $1,000 to $10,000 per home. Assuming that two 
telehome care visits occur per patient per week, it would take 
10 to 100 weeks to amortize the cost of equipment based on the 
travel cost savings of approximately $50, as stated previously. 
It is evident that cost-effective home care depends on limiting 
the cost of equipment taken to the home to that which is needed 
by the patient.
    In addition to a decreased cost of providing home care, 
published telehealth studies have shown potential cost of care 
benefits from fewer office visits for patients, reduced 
emergency room visits, reduced hospitalization rates as much as 
50 percent, reduced in-home visits, in-person home visits of 49 
percent, and fewer long-term care placements. For example, Mr. 
F, who has congestive heart failure, was being admitted for 
hospital care an average of 7 days each quarter. After 
telehealth care began in his home, he was admitted for only one 
23-hour observation in a year.
    In summary, as a leader in telehealth programs providing 
home care, I request your support for laws and policies which 
enable the cost-effective delivery of care for patients in 
their home using both traditional and telehealth methods. For 
high-quality and cost-effective telehealth care, these laws and 
policies should, A, not require a professional medical person 
as the presenter of patients in homes; B, permit the use of 
store-and-forward technology which is used for patient 
monitoring; and, C, recognize telehealth home care as a service 
by HCFA under the prospective pay system for purposes of care 
and accounting. None of these requests will require additional 
funding from HCFA. They are all budget neutral.
    Thank you.
    [The prepared statement of Sam Burgiss follows:]
 Prepared Statement of Sam Burgiss, Manager, UT Telemedicine Network, 
                 University of Tennessee Medical Center
    Chairman Bliley and Members of the Committee, thank you for this 
opportunity to speak about the application of telehealth in home care. 
I am Sam Burgiss, manager of the University of Tennessee Medical Center 
Telemedicine Network at Knoxville. The University of Tennessee Medical 
Center Telemedicine Network began its telehealth program in 1995 with 
rural patients located in their communities receiving care from 
physicians and other providers located in our medical center. This care 
uses interactive video conferencing between the provider and a patient 
presented by a nurse, and uses remote patient monitoring technologies.
    In April 1998 with a grant from the Office for the Advancement of 
Telehealth of the Department of Health and Human Services, the UT 
Telemedicine Network began providing care in patient homes using home 
health agency nurses located in their offices. Interactive video 
equipment and hand held digital instruments are available for 29 homes 
from UT Home Health Services. Another project funded by a charitable 
trust began in 1999 to provide telehealth care in the homes of 35 
congestive heart failure patients and 44 diabetic patients referred by 
their primary care physicians. The project was developed to provide 
care for the people of Scott County, Tennessee; to evaluate the 
potential improvement in the physical function of the patients; and to 
evaluate the potential decrease in health care costs due to hospital 
readmissions. As an example of this care, Ms. HY had a slow heart rate 
of approximately 40 beats per minute. On one occasion, the telehealth 
nurses detected that the rate was 26, and 911 was called. Ms. HY 
received a pacemaker and has become more active.
    The lowest cost of health care can be obtained by providing the 
correct level of care at the correct time. Certainly using a specialist 
too soon increases cost. Delaying needed care can increase the 
morbidity of the patient and increase the cost of treatment at a later 
time. As shown in a study of 87 rural dermatology patients, the cost of 
care for dermatologic conditions before examination by a dermatologist 
using telehealth was twice that of the cost of care by the 
dermatologist.\1\ Since care in the home has the potential to be the 
lowest cost when compared with assisted living facilities, nursing 
homes, and hospitals; national laws and policies should support quality 
home care being provided cost-effectively.
    Telehealth has the potential to reduce the cost of home care for 
suitable patients and conditions. Home care programs that have used 
telehealth provide homes with video conferencing and/or monitoring 
instruments. Video conferencing provides interactive audio and video 
between the patient and nurse typically using the standard home 
telephone line. Monitoring instruments at the patient's home transmit 
data to a central station using the telephone line, or digital medical 
instruments can be viewed by the video. Home care by telehealth is 
typically provided by home health nurses and may also be provided by 
physicians located in their offices and consulting with patients in 
their homes.
    In a study of 14 patients having 444 telehome visits in 15 months, 
patients reported the following: a) an increased sense of security that 
medical help was readily available, b) reduced confusion over 
medication use, c) time savings during the televisit, d) increased 
sense of being in control, e) increased personal attention from nursing 
staff, f) increased privacy, and g) quality of care same as or better 
than a traditional in-home visit.2 The cost saved for the televisit 
compared with a traditional visit averaged $49.33 per visit for nurse 
transportation and labor cost during travel. Visit time in two studies 
averaged 18 minutes for telehealth compared with a traditional average 
time of 45 minutes.\2\,\3\ Nurse productivity more than 
doubled during home televisits due to less distractions and more focus 
while creating high levels of patient satisfaction.
    Cost of equipment for telehomecare use can range from less than 
$1,000 to $10,000. Assuming that two telehomecare visits occur per 
patient per week, it would take from 10 to 100 weeks to amortize the 
cost of the equipment based on the travel cost savings of approximately 
$50 as stated previously. It is evident that cost-effective home care 
depends on limiting the cost of the equipment taken to the home to that 
which is needed by the patient.
    In addition to a decreased cost of providing home care, telehealth 
has shown potential cost of care benefits from fewer office visits for 
patients, reduced emergency room visits, reduced in-patient 
hospitalizations, and fewer long-term care placements.\4\ For example, 
Mr. F., who has congestive heart failure, was being admitted for 
hospital care on an average of seven days each quarter. After 
telehealth care began in his home, he was admitted for only one 23 hour 
observation in a year. Ten published or presented studies on the use of 
telehealth in home care, by and large, show that: a) the need for in-
person home visits declines, b) patient satisfaction is excellent, c) 
hospitalization rate decreases as much as 50% suggesting improved 
patient care and reduced cost of care.\5\ None of the studies suggest 
any decline in quality of care, or any negative outcomes.\5\
    As a leader in telehealth programs providing home care, I request 
your support for laws and policies which enable the cost-effective 
delivery of care for patients in their homes utilizing both traditional 
and telehealth methods. For high quality and cost-effective telehealth 
care, these laws and policies should a) not require a professional 
medical person as the presenter of patients in homes, b) permit the use 
of store-and-forward technology which is used for patient monitoring, 
and c) recognize telehealth home care as a service by HCFA under the 
Prospective Pay System for purposes of care and costing.

                               References

    \1\ Burgiss SG, Julius CE, Watson HW, Haynes BK, Buonocore E, Smith 
GT. Telemedicine for dermatology care in rural patients. Telemedicine 
Journal, 3(3), 1997, 227-233.
    \2\ Dimmick SL, Mustaleski C, Burgiss SG, Welsh T. A case study of 
benefits & potential savings in rural home telemedicine. Home 
Healthcare Nurse, 18(2), February 2000, 125-135.
    \3\ Johnston B, Wheeler L, Deuser J. Kaiser Permanente Medical 
Center's pilot tele-home health project. Telemedicine Today, 4(7), 
August 1997, 16-17, 19.
    \4\ Jossey P, Gustke S. Financial feasibility of rural 
telehomecare. Fourth Annual Meeting of the American Telemedicine 
Association, April 1999, Salt Lake City, UT.
    \5\ Mahmud K. E-mail communication. August 25, 2000.
UT Telemedicine Network, University of Tennessee, Center for Community 
                   Health, Scott County Telemedicine
                            success stories
What a difference a pacemaker makes
    As part of the UTCCH Program that cares for participants with 
congestive heart failure, the physiologic monitoring equipment 
determined that one of the new patients (HY) had a heart rate that was 
consistently in the 40s, a slow heart rate. Her doctor was notified, 
and he counseled observation. When HY's heart rate dropped into the 
30s, and she complained of chest pain and shortness of breath, she was 
sent to the Scott County Emergency Department. From there she was sent 
to Oak Ridge Methodist Medical Center, where she was seen by a 
cardiologist. He changed her medications and her heart rate rebounded 
to between 50 and 60 beats per minute. However, on Feb. 24, HY's heart 
rate dropped precipitously to 26, and 911 was called. HY was rushed to 
the Scott County Emergency Department. She was transferred to Methodist 
Medical Center, where a pacemaker was installed. Since she has returned 
home, HY can now walk through her house and no longer needs her 
nitroglycerine patch. She is taking fewer medications. She recently 
went to the beauty shop, a special event because she had not been able 
to leave her house and was confined much of the time to bed when she 
entered the Scott County Telemedicine Program.
Controlling high blood pressure
    Another Telemedicine Program participant with CHF had problems with 
elevated blood pressure spikes that were detected through the 
physiologic monitoring program. When her diastolic pressure exceeded 
100, her doctor was notified. He adjusted her medication, which brought 
her BP down. However, cardiac monitoring also showed an increasing 
number of heart arrythmias. Her doctor was again notified and she was 
sent to Parkwest Medical Center. As of this writing, she has fewer 
life-threatening arrythmia episodes and her medications have been 
reduced.
Video Monitoring in the Home
    The ability to see Telemedicine Program participants in their homes 
has been particularly beneficial. Two participants (IB and BS) had 
developed blood clots in their legs. As usual during a video visit, the 
participants were asked about new problems, and both IB and BS 
complained of pain. Swelling and discoloration in their legs were 
plainly visible on the monitor. Their doctors were promptly notified in 
each case. A brief hospitalization ensued to start anti-coagulant 
therapy for blood clot lysis. As a result, BS is back riding his 
horses. IB is much more mobile around her home and was able to take her 
planned vacation to Florida.
Summary
    Ten of the 30 (33%) CHF Telemedicine Program participants have been 
able to make significant lifestyle improvements and/or reduce their 
dependence on medications. In the diabetes program, 8 of 30 (26%) have 
been able to fine tune their diabetes management through either 
medication changes or the initiation of insulin therapy. Additionally, 
100% of these participants have said that they like their new blood 
sugar monitors because the lancets are sharper and finer and their 
fingers are not as sore.

    Mr. Bilirakis. Thank you very much, Dr. Burgiss.
    To introduce Dr. Ross-Lee, Mr. Strickland the gentleman 
from Ohio.
    Mr. Strickland. Thank you, Mr. Chairman.
    It is my pleasure to welcome to this committee one of my 
favorite constituents, Dr. Ross-Lee, who is the Dean of the 
College of Osteopathic Medicine at Ohio University right in the 
center of my Appalachian district.
    I would like to share with my friend from Michigan, Mr. 
Stupak, the fact that, prior to coming to Ohio, she was the 
associate dean at the College of Osteopathic Medicine at 
Michigan State University. Michigan's loss is Ohio's gain.
    And, last but not least, the wonderful singer/entertainer 
Diana Ross is the sister of our honored guest today. And Dr. 
Ross-Lee, it is wonderful to have you and thank you for all you 
do for Appalachia, Ohio.
    Mr. Bilirakis. Doctor, please proceed.

