August 7, 2001

Cara Towle, RN, MN
Director
University of Washington Telehealth Program

Jennifer Mas
Research Coordinator
University of Washington's Telepartner's Project

Introduction and Promises of Telemedicine
The shortage of medical professionals and the lack of access to medical care for rural residents have been well documented. In Washington, one of every four residents lives in a rural community, and their access to health care is limited. This is due in part to the concurrent pressures of managed care, the changing insurance market, and the passage of the 1997 congressional Balanced Budget Act and the propensity of physicians to locate in urban areas ("Rural Health Policy: where do we go from here?" Aaron Katz, et.al. 8/00).

Telemedicine is defined by the Institute of Medicine as "the use of electronic information and communications technologies to provide and support health care when distance separates the participants." It has shown promise as a potential solution to rural access dilemmas. The technology available for telehealth activities is expanding, improving, and becoming more affordable. Internet capabilities, digitized radiology and pathology images, email, remote stethoscopes and laparoscopic cameras, video teleconferencing, and various wireless communications are examples of technological advances that may be used to provide access to medical care and education. As such, telehealth activities are naturally suited to overcoming the geographic and financial barriers inherent in serving remote, rural, and international communities.

The potential benefits of telemedicine and telehealth services are numerous. The provision of direct clinical services, specialty consultation services, and educational inservicing via telemedicine may increase patient access to medical care as well as decreasing costs, time lost and other hardships associated with patient travel to urban areas, or provider travel to rural areas. The issues of cost, time lost, and associated expenses have also potentially diminished professional isolation among rural providers. Telehealth services have the potential to decrease that sense of isolation, as well as to enhance the level of care provided by practitioners in rural areas by providing professional interaction and continuing education programming. A long-range result may be the further development and growth of the rural health care workforce. Telehealth services may also enhance research capabilities by facilitating the administration of multi-site clinical research trials, decreasing costs associated with managing multi-site clinical research trials, and increasing potential study size and geographic reach.

Although "telemedicine" has been available - at ever improving levels of technology - for decades, its implementation has been sparse at best. Use of video teleconferencing for continuing education purposes is not uncommon, but there are only a handful of robust clinical telemedicine programs across the country, the majority of which are grant-funded and as yet not financially self-sustaining. The full implementation and integration of telehealth services continues to face serious challenges.

While the technology has advanced, issues such as system incompatibility, equipment costs, and telecom systems that are inaccessible, poor, or costly have prohibited utilization. Containing costs of telehealth services with available budgets is also a major issue. Despite decreases in prices, the technology continues to be expensive to purchase, to maintain, and to upgrade and is often well beyond the financial reach of small rural hospitals and clinics and even of large urban and academic medical centers. Only recently have telemedicine services begun to receive limited reimbursement from Medicare for physicians and other telemedicine providers, and reimbursement among state agencies and private payers varies widely. However, these fees do not cover costs of technology and program administration. State licensure and credentialing requirements remain prohibitive for consultations across state lines. Medico-legal concerns, quality of care issues, and scheduling complexities also impede telehealth services. Privacy concerns continue to limit confidence among clinicians, patients, insurers and other governmental and private business entities.

Finally, definitive studies are required to demonstrate assumed benefits of telehealth services such as improved cost effectiveness and improved clinical outcomes. A recent report prepared for the Agency for Healthcare Research and Quality by the Oregon Health Sciences University Evidence-based Practice Center (EPC) examined three study areas of telemedicine, including store-and-forward, self-monitoring/testing, and clinician interactive services. According to the report, a small but growing number of active programs demonstrate the technology can work, and their growing number indicates that telemedicine has benefits from clinical and economic standpoints. However, the longevity of these programs is not clear, and many may fail to survive beyond initial funding or enthusiasm. Evaluators are reluctant to definitively endorse the efficacy of telemedicine technology because evidence is still not clear. The EPC team concluded that further research is needed on telemedicine in practice networks and randomized controlled trials that assess patient outcomes and costs related to entire episodes of care should be used to assess telemedicine systematically, to refine target populations, refine interventions prompted by them, and develop standardized tools to measure effectiveness and harm. Also needed is an assessment of different methods of delivery and payment.

