The Western Governors' Association Telemedicine Action Report

Western Governors are committed to improving access to and quality of health care for people living in the rural West. To support this goal the Western Governors'Association convened a Telemedicine Policy Review Group consisting of telemedicine experts, senior state health officials, and other interested parties. Six background papers were prepared on major barriers to telemedicine. The recom mendations developed by the Review Group and contained in this document were based on those papers. This effort was supported by grants from the Henry J. Kaiser Family Foundation, Menlo Park, California and the U.S. Office of Rural Health Policy.

The Governors thank everyone who participated in developing the Telemedicine Action Report.

Table of Contents

A Vision for Telemedicine

Nationally known neurologist Theresa Myers, MD is conducting rounds at the Community Hospital in Coffee Creek, Idaho, as she does every two weeks. After pulling up the latest x-rays and lab results on a computer for her patient Barbara Collins, Dr. Myers asks the local Physician's Assistant to describe Barbara's worsening tremor. Dr. Myers then asks Barbara to walk across the room, touch her finger to her nose and write her name. After watching Barbara, the doctor and the PA are able to make a firm diagnosis, discuss a plan for treatment, and arrange for a follow up visit. Her patient appointments completed for the morning, Dr. Myers looks out her office window at downtown Salt Lake City, thinking about her "visit" to Alaska tomorrow, while Barbara Collins drives back to her ranch in rural Idaho.

Dr. Myers visited Coffee Creek through a video conferencing link, and before the day's end, she will be reviewing charts and providing consults to physicians located in North Dakota and Washington state through the use of electronic mail. These linkages are part of a far reaching network that provides rural citizens access to the best specialists in the region. And although the meeting between Dr. Myers and Barbara Collins has yet to take place, projects are now underway that would make such meetings a reality.

Each Western Governor knows only too well that people living in rural areas have limited access to basic health care and uncertain prospects for the future. Access is limited by geographic isolation, the relative scarcity of rural physicians, limitations on physician reimbursement, poor public transportation to larger cities, and even vagaries of weather that impede travel.

Efforts to encourage physicians and other health professionals to establish practices in rural under served areas have been only partly realized. Many western states continue to look for solutions to the problems of access to and quality of health care for rural citizens, particularly when health professionals are not available in rural communities.

Although not a panacea, telemedicine holds great promise to enhance health care delivery in rural areas by allowing a physician or other health professional to examine a patient while linked by video or other means to an expert consultant at a distant medical center. Radiologists and other specialists can review medical images transmitted over telephone lines. And university-based pathologists can review biopsies done in a rural hospital while the patient is still under anesthesia. Without telemedicine, these services would require travel on the part of either the patient or the consultant, or would simply not be available at all.

Rural health professionals who use telemedicine are also likely to feel less isolated from medical colleagues and resources, thanks to the specialty "backup" and educational opportunities now available. Continuing education and consultations via telemedicine are expected to improve recruitment and retention of health professionals in rural areas, many of which would otherwise be without any local medical care.

Telemedicine's potential goes beyond improving the health of individuals. Telemedicine has been used effectively to improve public health in rural communities by providing timely information and training for rural county health departments. Several projects will use telemedicine to assist local citizens' organizations to improve the overall health of their communities by supporting anti-smoking, accident prevention, prenatal care, and Other public information programs. Interest in telemedicine is also growing among private physicians, other health care practitioners, and managed care organizations as a way to provide high quality care in a more cost effective manner.

Today, telemedicine holds more potential than ever to fulfill its promise of improved access to health care for under served rural citizens. Previous high costs and technical limitations on telemedicine technology have been significantly reduced and are no longer a primary barrier The most significant barriers to telemedicine are:

If it succeeds in improving access and quality, telemedicine is likely to increase health care costs for society. On the other hand, telemedicine is expected to improve health outcomes, reduce patient travel and time off work, and retain more health care dollars in rural communities-all likely to result in savings. Given our limited experience with telemedicine to date, these costs and savings, and their distribution throughout the economy, cannot be estimated accurately.

Western Governors, united by the need to improve medical services in remote areas common throughout the region, are well-positioned to develop, advocate, and implement strategies that can address telemedicine barriers and foster experimentation. The purpose of the Telemedicine Action Report is to describe telemedicine barriers and to provide the Governors with steps they can take to help reduce these barriers and to stimulate the development and utilization of telemedicine networks in the West. Close examination of the telemedicine activity that results will enable us to answer critical policy questions about costs and benefits.

