[Congressional Record Volume 143, Number 25 (Monday, March 3, 1997)]
[Senate]
[Pages S1828-S1832]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CONRAD (for himself, Mr. Kerrey, Mr. Harkin, Mr. 
        Wellstone, Mr. Baucus, Mr. Cochran and Mr. Inouye):
  S. 385. A bill to provide reimbursement under the Medicare Program 
for telehealth services, and for other purposes; to the Committee on 
Finance.


                THE COMPREHENSIVE TELEHEALTH ACT OF 1997

 Mr. CONRAD. Mr. President, today, I am pleased to be joined by 
Senator Kerrey, Senator Harkin, Senator Wellstone, Senator Baucus, 
Senator Cochran, and Senator Inouye to introduce legislation to help 
improve health care delivery in rural and underserved communities 
throughout America through the use of telecommunications and telehealth 
technology.
  Telehealth encompasses a wide variety of technologies, ranging from 
the telephone to high-technology equipment that enables a surgeon to 
perform surgery from thousands of miles away. It includes interactive 
video equipment, fax machines and computers along with satellites and 
fiber optics. These technologies can be used to diagnose patients, 
deliver care, transfer health data, read x-rays, provide consultation, 
and educate health professionals. Telehealth also includes the 
electronic storage and transmission of personally identifiable health 
information, such as medical records, test results, and insurance 
claims.
  The promise of telehealth is becoming increasingly apparent. 
Throughout the country, providers are experimenting with a variety of 
telehealth approaches in an effort to improve access to quality medical 
and other health-related services. Those programs are demonstrating 
that telecommunications technology can alleviate the constraints of 
time and distance, as well as the cost and inconvenience of 
transporting patients to medical providers. Many approaches show 
promising results in reducing health care costs and bringing adequate 
care to all Americans. For the first time, technological advances and 
the development of a national information infrastructure give 
telehealth the potential to overcome barriers to health care services 
for rural Americans and afford them the access that most Americans take 
for granted. But it is clear that our Nation must do more to integrate 
telehealth into our overall health care delivery infrastructure.
  Because I believe telehealth holds incredible promise for rural 
America, I formed the Ad Hoc Steering Committee on Telemedicine and 
Health Care Informatics to explore telehealth and related issues in 
1994. The purpose of the steering committee, which includes telehealth 
experts from government, private industry, and the health care 
professions, is to evaluate Federal policies on telehealth and how to 
use telecommunications technology more effectively to increase access 
to health care throughout America.
  Throughout the last few years, as the steering committee held 
meetings and policy forums, it became increasingly apparent that there 
is enormous energy and financial effort being devoted to telehealth 
today, both by government and private industry.
  Because so many rural and underserved communities lack the ability to 
attract and support a wide variety of health care professionals and 
services, it is important to find a way to bring the most important 
medical services into those communities. Telehealth provides an 
important part of the answer. It helps bring services to remote areas 
in a quick, cost-effective manner, and can enable patients to avoid 
traveling long distances in order to receive health care treatment.
  Telehealth is already making a difference in my State. The University 
of North Dakota has a fiber optic two-way audio and video interactive 
network that has been used to train students in areas like social work 
and medical technology. Recently, I had the opportunity to spend some 
time with two of the premier telehealth systems in the State of North 
Dakota. I was amazed at the capabilities of these systems. They 
currently supply speciality care to rural North Dakota clinics, manage 
chronic disease, lower administrative costs, and reduce the isolation 
felt by rural and frontier practitioners.
  Because telehealth is in many respects an emerging health care 
application, it is particularly important to constructively capitalize 
on efforts like these. My proposal attempts to facilitate this in a 
number of ways.
  The first element of my proposal builds on current demonstration 
projects to require the Health Care Financing Administration to put in 
place a reimbursement system for telehealth activities under Medicare. 
Medicare reimbursement policy is an essential component of helping to 
integrate telehealth into the health care infrastructure, and must be 
explored. It is particularly important in rural areas, where many 
hospitals do as much as 80 percent of their business with Medicare 
patients. While rural areas are the most in need of telehealth 
services, I also realize there are other groups that would greatly 
benefit from an expansion of this service. That is why I am also asking 
the Secretary of Health and Human Services to submit a report that will 
examine the impact of expanding telehealth reimbursement for nonrural 
Medicare beneficiaries who are home-bound or nursing home-bound and for 
whom being transferred for health care services imposes a serious 
hardship.