                  STATEMENT OF BARBARA ROSS-LEE

    Ms. Ross-Lee. She is my little sister, by the way.
    I think it is still morning. Good morning, Mr. Chairman and 
members of the Committee on Commerce. I would like to thank 
you, the Subcommittee on Health and Environment, I would like 
to thank you for inviting me to give testimony on this very 
important issue, telehealth.
    My name, as you know now, is Barbara Ross-Lee; and I am the 
Dean of the College of Osteopathic Medicine at Ohio University. 
I began my career in osteopathic medicine as a family physician 
providing care for underserved populations. I have a long 
acquaintance with the issues of access, particularly related to 
preventive and primary care services.
    Our college is located in the region of this country known 
as Appalachia, in the southeastern part of the State of Ohio. 
Sparsely populated, southeastern Ohio is a region that is 
dominated by high poverty rates, limited employment 
opportunities and poor health indicators. The counties are 
primarily rural with limited transportation, government, 
economic or communication infrastructure.
    In addition, a majority of the rural southern Ohio counties 
continue to hold designations as Health Professional Shortage 
Areas by the Federal Government. Health care delivery depends 
on a very fragile infrastructure of rural providers. Addressing 
the issues of access within the bounds of acceptable costs, 
available people and technology transcends issues of health 
care and exemplifies the entrenched systemic disparities in 
rural infrastructure.
    The high rate of poverty in rural Appalachia, including 
Southeast Ohio, is the most consistent single contributing 
factor to limitations in transportation, economic development, 
educational opportunities and medical services. Recently 
identified discrepancies in access to digital information 
technology by rural underrepresented populations which we refer 
to as the digital divide are an additional symptom of the 
larger problem. As the new E-service economy holds great 
promise for one side of the digital divide, in rural 
underserved areas it represents a new symptom of a preexisting 
problem of limited resources and unmet basic service needs.
    It is clear from a technical standpoint that telemedicine 
works and can and does provide medical services for 
geographically isolated populations. Financing for telemedicine 
services is perhaps the most critical measure of the field's 
maturity and prospects for growth. The availability of high-
capacity information infrastructure is a limiting factor to the 
expansion of both telecommunications- based health care 
delivery and economic development.
    The anticipation that we saw or felt when HCFA announced 
the changes to telemedicine reimbursement and designated HPSA 
areas has changed from a mood of excitement to a mood of 
frustration and despair over the last few years. The current 
75/25 method of reimbursement for telemedicine and the absence 
of bandwidth infrastructure in rural America does nothing to 
promote the advantages of this new technology. It further feeds 
the digital divide in rural America and deepens a preexisting 
schism in health care service availability.
    Not providing reimbursement for store-and-forward 
consultation is another hindrance to further enhancing health 
care delivery in rural America through the use of telemedicine 
technology. These are the types of consults most often 
compatible with rural practice. It is within this kind of 
utilization that telemedicine really brings many benefits to an 
underserved rural population.
    At the Ohio University College of Osteopathic Medicine we 
have great success in the utilization of a mobile van for the 
delivery of preventive pediatric health care. In other words, 
we took the service to the population. We have seen significant 
positive health outcomes such as increased immunization rates 
and pediatric screening examination through these efforts.
    Through the combined hard work of community leaders working 
with Congressman Ted Strickland's office we have secured 
financing of a second van targeted toward the underserved adult 
community in Southeastern Ohio. The new van will incorporate 
telehealth to improve preventive screening for our underserved 
and isolated adult populations. We will use this technology 
through our existing technology infrastructure at existing 
schools and community centers.
    In addition to our vans, we also have a telepsychiatry 
program that was launched and initiated through a collaboration 
with many mental health providers in Southeast Ohio. The 
reality is, without this telepsychiatry program, we would have 
had no pediatric telepsychiatry in at least 10 counties in 
Southeastern Ohio.
    To sum this up, let me just say we would like to, based 
upon our experience both in outreach as well as our experience 
with telepsychiatry, we would like to be bold enough to suggest 
a proposal for your consideration as it relates to rural 
communities in this country. We would like to suggest that you 
consider establishing digital health care empowerment zones for 
rural America. Community leaders, volunteer organizations and 
rural health care providers would partner in the development of 
empowerment zones for the express purpose of developing 
innovative methods of health care delivery utilizing digital 
technology in all parts of rural America.
    Empowerment zones would analyze the current digital 
infrastructure, assess the health care needs of their 
communities and develop strategies with measurable health 
outcome objectives. The digital health care empowerment zone 
for rural America could be funded by block grants. The proposed 
empowerment zones would be granted waivers from existing 
Federal Medicare and State Medicare reimbursement guidelines.
    I could give you more, some specifics, but I would like to 
thank you for inviting me here.
    Mr. Bilirakis. Thank you, Dr. Ross. That is a good 
suggestion.
    One of the things we will tell you when we finish up here--
I guess I will tell you now--is that legislation to try to 
cover many of the areas that have been discussed here today is 
being worked on now. Majority and minority staffs have been 
working on it for quite some time but certainly not going to be 
enough to cover the entire waterfront. So the hope is that we 
will not let this end with the legislation that I am talking 
about.
    Mr. Stupak has an awful lot to do with that legislation, 
too. His input is based on his personal experiences.
    So in that process we will, of course, take everything into 
consideration. We appreciate very much suggestions and 
recommendations made by the witnesses. That really helps a lot.
    [The prepared statement of Barbara Ross-Lee follows:]
 Prepared Statement of Barbara Ross-Lee, Dean, College of Osteopathic 
                       Medicine, Ohio University
    Good morning Mr. Chairman and Members of the Committee on Commerce, 
Subcommittee on Health and Environment. I would like to thank you for 
inviting me to give testimony on this very important issue--Telehealth. 
My name is Barbara Ross-Lee, D.O. and I am the Dean of the College of 
Osteopathic Medicine at Ohio University. I began my career in 
osteopathic medicine as a family physician providing care for 
underserved populations. I have a long acquaintance with the issues of 
access.
    My college is located in the region of this country known as 
Appalachia, in the Southeastern part of the state of Ohio. Sparsely 
populated, Southeastern Ohio as a region is dominated by high poverty 
rates, limited employment opportunities, and poor health indicators. 
The counties are primarily rural with limited transportation, 
government, economic, or communication infrastructure. The area also 
contains small communities that are lacking the resources and expertise 
to access the telecommunications resources available to communities in 
metropolitan areas of the state and to provide the professional 
development necessary to be competitive in the technologically 
advancing world.
    In addition, a majority of rural southern Ohio counties continue to 
hold designation as Health Professional Shortage Areas (HPSA) by the 
federal government. Historically, rural medically underserved areas of 
Southeast Ohio have experienced great difficulty in recruiting and 
retaining primary care physicians. Because there is presently very 
little economic and professional support, physicians choose to locate 
in urban areas where they can access technologies and communicate with 
large specialized medical groups.
    Health care delivery in Appalachian Ohio depends on a fragile 
infrastructure of rural providers. This region, consisting of 29 
counties in the southeast quadrant, includes over 1.4 million 
individuals living in the most impoverished conditions in the state. 
Health care services are sparsely distributed, with 23 of the counties 
designated as either full or partial primary care HPSA. Availability of 
specialty providers is almost non-existent. Geographic isolation, a 
poorly developed system of roads, inadequate levels of health 
infrastructure, little employment-based insurance, inadequate 
transportation systems, and diffusely distributed populations further 
exacerbate the problem of providing adequate services under current 
health care models. As a result, many inhabitants have no continuing 
sources of care, do not seek or delay seeking medical care when 
initially needed, instead showing up with more severe acute illnesses 
in emergent care facilities. Similarly, patients with chronic disease 
are less likely to receive adequate management of their condition 
thereby increasing their risk of significant and debilitating 
complications. Each of these scenarios results in poorer outcomes to 
the patient and higher costs to the health care system.
    These concerns are exemplified by the experience of Vinton County, 
Ohio (right next door to my county). Its 12,000 residents are sparsely 
distributed across several villages within the county's 414 square 
miles. High rates of poverty (children--60.9% in 1999, #1 in Ohio) and 
unemployment (10.9% in 1998; 153% state average), low rates of 
insurance coverage, absence of a public transportation system, and 
other factors associated with impoverished areas (41.3% of adults >25 
did not have a high school education in 1998; 20% of households were 
without a telephone in 1990) make health care unattainable to a large 
segment of the area's residents. Donald Barton, DVM, County Health 
Commissioner has repeatedly expressed concern about the ability of 
resources within the community to meet the health care needs of the 
populace. Only two physicians practice within the county, both in the 
county seat of McArthur Village, qualifying it as a designated Health 
Professional Shortage Area. It is unrealistic to expect that health 
care providers can establish thriving practices in the county's other 
smaller villages due to the limited patient base. Advances in 
technology, more specifically telemedicine, would provide a feasible 
model for meeting these needs without developing an unrealistic and 
unsustainable bricks-and-mortar foundation in each of the communities.
Rural Healthcare Issues
    Many residents in rural areas of Ohio have limited access to 
preventive and primary health care services. Addressing the issue 
within the bounds of acceptable cost, available people, and technology 
transcends issues of healthcare and exemplifies the entrenched systemic 
disparities in rural infrastructure. A study by the Office of 
Technology Assessment (OTA) cited three problems that are specific to 
residents of rural areas:

 Although the rural population has relatively low mortality 
        rates, a disproportionate number of rural people suffer from 
        chronic illness. Furthermore, infant mortality is slightly 
        higher than in urban areas and the number of deaths from injury 
        are dramatically higher.
 The lack of public transportation systems and the existence of 
        few local healthcare providers make it difficult for rural 
        individuals to reach facilities where they can obtain care.
 The OTA found that physical barriers to access, difficult as 
        they are, might be overshadowed by financial barriers.
    The high rate of poverty in rural Appalachia, including southeast 
Ohio, is the most consistent single contributing factor to limitations 
in transportation, economic development, educational opportunities, 
political representation, and medical services. Recently identified 
discrepancies in access to digital information technologies by rural 
underrepresented populations (i.e. the ``digital divide'') are an 
additional symptom of the larger problem. As the new e-service economy 
holds great promise for one side of the digital divide, in rural 
underserved areas, it represents a new symptom of a pre-existing 
problem of limited resources and unmet basic service needs.
    Studies suggest that rural communities have a disproportionately 
greater need for health care services than their urban and suburban 
counterparts. As an example, it has been estimated that nearly 60% of 
traffic fatalities occur in rural areas.
Telemedicine
    A significant outcome of many federally funded projects is an 
overwhelmingly positive outcome in technological terms. It is clear, 
from a technical standpoint, that telemedicine works and can (and does) 
provide medical services for geographically isolated populations. 
Financing for telemedicine services is perhaps the most critical 
measure of the field's maturity and prospects for growth. Long enabled 
by the crutch of public funding for program start-up, few managers have 
had much incentive to justify services from a business perspective. As 
a result, loss of federal or state grant funding has meant the end of 
some otherwise worthwhile programs. As telemedicine services have 
gained wider adoption, telecommunications cost still rank highest as an 
operational barrier followed closely by the lack of a comprehensive 
cost reimbursement plan. Without a stable reimbursement plan by 
Medicare, Medicaid, and third party payers, implementation of 
telemedicine will lag woefully behind the technological abilities to 
make operational those needed services to rural healthcare consumers 
and healthcare providers.
Limited Infrastructure
    The availability of high capacity information infrastructure is a 
limiting factor to the expansion of both telecommunications based 
healthcare delivery and economic development. Live consultant 
interactions depend more reliably on broadband services. As many rural 
communities are still struggling to attain the most basic services 
provided by limited local Internet Service Providers (ISPs), broadband 
services are being deployed in more populous and prosperous areas 
around the country. Broadband or high-speed Internet access is provided 
by a series of technologies that give users the ability to send and 
receive data at volumes and speeds far greater than current Internet 
access over traditional telephone lines. High-speed two-way connections 
can be used for interactive applications such as online classrooms, 
economic development, or support services for rural healthcare.
    The deployment of broadband to the American home is being financed 
and implemented by the private sector as a business strategy. Less 
dense populations are much less attractive to private sector 
investment. Based on the economics of limited subscribers, geographic 
barriers, and shortage of economic development opportunities, it is 
unclear how advanced telecommunications services will be provided, 
supported, and sustained in rural underserved areas.
Reimbursement
    There are many issues surrounding the methodology HCFA has adopted 
in reimbursing providers for Telehealth services, especially within 
rural America. Recent U.S. data figures indicate that there are a 
greater percentage of Medicare beneficiaries in rural America when 
compared to urban settings. Medicare payments to those few physicians 
that practice in the many small rural communities like those seen in 
Southeastern Ohio account for over 60% of practice revenues. Within our 
small rural hospitals in Appalachia, Medicare payments may run as high 
as 90% at times. With counties that have as few as two physicians and 
no mid-level health care providers, access to health care remains a 
``high priority'' problem for the senior citizens in rural Southeastern 
Ohio. This decreased access to health care in Appalachia is occurring 
in a population that demonstrates a higher than expected incidence of 
chronic debilitating diseases such as Diabetes, Chronic Obstructive 
Lung Disease, Obesity, Heart Disease and elevated cholesterol levels. 
Telemedicine offers much to aid in the care of these disease entities 
as well as other disorders among rural residents. It remains true 
however, that the methodology adopted by HCFA in promoting telemedicine 
has hindered rather than helped bring healthcare to the Medicare 
recipients of Southeastern Ohio, and other rural areas throughout our 
country.
    The anticipation that we saw when HCFA announced the changes to 
telemedicine reimbursement in designated HPSA areas has changed from a 
mood of excitement to a mood of frustration and despair over the last 
year. The current 75/25 method of reimbursement for telemedicine in the 
absence of bandwidth infrastructure in rural America does nothing to 
promote the advantages of this new technology. It merely acts as a 
disincentive to opportunities for expansion of access to care for 
Medicare recipients who are already disadvantaged in the healthcare 
provision continuum. It focuses on maintaining a bottom line cost 
sharing by providers using a methodology that has been deemed illegal 
when practiced independently by physicians (fee-splitting). It further 
feeds the digital divide in rural America and deepens a pre-existing 
schism in healthcare service availability.
    Those of us in rural communities already experience great 
difficulty in recruiting and sustaining an adequate supply of primary 
care health providers. For the purposes of telemedicine, current HCFA 
policies increase costs to provider participants in terms of time, 
facility utilization, staffing, administration and equipment; further 
burdening an already overburdened and fragile healthcare system. Rural 
primary care providers are not reimbursed on a reasonable cost basis 
for goods used, services rendered or time and effort provided as a 
presenter. They are reimbursed at an arbitrary figure of 25% of the fee 
received and administered by the consultant provider.
    Potential reimbursement for ``store and forward'' consultation is 
another possibility to further enhancing healthcare delivery in rural 
America through the use of telemedicine technology. These are the type 
of consults most often compatible with rural practice. In many 
instances what is needed is a review of current lab data or tests to 
enhance patient care. For a breast cancer patient, a review of current 
red and white blood cell counts may allow the rural primary care doctor 
or rural hospital to adjust and administer a dose of chemotherapy, 
rather than requiring a three to four hour drive to see her oncologist. 
For a patient with severe diabetes, the ability to store and forward 
blood sugar measurements along with other lab data to their 
endocrinologist will save time, effort and money. Surely a reasonable 
rate of reimbursement for asynchronous medical care makes common sense. 
It is within this kind of utilization that telemedicine really brings 
many benefits to an underserved rural population, rather than HCFA's 
insistence that any telemedicine involve a ``live'' interactive 
conference.
    At the Ohio University College of Osteopathic Medicine, we have had 
great success in the utilization of a mobile van for the delivery of 
preventive pediatric healthcare. We have seen significant positive 
health outcomes, such increased immunization rates and pediatric 
screening examinations, through these efforts. Through the combined 
hard work of community leaders working with Congressman Ted 
Strickland's office, we have secured financing of a second van targeted 
toward the underserved adult community in Southeastern Ohio. The new 
van will incorporate Telehealth to improve preventive screening for our 
underserved adult populations. We will use this technology through our 
existing infrastructure at schools and community centers in Ohio. 
However, these services will be non-sustainable without changes to the 
current Medicare reimbursement policies.1Telemedicine has already 
enjoyed a positive track record at many locations. In order to best 
provide these services to rural Medicare recipients, we advocate 
further improvements to the Balanced Budget Act of 1997. We feel that 
measures like Senate Resolution 2505 and House Resolution 4771, that 
propose important changes to healthcare delivery through telemedicine 
are steps in the right direction.
    We further suggest the consideration of ``Digital Healthcare 
Empowerment Zones for Rural America.'' Community leaders, volunteer 
organizations and rural healthcare providers will partner in the 
development of empowerment zones for the express purpose of developing 
innovative methods of healthcare delivery utilizing digital technology 
in rural America. Empowerment zones will analyze the current digital 
infrastructure, assess the healthcare needs of their communities, and 
develop strategies with measurable health outcome objectives. The 
Digital Healthcare Empowerment Zones for Rural America will be funded 
by block grants. Proposed empowerment zones will be granted waivers 
from existing federal Medicare and state Medicaid reimbursement 
guidelines, on a community-by-community basis, to incorporate cost-
based reimbursement that supports sustainable infrastructure and 
healthcare delivery.
                               Supplement
              advanced practice nurse/telemedicine program
 A Collaborative Project of the Ohio University College of Osteopathic 
           Medicine and the Southern Consortium for Children
Background
    The Southern Consortium for Children, a collaborative of four 
Alcohol, Drug Addiction and Mental Health Services Boards (ADAMHS), has 
been instrumental in bringing psychiatric services for children to ten 
Appalachian counties in southern Ohio. Approximately seven years ago, 
brokering services equivalent to one full-time child psychiatrist into 
the local mental health provider agencies was the first step in meeting 
the need for children's outpatient psychiatric services. Prior to that 
time, no child psychiatry services were available through the local 
agencies. The Advanced Practice Nurse/Telemedicine Program was designed 
to further increase access to those services. The program was funded by 
a grant from the Health Resources and Services Administration (HRSA), 
Office of Rural Health Policy, Rural Outreach Program and covered seven 
of the ten counties served by the Consortium. Additional funding was 
obtained from the Substance Abuse and Mental Health Services 
Administration (SAMHSA) in the second year to include the remaining 
three counties in the program.
    The collaborative partners and their responsibilities in the 
program are:

 The Southern Consortium for Children--fiscal agent, project 
        management
 Four local mental health agencies--house collaborative 
        psychiatrist/nurse practices, provide support services
 Two child psychiatrists--provide psychiatric services 
        (primarily prescribing and monitoring medications)
 Two clinical nurse specialists (CNS)--provide psychiatric 
        services (primarily monitoring medications; will begin 
        prescribing in fall of 2001)
 The Ohio University College of Osteopathic Medicine--
        installation, management, and maintenance of video 
        teleconferencing system.
Services
    The services provided through the program fall into two main 
categories: direct service and education/consultation. The direct 
services that are provided by the psychiatrist/nurse collaborative 
practices include psychiatric assessment of children and adolescents, 
prescription of medication, monitoring medication, and client and 
family education. All clients receiving direct services are children 
and adolescents between 4 and 18 years old and most (65-75%) are 
Medicaid-eligible.
    The Behavioral Pediatric Case Seminar Series makes up the majority 
of the education/consultation piece. Initiated in September 1998, each 
program in the series is a monthly hour-long presentation from noon to 
1:00 PM. Each program consists of a case study that is presented to a 
panel composed of a child psychiatrist, a CNS, and a psychologist. The 
panel's review of the case is then followed by questions from the 
audience. Each program is presented via video teleconference with seven 
sites currently participating across the ten-county region. As of May 
2000, 604 participants have attended 20 programs in the series. The 
series began as a way to enhance communication between the child 
psychiatrists and pediatricians in order to facilitate referrals and to 
increase the appropriateness of referrals from pediatricians to the 
mental health system. Now physicians, nurses, psychologists, social 
workers, medical students, and school counselors among others attend 
the series. The disciplines presenting cases have been equally diverse 
with consumers participating as well.
Videoconferencing
    Videoconferencing has proven to be a powerful tool for education 
and consultation in this program. It has also been used extensively for 
administrative functions. The guidance provided by OUCOM has been 
instrumental in creating a videoconferencing network that has addressed 
these functions effectively and in a trouble-free manner.
    However, the original intent of the program was, and continues to 
be, to use videoconferencing technology to provide direct services to 
children. Ohio's lack of policy regarding Medicaid reimbursement for 
clinical services delivered via videoconference is one of two problems 
that have effectively prevented the use of the technology for direct 
service. The other factor has been the lack of funds to connect each 
satellite clinic to its parent clinic. The SCC has worked with the Ohio 
Department of Mental Health (ODMH) and the Ohio Department of Human 
Services (ODHS) to help forge a policy regarding reimbursement.
    A policy proposed by ODMH but not yet implemented would allow no 
more than 20% of services to be provided via videoconference. The SCC 
believes that, due to the large geographical area, diffuse population 
and shortage of clinicians, rural areas should be allowed more 
flexibility to utilize technology to meet the mental health needs of 
their children.
    Several grant proposals have been submitted in order to fund 
videoconferencing systems for the satellite clinics. The SCC remains 
committed to the use of technology as an effective tool in addressing 
the behavioral health needs of children in Appalachian Ohio.

    Mr. Bilirakis. Well, Ms. Mary Patrick is Director of 
Quality Improvement, Blue Cross and Blue Shield of Montana. Ms. 
Patrick, please proceed.
    Ms. Patrick. Just a side note here, do you sing, too?
    Ms. Ross-Lee. I dance.

                  STATEMENT OF MARY R. PATRICK

    Ms. Patrick. Mr. Chairman and committee members, it is an 
honor and privilege to be here today from Blue Cross and Blue 
Shield of Montana to share with you what has taken place in our 
great State in the field of telemedicine. I thank you for your 
interest and support for this technology.
    Montana, the fourth largest State in the Union, has lots of 
vast beauty and open frontiers, big sky country, has a small 
population, approximately 880,000 people, and lots of land, 
147,000 square miles, therefore making Montana a challenging 
place to deliver health care. Almost half of our total 
population is classified as rural. We have 56 hospitals and 
critical access facilities located primarily in the western 
part of our State.
    We have a map up there to show you. You can just put a line 
right down the center of the State, and you will see the 
eastern part of our State is in great need of health care 
delivery.
    Seven counties out of 56 total have no health care facility 
of any type. Forty-three of Montana's 56 counties have no 
psychiatrists, and there are no psychologists and no 
psychiatrists east of Billings, all the way up to the border of 
Canada, as well as specialties. Great Falls, Missoula and 
Billings, which are located predominantly in the western part 
of the State, are considered our main medical hubs as they are 
the only areas in the State that can provide all types of care, 
including open heart surgery. In such a widespread and sparsely 
populated State, many residents have to travel long distances 
for health care services, particularly for specialty care.
    Blue Cross and Blue Shield of Montana has been reimbursing 
for telemedicine consults for almost 7 years, since first 
requested to do so by several participating mental health 
providers in our State and the Eastern Montana Telemedicine 
Network. The Eastern Montana Telemedicine Network consists of 
13 medical and mental health not-for-profit facilities located 
primarily in the eastern part of our State capable of two-way 
video conferencing, and they definitely fill a gap for delivery 
of health care in this part of our State.
    At this time, both Medicaid and Medicare reimburse for 
these services in Montana. Medicaid has done so since the 
inception of these services in Montana. Medicare currently 
reimburses for consultations only and has several contingencies 
related to payment for these services which most providers 
perceive as a problem.
    In addition to consultations, there will be other 
telemedicine services that residents of Montana will need. 
Telehome care is something that will eventually be available 
for alternative health care delivery, for long-term disability 
and home care. Montana is predicted to have the third highest 
elderly per capita population in the year 2025.
    In addition to consultations, telepsychiatry has many other 
applications that could also benefit Montana's sparsely 
distributed population. Medication review, discharge planning 
and follow-up care, individual and family therapy, emergency 
consultations are some of the additional realities of care 
through telemedicine technology.
    According to the Eastern Montana Telemedicine Network, an 
average of 20 Medicare patients per month over 7 years utilized 
telepsychiatry services and paid out of their own pockets. 
Telemedicine does not create new or different health care 
services. It simply provides a new way to deliver existing 
medical or health care services. The day will come when 
regulatory and payment issues will be resolved and telemedicine 
will be fully integrated into our Nation's health care system.
    Blue Cross and Blue Shield of Montana is proud to be a 
leading participant in this process in our State. Thank you for 
your time and for asking Blue Cross and Blue Shield of Montana 
to participate in this hearing.
    Mr. Bilirakis. I guess one of the questions might be asked 
of you is what is their reimbursement policy, but I won't do 
that at this point.
    [The prepared statement of Mary R. Patrick follows:]
 Prepared Statement of Mary R. Patrick, Blue Cross and Blue Shield of 
                                Montana
                              introduction
    It is an honor and privilege to be here today to share with you 
what has taken place and is taking place in the great state of Montana 
in the field of telemedicine. I have lived in Montana for almost 10 
years and I have grown to appreciate the vast beauty and open frontiers 
of the fourth largest state in the union. Our Big Sky country has a 
population of some 880,000 people and covers a land area of more than 
147,000 square miles. In size, our border can encompass Virginia, 
Maryland, Delaware, Pennsylvania, and New York, and still have room for 
the District of Columbia. Montana is a challenging environment for 
delivery of healthcare because of our geography and demographics. While 
telemedicine technology has many clinical and non-clinical uses in both 
urban and suburban areas, it is the rural applications that are most 
near and dear to Montanans.
    I hope to provide you with some insights into why Blue Cross and 
Blue Shield of Montana was one of the first commercial healthcare 
payers to reimburse telemedicine services. Included in this overview 
will be a look at Montana's demographics, Blue Cross and Blue Shield of 
Montana's role in telemedicine, and some interesting outcomes and 
satisfaction comments from a provider and member.
                          montana demographics
    Overview
 882,799--1999 estimated population.
 Per capita personal income is $22,314.00 in 1999.
 60,000 Native Americans from 11 federally recognized tribes, 
        residing on the 7 designated reservations.
 Urban population accounts for 52.5% of the population.
 Rural population accounts for 47.5% of the population.
 Growth of the 65 and over population is expected to increase 
        from 13.1% in 1995 to 24.5% in 2025.
 Montana is projected to have the third highest proportion of 
        elderly in 2025.
                     delivery of healthcare impact
    In such a widespread and sparsely populated state, many residents 
must travel long distances for healthcare services, particularly for 
specialty care. If a person lives in Virginia City, Montana, and needs 
open heart surgery, that person has to travel anywhere from 3 to 4 
hours at a minimum, depending on where their cardiac surgeon is 
located. These services are available only in Billings, Missoula and 
Great Falls.
    When someone in a major metropolitan area develops chest pain and 
calls ``911,'' there is a good chance that an ambulance will respond 
with Advanced Cardiac Life Support trained personnel within 10 minutes. 
That person would likely be transported to a level of facility equipped 
to handle all cardiac emergencies and situations within 10-20 minutes.
    A rancher outside of Dillon, Montana, located in the southern 
corner near the Idaho border, who develops chest pain and calls ``911'' 
may not see an ambulance arrive for an hour. There is also the 
possibility that there are no Advanced Cardiac Life Support Personnel 
on board the ambulance. It is also quite likely that once the patient 
is on board the ambulance, it may take another hour or more to arrive 
at a Critical Access Facility. This type of facility can only 
temporarily stabilize an acute cardiac patient until they can be 
airlifted to a facility equipped to handle this type of emergency.
Blue Cross and Blue Shield of Montana
    Blue Cross and Blue Shield of Montana has been providing health 
insurance to Montanans for 60 years. We are home-grown, based in 
Helena, Montana. Overall, we serve 280,000--half of the state's insured 
population--across our state. We also serve 140,000 seniors through 
Medicare Parts A and B.
    Our health plans offer choice and access to all types of healthcare 
services for our consumers. Given the rural nature of our state, we 
face challenges in providing quality primary, particularly specialty 
care, to our members. An overview of specialty care availability in 
Montana is specified in the five attached maps.
    Blue Cross and Blue Shield of Montana contracts with 1,160 family 
practice and specialty participating physicians in our traditional 
indemnity network. A breakdown of numbers and distribution of specialty 
physicians is as follows:

 Four pediatric cardiologists--three are located in three out 
        of the four main medical hubs' in the western part of the 
        state, and one located in Billings.
 One pediatric pulmonologist (located in the western part of 
        the state).
 Thirteen cardiovascular surgeons, 38 cardiologists and 15 
        pulmonologists (none are located east of Billings).
 Thirty-two neurologists and 23 neurosurgeons (none are located 
        east of Billings).
 Three neonatologists (none are located east of Billings).
 There are a total of 56 hospitals and Critical Access 
        Facilities in the state with only five considered to be Tier I 
        level facilities. Tier I facilities provide the highest level 
        of acute care (none are located east of Billings). Seven 
        counties are without any type of healthcare facility.
    In late 1993, our company was asked by Eastern Montana Telemedicine 
Network (EMTN) in Billings and several of our providers to reimburse 
clinical services for our members via telemedicine technology. EMTN is 
a consortium comprised of 13--notforprofit medical and mental health 
facilities located primarily in counties east of Billings. Each site is 
connected via two-way interactive videoconferencing technology to 
provide medical and mental health consultations, medical and higher 
education, and administrative and business services to residents in all 
communities of the network. EMTN provided telemedicine services at 
various sites in the eastern part of Montana.
    Because of the potential benefits for our Blue Cross and Blue 
Shield of Montana members, our Company initiated the process for 
approval for reimbursement of telemedicine services just like face-to-
face consultations. Our multi-specialty physician advisory board 
reviewed the proposal and advised that we should pay for telemedicine 
consultations because we reimburse face-to-face encounters minus the 
technology component. As a result, the referring health care 
professional would be reimbursed for an office visit and the consulting 
physician would be reimbursed for the consultation visit. Upon 
initiation of reimbursement for these services, we asked the health 
care professional community to include a specific modifier when billing 
for these encounters to help us track utilization. We have not, 
however, been able to track utilization through this technology due to 
inconsistent compliance. While we don't want any extra burden on our 
health care professionals for the purpose of tracking utilization, we 
do want to foster compliance to better quantify all quality of care 
issues.
                         value to our members:
    Through the Eastern Montana Telemedicine Network, Montana has been 
able to realize the positive outcomes of our Company's decision to 
reimburse for telemedicine. Because psychiatry is consistently the 
highest utilized specialty in Montana, and there are no psychiatrists 
east of Billings, we have chosen the following provider and member 
testimonials to share with you today:
        A Billings, Montana psychiatrist has been providing psychiatric 
        services to patients throughout eastern Montana for over 15 
        years. Since the inception of EMTN (7years) this doctor has 
        transitioned a case-load of over two hundred patients to 
        telemedicine. His patients are always given a choice of coming 
        to see him in Billings or choosing to be seen over 
        telemedicine. Ninety nine percent of the time they chose to be 
        seen over telemedicine. During a recent televisit with this 
        psychiatrist, one patient commented on how much they liked 
        being able to see him this way. She said, `` you know my 
        daughter would have to take a day off from work and put her 
        child in day care to bring me to see you. This is so much 
        better for all of us.'' On a recent patient evaluation form 
        from EMTN, the following comment was made, ``This technology is 
        a must for rural areas like ours. This saved me a day's drive 
        down and a day's drive back plus the expense of a hotel for a 
        15 minute check.''
             medicaid and medicare reimbursement in montana
    Medicaid in Montana has reimbursed for telemedicine services since 
the inception of telemedicine. In fiscal year 1995, Medicaid estimated 
that using telemedicine saved Medicaid patients $65,000 in travel time, 
lost wages, food and lodging. Since Medicaid reimburses for travel 
expense, this item was a tangible outcome for them to measure and 
track.
    As a result of the Balanced Budget Act (BBA) of 1997, Health Care 
Financing Administration (HCFA) was mandated to reimburse for select 
teleheatlh consultations beginning January 1, 1999. This was an 
important first step in recognizing telehealth as a reimbursable 
service. The current rules remain in an evaluation period as evidenced 
by the numerous federal bills that have been introduced to amend these 
rules.
    The BBA requires fees related to telemedicine encounters be shared 
(split) between the referring health care professional and the 
consulting specialist. The Healthcare Financing Administration (HCFA) 
has interpreted this to mean that 75% of the normal consult fee should 
go to the specialist and 25% should go to the referring health care 
professional. Fee sharing is the area of most concern to health care 
professionals and those involved in telemedicine programs.
    At this time HCFA only recognizes physicians, physicians 
assistants, nurse practitioners, nurse midwives, or clinical nurse 
specialists as providers of telemedicine services who are eligible for 
reimbursement. HCFA's rules exclude clinical psychologists and 
physical, occupational, and speech therapists. These health care 
professionals are normally reimbursed when providing services face-to-
face.
    A large majority of telemedicine programs utilize registered 
nurses, licensed practical nurses, or other health care professionals 
to present the patient to the physician over the telehealth system. The 
Health Care Financing Administration does not recognize these providers 
to be eligible presenters of patients for reimbursement purposes. The 
agency only recognizes the actual referring health care professional or 
an employee of the referring health care professional, who could be a 
registered nurse, licensed practical nurse, etc.
    Telehomecare provides healthcare service delivery alternatives for 
individuals with disabilities and home care clients with both acute and 
long-term needs. Many patients or family member caregivers are capable 
of presenting themselves or the family member to a health care 
professional over a telemedicine network for care. Telehomecare lends 
itself to this type of presentation, as do certain psychiatric 
sessions. Self-presentation of a patient for telehomecare allows the 
patient to become more involved in treatment and recovery. Also, 
telehomecare allows a reduction in the number of visits by a nurse, who 
in turn reduces costs and allows for increased interactions with the 
medical staff via the telehomecare health system. For telepsychiatry, 
those patients who can present themselves ensure confidentiality of 
such sessions.
                               conclusion
    Telemedicine is a tool for improving the rural health care system. 
Telemedicine fosters the growth of integrated health care systems that 
serve both rural patients and rural health care professionals. It 
provides rural patients with access to comprehensive health care 
services, both in their community and from distant health care 
professionals. Rural health care professionals find their practice less 
isolating because telemedicine facilitates contact with distant 
colleagues who share their interests.
    The day will come when telemedicine is fully integrated into the 
rural health care system. The effectiveness of telemedicine will have 
been established. The regulatory and payment issues will have been 
resolved. Many players will have participated in this process including 
Congress, states, telecommunications, health care professionals and 
others. Blue Cross and Blue Shield of Montana is proud to be a leading 
participant in the process in our state.
    Thank you for your time and for inviting Blue Cross and Blue Shield 
of Montana to provide you with information on our progressive support 
and payment policies in the area of telemedicine.

                 Telemedicine Reimbursement References

    1. Campbell, Paul R., 1996, ``Population Projections for States, by 
Age, Sex, Race and Hispanic Origin: 1995 to 2025,'' Report PPL-47, U.S. 
Bureau of the Census, Population Division
    2. Census and Economics, Inc., 2000 State Profiles.
    3. Department of Health and Human Services, HCFA, Medicare Program, 
Payment for Teleconsultations in Rural Health Professional Shortage 
Areas, Proposed rule, July 1998.
    4. Eastern Montana Telemedicine Network, provider and member 
comments on Telemedicine Service, 2000.
    5. McLosky-Armstrong, Tracy, Sprang, Burgiss, Reid, Hammack, 
``Medicare Reimbursement for Telehealth Encounters--Position Paper'', 
October 5, 1999.
    6. McLosky-Armstrong, Tracy, Sprang, Burgiss, ``Medicare 
Reimbursement for Telehealth--An Assessment of Telehealth Encounters, 
July 1, 1999-December, 1999, July 8, 2000.
    7. Population Estimates Program, Population Division, U.S. Census 
Bureau, Washington D.C., 2000.
    8. Telemedicine--A Guide to Assessing Telecommunications in Health 
Care, Marilyn J. Field, Editor, National Academy Press, Washington, 
D.C., 1996.
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    Mr. Bilirakis. Dr. Grigsby is the Study Manager for the 
Center for Health Services and Policy Research with the 
University of Colorado Health Sciences Center.
    Dr. Grigsby, please proceed, sir.