Additional information on the telemedicine barriers discussed in the Action Report is provided in background papers to this document under separate cover.

Barrier One: Infrastructure Planning and Development

It is rare for emerging health care applications to be factored into western state telecommunications and information technology planning or procurement. Failure by state policy makers to consider needs and solutions across the range of state activities (education, criminal justice, health and social services, etc.) can result not only in missed opportunities for capacity and cost sharing, but also can lead to costly redundancies and incompatibilities. In addition, state legislation regarding telecommunications often fails to integrate health care concerns. While few believe that advanced telemedicine applications can be cost effective as stand-alone systems, many are convinced that telemedicine is a significant component of an overall policy that seeks increased public and private investment in and increased use of network capacity, especially in rural areas.

Disregard of integrated planning and coordination can be expensive not only within a state, but also when networks cross state lines While the West is a national leader in telemedicine, demonstrations have begun only recently. When these systems reach the state line, it is essential that they be compatible with the technical environment in neighboring states. Two western demonstrations are seeking to pioneer interstate telemedicine-the WAMI network in Alaska, Idaho, Montana, and Washington and the High Plains Rural Health Network in Colorado Kansas, and Nebraska.

Recommended Actions

  1. Governors should direct their cabinet officials and budget directors to integrate information technology planning and development across state agencies and within communities, to consider the needs of telemedicine and other health care applications, and to foster continuing competition. Integrated planning should occur not only as part of periodic high-level initiatives but also in the course of the regular budget process. Governors should also ensure that telemedicine and other health care issues are considered during legislative deliberations on telecommunications policy.
  2. Governors should encourage all providers and vendors that support telephone, cable, and wireless, providers, to create public/private partnerships and to support nonurban information infrastructure deployment and use.
  3. The Governors should direct WGA to facilitate communication and coordination among the western states as they consider how infrastructure development will impact telemedicine. The Governors should direct WGA to assist member states that have yet to comprehensively address information technology planning to learn from states that are doing so, such as Utah, Nebraska, North Dakota, and California.

Barrier Two: Telecommunications Regulation

Limited competition for telecommunications services in rural areas and regulatory distortions created by arbitrary boundaries, such as Local Access and Transport Areas (LATAs), result in prohibitively high costs for transmission services needed to support high bandwidth applications like interactive video. In many rural communities, prices for intra-LATA calls are unusually high and there is no local access to the Internet.

State laws governing utility regulatory commissions include prohibitions on discrimination through rates or services between similarly-situated customers. These rules do not permit incentive prices for telemedicine users and result in unnecessarily high telecommunications costs.

On the demand side, small disparate rural telemedicine networks and users lack sufficient market power to negotiate favorable rates and service from telecommunications providers.

Recommended Actions

  1. Governors should direct their state utility regulatory commissions and state Attorneys General to review and recommend modifications to state public utility laws and regulations governing competition, pricing and pricing standards, and depreciation. Changes should be considered that would lower prices for telemedicine services likely to improve rural public health and benefit society at large, and that would encourage investment and extend services to under and unserved areas.
  2. Governors should encourage physicians, other health care practitioners, hospitals, rural communities, educational organizations, payers, and patient groups to unite both within states and regionally. These interests can create organizations of telemedicine consumers that can yield economies of scale in purchasing, exert greater influence in policy making, and advocate interoperability in technology across systems. Existing rural cooperatives provide useful models for telemedicine users.

Barrier Three: Reimbursement for Telemedicine Services

Reimbursement policies for telemedicine services by HCFA, private insurers, and state Medicaid programs are currently limited and inconsistent. HCFA has not yet established a national coverage policy for Medicare, but is working toward one. HCFA does allow state Medicaid agencies to establish their own coverage policies for telemedicine. The lack of clear and consistent policy makes it difficult to cover the costs of telemedicine systems with reliable sources of revenue. Both public and private payers are reluctant to set policy for telemedicine reimbursement without detailed information about the costs and the effectiveness of specific telemedicine procedures and applications. In the absence of reimbursement policies, physicians and other health care practitioners are unlikely to offer medical services via telemedicine networks. Currently, most telemedicine systems are supported by state, federal, and private demonstration grants that do not provide stable sources of revenue for long-term viability. Despite the uncertainties surrounding the effectiveness of telemedicine's various applications, public and private payers need to begin to set reimbursement policy. Even limited certainty regarding payment will enable telemedicine activity to continue and expand. Greater experience and rigorous evaluation will provide a better understanding of the costs and effectiveness of telemedicine, supporting further policy making on reimbursement and adoption of telemedicine in managed care. This "bootstrap" approach will enable policy to be developed and adapted as our under standing of these issues increases, and as our experience with telemedicine grows.

