Hospitals and clinics serving rural Iowa appear to have it made. They can

piggyback telemedicine applications via a statewide fiber-optic network

built for schools and libraries. And, with advances in network bandwidth

and the decreasing cost of networking equipment, country doctors can provide

cost-effective care with the breadth of service that one would expect in

a metropolitan area. Specifically, doctors in rural Iowa can reach specialists

in Des Moines with videoconferencing units and send medical information

and X-rays in real time over digital lines.

Exactly what the doctor ordered? Maybe not.

Telemedicine, applying electronic communication technologies to health

education and medicine, is hardly advancing in Iowa and other rural areas.

Despite progress in technology, other problems plague long-distance

rural health care: States won't put up the money to fund it. Insurance providers

drag their feet when it comes to reimbursements. Licensing and liability

issues abound. And people living in rural areas just don't accept it.

"Technology can actually do more than we're able to provide for," says Jon

Linkous, executive director of the American Telemedicine Association. "We

can do some wild and crazy things, "Star Wars' kind of stuff with the gadgets

we have now, but policy barriers are really holding telemedicine back."

This tension between policy and practice has telemedicine players frustrated

and questioning the long-term survival of telecommunications-based health

care. Even programs in Georgia, where a great deal of effort has been put

into the statewide infrastructure, are on the edge.

Lori Eubanks, telemedicine coordinator for the Phoebe Putney Memorial

Hospital, Albany, Ga., said telemedicine has been great for indigent residents

in rural counties surrounding the hospital, but she worries about how long

the hospital's clinic consults with the Medical College of Georgia in Augusta

will last.

"I think that the state of Georgia needs to step up and help with the high

costs that are associated with this thing," Eubanks said. "The hospitals

and the clinics are bearing it on their own, and it's still very, very expensive.

And I think if that's not done, a lot of hospitals, possibly even mine,

will drop it."

Higher-ups are more optimistic. The number of telemedicine programs

is growing steadily. And Dena Puskin, director of the Office for the Advancement

of Telehealth (OAT) at the U.S. Department of Health and Human Services,

said telemedicine is increasingly important to the overall health policy

of states, with most states forming a commission, an advisory committee

or centers for studying and advancing telemedicine.

Believers in telemedicine have their fingers crossed that government

policy-makers will warm to the concept when they recognize how efficient

and financially beneficial it can be.

A study by the Medical College of Georgia, for example, found that using

telemedicine to treat certain types of Medicaid patients saved as much as

$50,000 in patients' out-of-pocket expenses and $30,000 in Medicaid transportation

costs. The study helped persuade the Health and Human Services Agency, which

administers Medicaid, to provide insurance reimbursement for telemedicine

services in Georgia.

"This is not any different medicine. It's simply a different tool to

deliver that medicine," said Laura Adams, director of operations for the

Medical College of Georgia. "And you shouldn't put any artificial requirements

on it."

Cash Run

Not surprisingly, money — or lack thereof — is the biggest obstacle

facing telemedicine. The Health Care Financing Administration and a few

other federal sources pay for most rural telemedicine sites. But that funding

never covers everything. Although technology costs are falling, telemedicine

remains expensive, with higher-than-average costs for staffing, user support,

operations, billing and training.

In southeastern Texas, for example, federal money helped get a state-of-the-art

high-tech mobile medical unit to four impoverished counties near Harlingen.

The unit features a digital camera, videoconferencing capability via satellite,

a dental chair, ophthalmology equipment and a laboratory that screens for

diabetes and tuberculosis.

But the mobile unit is garaged because there is no money for a permanent

staff, said Sister Mary Nicholas Vincelli, a director of community public

health at the Texas Department of Health.

"We take it out when we can, but there's no regular source of funding,"

Vincelli said. "We do get some money for grants...that we've written, but

it's an ongoing issue."

The situation is all the sadder because residents appreciated the service.

During a two-week period when American military physicians and nurses assisted

the unit, more than 7,000 patients showed up for care.

Money used to be a problem in California too, but the state's telemedicine

system has taken off since getting a windfall of seed money from the Healthy

Families Demonstration Project, a Health and Human Services program funding

39 California sites, and the California Endowment, a grant from the California

Telehealth and Telemedicine Center.

"Telemedicine is definitely on an upswing now in this state," said Jana

Katz, program manager of the telemedicine program at the University of California-Davis,

a hub facility that provides specialists via videoconferencing and also

operates rural primary care sites.

"A lot of people think it's because we've legislated insurance reimbursement

for telemedicine services,'' Katz said, "but I think that the availability

of grant funding is more significant. We've had the reimbursement since

1997, and there hasn't been a whole lot of activity up until we got these

recent projects in place."

Paying the Piper

The lack of insurance reimbursements trips up other states. Most insurance

providers balk at paying for services not conducted in the traditional face-to-face

doctor/ patient model. When it comes to telemedicine, Medicare will reimburse

only for teleradiology, some remote patient- monitoring applications and

live video consultations with patients in remote areas but only when a physician

presents the patient.

When areas are short on doctors to begin with, that isn't much help.

In Georgia more than 86 percent of telemedicine consultations involve non-physician


Private insurance providers and Medicaid have been more open-minded,

but not much. Medicaid reimburses for some telemedicine services in 15 states.

And several states — including California, Oklahoma, Texas, Louisiana and

Hawaii — have legislated private insurance carriers to pay for long-distance

health care.

Others, like Georgia, have negotiated arrangements with Medicaid and

the insurance industry. As of August, 150 private providers were reimbursing

for most telemedicine services in Georgia.