                    STATEMENT OF JIM GRIGSBY

    Mr. Grigsby. Thank you, Mr. Chairman, honorable members. I 
appreciate the opportunity to speak with you today.
    I think previous witnesses, because they tend to be 
providers or involved in different aspects of telemedicine, 
have presented a somewhat different perspective than I will. I 
am in basic agreement with previous witnesses, as well as with 
Dr. Berenson, that some fundamental changes are necessary in 
coverage and payment policy toward telemedicine, but I should 
say I am a research scientist primarily at the University of 
Colorado. I am in the Division of Geriatric Medicine; and I do 
a combination of medical outcomes research, primarily with 
Medicare beneficiaries, and cognitive neuroscience looking at 
neurologic functioning in older adults; and so many of my 
remarks come from that perspective.
    Telehealth, which is the use of telecommunications and 
information technology, is a term we have thrown around quite a 
bit today. The basic idea of it is to deliver health services. 
It seems simple enough on its face, but it presents actually a 
number of complex issues for policymakers, legislators and 
health care practicers as well. The concept of telehealth is 
nearly as broad, in fact, as is medical care itself; and 
consequently it defies simplistic discussions of effectiveness 
or cost effectiveness.
    In general, it involves three components. First, it refers 
to the provision of various kinds of health services, ranging 
from information about health and illness to diagnostic 
assessment, remote monitoring of patients and robotic 
interventions. Second, the services involves persons that are 
different from a provider. And, third, they are accomplished 
using any of a variety of telecommunications, video and 
information technologies.
    Given the newness of the field and the wide range of 
possible uses of the technology, some telehealth applications 
are probably very effective and quite inexpensive. Others are 
likely to be extremely expensive and of little use for most 
practical purposes. What this means is if you ask whether 
telehealth is effective or cost effective there is no answer to 
your question. On the other hand, if you ask whether 
interactive video is an effective means of allowing people in 
remote rural communities to see specialists in urban areas, not 
only can your question be answered but the answer is probably 
yes.
    Efforts to develop coverage and payment policies so far 
have focused primarily on interactive video and in rural areas 
in a fee-for-service environment. While this is an important 
application, it appears that, over the coming years, it is 
going to represent a diminishing percentage of what actually 
transpires in telehealth; and it is important that we realize 
that if a rational policy is to be devised what we have to do 
is make relatively fine-grained distinctions among different 
types of telemedicine practices and applications.
    For a number of complex reasons, research data on 
telehealth are very limited, often nonexistent. Because the 
evaluation of new technology is an inherently time-consuming 
process, we are constantly falling farther behind as the 
technology and uses to which it is put develop rapidly. For 
example, HCFA, at the direction of Congress, established 
several telemedicine demonstration problems in the 1990's. At 
the time they were established, these were state-of-the-art. 
They were intended to use primarily interactive video for the 
provision of specialty medical consultation to residents of 
rural areas, and it was assumed that this was the primary 
direction in which telemedicine was going to go.
    An evaluation of these demonstrations was established, and 
that demonstration project, the waiver that provided payment 
for those demonstration programs and the evaluation itself were 
narrowly defined. Initial projections were that there would be 
a large number of patients who would receive services under 
this program; and, in fact, it has been quite limited, as Dr. 
Berenson and others have pointed out. That represents 
historical factors, assumptions that were made at one point 
about the direction of telemedicine and our own lack of 
knowledge.
    I am the principal investigator on the evaluation for HCFA 
of the telemedicine demonstrations, and because the 
demonstrations themselves have produced very low volumes of 
patients, we have suggested a number of changes in direction in 
the evaluation and in HCFA's approach to this, including 
studies of home health care, of the use of store-and-forward 
technology, and we are currently in negotiations with HCFA 
about some of these possible changes. They are under 
consideration, look upon them favorably, and we are hopeful 
that in the very near future we will be able to redirect the 
focus of our efforts to some extent.
    Thank you.
    [The prepared statement of Jim Grigsby follows:]
  Prepared Statement of Jim Grigsby, Study Manager, Center for Health 
 Services and Policy Research, University of Colorado health Sciences 
                                 Center
 definitions and applications of telemedicine, telehealth, and e-health
    The terms telemedicine, telehealth, and e-health are often used 
somewhat interchangeably, and each may be defined in a number of 
different ways. In general, they involve the following three 
components: 1) These terms refer to the provision of various kinds of 
health services, ranging from information about health and illness 
through diagnostic assessment, remote monitoring of patient condition, 
and robotic interventions. 2) The services in question involve persons 
who are at some distance from the provider. 3) They are accomplished 
using any of a variety of telecommunications, video, and information 
technologies. The Institute of Medicine, in its 1996 report on the 
evaluation of telemedicine,1 discussed a number of 
definitions, some of which also encompassed the use of these 
technologies for administrative and educational purposes.
---------------------------------------------------------------------------
    \1\ Institute of Medicine Committee on Evaluating Clinical 
Applications of Telemedicine: (1996) Telemedicine: A guide to assessing 
telecommunications in health care. MJ Field (ed.). Washington, DC: 
National Academy Press.
---------------------------------------------------------------------------
    While the term telemedicine is ordinarily used to refer to the 
remote provision of medical care, the broader term telehealth often is 
used to include such things as patient education, public health, 
continuing education for health professionals, administrative meetings, 
and psychiatric discharge planning, among many others. E-health is 
frequently used to refer to commercial applications of Internet 
technology that generate revenue either by selling health-related goods 
and services, by advertising such goods and services, or by obtaining 
and selling information about Internet users. Although the use of the 
telephone by itself to provide health services could be considered to 
fall under most definitions of telemedicine, and there are data showing 
that many such uses are cost-effective, telephonically provided 
services are not covered for Medicare beneficiaries, and most other 
purchasers of health services also refuse to pay for telephone 
consultations.
    Discussion of the effects and effectiveness of telemedicine and 
telehealth is often complicated by the fact that the terms encompass a 
very wide array of technologies and applications, varying along several 
different dimensions. For example, a telemedicine encounter may be 
conducted in real time between two or more persons at different sites 
using interactive video (IAV) or audio (radio or telephone) technology. 
A substantial percentage of telemedicine currently is accomplished in 
this manner using IAV, with a consulting provider at one end of the 
link and a patient (and sometimes another provider) at the other end. 
However, because of the high cost of transmission and limitations on 
the local infrastructure, video technology is not available everywhere. 
Consequently, in certain remote regions--such as much of Alaska--
paraprofessional community health aides may employ a kind of 
telemedicine that uses radio to allow them to consult with physicians 
or other providers about patient management.
    While the use of videoconference technology links patients and 
providers simultaneously, telemedicine and telehealth services also may 
be provided asynchronously, in which case providers, or providers and 
patients, interact with one another somewhat less directly, through 
systems that transmit data by email, fax, or other means of data 
transfer. Some systems of this sort involve personal computer-based 
store-and-forward systems, which are essentially multimedia email 
(i.e., containing images). Store-and-forward protocols generally 
involve transmission of images (e.g., CT scans or x-rays), lab data, 
history, and physical exam findings bundled into a single email message 
that is transmitted to a medical specialist or subspecialist for 
interpretation. The consultant then sends a report of findings and 
impressions by return fax or email. Other telehealth systems involve 
transmission of certain physiologic data--such as diabetics' blood 
glucose values--generally over ordinary telephone lines, possibly by 
means of a dedicated modem.
    There is a broad and ever-expanding variety of uses of the various 
technologies for providing different health services. Among others, 
these include the use of IAV for specialty consultation, psychiatric 
evaluation, and psychiatric treatment; store-and-forward consultation 
and second opinions; compressed IAV for home health care; facsimile 
transmission of EEG and EKG data; real-time telemetric transmission of 
vital signs; and regular remote monitoring of respiratory status, using 
spirometry, of persons with asthma. Some providers have established 
World Wide Web sites that provide educational material to patients with 
certain conditions, or that permit communication between patients and 
providers. Should humans travel to Mars, a sophisticated telemedicine 
system will assuredly be necessary, but the same might be said of many 
remote terrestrial regions where access to health care is severely 
limited.
    Perhaps the most important point to be made here is that 
telemedicine and telehealth are not unitary phenomena, but are 
extremely variable in their specific aims and implementation. The 
telemedicine programs of the early 1990s, which relied primarily on 
remote videoconference technology, bore a striking resemblance to the 
very first telemedicine programs established in the late 1950s. 
However, recent advances in medical, computing, and telecommunications 
technologies have led to the development of such a diverse range of 
technologies and applications that it no longer makes sense to pose 
questions about the effectiveness or cost-effectiveness of telehealth. 
Some telehealth applications are very effective and quite inexpensive, 
while others are likely to be extremely expensive and of little use for 
most practical purposes. Therefore, the questions to which we should 
turn our attention have to do with whether certain applications of 
specific technologies are useful means of handling specific health 
conditions.
    For illustrative purposes, consider the question, ``is telehealth 
effective?'' The question is commonly asked, and sounds reasonable 
enough, but unfortunately is so broad it has no meaningful answer. 
Because telehealth is really a vehicle for delivering health services 
of all sorts, this is tantamount to asking whether telecommunications 
systems work, and whether medical care is effective. If we are to learn 
anything of value about the use of information and telecommunications 
technology in providing health care, the questions we ask must be 
precisely focused. We might, for example, ask, ``does the remote 
monitoring of blood glucose levels, with transmission of the recorded 
data via modem to a computer that analyzes the data and notifies 
providers and/or patients when there are problems, result in better 
control of blood glucose levels, less expensive management of diabetes, 
and a lower rate of serious complications?''
                      the evaluation of telehealth
    There exist limited data on the effectiveness and cost-
effectiveness of telehealth. In 1996, the Institute of Medicine of the 
National Academy of Sciences compiled a comprehensive volume on 
telemedicine, with detailed recommendations for its evaluation. This 
worthwhile endeavor has thus far produced little fruit. This lack of 
relevant data may be traced to many factors, including the following:

 the constant change and refinement of the technology--by the 
        time a research study is published, the equipment, technology, 
        and applications studied may be obsolete;
 an emphasis on the development and implementation of systems 
        intended to provide clinical services, by administrators and 
        clinicians for whom research is of secondary importance;
 relatively poor compliance with data collection protocols, 
        even in programs that have attempted to evaluate their 
        telehealth services;
 the very low volume of persons who receive telemedicine 
        services, which makes it difficult to obtain adequate samples 
        for analysis, especially within specific categories of disease;
 the variability among telemedicine programs with respect to 
        equipment, technology, applications, and services provided;
 the rapid pace of change in the telecommunications and 
        computer industries; for example, personal computers did not 
        even exist until the early 1980s, yet it is now possible to 
        purchase a desktop computer that meets the definition of a 
        supercomputer for under $3,000;
 the use of telemedicine has not reached a sufficiently steady 
        state, even within most single programs, to permit 
        comprehensive cost-effectiveness analysis;
 reluctance on the part of many health care providers to use 
        telemedicine--due in part to the lack of a national coverage 
        and payment policy, and in part to deeply entrenched habits of 
        practice;
 policies, regulations, and legislation (e.g., limiting 
        coverage) that retard the proliferation of telehealth; and
 failure of agencies that have funded telemedicine projects to 
        require systematic evaluation of outcomes.
    Discussions of research on telehealth generally concern themselves 
with three major issues: costs, quality, and access. The essential 
question is whether these services provide care of adequate quality at 
a reasonable cost. Also of interest is whether they permit access to 
health care for persons for whom such care otherwise might not be 
available. The issues that providers and policymakers would like to see 
addressed include the following:

 Is telehealth care comparable in quality to health services 
        provided in person?
 How should such services be reimbursed?
 Are the outcomes of in-person health care and telehealth care 
        equivalent?
 Is the cost of telehealth services roughly equivalent to that 
        of face-to-face care?
 Will telehealth increase access to health services? If so, 
        what will be the effect of telehealth on overall rates of use 
        of health services? Will increases in some areas (e.g., 
        outpatient specialist consults) be offset by decreases in 
        others (e.g., inpatient admissions)?
 Are patients satisfied with the care they receive via 
        telehealth?
    Unfortunately, few data exist providing answers to these questions. 
Moreover, the questions themselves are overly broad, and cannot 
possibly be answered in a meaningful way in a reasonable period of 
time. To a large extent, rapid technological change and the flow of 
investment money drives the evolution and proliferation of telehealth. 
New health care applications follow at a somewhat slower pace, while 
the associated social, policy, and legislative issues lag well behind. 
Because technology assessment moves far more slowly than technological 
innovation and dissemination, the data required for planning and policy 
making are inevitably late in coming, frequently out of date by the 
time they are available, and of limited use for planning.
    For example, the Health Care Financing Administration (HCFA), at 
the direction of Congress, established five telemedicine demonstration 
programs in the mid-1990s. These programs, which were state-of-the-art 
at the time they were initially funded, were established primarily to 
use interactive video for the provision of specialty and subspecialty 
medical consultation to residents of rural areas. With the benefit of 
hindsight, it appears that they were based on a model that some 
telehealth providers now consider either unworkable or of limited 
applicability. In addition, the payment waiver for the demonstration, 
obtained by HCFA with the approval of the Office of Management and 
Budget, was narrowly defined (covering only specialty consultation, and 
not common patient evaluation and management codes), and was based on 
projections of patient volumes that were considered realistic in 1995. 
Subsequent experience, however, has shown that the number of persons 
living in rural areas who require consultative services--and who are 
likely to be referred for such services by their primary care 
physicians--is significantly lower than anticipated. As a consequence, 
the evaluation of the demonstrations and payment methodology has 
collected minimal data. The problem of inadequate research data is not 
unique to these demonstrations, however. For example, in the case of 
one federal agency, an evaluation that had been in planning for several 
years was canceled before it began.
                   what do we know about telehealth?
    Certainly there are important reasons to evaluate the efficacy and 
effectiveness of telehealth scientifically, and to assess its economic 
effects on the health care system. It should be kept in mind, however, 
that the effectiveness of most health services provided to Americans in 
conventional face-to-face modes of delivery has never been evaluated. 
In fact, only in recent years have scientists, providers, and the 
government begun to place an emphasis on evidence-based medicine, 
accompanied by the development of practice guidelines intended to 
ensure a relatively uniform, empirically-based, acceptable standard of 
care.
    Although the evidence is quite limited, there are some data that 
support the effectiveness of certain telehealth applications. For 
example, interactive video consultation, evaluation, and management 
have been practiced clinically off and on for over 40 years, and most 
physicians who have used the technology--even the relatively 
unsophisticated systems of the 1960s and 1970s--have found it an 
acceptable means of providing a wide range of services. This general 
conclusion has been supported by a handful of well-designed, but mostly 
older studies. It appears that interactive video health care has some 
limitations, but if these are kept in mind and the technology is used 
appropriately, preliminary data suggest that it is generally safe and 
effective.
    Less is known about such applications as store-and-forward 
telemedicine, remote monitoring of physiologic status, or the use of 
telemedicine in home health care. Nevertheless there is reason to 
believe that these may be useful additions to the more traditional 
health care system if used judiciously. At this time, the bulk of the 
limited data supporting these methods is anecdotal, but generally 
positive.
    We know very little about the actual costs of providing telehealth 
services. It is clear that those applications involving interactive 
video tend to require significant amounts of telecommunications 
bandwidth, and consequently have rather high (and sometimes 
prohibitive) recurring costs, despite the availability of Universal 
Service subsidies in some areas. As a rule, the few studies that have 
been conducted on costs suggest that as long as patient volumes remain 
low (an almost ubiquitous problem, especially in rural areas), 
interactive video health services are more costly than those provided 
in person. This relationship may be reversed in the event that volume 
could be increased, but if recent experience is a guide, it seems that 
the number of telehealth encounters is liable to increase slowly. As a 
consequence, the high telehealth encounter cost per patient is 
particularly problematic in rural areas--especially those that are very 
sparsely populated--since these areas may never have sufficient numbers 
of telehealth encounters to generate the revenue that would support an 
interactive video system. In fact, for some geographic areas it is 
difficult to imagine any scenario in which interactive video telehealth 
could become financially self-sustaining.
    Although it has not been examined carefully, a reasonable case 
could be made a priori for the use of telehealth in home health care. 
Beginning 1 October 2000, HCFA will reimburse home health agencies 
using a prospective payment system (PPS), according to which an agency 
will receive lump sum payments (with certain defined exceptions) for 
providing services to patients in the home, irrespective of the number 
of visits required. Because preliminary data suggest that interactive 
video may be useful for certain home health tasks, the home health 
industry has shown considerable interest in implementing telehealth 
systems that could substitute for, or augment, some in-person visits by 
nurses, therapists, or aides. While this telehealth application might 
reduce agency costs, and could potentially increase access to care for 
patients, it also raises questions about the quality of care provided--
questions that presumably could be answered using data from the Outcome 
Assessment and Information Set (OASIS) HCFA's instrument for assessing 
quality of care and enabling outcome-based quality improvement. Thus, 
although we don't currently have answers to these questions, their 
evaluation in this case could be relatively straightforward.
    There are limited data concerning the interpersonal/social aspect 
of the quality of telemedicine. In general, however, studies of patient 
and provider satisfaction with telemedicine have yielded mostly 
positive results (as is the case for studies of satisfaction with 
medical care in general).
    The evaluation of telehealth is unique in that telehealth is not a 
specific treatment or device, a diagnostic or interventional tool with 
a fairly circumscribed use. Instead, it is essentially a means of 
extending the services of health care providers to persons who are not 
physically present in the provider's office. Hence its scope is 
exceptionally broad. Even if those who conduct research on these 
questions could keep pace with change in technology in applications, it 
would be impossible to evaluate all the possible uses of telehealth/
telemedicine.
                     current trends in telemedicine
    The early 1990s saw the proliferation of telemedicine systems 
providing real-time, wide-bandwidth video consultations, generally from 
a tertiary care hospital (often referred to as a ``hub'') to outlying 
rural hospitals and clinics (the ``spokes'' in these systems). However, 
the past few years have witnessed a shift toward PC-based store-and-
forward telemedicine, remote monitoring of patients' condition, and 
home health. In many cases, the former ``hub and spoke'' systems have 
diminished in importance, so that direct communications are 
increasingly possible between outlying sites, and even between sites 
within different programs. The systems being used are generally more 
convenient and probably cost-effective means of providing services, 
many of which can be delivered across a readily available, accessible, 
and inexpensive Internet platform. Over time, the costs of equipment 
have dropped considerably while its usefulness and usability have 
increased concomitantly. Telecommunications charges have remained 
relatively stable, but the availability of certain new digital services 
has made the delivery of video-based services somewhat less expensive.
                     government telemedicine policy
    Since the 1960s, the federal government has supported the 
development of telemedicine through grants, contracts, and NASA or 
Department of Defense budget line items that to date probably amount to 
over a billion dollars. A number of agencies currently provide such 
support, and their representatives have been actively involved in 
discussions that shape both policy and directions of growth in 
telemedicine. A comprehensive discussion of those policy issues is 
beyond the scope of this testimony, but I will briefly mention two 
important and problematic policy matters: coverage and payment for 
telemedicine services, the potential for fraud and abuse, and 
interstate licensure.
    With a few circumscribed exceptions (e.g., Congress mandated that 
coverage be extended to certain Health Professional Shortage Areas 
effective January 1999), Medicare reimbursement of fee-for-service 
telemedicine is not available, and it appears that HCFA may be 
reluctant to permit telehealth services under prospective payment 
programs. The agency has been criticized for its caution in moving 
toward a general coverage policy, but has expressed concern that 
insufficient data exist to inform policy decisions. Other payers have 
been slow to set policies of their own, although some commercial 
insurance companies pay for certain telemedicine services, as do Blue 
Cross/Blue Shield organizations, and Medicaid covers some telehealth 
encounters in nearly a third of the States.
    Many of the issues involved in telehealth coverage policy are 
admittedly somewhat complex. As noted previously, discussions of 
telemedicine coverage policy tend to treat telehealth as though it were 
a readily identifiable, unitary clinical phenomenon. A major problem 
with this line of thinking is the protean nature of the health care 
that can be provided using computer and telecommunications technology. 
A comprehensive policy must take these important differences into 
consideration. In addition, many telemedicine providers are moving 
toward alternatives to IAV consultation systems. Yet the primary focus 
of research for Medicare is on IAV systems used for specialty and 
subspecialty consultation--systems which may represent a minority of 
telehealth applications by the time a policy is finally promulgated. 
Further research on the effects and effectiveness of telehealth is 
clearly needed, although at the current pace, the scientific data 
obtained are likely to lag many years behind the current status of the 
technology and its applications.
    An issue of some concern for policy makers is the potential for 
fraud and abuse. Entrepreneurial health care providers have already 
drawn attention for implementing questionable schemes using the 
Internet, and similar operations--many frankly criminal in nature--
certainly will arise over time. Telehealth is not unique in this 
regard, however, and it seems eminently reasonable to develop methods 
for detection of such abuses in conjunction with the development of 
coverage policies.
    Finally, a lack of reimbursement for telehealth services is only 
one of several factors slowing the expansion of telemedicine. Licensure 
to practice medicine and other health professions, for example, is 
regulated by the individual states, and bills have been introduced or 
passed in some states that severely limit the interstate practice of 
telehealth. Examinations assessing the competence of physicians are 
conducted using national standards; patient outcome studies are done on 
a national, not statewide basis; and practice standard guidelines are 
developed on a national basis as well. State regulation of licensure 
may well continue to hinder the spread of telehealth services.