  The second element of this proposal asks the Secretary of Health and 
Human Services to submit a report to

[[Page S1829]]

the Congress on the status of efforts to ease licensing burdens on 
practitioners who cross State lines in the course of supplying 
telehealth services. Currently, consultation by almost any licensed 
health professional in this situation requires that the practitioner be 
licensed in both States.
  In talking with telehealth providers in my State, and with experts on 
the ad hoc committee, I have been told repeatedly that this is one of 
the most significant barriers to developing broad integrated telehealth 
systems. More importantly, they tell me States have actively been using 
licensure to close their borders to innovative telehealth practice. In 
the past 2\1/2\ years, 11 States have taken legislative action to 
ensure that out-of-State practitioners must be fully licensed in their 
State in order to provide telehealth services, even if they are fully 
licensed in their own State. During a recent discussion with a 
telehealth practitioner from my home State of North Dakota, I was told 
about a group of telehealth specialists who, among their small group 
practice, were licensed in more than 30 different States. That means 
they pay 30 different fees, are responsible for 30 different continuing 
education requirements, and are overseen by 30 different regulatory 
bodies. This is a costly and burdensome procedure for many 
practitioners, but the burden falls particularly heavily on rural 
practitioners, who face long travel times to acquire continuing 
education, and who frequently run on lower profit margins than urban 
practitioners.
  While I am not prepared at this time to propose that the Federal 
Government get involved with professional licensure, I have asked the 
Secretary to study the issue and report to Congress yearly on the 
status of efforts by States and other interested organizations to 
address this issue. This will allow us to reach out to the States and 
work together to find solutions to cross-State licensure concerns. As 
part of this report, I have asked the Secretary to make recommendations 
to Congress, if appropriate, about possible Federal action to lower the 
licensure barrier.
  A third element of my proposal involves coordination of the Federal 
telehealth effort. Vice President Gore has been making outstanding 
contributions in the area of the information super- highway. The 
Department of Health and Human Services, in large part at the urging of 
the Vice President, has created an informal interagency task force that 
is examining our Federal agency telehealth efforts. This group recently 
completed a report on telehealth that highlights current Federal 
activities and also provides a thorough examination of many of the 
important issues in telehealth.
  My bill attempts to use that task force to inventory Federal activity 
on telehealth and related technology, determine what applications have 
been found successful, and recommend an overall Federal policy approach 
to telehealth. Many departments and agencies of the Federal Government 
are engaged in telehealth activity, including the Veterans' 
Administration, Department of Defense, Department of Agriculture, 
Office of Rural Health Policy, and many others. The more these agencies 
work together to coordinate the Federal effort and consolidate Federal 
resources, the more effective the Federal Government will be in 
contributing to telehealth in a positive way. I believe this is 
especially important in light of the recent GAO report calling for an 
expanded role for this group and more coordination of telehealth issues 
across the Federal agencies. The efforts of this group, along with the 
ongoing activities of the congressional ad hoc steering committee, will 
provide a renewed focus for telehealth across the Federal Government. 
Such coordination will also help protect the American taxpayer from 
unnecessary duplication of effort.
  The fourth part of my proposal helps communities build homegrown 
telehealth networks. It attempts both to build a telehealth 
infrastructure and foster rural economic development and incorporates 
many of the most important lessons learned from other grant projects 
and studies on telehealth from across the Federal Government.