Recommended Actions

  1. For the near term, Governors should direct their Health Departments to establish a task force consisting of physicians, other health care practitioners, managed care organizations, third party payers, state insurance commissions, rural consumer groups, federal agencies, and other interested parties to negotiate and set initial statewide policy on telemedicine reimbursement. The task force should set policy in such areas as:
  2. To provide a framework for a regional approach to reimbursement, the Governors should direct WGA to support and coordinate task force activities among the states. WGA should also survey and disseminate current reimbursement policy in western states.
  3. To provide a basis for reimbursement policy, Governors should encourage and support universities, public and private payers, and other organizations to study the cost effectiveness of telemedicine services within states and within the region. Information gained from these studies should be disseminated broadly.

Barrier Four: Licensure and Credentialing

Currently, physicians and other health care practitioners must satisfy numerous requirements to obtain a license to practice medicine in each state, and to be credentialed to practice at individual health care facilities. Practitioners are understandably reluctant to use multistate telemedicine networks because of the costs and administrative burdens of complying with multiple Censure and credentialing rules compared to the expected frequency of network use.

There are two purposes for licensure requirements. The first is to ensure quality health care services. The second is to regulate the commercial activities of individuals that practice the healing arts. Credentialing by health care facilities acts to limit the license that the state has granted. Local physicians and other health care practitioners can therefore use licensure and credentialing as a means to protect their markets from out-of-state competition. This market regulation conflicts with policies that aim to optimize the delivery of health care within a region.

A long-running debate about the wisdom of licensing and credentialing physicians and other health care practitioners at the state and facility level has been taking place in Washington, D.C. Decisive action by the Western Governors will demonstrate state capacity to develop solutions to this complex problem and will help to avoid federal preemption.

Recommended Actions

  1. The Governors should direct the WGA to form a task force of interested parties to draft a Uniform State Code for Telemedicine Licensure and Credentialing (similar in principle to the Uniform Commercial Code). Participants should include state, regional, and national medical societies, legal and hospital associations, the Federation of State Medical Boards, rural consumer groups, and relevant state regulators. The task force should consider issues such as: definition(s) of telemedicine, simplified licensing of individuals, licensure of networks, and requirements and grants of credit for continuing medical education. The task force could also explore the possibility of expanded interstate reciprocity in licensing and credentialing as an alternative to a model code.
  2. To address the potential concerns of affected constituencies, the Governors should direct the task force to analyze the costs and benefits for patients and telemedicine practitioners of opening health care markets via telemedicine.

Barrier Five: Medical Malpractice Liability

There is significant uncertainty regarding whether malpractice insurance policies cover services provided by telemedicine. Telemedicine networks that cross state lines create additional uncertainties regarding the state where a malpractice lawsuit may be litigated and the law that will be used. Will the lawsuit be heard in the state of the provider, the patient, or in another state covered by the network? Which state's law will govern the case? Choice of venue and choice of law issues can have significant financial implications for the parties to litigation as states differ in the statutory limits placed on the amount of malpractice awards.

Recommended Actions

  1. Governors should direct their state insurance commissions to review the current policies of the malpractice insurance industry with regards to telemedicine, and to recommend changes that encourage insurers to develop clear and consistent coverage policies.
  2. Choice of venue and law questions will be decided by the courts. The Governors should request appropriate legal bodies, such as the American Bar Association and the National Association of Attorneys General, to draft legal policy opinions that review federal procedures and state statutes and give guidance to the courts to assist in the resolution of venue and choice of law issues in a telemedicine malpractice lawsuit.
  3. To help create more certainty, Governors should introduce legislation to amend their state's malpractice liability limitation statute so that it applies to out-of-state telemedicine physicians and other health care practitioners.