    Mr. Bilirakis. Thank you very much, Doctor.
    I did want to announce before I go into my questions that 
there will be a telemedicine demonstration immediately after we 
finish up here, to be presented by Eastman Kodak, by VitelNet 
and American Medical Development. Hopefully, most of us can 
stay for that demonstration. They have gone to an awful lot of 
trouble to present that to us.
    Of course, the opening statements of all members of the 
subcommittee are a part of the record.
    Ms. Patrick, what reimbursement policies does Blue Cross 
and Blue Shield of Montana follow? Do you follow the HCFA 
reimbursement policies when you reimburse?
    Ms. Patrick. No, we don't.
    Mr. Bilirakis. You have your own criteria?
    Ms. Patrick. We pay just as we would for any face-to-face 
service encounter, patient encounter. We pay the referring 
physician a visit, you know, for the initial diagnosis, and 
then we pay the consulting physician for their consultation.
    Mr. Bilirakis. Any comments regarding that? I think we are 
all pleased to hear that.
    You know, in the process of any piece of legislation we 
have the Congressional Budget Office in our lives, and they 
have to score, as we call it, all legislation, and in other 
words price it. And of course, as much as we keep harping on 
what we call dynamic scoring and things of that nature, we 
never get it. They are concerned with the cost today and not 
concerned, unfortunately, with the ultimate savings, the 
preventative health care, for instance.
    Dr. Burgiss, particularly in your case, looking over your 
written submittal here you have given us an awful lot of 
information that should be very helpful in terms of approaching 
them and trying to get better scores, maybe not for this 
immediate piece of legislation that I am talking about but 
downstream as we go along. And so I would say to all of you, 
any information you can furnish to us in that regard would be 
very, very helpful in the ultimate savings that result.
    I don't know, Ms. Patrick, whether Blue Cross and Blue 
Shield of Montana has basically conducted some sort of a study 
to determine is this costing them really more money or is it 
really saving them money or whatever the case may be, but if 
that is the case, please submit all that to us.
    Ms. Davis, you indicate in your testimony that your region, 
the Upper Peninsula, should be an ideal place for telemedicine 
because every county in the UP, the Upper Peninsula, holds 
partial Health Professional Shortage Area designation, which is 
a prerequisite for HCFA reimbursement. And you state, current 
HCFA policies frustrate even the UP with unrealistic 
requirements regarding who can be a telepresenter--the 75/25 
split fee that many of you have mentioned, the strange roles 
governing store-and-forward technology and the ineligibility of 
some services for reimbursement altogether.
    Now, I know that Bart is aware of most of these, maybe all 
of them, and he has had quite an input in what we are now 
working on and hopefully will have an input on anything we do 
in the future when we expand our look at this area. Would you 
want to share with us which of those HCFA policies you feel are 
most destructive to telemedicine in the Upper Peninsula?
    Ms. Davis. I would suggest that when we work with 
physicians and patients in putting together and coordinating 
telemedicine consultations the two most restrictive are who the 
presenter is. Most often we have an RN and sometimes an LPN, 
and there are situations where the patient presents him or 
herself. And then the fee-sharing usually comes up at a later 
point when we talk to the physician about reimbursement; and, 
to be honest, there are times when the physician is liable to 
say, let us forget it; I will see the patient in my office.
    Mr. Bilirakis. Any other comments from any other panelists 
in that regard? Yes, Dr. Rheuban.
    Ms. Rheuban. The issue of primary care practitioners 
leaving their office to travel with a patient to the 
workstation is problematic as well. These doctors are very busy 
and for them to drive even, for example, as Ms. Hubbard 
described, 40 minutes round trip to a workstation at another 
clinic is an impediment because they have patients waiting in 
their waiting room.
    Mr. Bilirakis. Any further comments? Yes, Dr. Burgiss.
    Mr. Burgiss. Yes. An example that well illustrates this, we 
have a clinic in a rural area. The care provider is a nurse 
practitioner, and that nurse practitioner is busy seeing the 
patients that are in the waiting room. The nurse practitioner 
doesn't have the time, even in the same building, to present 
patients for telemedicine purposes. That should be done by her 
nurse associate instead of the nurse practitioner who should be 
caring for those in the waiting room.
    Mr. Bilirakis. And do you feel that that nurse practitioner 
is competent and capable to present this patient to----
    Mr. Burgiss. Yes. The nurse practitioner or her nurse 
associate, either one could do the presentation.
    Mr. Bilirakis. My time is expired really, but just very 
quickly, one of the areas that we are going to have to 
address--and this is why telemedicine really did not take off a 
few years ago the way some of us hoped it would--is the 
licensure requirements in various States. Any quick comments 
regarding that? Yes.
    Mr. Reid. Mr. Chairman, in response to that, for some 
medical centers and some telemedicine programs, licensure, 
interstate licensure, cross-State licensure is an issue. But, 
to be perfectly honest, I think that that falls about No. 6 or 
seven on the list of things that might ought to be fixed. The 
comparative number of people, patients and providers that that 
issue affects is small, compared to the issues we brought up 
about fee splitting, about scope of services and eligibility.
    Mr. Bilirakis. Dr. Ross-Lee.
    Ms. Ross-Lee. I just wanted to add, one of the areas that 
we haven't touched on, because when you talk about the two ends 
of the services, particularly in rural areas, the technical 
personnel to support these systems is not there and very 
difficult to access. It is interesting that becomes the pivotal 
issue often.
    Mr. Bilirakis. What would you say, though, to the medical 
association that would demand that it be a licensed physician 
on each end?
    Ms. Ross-Lee. Licensed physician on each end of the 
delivery?
    Mr. Bilirakis. Yes or--well, licensed physician, a licensed 
individual but----
    Ms. Ross-Lee. Has to be on one end of the service.
    Mr. Bilirakis. How about each end?
    Ms. Ross-Lee. Not necessarily each end.
    Mr. Bilirakis. Not necessarily each end.
    All right. I am going to yield to Mr. Brown.
    Mr. Brown. Thank you.
    Dr. Grigsby, thank you for joining us. You provided us I 
thought a pretty good definition of telehealth and some of the 
things--and I think a pretty good understanding or gave us a 
pretty good understanding of the sort of range of services. 
Tell us, if you would, in terms of cost, in terms of 
effectiveness, what aspects of telehealth have been most 
successful, what have been least successful. Just sort of run 
through that, if you would, for us.
    Mr. Grigsby. It is difficult to do with any sort of 
rigorous information because no good-quality, well-designed 
cost-effectiveness studies have been conducted with the 
exception of studies in very controlled populations like 
prisons, that sort of thing. Anecdotal data suggests that many 
applications of telemedicine may well be quite cost effective. 
Certainly, there may be savings for patients who don't have to 
do a lot of traveling. There may be other sorts of savings as 
well.
    Some people suggested store-and-forward technology might be 
rather less expensive than face-to-face. Home care is a subject 
that has been brought up considerably today, and a number 
people think that the cost of home health visits could fall by 
as much as 60 to 65 percent if they were conducted using 
interactive video.
    Mr. Brown. What role does volume have in that in terms of 
comparing costs of telehealth versus patient service directly?
    Mr. Grigsby. A significant role.
    One of the difficulties, for example, in rural areas is 
that the costs of providing the service remain relatively high 
due usually to recurring costs that are fixed for 
telecommunications, for example. So if you have a sparsely 
populated rural area and the volume of referrals is low, then 
the cost per patient consults will then be relatively high. So 
as you are able to increase that volume, then you may get some 
improvements in that ratio. The difficulty is, in many rural 
areas there are some question whether it will ever be possible 
to develop self-sustaining programs that will provide a wide 
range of telemedicine services.
    Mr. Brown. Dr. Ross-Lee, do you want to comment on that?
    Ms. Ross-Lee. I was just agreeing with his comments that in 
some rural areas, even using the technology, getting 
sustainable services that are cost effective over time, I am 
just not sure whether there is a formula to do that.
    Mr. Brown. Thank you, Mr. Chairman.
    Mr. Bilirakis. Mr. Stupak, to inquire.
    Mr. Stupak. Thank you, Mr. Chairman.
    Ms. Davis, assuming HCFA and private payers reimburse 
telehealth in a sensible way--that is a big if, but let us say 
they did--how would Marquette use its network? In short, I 
guess what I am trying to drive at is how could a network work 
more, better, get more use out of the network we currently 
have?
    Ms. Davis. Well, I think the fixes in reimbursement would 
certainly go a long way to convince physicians that it is a 
viable opportunity. We are also working on some other barriers 
that we have. We feel that the convenience of the equipment to 
the physician is a real detriment, and that is one of our new 
initiatives for the upcoming year. Certainly staff needs to be 
dedicated to promote and to set up the systems around the 
telehealth consultations. Those don't come at the drop of a hat 
either.
    So reimbursement certainly is one issue; and, as Joe Tracy 
pointed out, it is a significant issue in terms of furthering 
telehealth. It won't make or break it itself. There are other 
barriers out there. So we are working on the other barriers, 
too, but certainly removing some of the restrictions in 
reimbursement would open the doors.
    We use the system for communities, the community hospitals 
to allow their patients to present to our specialist. We have 
some specialists at Marquette General that consult with 
subspecialties at educated care centers like University of 
Michigan.
    We have used it when your specialists are traveling out 
among the communities. For instance, in the case of pediatric 
cardiology, we have one of them in the Upper Peninsula. So when 
that pediatric cardiologist is out in, say, Houghton and we 
have an infant in our neonatal intensive care unit that needs 
the services immediately, we use it that way. So it is not 
always how some people think of telemedicine consults with the 
rural physician referring to the specialist.
    And one thing that has been striking me today is that there 
is no two or three set examples of telemedicine, that there are 
so many different situations in which you could use it and you 
would find so many different stories as you talk to each one of 
us on how that happens.
    Mr. Stupak. I was going to offer--anyone else want to 
expand on that, how else can we have optimum use of 
telemedicine, what barriers must we overcome? Mr. Reid.
    Mr. Reid. Thank you, Mr. Stupak.
    One of the clear issues as a HCFA demonstration program and 
that I think as experienced by a lot of telehealth providers is 
the scope of services currently reimbursed is so narrow it 
defines a very small percentage of the patients that could 
receive care. And I think that if we were going to try and 
optimize the use of our network for clinical purposes, the 
first thing I would ask is we be allowed to provide all the 
services that we can over telemedicine, not just the very 
narrow limited scope of consultation codes, the 12 CPT codes I 
referred to earlier.
    There has been a lot of discussion about we just don't 
know, we don't know what is safe, we don't know what is 
efficacious, there haven't been any randomized controlled 
trials. To be perfectly honest, there are lots of services that 
HCFA recommends or reimburses for today that have never been 
proven with randomized controlled trials. They reimburse for 
the remote interpretation of ECGs when faxed to the 
cardiologist. I am not aware of any randomized controlled 
trials to show the cardiologist could read faxed ECGs as well 
as they could read the ECG they might hold in their hand.
    And this speaks to the point we have already said, this is 
not a new technology. It is not a new service. It is a new way 
of providing the same old service. And with the limitations of 
the obvious, like surgical procedures, there are systems in 
place within HCFA's accounting and computer systems today that 
say, whoops, this particular type of provider, this particular 
type of specialist, why in the world is this person billing 
this particular code that describes something that is totally 
out of their presumed scope of practice? The same sort of check 
and balance could be applied to the services if they were just 
to be open to a broader service; okay, we are not going to 
reimburse for surgical procedures performed over telemedicine.
    Mind you, the military might suggest that is doable. In a 
general civilian population, it is not. So it is not 
unreasonable to think all services could be empowered to be 
reimbursed with those sorts of checks, and that would be our 
primary request.
    Mr. Stupak. Let me ask this question and defer maybe to the 
doctors on the panel. In telehealth how can we use that to 
decrease patients costs like maybe allowing earlier 
intervention such as diabetes management? Do you do that now? 
How is it working? What other example besides diabetes would be 
an example? Dr. Rheuban.
    Ms. Rheuban. We primarily have done a lot of diabetes 
education using our telehealth networks. We have actually done 
hundreds of hours at multiple sites simultaneously and let them 
all chat with our diabetes educators in Charlottesville. And we 
think education plays a key role in improving the health of our 
citizens. So that is sort of a tagalong extra by having these 
networks in place to be able to use it for other applications 
as well as for health professional education as well.
    In terms of costs, pediatric cardiology seems to be coming 
up, and that is my specialty. I would say we are also enrolled 
in a multi-institutional collaborative study to look at the 
costs of interpretation of pediatric cardiac ultrasounds 
remotely via telemedicine versus the costs of transporting 
through ambulances and helicopters and fixed-wing patients to 
health care facilities where there are pediatric cardiology 
services available.
    We in Virginia also travel. We have field clinics all over 
the Commonwealth of Virginia, but when we travel to Southwest 
Virginia we are there 1 day out of every 2 months. With the 
telemedicine services, we are there all the time.
    Mr. Stupak. Thank you, Mr. Chairman. I see my time is up, 
so thank you.
    Mr. Bilirakis. Mr. Strickland.
    Mr. Strickland. Thank you, Mr. Chairman.
    Dr. Ross-Lee, you mentioned in your testimony this concept 
of having digital health care empowerment zones for rural 
America. It is an intriguing concept to me. Could you elaborate 
on what you are thinking when you talk about that?
    Ms. Ross-Lee. Well, even as I have listened to the 
witnesses today, as we describe our communities, as much as 
there is a significant need based on access both to primary 
care services and specialty services, each of these communities 
is different, and certainly the problems that we are attempting 
to address are very complicated and include more than just 
health care which seems to be a symptom of a broader 
infrastructure problem. It makes sense to me, therefore, to 
empower the communities themselves, to look at communities as 
to what may be necessary for them to most efficiently and most 
effectively use the technology to deliver the kinds of services 
that would be appropriate for their community.
    The earlier question about whether a licensed professional 
should be on either end--I mean, I visited Alaska; and the 
reality is they have lay people trained to deliver services, 
and without them there would be no services. So I think we need 
to deal with the specifics of the community, and this kind of 
empowerment zone would allow you to do that. I mean, the 
community comes together and plans, looks at what it needs, 
assesses its challenges and then try and establish a system to 
do that.
    Now, how do we fund that? I am not sure that HCFA is going 
to be the mechanism for which we effectively integrate 
technology into the health care of this country anyway. It is a 
reimbursement mechanism. Most of the programs that currently 
exist exist by delivering services for free because the 
reimbursement for these services is not what is driving, you 
know, the train on the issue.
    So I think that we should build an infrastructure, 
particularly in rural America that already has fragile 
infrastructure, in a whole bunch of ways. This may be the way 
to bring some equity between urban and rural communities not 
just for health care but for education and economics and 
everything else.
    Mr. Strickland. Would any of the others of you like to 
comment on this concept? I saw some heads going up and down as 
Dr. Ross-Lee was speaking.
    Mr. Reid. As I think about the concept that she has 
proposed, it certainly would be a challenge to implement, but 
it holds all sorts of promise.
    One of the things that we have all probably recognized is 
that the technologies that we use, and particularly interactive 
video technologies that we use, are rarely used exclusively for 
the delivery of health care services; and several Federal 
grantees today who have received telemedicine grants are using 
their technologies for other purposes as well with regards to 
continuing medical education, patient education, lay education, 
continuing education for teachers and for other professionals 
in the community.
    My own experience in extremely rural settings is that this 
technology becomes a resource to the entire community, not just 
to the medical personnel, and so in that regard the concept of 
empowering communities with digital technologies that would 
include interactive video or a high-speed network for 
information exchange will empower the whole community, and I 
would think there would be great justification for that. If the 
medical metaphor happens to be the sort of driving force for 
that, so be it.
    Mr. Strickland. Dr. Ross-Lee, you talked about our region, 
the Appalachian region, and the high poverty rates and the high 
infant mortality rates, more children dying as a result of 
injuries and the like and the fact that you are going into some 
of the schools. How do you get reimbursed for those kinds of 
services?
    Ms. Ross-Lee. We are usually grant funded. Grant funds 
usually last 3 years. So we are out there beating the bushes 
every 3 years to try and fund those programs. We are not 
reimbursed through Medicare or Medicaid for those kinds of 
services that we are delivering.
    Mr. Strickland. So it is not just a Medicare reimbursement 
problem, it is also Medicaid reimbursement problem we are 
facing as well?
    Ms. Ross-Lee. Absolutely.
    Mr. Strickland. Mr. Chairman, I yield back my time.
    Mr. Bilirakis. How about private insurance?
    Ms. Ross-Lee. No private insurance payments.
    Mr. Bilirakis. You tried and no private insurance will pay?
    Ms. Ross-Lee. The populations we are dealing with, most of 
them don't qualify. We have counties where 75 percent of the 
population qualifies for Medicaid.
    Ms. Rheuban. I would like to make a comment about private 
insurance in Virginia. Most of the payers do not reimburse for 
telehealth services. We have had on occasion an insurer comment 
about the phenomenal response that the patient had and actually 
eventually pay for that encounter primarily because then the 
hospitalization is at the community hospital level which is at 
lower cost than at a tertiary care or another care facility to 
which the patient might have otherwise been transported.
    I will also say--I will not mention the name of the managed 
care entity, but when I approached one managed care entity 
about reimbursing telehealth services I was told directly, why 
would we ever want to enhance access?
    Mr. Bilirakis. Wow.
    Mr. Strickland. Mr. Chairman, could I ask a question?
    Mr. Bilirakis. It is still your time, as a matter of fact.
    Mr. Strickland. I am just curious as to why you wouldn't 
want to give us the name of that HMO.
    Mr. Reid. Because they are still a payer in her State.
    Mr. Bilirakis. Let us shift that question, that point over 
to Ms. Patrick, your comment.
    Ms. Patrick. Now, what is the question again? I am still in 
shock.
    Mr. Bilirakis. I raised the point about private insurance 
paying, and you have heard Dr. Rheuban's comment. Have you all 
run studies to determine that it is actually advantageous--
obviously advantageous to the patient but I mean advantageous 
to the company--to go ahead and pay for these services?
    Ms. Patrick. You know, there currently is no identifiable 
CPT code for telemedicine utilization. So up to this point we 
have not been able to adequately track, you know, our 
utilization. We do know that through Eastern Montana 
Telemedicine Network data that we get from them as far as 
utilization goes and also data that we get that we see from 
Medicaid and the amount of savings that they have realized 
through this, we know that this is something that we definitely 
want to continue to support and even expand somehow and get 
involved as one of the players in our State to see, you know, 
what gaps we can help with to deliver more of this type of 
care.
    Mr. Bilirakis. What is the story with Blue Cross and Blue 
Shield in the other States?
    Ms. Patrick. You know, I have been asked to speak to this 
in a couple of States, in Florida and in Utah, and I don't know 
exactly what the reservation is. I think they may be perceiving 
this as a new--another kind of technology that, you know, maybe 
it is experimental, maybe it is not going to be cost effective. 
But in all reality, to us at Blue Cross and Blue Shield of 
Montana, the bottom line is it allows our members to have more 
access to care. Otherwise, they wouldn't have.
    Mr. Bilirakis. There are a number of payers, as I 
understand it, that do pay for these services. I understand 
that in Arizona and Wisconsin, the 22 payers, and in Arkansas, 
6 payers cover these services.
    Mr. Reid.
    Mr. Reid. Thank you, Mr. Chairman.
    I actually had the pleasure of conducting a survey of 
telemedicine reimbursement practices in the States that are 
covered by many of the Federal funded grant programs, and the 
data that we collected suggested there were over 180 different 
payers who paid for telemedicine services in some capacity in 
most States. There were very few States who didn't have one or 
more payers that paid. There are States where Blue Cross pays, 
and States where Blue Cross doesn't.
    I would say that I had the pleasure of working with eastern 
Montana telemedicine, working with Ms. Patrick some 6 or 7 
years ago, and the vision that they showed in stepping forward 
and leading in that regard is unparalleled and, frankly, not 
seen since.
    We have the challenge in each of our States because whether 
Aetna or Blue Cross or Prudential covers in one State, their 
plan is different, maybe under a different policy, a different 
intermediary in another State. So we as providers have the 
challenge of going to each individual company within our State 
and saying, well, come on, guys, why not, show us a good reason 
not to. And the typical response is, well, because it is going 
drive up costs.
    I actually had the pleasure of asking Ms. Patrick to come 
to my State of Iowa now and speak to several payers in a closed 
door session. And you haven't said it yet, but I am going to 
ask you to verify that indeed in that setting you said that it 
has not driven up your costs; you have been able to identify no 
additional cost.
    Ms. Patrick. We are not aware of any additional costs, you 
know, from this service. So we do not have a problem 
whatsoever.
    Mr. Bilirakis. You have not seen overutilization of the 
service?
    Ms. Patrick. We have--no.
    Mr. Bilirakis. Taking advantage of the service.
    Ms. Patrick. No. I think that our members are choosing 
video conferencing, telemedicine instead of actually physically 
going there, and understandably so.
    Mr. Bilirakis. The bells have just sounded for a vote. With 
the indulgence of my colleagues, Ms. Patrick--is it always an 
MD or might the provider be someone other than an MD?
    Ms. Patrick. It could be someone other, yes.
    Mr. Bilirakis. So now they present this to, let us say, the 
Mayo Clinic or wherever it might be. Have you run into any 
problems or have there been any problems with your State 
licensure board in other words practicing medicine in Montana 
when you are not a Montana-licensed doctor?
    Ms. Patrick. We haven't had any activity as far as that 
goes, but I do know that our legislature is currently looking 
at setting some kinds of fees for providers to be able to 
participate or deliver this service. I don't think they are 
astronomically high fees.
    Mr. Bilirakis. But in the process of setting those fees 
they would be then satisfying the licensure requirement? You 
know--and talk about the Montana Medical Board, for instance, 
practicing medicine without a license in Montana.
    Ms. Patrick. I believe so.
    Mr. Bilirakis. That used to be quite a problem. I don't 
really know what the current picture is now since there has 
been some reimbursement on the part of Medicare. That is an 
obstacle--that is what I was really leading up to, Dr. Ross-
Lee, when I asked you my questions.
    Ms. Ross-Lee. It might also be a problem even as the 
licensure boards, at least among physicians, are sharing a lot 
of information and setting similar standards. But for the 
nonphysician providers that are also listed as potential 
providers on either end the States vary significantly in the 
licensure requirements there, and I am not sure they have come 
very close.
    Mr. Bilirakis. Anything further, Mr. Strickland or Mr. 
Brown?
    Mr. Strickland. No.
    Mr. Bilirakis. All right. We are going to excuse you and 
thank you, much gratitude for helping us out here, helping us 
do good things.
    We do have a vote on the floor. There will be a 
demonstration presented. Certainly our staffs will be here if 
we are not able to come back depending on what is happening 
over there.
    The hearing is adjourned. Thank you very, very much.
    [Whereupon, at 1:05 p.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows:]
  Prepared Statement of Hon. John Thune, a Representative in Congress 
                     from the State of South Dakota
    Chairman Bilirakis and Ranking Member Brown: I commend you for your 
leadership you and the members of this subcommittee have shown in the 
area of Medicare modernization and reform. By holding today's hearing 
on telehealth, you are recognizing the importance of this issue to both 
patients and providers who live in rural and medically underserved 
areas.
    Telehealth as a method of health care delivery was, at one time, a 
new concept in health care delivery, a theoretical way to connect 
patients with their doctors. But telehealth is no longer an experiment, 
it's a service that is used every day in rural areas across the 
country. The district I represent comprises the entire state of South 
Dakota. That's 66 counties and 77,000 square miles made up primarily of 
farmland and grassland. When the citizens of South Dakota need to 
access their health care provider, it is not uncommon to drive a 
hundred miles just to make a regular appointment.
    During the August work period, I traveled around the state visiting 
rural hospitals, clinics, and nursing homes to get a closer look at the 
challenges faced by rural health care providers. I saw some of the 
amazing things health care providers are doing with telehealth 
technology. Lung specialists in Sioux Falls are using electronic 
stethoscopes to treat patients with pneumonia who live in Flandreau, a 
town of 2,322 people. The Pine Ridge reservation, which sits in the 
nation's poorest county per capita, is over 130 miles from the area's 
major medical center in Rapid City. Residents of Pine Ridge who may be 
dealing with depression no longer have to wait for months to see a 
psychiatrist but can access a mental health provider using two-way 
interactive video cameras. Expectant mothers in Hoven can get good pre-
natal care using OB ultrasounds transmitted over phone lines without 
having to make the 90-minute drive to Aberdeen.
    Telehealth services have become critical for these patients and the 
providers who care for them. Back in 1997, Congress authorized several 
telehealth demonstration projects to study the impact of telehealth on 
health care access, quality, and cost. These projects have proven the 
feasibility of using technology to provide primary and specialty care 
for patients in rural and medically underserved areas.
    The Health Care Financing Administration (HCFA) however has created 
reimbursement policies that have had the effect of excluding services 
to those patients who would derive the most benefit from access to 
telehealth; seniors who are often unable to travel long distances for 
direct health care. In 1999, Medicare covered only 6 percent of all 
telehealth visits. That was about $11,000 in claims. Clearly, Congress 
intended that HCFA would provide more reimbursement for these critical 
services.
    With these facts in mind, I introduced H.R. 4841, the Medicare 
Access to Telehealth Services Act of 2000, a measure aimed at 
eliminating some of the reimbursement barriers to telehealth services. 
H.R. 4841 looks at Medicare reimbursement for telehealth services and 
addresses the significant barriers in the Balanced Budget Act of 1997 
(BBA) to the continued use and expansion of this technology.
    Some of the most onerous barriers will be discussed during today's 
hearing. They include requiring a telepresenter to be with the patient, 
forcing providers to share their fees, limiting reimbursement areas and 
billing codes, and neglecting facility costs.
    As the discussions continue on further refinements of the BBA, I 
strongly urge the members of this subcommittee to include provisions to 
address these funding barriers. Congress has worked to ensure that 
technology is available to our constituents, now it's time for this 
technology to work for us.
                                 ______
                                 
