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Strengthening the Rural Health Infrastructure

Telemedicine in Rural Areas

Research Findings and Issues for States


James Grigsby, Ph.D., Senior Researcher, Center for Health Policy and Research, University of Colorado Health Sciences Center, Denver, CO.

Richard Morrissey, Director, Office of Local and Rural Health Systems, Kansas Department of Health and Environment, Topeka, KS.

Dena S. Puskin, Sc.D., Acting Director, Office of Rural Health Policy, U.S. Department of Health and Human Services, Rockville, MD.

As technologies for data compression and electronic transmission improve, telemedicine provides new opportunities for strengthening the rural health infrastructure and new challenges for policymakers. This session described existing research findings that suggest that telemedicine is effective, and the status of several federally supported demonstration projects that are exploring the potential for telemedicine to improve access to health care services for rural populations.

Jim Grigsby opened the session by defining telemedicine as "the use of telecommunications and information technology to provide health services to persons at some distance from the provider." He reminded the audience that by this definition we have been using some forms of telemedicine for more than 30 years. He reviewed studies done in the 1970's that showed that in many cases audio-only was as good as video and that for some medical specialties the telephone could serve as a cost-effective substitute for routine clinic followup and even diagnosis.

Grigsby noted that most uses of telemedicine have not yet been studied. The Health Care Financing Administration (HCFA) is currently funding an evaluation that will study interactive video showing 3-month medical outcomes, as well as cost and utilization outcomes. The issues that need to be addressed by policymakers include reimbursement (e.g., through Medicaid, Medicare, and private managed care plans), financing infrastructure, cross-State licensing, augmentation versus substitution of services, and specific applications (e.g., radiology).

Richard Morrissey told the audience that Kansas Medicaid has been supportive of improving access in rural areas and is currently reimbursing telemedicine consultations. He offered the following advice and summary points:

  • Telemedicine systems can reinforce rural infrastructure but you need an adequate telecommunications infrastructure.
  • Telemedicine systems can be effective tools for network development by enhancing communications; but be aware that some health professionals may feel threatened.
  • Continually reinforce basic planning principles in developing telemedicine applications—resist technology driving the plan and don't lose touch with the "real issue" (i.e., primary care) in rural areas when paying attention to consultation.
  • Promote development of non-medical, non-video, multiple-use systems.

With reimbursement being one of the key issues acting as a barrier to the greater use of telemedicine, Dena Puskin discussed provisions of the 1997 Balanced Budget Act (BBA) that mandate that Medicare pay for telemedicine consultations for beneficiaries residing in rural Health Professional Shortage Areas, beginning on January 1, 1999. She also listed 10 States that currently reimburse telemedicine under Medicaid (Arkansas, California, Georgia, Iowa, Kansas, Montana, North Dakota, South Dakota, Virginia, and West Virginia).

Dr. Puskin also discussed provisions of the Universal Service Order of the Telecommunications Act of 1996, which require that public and non-profit rural health providers have access to telecommunications services for health care services at rates comparable to those in urban areas for similar services. She reviewed eligibility for these discounts and provided information on the application process. She suggested that State and local agencies can do the following to promote telemedicine:

  • Publicize the availability of universal service funds and provide technical assistance to health care and telecommunications service providers.
  • Work with public utility commissions to ensure that all qualified telecommunications providers are allowed to bid under the Federal Universal Service program.
  • Medicaid and State health insurers can develop telemedicine coverage policies with particular attention to including provisions for coverage under managed care contracts.
  • Consider legislation that would mandate coverage of telemedicine by private third-party insurers.
  • Create a central agency with the State to coordinate State telemedicine health policies and provide leadership in creating the "televillages" of tomorrow.


Grigsby J. Telemedicine In the United States. Telemedicine: Theory and Practice, Springfield, Illinois: Charles C. Thomas, chapter 11, pp. 291-325.

Grigsby J, Kaehny MM, Sandberg EJ, et al. Effects and Effectiveness of Telemedicine. Health Care Financing Review Fall 1995;17(1):115-31.

Medicare Demonstration Project Helps to Identify Critical Issues, BNA's Health Care Policy Report Sep 29 1997;5(38):1491.

U.S. Government Accounting Office. Telemedicine: Federal Strategy Is Needed to Guide Investments. GAO/NSIAD/HEHS-97-67, February 1997.

U.S. Department of Agriculture, Rural Development, Rural Utilities Service (USDA, RUS),

Federal Communications Commission (FCC),

U.S. Department of Agriculture, National Agricultural Library, Rural Information Center,

Federal Office of Rural Health Policy (FORHP),

Rural Policy Research Institute (RUPRI),

Kansas Telemedicine Policy Group, Telemedicine: Assessing the Kansas Environment, November 1993, Executive Summary.

Kansas Telemedicine Policy Group, Problems Issues Potentially Addressed by Telemedicine, p. 6.

Federal Communications Commission. Updated Frequently Asked Questions On Universal Service for Rural Health Care Providers. DA 97-1932, released September 5, 1997, pp. 1-10.

Bonnett TW, Telewars In the States: Telecommunications Issues In A New Era of Competition, Council of Governors' Policy Advisors, Washington, D.C., 1996.

Office of Rural Health Policy, Exploratory Evaluation of Rural Applications of Telemedicine, February 1, 1997, Executive Summary, p. i-iv.

Health Resources and Services Administration, Press Release, HRSA News, "HRSA Awards $5.2 Million for Rural Telemedicine Grants," October 7, 1997.

U.S. Department of Commerce, Telemedicine Report to Congress, January 31, 1997, Executive Summary, pp. 1-11,

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