  Clearly, the scarcity of resources in many rural communities requires 
that the coordination and use of those resources be maximized. My bill 
encourages cooperation by various local entities in an effort to help 
build sustainable telehealth programs in rural communities. It plants 
seed money to encourage health care providers to join with other 
segments of the community to jointly use telecommunications resources. 
Using a unique loan forgiveness program, it rewards telehealth systems 
that supply appropriate, high-quality care while reducing overall 
health care costs.
  Most importantly, it does not create a system where various 
technological approaches are imposed upon communities. Rather it 
enables potential grantees to determine user-friendly approaches that 
work best for them. This homegrown approach to developing user-friendly 
telehealth systems, as well as the preference for coordinating 
resources within communities, will help ensure the long-term viability 
of such programs after the grant expires.
  Mr. President, my proposal is a sound first step in our national 
efforts to integrate telecommunications technology into the rapidly 
evolving health care delivery system. This bill is very similar to 
legislation, S. 2171 I introduced late in the 104th Congress. I am very 
encouraged by the positive feedback I have received from telehealth 
networks across the country. Over the past few months, I have attempted 
to reach out to different groups and incorporate their ideas into this 
proposal. As a result, I have made several changes in the bill that I 
believe will make this a stronger proposal. But, as with any complex 
issue, I understand that some may prefer different approaches. By 
introducing this legislation early in the 105th Congress, I hope to 
send a message to all interested parties that now is the time to come 
forward with creative solutions to these important issues. It is my 
hope that comprehensive telehealth legislation can be attached to any 
Medicare reform legislation enacted in this Congress so we can improve 
access to needed health care services for rural and underserved 
populations.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 385

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the 
     ``Comprehensive Telehealth Act of 1997''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.

        TITLE I--MEDICARE REIMBURSEMENT FOR TELEHEALTH SERVICES

Sec. 101. Medicare reimbursement for telehealth services.

                     TITLE II--TELEHEALTH LICENSURE

Sec. 201. Initial report to Congress.
Sec. 202. Annual report to Congress.

TITLE III--PERIODIC REPORTS TO CONGRESS FROM THE JOINT WORKING GROUP ON 
                               TELEHEALTH

Sec. 301. Joint working group on telehealth.

              TITLE IV--DEVELOPMENT OF TELEHEALTH NETWORKS

Sec. 401. Development of telehealth networks.
Sec. 402. Administration.
Sec. 403. Guidelines.
Sec. 404. Authorization of appropriations.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--The Congress finds the following:
       (1) Hospitals, clinics, and individual health care 
     providers are critically important to the continuing health 
     of rural populations and the economic stability of rural 
     communities.
       (2) Rural communities are underserved by specialty health 
     care providers.
       (3) Telecommunications technology has made it possible to 
     provide a wide range of health care services, education, and 
     administrative services between health care providers, 
     patients, and administrators across State lines.
       (4) The delivery of health services by licensed health care 
     providers is a privilege and the licensure of health care 
     providers and the ability to discipline such providers is 
     necessary for the protection of citizens and for the public 
     interest, health, welfare, and safety.
       (5) The licensing of health care providers to provide 
     telehealth services has a significant impact on interstate 
     commerce and any unnecessary barriers to the provision of 
     telehealth services across State lines should be eliminated.
       (6) Rapid advances in the field of telehealth give Congress 
     a need for current information and updates on recent 
     developments in telehealth research, policy, technology, and 
     the use of this technology to

[[Page S1830]]

     supply telehealth services to rural and underserved areas.
       (7) Telehealth networks can provide hospitals, clinics, 
     health care providers, and patients in rural and underserved 
     communities with access to specialty care, continuing 
     education, and can act to reduce the isolation from other 
     professionals that these health care providers sometimes 
     experience.
       (8) In order for telehealth systems to continue to benefit 
     rural and underserved communities, the medicare program under 
     title XVIII of the Social Security Act (42 U.S.C. 1395 et 
     seq.) must reimburse the provision of health care services 
     from remote locations via telecommunications.
       (b) Purposes.--The purposes of this Act are as follows:
       (1) To mandate that the Health Care Financing 
     Administration reimburse the provision of clinical health 
     services via telecommunications.
       (2) To determine if States are making progress in 
     facilitating the provision of telehealth services across 
     State lines.
       (3) To create a coordinating entity for Federal telehealth 
     research, policy, and program initiatives that reports to 
     Congress annually.
       (4) To encourage the development of rural telehealth 
     networks that supply appropriate, cost-effective care, and 
     that contribute to the economic health and development of 
     rural communities.
       (5) To encourage research into the clinical efficacy and 
     cost-effectiveness of telehealth diagnosis, treatment, or 
     education on individuals, health care providers, and health 
     care networks.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Health care provider.--The term ``health care 
     provider'' means anyone licensed or certified under State law 
     to provide health care services who is operating within the 
     scope of such license.
       (2) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
        TITLE I--MEDICARE REIMBURSEMENT FOR TELEHEALTH SERVICES

     SEC. 101. MEDICARE REIMBURSEMENT FOR TELEHEALTH SERVICES.