        Prepared Statement of Children's National Medical Center
Background on CNMC
    On behalf of the hundreds of thousands of children treated at our 
facilities over the years, coming from every state in the country, we 
appreciate the opportunity to offer testimony regarding our experiences 
in providing telehealth services in medically underserved urban areas 
for a large Medicaid population.
    Children's National Medical Center (CNMC) has provided 
comprehensive quality medical care and health services since 1870, and 
is the only integrated healthcare system in the Washington D.C. area 
dedicated exclusively to the care of infants, children, adolescents and 
young adults. In addition to our main campus, Children's network of 
care includes four inner-city pediatric health centers, six regional 
outpatient centers, several suburban ambulatory surgical locations, and 
a hearing and speech center. CNMC consistently ranks among the nation's 
top pediatric hospitals.
    Above all, CNMC seeks to provide unparalleled pediatric healthcare 
services that enhance the health and well-being of children regionally, 
nationally, and internationally. We are creating solutions to pediatric 
healthcare problems. To meet the unique healthcare needs of children, 
adolescents, and their families, CNMC strives to excel at the core 
components of our mission--Care, Advocacy, Research, and Education.
A Model for Medically Underserved Urban Areas
    Currently, much of our community outreach and our efforts to 
improve healthcare access occur through our four Community Pediatric 
Health Centers (CPHC) located throughout medically underserved urban 
areas in the District of Columbia. Since the first opening in 1967, the 
CPHCs have provided three generations of District of Columbia families 
with high quality primary, specialty and preventive healthcare 
services.
    After a decade of preliminary work, CNMC established a formal 
Pediatric Telemedicine Program in 1997 in an effort to provide leading 
edge technological support for clinical care and research. CNMC has 
actively pursued telemedicine in an effort to define opportunities 
where technology can be leveraged to improve patient care for the 
children of the region. The telemedicine team is dedicated to planning, 
implementing, and analyzing telemedicine activities in order to improve 
access to primary and specialty care, to increase convenience for 
patients and physicians, and to improve education for physicians, 
healthcare professionals, families and patients.
    Despite dramatic advances in our knowledge of how to treat the 
medical conditions of our population, children of urban underserved 
communities encounter many obstacles when attempting to access quality 
healthcare--including socioeconomic isolation, maldistributed health 
services, lack of health insurance, and poverty. Fragmented access, 
inconsistent quality, excess costs, loss of continuity, and ineffective 
continuing medical education characterize the deficiencies of our 
existing health care system.
    Meeting the healthcare challenges of our inner city children and 
families with the help of telemedicine requires a collaborative network 
of community partners. These partnerships provide the foundation for a 
new technology-enabled delivery model, the Pediatric Community Health 
Network (PCHN). Our proposed approach will be a major step toward 
achieving our long-term goal of providing a means to improve pediatric 
health indicators at the local and national level.
    This technology-enhanced telemedicine model strives to achieve the 
following goals:

1) increase access to primary and specialty healthcare for the child 
        and family;
2) increase the convenience of healthcare delivery by bringing the 
        specialists and healthcare professionals to the child and the 
        family;
3) decrease cost and time lost while seeking primary and specialty care 
        (lost school days, lost work days);
4) decrease delays in diagnosis by allowing earlier access to 
        specialists, which in turn will reduce costs and treatment 
        time;
5) improve communication and provide a means to support the continuum 
        of care for the patient, family and healthcare provider(s);
6) improve healthcare education by providing patients and their 
        families with better resources and educational healthcare;
7) improve quality and effectiveness of medical follow-up appointments.
    Through the use of telemedicine at our primary care clinics and 
outlying rural sites, patients can have instant access to the myriad of 
specialists at our main campus. Oftentimes access to health care in 
large urban areas can be just as difficult and time consuming as in 
rural areas. For many of our patients, travelling across a large 
metropolitan area to reach another health care facility would require 
time off from their jobs, time lost from school, and hours spent on 
public transportation lines before reaching the facility. For the 
families that have access to this technology, this instant access to 
specialists reduces the need for follow-up appointments that often must 
be canceled, and assists with earlier diagnosis that helps children 
heal faster.
    Children's telemedicine program for the underserved urban pediatric 
community is the first initiative of its kind. Our goal is to build a 
sustainable model that will be replicated across the country. By 
deploying telemedicine in the urban setting, the impact on the 
underserved community could be extensive. This technology that supports 
our telemedicine program empowers families and communities to improve 
the health status of their most valuable asset--the children.
Barriers to Effective Use of Telemedicine
    As promising as this technology and its applications may sound, 
significant reimbursement barriers prevent us from deploying this 
technology solution to a great extent in medically underserved urban 
communities and the surrounding area. The significant challenges we 
face include:

 Funding for technology: Although the Office for the 
        Advancement of Telehealth in the Health Resources and Services 
        Administration has provided support for the development of 
        telehealth services, their funding has been limited to rural 
        projects only. But children in medically underserved urban 
        areas face many of the same barriers to health care as rural 
        patients, and could benefit substantially from telemedicine 
        projects. We strongly urge Congress to support funding for 
        telemedicine projects in urban settings.
 Reimbursement for telehealth services for Medicaid patients: 
        As Congress considers improvement of the reimbursement 
        mechanisms for telehealth services, we strongly urge you to 
        remember the children and families that receive their health 
        care from Medicaid. Telehealth services should not be 
        restricted to Medicare beneficiaries. The Medicaid population 
        is often overlooked or forgotten during consideration, but the 
        children who benefit from Medicaid services are equally 
        deserving.
Summary
    Children's National Medical Center is dedicated to improving the 
health status of our community. We can not do this alone. The 
advancement of new technologies coupled with a highly competitive and 
challenging healthcare environment requires innovative patient care. It 
is critical that telemedicine be permitted to enter the mainstream 
delivery system.
    According to the Children's Defense Report in 1998,
        Every 43 minutes a child was reported abused or neglected . . .
        Every 6 hours a baby was born to a teenage mother . . .
        Every 7 hours a baby was born at low birth weight . . .
        Every 3 days a baby died during the first year of life . . .
    These ``moments'' represent reality in the lives of many District 
of Columbia infants, children and adolescents, and are reflective of a 
growing trend in our region and our nation. The region's children face 
a long list of challenges that impact their ability to receive quality 
health care so that they may lead healthy and productive lives. While 
we understand the significance of bringing telemedicine to rural 
Medicare beneficiaries, we strongly urge Congress not to forget the 
medically underserved urban children who are Medicaid beneficiaries. 
They are important constituents, too.
    We look forward to working with you to advance the use of 
telemedicine to help build healthy communities. If you need further 
information regarding CNMC, please do not hesitate to contact Greta 
Todd, CNMC Director of Legislative Affairs, at 202-884-2340. Thank you 
again for your consideration of our concerns.