Current Reimbursement Status
Reimbursement continues to be one of telemedicine's greatest barriers and although reimbursement will not ensure the success of a telemedicine initiative, lack of reimbursement guarantees that telemedicine efforts, despite proven success, will fail.

Currently Medicaid programs in 18 states reimburse for telemedicine services in some capacity, although Washington State's Program is still not one of them. (See Appendix A: Medicaid Reimbursements for Telemedicine.) In addition, many states have taken innovative approaches in negotiating with private payers to reimburse for telemedicine services.

For this paper, authors interviewed representatives of four robust telehealth programs. A standard set of questions was posed to University of Kentucky, University of California at Davis, Eastern Montana Telemedicine Network and University of Arizona. (See Appendix B: Responses from Reimbursement Inquiries.)

The four organizations used three approaches to bill Medicaid and private payers:
1) Contract negotiation;
2) Letters of intent simply announcing billing would begin; and
3) State mandates through legislation.

Contract Negotiation
Of the agencies contacted, contract negotiation was the least successful method and most time consuming. University of Arizona negotiated for three years before it obtained an agreement with "Access in Arizona", the state's Medicaid Program, to pay for telemedicine consults, including both live video consults and store and forward consults.

University of Kentucky's TeleCare Director unsuccessfully negotiated with Kentucky State Medicaid officials and private payors for over three years until persuading Representative Steve Nunn to initiate legislation.

Assumed Compliance/Letter of Intent
Eastern Montana Telemedicine Network sent letters to all of its insurers, including Medicaid, saying billing would begin for telemedicine services. Their network invited questions and offered to provide a CPT modifier for electronic billing. University of Arizona applied this approach to its private payors as well. For both agencies, only a few insurers responded with questions, and one required a CPT modifier in Arizona.

State Initiatives
Of the agencies contacted, two proposed and lobbied for legislative measures to allow reimbursement for telemedicine. The University of Kentucky, after unsuccessfully trying to negotiate a contract with payors, and the University of California at Davis were successful in promoting legislation.

University of Kentucky worked with Representative Steve Nunn to draft House Bill 177. The bill formed a joint program between the University of Kentucky and the University of Louisville to create a network including 25 rural sites, 10 public health departments, four training centers and a Board of Directors. The bill mandates that Medicaid and private payors reimburse for telehealth encounters the same as if the encounter was in-person. All sites participating cover their own telecommunication charges (unless there is grant support). Store and forward is not reimbursed. Billing began in July 2001.

In California, Senate Bill 1665, The Telemedicine Development Act of 1996 significantly impacted University of California at Davis. The initiative mandated private health insurance and managed care plans to integrate telemedicine into their existing reimbursement policies and procedures. The bill used a flexible approach, allowing private payers to phase in telemedicine reimbursement and treating telemedicine in a similar manner as traditional face-to-face care. The Medi-Cal Program, California's Medicaid Program, was required by legislation to have telemedicine reimbursement policy in place by a certain date. Face-to-face contact between healthcare providers and patients was no longer a requirement for reimbursement.

The bill also addressed patient protection measures including confidentiality, informed consent and physician licensure issues. To address the cross-state licensure problems, the bill allowed practitioners out of California who do not hold a California license to provide consultation to a licensed California practitioner. The interstate consultation is allowed only when the in-state practitioner has ultimate authority over the care of the patient.

It is important to point out that of the four agencies, none are financially self-sustaining despite highly successful programs with as many as 52 satellite clinics in some instances and reimbursement models in place. All agencies have the financial support of their associated medical centers and some agencies track revenue generated to the medical center for referrals. University of California at Davis was 25% financially self-sustaining in the first three years of operation, but today is roughly 80% self-sustaining with clinical consults and educational services comprising the majority of their program.

Additionally, some agencies have financial support within a technologically closed network either by charging a membership fee or by maintaining partnerships where partners maintain their own equipment and telecommunication charges.

Solutions at Washington State's Level
To encourage integration of telemedicine into delivery care systems; Washington State's legislature and/or administrative agencies could provide or promote:
1. Statewide collaboration among all telemedicine agencies;
2. Reimbursement mandates for Medicaid and payors;
3. Reimbursement to include store and forward technology;
4. State funds appropriated to maintaining telecommunication infrastructure;
5. Standardized credentialing agreements for practitioner's intra- and interstate wide (state licensure not required if out-of-state physician is providing consultation to an in-state licensed physician);
6. Standardized CPT codes with TM modifiers that do not limit telemedicine practices but maintain records of telemedicine encounters for research purposes; and
7. Standardized evaluation mechanisms for statewide telemedicine encounters for research purposes.