       (a) In General.--Not later than July 1, 1998, the Secretary 
     shall make payments from the Federal Supplementary Medical 
     Insurance Trust Fund under part B of title XVIII of the 
     Social Security Act (42 U.S.C. 1395j et seq.) in accordance 
     with the methodology described in subsection (b) for 
     professional consultation via telecommunications systems with 
     an individual or entity furnishing a service for which 
     payment may be made under such part to a beneficiary under 
     the medicare program residing in a rural area (as defined in 
     section 1886(d)(2)(D) of such Act (42 U.S.C. 
     1395ww(d)(2)(D))) or an underserved area, notwithstanding 
     that the individual health care provider providing the 
     professional consultation is not at the same location as the 
     individual furnishing the service to that beneficiary.
       (b) Methodology for Determining Amount of Payments.--Taking 
     into account the findings of the report required under 
     section 192 of the Health Insurance Portability and 
     Accountability Act of 1996 (Public Law 104-191; 110 Stat. 
     1988), the findings of the report required under paragraph 
     (c), and any other findings related to the clinical efficacy 
     and cost-effectiveness of telehealth applications, the 
     Secretary shall establish a methodology for determining the 
     amount of payments made under subsection (a), including the 
     cost of the consultation service, a reasonable overhead 
     adjustment, and a malpractice risk adjustment.
       (c) Supplemental Report.--Not later than January 1, 1998, 
     the Secretary shall submit a report to Congress which shall 
     contain a detailed analysis of--
       (1) how telemedicine and telehealth systems are expanding 
     access to health care services;
       (2) the clinical efficacy and cost-effectiveness of 
     telemedicine and telehealth applications;
       (3) the quality of telemedicine and telehealth services 
     delivered; and
       (4) the reasonable cost of telecommunications charges 
     incurred in practicing telemedicine and telehealth in rural, 
     frontier, and underserved areas.
       (d) Expansion of Telehealth Services for Certain Medicare 
     Beneficiaries.--
       (1) In general.--Not later than January 1, 1999, the 
     Secretary shall submit a report to Congress that examines the 
     possibility of making payments from the Federal Supplementary 
     Medical Insurance Trust Fund under part B of title XVIII of 
     the Social Security Act (42 U.S.C. 1395j et seq.) for 
     professional consultation via telecommunications systems with 
     an individual or entity furnishing a service for which 
     payment may be made under such part to a beneficiary 
     described in paragraph (2), notwithstanding that the 
     individual health care provider providing the professional 
     consultation is not at the same location as the individual 
     furnishing the service to that beneficiary.
       (2) Beneficiary described.--A beneficiary described in this 
     paragraph is a beneficiary under the medicare program who 
     does not reside in a rural area (as so defined) or an 
     underserved area, who is home-bound or nursing home-bound, 
     and for whom being transferred for health care services 
     imposes a serious hardship.
       (3) Report.--The report described in paragraph (1) shall 
     contain a detailed statement of the potential costs to the 
     medicare program under title XVIII of that Act of making the 
     payments described in that paragraph using various 
     reimbursement schemes.
                     TITLE II--TELEHEALTH LICENSURE

     SEC. 201. INITIAL REPORT TO CONGRESS.

       Not later than January 1, 1998, the Secretary shall prepare 
     and submit to the appropriate committees of Congress a report 
     concerning--
       (1) the number, percentage and types of health care 
     providers licensed to provide telehealth services across 
     State lines, including the number and types of health care 
     providers licensed to provide such services in more than 3 
     States;
       (2) the status of any reciprocal, mutual recognition, fast-
     track, or other licensure agreements between or among various 
     States;
       (3) the status of any efforts to develop uniform national 
     sets of standards for the licensure of health care providers 
     to provide telehealth services across State lines;
       (4) a projection of future utilization of telehealth 
     consultations across State lines;
       (5) State efforts to increase or reduce licensure as a 
     burden to interstate telehealth practice; and
       (6) any State licensure requirements that appear to 
     constitute unnecessary barriers to the provision of 
     telehealth services across State lines.