Barrier Six: Confidentiality

There are many views on the security of personal information in electronic form. Some believe that electronic patient records are more susceptible to unauthorized access and dissemination than are paper charts on hospital wards. Others believe that proper safeguards make electronic information more secure than paper records.

Patients wary of electronic data may be reluctant to use telemedicine systems that result in the creation or transmission of confidential information. Physicians and other health care practitioners with these perceptions may be reluctant to use electronic systems which they believe may increase the risk of breaching patient confidentiality.

Concerns about the confidentiality of patient-identifiable medical information are not unique to telemedicine As a result, proposals exist that seek to establish a federal privacy protection law for medical records generally or that propose a uniform model state code to establish a minimum standard of privacy protection that would be adopted by individual states.

Recommended Actions

  1. Governors should direct their Attorneys General to examine and consider proposed model state privacy codes that would create uniform standards for the protection of electronic medical records. Any model law considered should integrate telemedicine confidentiality concerns as well as address issues such as: standards for third-party disclosure of patient-identifiable medical information, informed patient consent for telemedicine services, regulation of data banks to limit disclosure of medical information, and exemptions for emergency and trauma situations.
  2. The Governors should direct WGA to assist in developing policy regarding federal efforts to enact confidentiality protections for medical records. This policy should ensure that if a federal approach is advisable, states have a substantial role in shaping these protections, and that particular confidentiality concerns relating to telemedicine are addressed.

Telemedicine Action Report Editors

Robert Flaherty, MD
The Virtual Medical Center, MT
Douglas Perednia, MD
Telemedicine Research Center, OR
Thomas O. Singer
WGA Director of Research
Paul Orbuch
WGA Counsel

Telemedicine Policy Review Group

John J. Ambre, MD, PhD
American Medical Association
Ed Bostik
High Plains Rural Health Network.
Margaret Cary, MD
U.S. Department Of Health & Human Services
Francis H. Chang
Henry J. Kaiser Family Foundation
Helen Collins
Health Care Financing Administration
Jerry Hoffman
NE Health Policy Project
Sally Johnstone
Western Interstate Commission for Higher Education
Kathy Kelly
Office of the Governor, WA
Jerry McCarthy
CO Rural Health Telcommunications Coalition
A. Richard Melton, Dr. PH
UT Department of Health
Deb Muller
SD Department of Health
Dena S. Puskin, Sc.D.
U.S. Office of Rural Health Policy
Jon R. Rice, MD
ND Department of Health
Leslie Sand berg
Center for the New West
Richard Schultz
ID Department of Health and Welfare
Bill Steele
CO Public Utilities Commission
Russ Webb
AK Department of Health

Telemedicine Background Paper Authors

Troy Eid
Center for the New West
Francoise Gilbert
Altheimer & Gray
Phyllis Granade
Medical College of GA
Jim Grigsby, Ph.D.
University of Colorado
William J. Halverson
Network Associates
Charles F Holum
Doherty, Rumble & Butler

Western Governors' Association 1994-1995 Board Of Directors

Governor Ed Schafer, ND
WGA Lead Governor for Rural Health

Governor Michael 0. Leavitt, Utah, Chairman
Governor E. Benjamin Nelson, Nebraska, vice Chairman
Governor Tony Knowles, Alaska
Governor A.P. Lutali, American Samoa
Governor Fife Symington, Arizona
Governor Pete Wilson, California
Governor Roy Romer, Colorado
Governor Carl T.C. Gutierrez, Guam
Governor Benjamin Cayetano, Hawaii
Governor Phil Batt, Idaho
Governor Bill Graves, Kansas
Governor Marc Racicot, Montana
Governor Bob Miller, Nevada
Governor Gary E. Johnson, New Mexico
Governor Edward Schafer, North Dakota
Governor Froilan C. Tenorio, Northern Mariana Islands
Governor John Kitzhaber, Oregon
Governor William J. Janklow, South Dakota
Governor George W. Bush, Texas
Governor Mike Lowry, Washington
Governor Jim Geringer, Wyoming

James M. Souby
Executive Director
Western Governors' Association
600 Seventeenth Street
Suite 1705, South Tower
Denver, CO 80202-5452
(303) 623-9378
(303) 534-7309 (facsimile)

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Last Updated: Tuesday, May 28, 1996, 8:43:54 AM
Allen Johnson - ND Health Dept. DP Coordinator -