Solutions at the Federal Level
To encourage integration of telemedicine into delivery of care systems; Congress and/or executive agencies could provide:
1. Enhanced Medicare reimbursement;
2. Reimbursement for store and forward telemedicine;
3. Continued research/grant funding;
4. Funding for telehealth education;
5. Reimbursement using CPT codes with telemedicine modifier (for data collection purposes);
6. Credentialing mandates in such a way as to assure quality but not to block the use of telemedicine or artificially inhibit patient access to care;
7. Cost effective, ubiquitous deployment of a wide spectrum of telecom services enabling telemedicine applications to be provided in all areas of the country and to the home;
8. A reduction in cost of telecom services in high-cost areas; and
9. Standardization to assure uniformity and compatibility.

Conclusion
Despite all of the barriers that have been ubiquitous to telemedicine thus far, the health care community has continued to initiate and push to expand telemedicine programs, largely in response to the needs of rural communities. With the proper reimbursement mechanisms in place and statewide support, Washington State could develop a telemedicine network that could significantly impact rural health care access issues through clinical and educational services.

Funding and reimbursement are needed to sustain programs, but from society's point of view, adding significant new expenditures to the health care system without displacing other costs or demonstrable improvements in health outcomes may not be justifiable. The measurement of cost related to telemedicine must take into consideration all of the costs as well as all of the cost savings. Costs to rural patients accessing care in metropolitan areas include travel, accommodations, time lost from work, and childcare. Costs to health care systems for sending practitioners to remote sites in order to provide care to rural patients or to obtain continuing education must also be taken into consideration. In Montana alone, it is estimated that there was a one million dollar savings in travel cost to practitioners for educational purposes in the year 2000. Factored into this figure is the travel cost for clinicians who may not have received professional education had telemedicine services not been offered for the courses. Finally, studies must be done to determine the effect of telemedicine on clinical outcomes and the associated cost differences.

High telecommunication charges are driven by the private sector costs or desires for profits and remain relatively unregulated. The Universal Services Administration Company offers some financial assistance from the Universal Service Fund (http://www.universalservice.org/programs/) to consortia of health care providers including rural public and non-profit health care providers and urban medical centers. However, application procedures are discouragingly cumbersome. Even with the fund, not all Washington sites are eligible and not all of telecommunication charges are absorbed even if they are eligible.

Washington State currently has a telemedicine infrastructure in place in many school districts, but this network has been devoted predominately to educational purposes. With further state financial allocations, this network could be expanded physically, geographically, and programmatically in order to serve health care needs through clinical services and professional education.

Given the numerous sectors involved in telemedicine, the key to the promotion of this technology as a tool to health care service delivery must be collaboration: across geographic, political, economic and industry boundaries.

