HD51 - Reimbursement for Telemedicine Services


Executive Summary:
Introduction

Nearly one-third of the Commonwealth's population lives in rural areas. The provision of health care to patients, who for reasons of distance or circumstance do not have ready access to medical care, presents both a challenge to the medical community and an opportunity for the use of telemedicine. The availability of telemedicine services may help rural and other under-served communities solve some of their problems in accessing health care.

Telemedicine is broadly defined as the use of telecommunications technology to deliver health care services and health professions education from a central site to distant areas. However, for purposes of this study, telemedicine means the practice of health care delivery, diagnosis, consultation, treatment, transfer of medical data and education using interactive audio, video and data communications.

History of Telemedicine. Telemedicine techniques have been under development for nearly 35 years. However, in the United States, with one exception, none of the programs begun before 1986 have survived. Evidence suggests that the single most important cause of the failure was the lack of a revenue stream for supporting them, and when external sources of funding were withdrawn, the programs disappeared.

The resurgence of interest in alternative health care delivery systems has been sparked by a variety of factors in the health care industry. Advances in technology that enable the transmission and remote display of images and information over digital communication pathways are a major factor contributing to renewed interest. Support for the technology is not universal, however. While it is viewed by some as a valuable tool for providing badly needed specialty care services to underserved areas and more efficient use of existing medical resources, others view it as a serious misallocation of increasingly scarce health care dollars.

Telemedicine Today

Cost-Benefit and Quality of Care. A common theme surrounding telemedicine applications is the lack of published research and evaluation data. Whether and how telemedicine affects the quality of care delivered has not yet been proven. Where rigorous research efforts have been documented, positive evaluations have generally resulted.

Telecommunications Advances. Current telecommunications costs and the need for an updated telecommunications infrastructure in some rural areas are inhibiting the delivery of telemedicine services. The recently enacted Telecommunications Act of 1996 should result in decreased infrastructure costs as competition among cable companies, telephone companies and wireless communication providers increases.

Currently, no statewide network exists to serve all of Virginia. Because of this, most of rural Virginia has slower lines with minimal bandwidth, necessitating longer and more costly transmittal times. A contract, recently negotiated by Virginia Tech, appears to open new doors for lower telecommunications costs in the Commonwealth.

Government Health Care Initiatives

Telemedicine and the Federal Government. Military telemedicine systems benefit from having an extensive communications network already established, including the latest in technology. In addition, these systems have not been constrained by licensing and credentialing regulations or reimbursement regulations.

Health Care Financing Administration (HCFA). HCFA is a federal agency within the Department of Health and Human Services, created in 1977 to administer the Medicare and Medicaid programs. HCFA has addressed the lack of definitive data supporting the use of telemedicine by funding a three-year telemedicine evaluation trial begun in October 1996, in four states (Georgia, North Carolina, Iowa and West Virginia) to gather this information. Until the results become available, HCFA prohibits reimbursement through Medicare for IATV telemedicine. Because sufficient data does not exist about the outcomes and cost-benefits of telemedicine, and until HCFA makes a ruling, health care providers in a fee-for-service environment cannot receive reimbursement for telemedicine consultations with Medicare patients.

Medicaid and Telemedicine. Medicaid law does not recognize telemedicine as a distinct service. Still, Medicaid reimbursement for services furnished through telemedicine applications is available as an optional cost-effective alternative to direct consultations or examinations, or as an element of many other Medicaid covered services. According to HCFA, states covering medical services that utilize telemedicine for example, may reimburse for both the provider at the hub site for the consultation and the provider at the spoke site for the office visit or states may also create an alternative payment methodology. At this point, Medicaid reimbursement of services utilizing telemedicine is available in at least nine states, including Virginia.

Current Telemedicine Projects in Virginia. There are a number of activities that state agencies and institutions have initiated in an effort to promote the acceptance of telemedicine in Virginia (Appendix B).

Telemedicine and Other State Health Care Services. Current telemedicine projects vary with respect to goals, organization, funding and technology.

The system in Georgia was initiated in November 1991, with an overall goal of ensuring that everyone in the state has immediate access to quality health care. Among a number of other projects, North Carolina launched the NTIA Rural ED Telemedicine Link project as a means of evaluating the use of ATM technology and its utility in telemedical applications. In Iowa, a HCFA grant (one of four) will allow evaluation of the telecommunications medium for clinical applications of telemedicine, education and information systems applications. A HCFA grant made to West Virginia is being used to enhance the level of care available at the community level and reduce the sense of professional isolation commonly experienced by rural health care providers.

Telemedicine Costs

A report prepared for HCFA found no studies that provided an adequate overview of its cost-effectiveness. While telemedicine might reduce costs in certain cases, there is also the potential that costs may increase, at least in the short term. There is also the possibility that telemedicine might lower costs to patients, but increase costs for Medicare because more people are provided access to health care. What is not known is whether real improvements in health status would offset the increase in demand for care should either occur.

Reimbursement for Services

Third party reimbursement for general telemedicine consultations has not been universally enacted and Medicare and Medicaid reimbursement for telemedicine, other than teleradiology and telepathology, is limited.

In rural areas, up to 40% of physicians patient base consists of Medicare/Medicaid patients. It is unlikely that HCFA will move ahead without a clearer understanding of all the issues before proposing a uniform reimbursement policy for telemedicine. At a time when reductions in the growth of Medicare are being proposed, there will be reluctance to initiate policies that could increase costs by increasing access to services.

Conclusion and Recommendations

In discussions of the issues surrounding reimbursement for telemedicine services by state health programs, it is apparent that there is not presently consensus among those involved in using the technology and those responsible for managing payment for services. The reluctance to support a policy for considering reimbursement is linked to a number of things, including:

• Experimental nature of the technology.
• Lack of definitive data demonstrating its effectiveness.
• Concern that a policy supporting reimbursement will expand current medical coverage to include services traditionally not covered, such as telephone consultations and facsimile transmissions.
• Concern that improved access will increase utilization and cost.

There is widespread agreement, however, on the significance of the following assumptions:

• There is statewide interest and tradition in the efficient provision of competent medical care to citizens of the State and that telemedicine can further that interest.

• If it can be demonstrated that telemedicine is cost effective in the public sector, demand will drive its use in the private sector.

• Without the assurance of third-party payment for equivalent telemedicine services, and the resolution of the barrier it creates, the full potential of telemedicine will not be realized.

Given the present lack of experience to support the use of telemedicine as a safe, medically effective set of procedures and the dynamic nature of the technology, it is recommended that a policy for reimbursement for telemedicine services by state health programs in the Commonwealth on a routine basis not be implemented at this time.

However, once these obstacles have been overcome, the following recommendations should be considered in support of the implementation of a policy on reimbursement for telemedicine services by state health programs in Virginia:

• The Legislature should recognize the practice of telemedicine as a legitimate means by which an individual may receive certain medical services from a health care provider without person-to-person contact with the provider.

• No state-funded health care service program should require face-to-face contact between a health care provider and a patient for substantially equivalent services, appropriately provided through telemedicine.

• To monitor the implementation of telemedicine in Virginia, the Legislature should consider funding health services research regarding quality, efficiencies and cost-effectiveness of telemedicine services, when provided by state and/or local public providers.

• State organizations that provide reimbursement for telemedicine should monitor and evaluate the services using accepted research methodologies. Components of such methodologies address items such as the research design, data collection approach, and the adequacy of the measures for analysis.

• The Joint Commission on Health Care, in conjunction with the Council on Information Management, should coordinate telemedicine research in the State to promote and support its use. Likewise, it should monitor the activities and decisions at the federal level to ensure consistency with State policy implementation.