     SEC. 202. ANNUAL REPORT TO CONGRESS.

       (a) In General.--Not later than January 1, 1999, and each 
     July 1 thereafter, the Secretary shall prepare and submit to 
     the appropriate committees of Congress, an annual report on 
     relevant developments concerning the matters referred to in 
     paragraphs (1) through (6) of section 201.
       (b) Recommendations.--If, with respect to a report 
     submitted under subsection (a), the Secretary determines that 
     States are not making progress in facilitating the provision 
     of telehealth services across State lines by eliminating 
     unnecessary requirements, adopting reciprocal licensing 
     arrangements for telehealth services, implementing uniform 
     requirements for telehealth licensure, or other means, the 
     Secretary shall include in the report recommendations 
     concerning the scope and nature of Federal actions required 
     to reduce licensure as a barrier to the interstate provision 
     of telehealth services.
TITLE III--PERIODIC REPORTS TO CONGRESS FROM THE JOINT WORKING GROUP ON 
                               TELEHEALTH

     SEC. 301. JOINT WORKING GROUP ON TELEHEALTH.

       (a) In General.--
       (1) Redesignation.--The Joint Working Group on 
     Telemedicine, established by the Secretary, shall hereafter 
     be known as the ``Joint Working Group on Telehealth'' with 
     the chairperson being designated by the Director of the 
     Office of Rural Health Policy.
       (2) Mission.--The mission of the Joint Working Group on 
     Telehealth is--
       (A) to identify, monitor, and coordinate Federal telehealth 
     projects, data sets, and programs,
       (B) to analyze--
       (i) how telehealth systems are expanding access to health 
     care services, education, and information,
       (ii) the clinical, educational, or administrative efficacy 
     and cost-effectiveness of telehealth applications, and
       (iii) the quality of the services delivered, and
       (C) to make further recommendations for coordinating 
     Federal and State efforts to increase access to health 
     services, education, and information in rural and underserved 
     areas.
       (3) Periodic reports.--The Joint Working Group on 
     Telehealth shall report not later than January 1 of each year 
     (beginning in 1998) to Congress on the status of the Group's 
     mission and the state of the telehealth field generally.
       (b) Report Specifics.--The annual report required under 
     subsection (a)(3) shall provide--
       (1) an analysis of--
       (A) how telehealth systems are expanding access to health 
     care services,
       (B) the clinical efficacy and cost-effectiveness of 
     telehealth applications,
       (C) the quality of telehealth services delivered,
       (D) the Federal activity regarding telehealth, and
       (E) the progress of the Joint Working Group on Telehealth's 
     efforts to coordinate Federal telehealth programs; and
       (2) recommendations for a coordinated Federal strategy to 
     increase health care access through telehealth.
       (c) Termination.--The Joint Working Group on Telehealth 
     shall terminate immediately after the annual report filed not 
     later than January 1, 2002.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as are necessary for the 
     operation of the Joint Working Group on Telehealth on and 
     after the date of the enactment of this Act.
              TITLE IV--DEVELOPMENT OF TELEHEALTH NETWORKS

     SEC. 401. DEVELOPMENT OF TELEHEALTH NETWORKS.

       (a) In General.--The Secretary, acting through the Director 
     of the Office of Rural Health Policy (of the Health Resources 
     and Services Administration), shall provide financial 
     assistance (as described in subsection (b)(1)) to recipients 
     (as described in

[[Page S1831]]