Medicaid States

State	Consults	Payment	Reimbursement Sites	Service Types	Codes	Contact	Web Site
Arkansas	IVTC	Fee-For-Service, Same as Face-to-Face Manner	Spoke and Hub	Physician Consults	State-Specific	Will Taylor, 501.682.8362	http://www.medicaid.state/ar.us
California	IVTC	Fee-For-Service, Same as Face-to-Face Manner	Spoke and Hub	Medical and Mental Health	CPT codes with TM modifier	Dr. Michael Farber, 916.657.0548	http://www.medi-cal.ca.gov/
Georgia	IVTC	Fee-For-Service, Same as Face-to-Face Manner	Spoke and Hub	Physician Consults	Local codes to identify hub site. No modifiers for spoke site.	Sherley Benson, 404.657.7213	http://www.communityhealth.state.ga.us//
Illinois	IVTC	Fee-For-Service, Same as Face-to-Face Manner	Spoke and Hub	Physician Consults	State-Specific	R. Calluza or Maryann Daily, 217.782.2570	http://www.state.il.us/dpa/ html/medicaid_program.htm
Iowa	IVTC	Fee-For-Service, Same as Face-to-Face Manner	Spoke and Hub	Physician Consults	Local codes used for the add-on payment and CPT codes with TM modifier.	Mary Swartz, 515.281.5147	http://www.dhs.state.ia.us/ HomePages/DHS/medicaid.htm
Kansas	IVTC	Fee-For-Service, Same as Face-to-Face Manner for Mental Health and Home Health is at reduced rate.	Hub	Home Health Care (limited) and Mental Health Services	Local codes to identify home health services furnished using visual communication equipment. No modifiers for home health.	Fran Seymour-Hunter, 785.296.3386	http://www.srskansas.org/hcp/index.htm
Kentucky	IVTC	Fee-For-Service, Same as Face-tot Face Manner.	Spoke and Hub	Physician Consults	No modifiers.	Deborah Burton, 859.257.5405	https://telehealth.state.ky.us
Louisana	IVTC	Fee-For-Service, Same as Face-to-Face Manner. PAs can perform service if authorized by primary physician (who can only bill).	Spoke and Hub	Physician Consults	Consultative CPT codes.	Kandice McDaniels, 504.342.3891	http://www.dhh.state.la.us/OMF/index.htm
Montana	IVTC	Fee-For-Service, Same as Face-to-Face Manner	Spoke and Hub	Medical and psychiatric	No Special codes	Dave Thorsen, 406.444.3634	http://www.dphhs.state.mt.us/
Nebraska	IVTC	Fee-For-Service, Same as Face-to-Face Manner as long as no comparable service is available in 30 mile radius. Transmission costs are set at the lower of the bill charge or the state maximum allowable amount.	Spoke and Hub	Certain Physician Consults excluding some services	Vary dependin on who bills for service and which claim form is used.	Dr. Chris Wright, 402.471.9136	http://www.hhs.state.ne.us/svc/svcindex.htm
North Carolina	IVTC	Fee-For-Service, Same as Face-to-Face Manner. Consulting practitioner at hub site receives 75% of fee schedule amount for the consultation code. Referring physician at spoke site receives 25% of applicable fee.	Spoke and Hub	Initial, follow-up or confirming consultations in hospitals and outpatient facilities when patient is present.	Modifiers identify which portion of the teleconsult visit is billed.	Janet Tudor, 919.857.4049	http://www.dhhs.state.nc.us/dma/
North Dakota	IVTC	Fee-For-Service, Same as Face-to-Face Manner	Spoke and Hub	Physician Consults	CPT codes with TM modifier	David Zetner, 701.328.3194	http://lnotes.state.nd.us/dhs/dhsweb.nsf/ ServicePages/MedicalServices
Oklahoma	IVTC	Fee-For-Service, Same as Face-to-Face Manner	Spoke and Hub	Physician Consults	CPT codes with TM modifier	Nelda Paden, 405.530.3398	http://www.ohca.state.ok.us/
South Dakota	IVTC	Fee-For-Service, Same as Face-to-Face Manner	Spoke and Hub	Physician Consults	CPT codes with TM modifier	Linda Walden, 605.773.3495	http://www.state.sd.us/social/ medicaid/index.htm
Texas	IVTC	Fee-For-Service, Same as Face-to-Face Manner, Other health providers (NP, etc.) can bill, too.	Spoke and Hub	Physician Consults	CPT codes with TM modifier	Maureen Milligan, 512.424.6580	http://www.hhsc.texas.gov/Medicaid/index.html
Utah	IVTC	Fee-For-Service, Same as Face-to-Face Manner, only to the consulting professoinal for mental health services, and both the hub and spoke sites for diabetes training and children with special needs.	Spoke and Hub depending on service	Mental Health, Diabetes Self-Management Training, Services to Children with Special Health Care Needs in rural areas	CPT codes with GT and TR modifiers	Blake Anderson, 801.538.9925	http://hlunix.hl.state.ut.us/medicaid/
Virgina	IVTC	Fee-For-Service, Same as Face-to-Face Manner	Spoke and Hub	Physician Consults	Specific Local Codes	Jeff Nelson, 804.371.8857	http://www.cns.state.va.us/dmas/
West Virginia	IVTC	Fee-For-Service, Same as Face-to-Face Manner	Spoke and Hub	Physician Consults	CPT codes with TV modifier	Laurie Harbert, 304.926.1718	http://www.wvdhhr.org/bms/