"Six years ago we said, "We'll bill private insurance providers, and

they'll either pay or they won't,' " Adams said. "And pretty soon, some

of them started paying. And as more and more companies have come online,

the others are choosing to follow."

Iowa, on the other hand, sees little reimbursement. The state has a

Medicare waiver that covers a narrow range of services. However, Medicare's

rules were written long before telemedicine came on the scene. Consider

this confusion: In telemedicine, a consultation is an examination of a patient

via videoconferencing or store-and-forward technology. But in Medicare-speak,

a consultation is a one-time exam. For example, a Medicare patient with

a consultation for a mental health problem would be reimbursed for just

one visit.

"If the patient was seen once for medication, that would be covered,"

said Fred Eastman, programming and administrative coordinator for the Midwest

Rural Telemedicine Consortium in Des Moines. "But as soon as you get to

the point where you're seeing the patient on a regular basis, then that's

therapeutic and wouldn't be cov ered. So while reimbursement is available,

it's very, very limited."

Private insurance carriers in Iowa tend to follow the lead of Medicare,

Eastman said.

"Until it gets to the point where the payers decide that we're not providing

a new medical service, just providing the same service in a different manner,

it will continue to be a barrier — no matter how much technology we have

in place," Eastman said.

A Billing Question

While bandwidth has become more available, and computer costs are a

fraction of what they were a decade ago, telemedicine providers still grapple

with technology expenses. The worst are telecommunication line charges.

As a rule, rural areas pay more — often more than twice as much — for

T-1 lines than their urban counterparts. Congress attempted to fix this

disparity a few years ago when it passed the Telecommunications Act of 1996,

a law that included rural telemedicine provisions within the existing Universal

Service Program. The program was intended to subsidize phone service for

individuals who could not afford it, but it was expanded to provide financial

help to schools, libraries and rural telemedicine sites.

The telemedicine portion of the program pays for the incongruity in

line charge costs that exist between rural and urban areas. If a T-1 line

cost $500 in Washington, D.C., and $900 in the mountains of western Maryland,

the program would pick up the $400 difference. But telemedicine providers

aren't satisfied with the program, said Bill England, director of operations

for the Rural Health Care Division within the Universal Services Administrative


England said local providers believed that the Federal Communications

Commission would pick up the tab for internal wiring, as it does for schools

and libraries. But that's not the case. The schools and libraries part of

the program has a $2.25 billion budget, but rural telemedicine reaps $12

million a year.

The program also originally included stringent conditions on the disbursement

of subsidies. Only local private-sector telecom companies could be used,

a fact that knocked out financial hopes for Iowa, which uses a state-run

telecom network, and Alaska, which relies on long-distance carrier AT&T.

Alaska needed the program so badly that it tried to work out a deal where its long-distance carrier would sell circuits to local companies, but that hasn't worked out.

"There are more sites in Alaska than in any other state that have applied

for Universal Service Program subsidies, but so far not a single penny has

come to the state of Alaska, any health care provider or any telephone company

for Universal Service support," said Alice Rarig, telemedicine coordinator

for the Alaska Division of Public Health. "It's been very frustrating."

England expects recent changes to the program (expected to be published

this month) will help smooth the bureaucratic problems. Subsidies will now

be paid even when using long-distance carriers such as AT&T, MCI WorldCom

and Sprint, and the program will pay for more than one T-1 line.

"And this is not a competitive grant type of program," England said. "Anybody who

meets the criteria will be funded. That is, until we run out of money, which

we don't expect to happen this year. If we do, we will process applications

in the order they're received, and then we'll talk to the FCC about raising

the ceiling on the funds. We plan to revisit that issue annually."

On and On

But those are all the problems telemedicine faces.

"In many ways, it's a Pandora's box that's been opened," Puskin said.

Take physician licensing. If a doctor is licensed in Arizona, can he

examine a patient in Missouri via a videoconferencing link? And if something

goes wrong, which doctor is liable? In which state does the plaintiff sue?

Can the telecommunications provider be held financially responsible?

"These are issues that lawyers could have a field day with," Linkous said.

States have begun to address licensing. Although physicians must hold

a license in every state they practice in, states including California,

Texas, Tennessee, Oregon, Alabama and Montana have approved a special-purpose

license that allows for telemedicine across state lines. Other states, such

as Delaware and Minnesota, are considering similar legislation.

Some states, however, demand that telemedicine-based specialists be fully

licensed in their state.

"There is a lot of anxiety here about too many consultations leaving

the state because it's seen as very important that the state maintain its

capacity to meet the needs of the people of the state with specialists in

the main communities," Rarig said. "If all the teleconsults were to bypass

Anchorage and even Fairbanks and Juneau and go out of state, then we won't

get the specialists to come here and stay here, and then everybody will

be dependent."

Other issues that state policy-makers will soon contend with include

the appropriate use of the Internet for direct patient/provider consultations

and wholesale sales of prescription drugs. Then there's maintaining the

privacy and confidentiality of medical records when transmitting them over

private and public networks. Ultimately, observers expect states and the

federal government to work together to get past the policy stumbling blocks.

"Telemedicine offers too much in the way of care and cost-effectiveness

for it to ever fall by the wayside," OAT's Puskin said. "States recognize

that we don't have infinite people resources, that we can't economically

maintain a neurosurgeon in every community and even if we could, that they

couldn't keep the necessary skills up-to-date. The use of telemedicine technologies

is the way of the future. It's just that this is a relatively young industry,

and it's going to experience growing pains like any other new endeavor."


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