     subsection (c)(1)) for the purpose of expanding access to 
     health care services for individuals in rural and frontier 
     areas through the use of telehealth.
       (b) Financial Assistance.--
       (1) In general.--Financial assistance shall consist of 
     grants or cost of money loans, or both.
       (2) Form.--The Secretary shall determine the portion of the 
     financial assistance provided to a recipient that consists of 
     grants and the portion that consists of cost of money loans 
     so as to result in the maximum feasible repayment to the 
     Federal Government of the financial assistance, based on the 
     ability to repay of the recipient and full utilization of 
     funds made available to carry out this title.
       (3) Loan forgiveness program.--
       (A) Establishment.--With respect to cost of money loans 
     provided under this section, the Secretary shall establish a 
     loan forgiveness program under which recipients of such loans 
     may apply to have all or a portion of such loans forgiven.
       (B) Requirements.--A recipient described in subparagraph 
     (A) that desires to have a loan forgiven under the program 
     established under such paragraph shall--
       (i) within 180 days of the end of the loan cycle, submit an 
     application to the Secretary requesting forgiveness of the 
     loan involved;
       (ii) demonstrate that the recipient has a financial need 
     for such forgiveness;
       (iii) demonstrate that the recipient has met the quality 
     and cost-appropriateness criteria developed under 
     subparagraph (C); and
       (iv) provide any other information determined appropriate 
     by the Secretary.
       (C) Criteria.--As part of the program established under 
     subparagraph (A), the Secretary shall establish criteria for 
     determining the cost-effectiveness and quality of programs 
     operated with loans provided under this section.
       (c) Recipients.--
       (1) Application.--To be eligible to receive a grant or loan 
     under this section an entity described in paragraph (2) 
     shall, in consultation with the State office of rural health 
     or other appropriate State entity, prepare and submit to the 
     Secretary an application, at such time, in such manner, and 
     containing such information as the Secretary may require, 
     including--
       (A) a description of the anticipated need for the grant or 
     loan;
       (B) a description of the activities which the entity 
     intends to carry out using amounts provided under the grant 
     or loan;
       (C) a plan for continuing the project after Federal support 
     under this section is ended;
       (D) a description of the manner in which the activities 
     funded under the grant or loan will meet health care needs of 
     underserved rural populations within the State;
       (E) a description of how the local community or region to 
     be served by the network or proposed network will be involved 
     in the development and ongoing operations of the network;
       (F) the source and amount of non-Federal funds the entity 
     would pledge for the project; and
       (G) a showing of the long-term viability of the project and 
     evidence of health care provider commitment to the network.

     The application should demonstrate the manner in which the 
     project will promote the integration of telehealth in the 
     community so as to avoid redundancy of technology and achieve 
     economies of scale.
       (2) Eligible entities.--An entity described in this 
     paragraph is a hospital or other health care provider in a 
     health care network of community-based health care providers 
     that includes at least--
       (A) two of the following:
       (i) community or migrant health centers;
       (ii) local health departments;
       (iii) nonprofit hospitals;
       (iv) private practice health professionals, including rural 
     health clinics;
       (v) other publicly funded health or social services 
     agencies;
       (vi) skilled nursing facilities;
       (vii) county mental health and other publicly funded mental 
     health facilities; and
       (viii) providers of home health services; and
       (B) one of the following, which must demonstrate use of the 
     network for purposes of education and economic development 
     (as required by the Secretary):
       (i) public schools;
       (ii) public library;
       (iii) universities or colleges;
       (iv) local government entity; or
       (v) local nonhealth-related business entity.

     An eligible entity may include for-profit entities so long as 
     the network grantee is a nonprofit entity.
       (d) Priority.--The Secretary shall establish procedures to 
     prioritize financial assistance under this title considering 
     whether or not the applicant--
       (1) is a health care provider in a rural health care 
     network or a health care provider that proposes to form such 
     a network, and the majority of the health care providers in 
     such a network are located in a medically underserved, health 
     professional shortage areas, or mental health professional 
     shortage areas;
       (2) can demonstrate broad geographic coverage in the rural 
     areas of the State, or States in which the applicant is 
     located;
       (3) proposes to use Federal funds to develop plans for, or 
     to establish, telehealth systems that will link rural 
     hospitals and rural health care providers to other hospitals, 
     health care providers and patients;
       (4) will use the amounts provided for a range of health 
     care applications and to promote greater efficiency in the 
     use of health care resources;
       (5) can demonstrate the long-term viability of projects 
     through use of local matching funds (cash or in-kind);
       (6) can demonstrate financial, institutional, and community 
     support for the long-term viability of the network; and
       (7) can demonstrate a detailed plan for coordinating system 
     use by eligible entities so that health care services are 
     given a priority over non-clinical uses.
       (e) Maximum Amount of Assistance to Individual 
     Recipients.--The Secretary may establish the maximum amount 
     of financial assistance to be made available to an individual 
     recipient for each fiscal year under this title, and 
     establish the term of the loan or grant, by publishing notice 
     of the maximum amount in the Federal Register.
       (f) Use of Amounts.--
       (1) In general.--Financial assistance provided under this 
     title shall be used--
       (A) with respect to cost of money loans, to encourage the 
     initial development of rural telehealth networks, expand 
     existing networks, or link existing networks together; and
       (B) with respect to grants, as described in paragraph (2).
       (2) Grants and loans.--The recipient of a grant or loan 
     under this title may use financial assistance received under 
     such grant or loan for the acquisition of telehealth 
     equipment and modifications or improvements of 
     telecommunications facilities including--
       (A) the development and acquisition through lease or 
     purchase of computer hardware and software, audio and video 
     equipment, computer network equipment, interactive equipment, 
     data terminal equipment, and other facilities and equipment 
     that would further the purposes of this section;
       (B) the provision of technical assistance and instruction 
     for the development and use of such programming equipment or 
     facilities;
       (C) the development and acquisition of instructional 
     programming;
       (D) demonstration projects for teaching or training medical 
     students, residents, and other health professions students in 
     rural training sites about the application of telehealth;
       (E) transmission costs, maintenance of equipment, and 
     compensation of specialists and referring health care 
     providers;
       (F) development of projects to use telehealth to facilitate 
     collaboration between health care providers;
       (G) electronic archival of patient records;
       (H) collection and analysis of usage statistics and data 
     that can be used to document the cost effectiveness of the 
     telehealth services; or
       (I) such other uses that are consistent with achieving the 
     purposes of this section as approved by the Secretary.
       (3) Expenditures in rural areas.--In awarding a grant or 
     cost of money loan under this section, the Secretary shall 
     ensure that not less than 50 percent of the grant or loan 
     award is expended in a rural area or to provide services to 
     residents of rural areas.
       (g) Prohibited Uses.--Financial assistance received under 
     this section may not be used for any of the following:
       (1) To build or acquire real property.
       (2) Expenditures to purchase or lease equipment to the 
     extent the expenditures would exceed more than 40 percent of 
     the total grant funds.
       (3) To purchase or install transmission equipment (such as 
     laying cable or telephone lines, microwave towers, satellite 
     dishes, amplifiers, and digital switching equipment).
       (4) For construction, except that such funds may be 
     expended for minor renovations relating to the installation 
     of equipment.
       (5) Expenditures for indirect costs (as determined by the 
     Secretary) to the extent the expenditures would exceed more 
     than 20 percent of the total grant funds.
       (h) Matching Requirement for Grants.--The Secretary may not 
     make a grant to an entity State under this section unless 
     that entity agrees that, with respect to the costs to be 
     incurred by the entity in carrying out the program for which 
     the grant was awarded, the entity will make available 
     (directly or through donations from public or private 
     entities) non-Federal contributions (in-cash or in-kind) in 
     an amount equal to not less than 50 percent of the Federal 
     funds provided under the grant.

     SEC. 402. ADMINISTRATION.

       (a) Nonduplication.--The Secretary shall ensure that 
     facilities constructed using financial assistance provided 
     under this title do not duplicate adequate established 
     telehealth networks.
       (b) Loan Maturity.--The maturities of cost of money loans 
     shall be determined by the Secretary, based on the useful 
     life of the facility being financed, except that the loan 
     shall not be for a period of more than 10 years.
       (c) Loan Security and Feasibility.--The Secretary shall 
     make a cost of money loan only if the Secretary determines 
     that the security for the loan is reasonably adequate and 
     that the loan will be repaid within the period of the loan.
       (d) Coordination With Other Agencies.--The Secretary shall 
     coordinate, to the extent practicable, with other Federal and 
     State

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     agencies with similar grant or loan programs to pool 
     resources for funding meritorious proposals in rural areas.
       (e) Informational Efforts.--The Secretary shall establish 
     and implement procedures to carry out informational efforts 
     to advise potential end users located in rural areas of each 
     State about the program authorized by this title.

     SEC. 403. GUIDELINES.

       Not later than 180 days after the date of enactment of this 
     Act, the Secretary shall issue guidelines to carry out this 
     title.

     SEC. 404. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated to carry out this 
     title, $25,000,000 for fiscal year 1998, and such sums as may 
     be necessary for each of the fiscal years 1999 through 
     2004.
                                 ______