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Telemedicine and Telehealth Funding

Funding News

edited by Robert Roberts

  1. New Federal Legislation Impacts Telemedicine 7/15/2008
  2. CMS Rule Would All Physicians to Bill for Follow-Up Telehealth Consults 7/15/2008
  3. New Study Finds Telehealth Can Reduce Costs for Chronic Disease Care 6/20/2008
  4. New Legislation Would Expand Medicare Reimbursement to Urban and Suburban Areas 6/20/2008
  5. New Economic Analysis of Email-Based Telemedicine Available 5/24/2008
  6. FCC Extends Subsidized Funding of Some Rural Health Initiatives 4/16/2008
  7. HRSA Seeks Development of Audiology Telemedicine Diagnostic Protocol 4/16/2008
  8. Distance Learning and Telemedicine Grants Application Deadline Approaches 3/22/2008
  9. Telehealth Community Urged to Take Grassroots Action on OAT Funding 3/22/2008
  10. State Telemedicine News 3/1/2008

New Federal Legislation Impacts Telemedicine

On July 9th, the Senate passed the comprehensive Medicare legislation. This legislation with a number of important issues of importance to the Medicare community will also expand the list of telehealth originating sites to include hospital-based renal dialysis centers, skilled nursing facilities, and community mental health centers. The vote was the second attempt at passing this legislation after a vote for cloture failed in June.

The legislation has been vetoed by President Bush. However, both the House and the Senate passed the measure with sufficient margins to override a veto and it is likely that it will be overridden.

In other legislation, the Senate and House spending bills will boost telehealth funding. Both the Senate and House appropriations committees released FY 2009 spending bills that will increase funding for the Office for the Advancement of Telehealth (OAT)to $7,100,000 from a FY 2008 level of $6,700,000, while the Senate bill would increase OAT funding to a full $8,000,000.

The "Promoting Health Information Technology Act of 2008" (HR 6179) introduced on June 4th by Representatives Dave Camp from Michigan and Sam Johnson from Texas seeks to utilize public private partnerships and tax incentives to help the adoption of HIT.

A practice of five physicians could easily spend upwards of $200,000 to implement an electronic health record. To speed adoption, the PHIT Act would allow physicians who purchase HIT to deduct a larger portion of this business expense more quickly. The Act would also eliminate the arbitrary 2013 sunset HHS has placed on hospitals providing physicians with software for electronic health records.

The legislation would strengthen telehealth in several ways. Section 303 in the legislation would help to provide telehealth services across state lines, calls for a study on expanding home health and related telehealth services, examine how to pay for home health telehealth services, and look at ways to expand the list of sites to include county or public mental health clinics.

The legislation requests a study done by the Office for the Advancement of Telehealth to report on the use of store and forward technology for telehealth. This study needs to include an assessment of the feasibility and the costs for expanding the use of these technologies.

(Source: Federal Telemedicine News, July 13, 2008)

CMS Rule Would All Physicians to Bill for Follow-Up Telehealth Consults

Physicians would be allowed to bill for follow-up inpatient consultations delivered electronically under a proposed rule from the Centers for Medicare and Medicaid (CMS) that sets Medicare payments for 2009. The CMS is proposing to add new codes specific to the telehealth delivery of follow-up inpatient consultations. The codes are intended for use by providers who are consulted by a patient's attending physician regarding care but are not available for a face-to-face encounter.

The proposed rule could spur other health insurers to do the same. As defined, these inpatient telehealth consultations would include monitoring a patient's progress, recommending care-management changes or advising on a new plan of care in response to changes in the patient's status. Telehealth visits or e-visits would be done in real time, using an interactive communications system, except in Alaska and Hawaii, where store and forward technology is being used in federal telemedicine demonstration projects, the CMS said.

Payment for these follow-up visits would include all consultation-related actions done before, during and after communicating with the patient remotely, such as reviewing patient data and talking with other health providers on the care team and family members as well as completing medical records, according to the CMS.

The three new billing codes would each reflect the complexity of the telehealth consult. The first would be a straightforward visit, taking about 15 minutes, the second would include medical decision making that is somewhat complex and taking about 25 minutes, while the third code would reflect a patient visit of about 35 minutes that includes a more thorough conversation and decision making, the CMS said.

The American Medical Association has called for e-visit reimbursements that accurately reflect the scope and complexity of the work involved. Without reviewing all the details yet, the AMA would be, in concept, "all for it," a spokeswoman said.

While e-visits are still new, some health plans have already started reimbursing providers for them, said Jonah Frohlich, senior program officer at the California HealthCare Foundation, a not-for-profit research group in Oakland. Five health plans in California pay $40 per telehealth visit, and some national health plans are piloting the concept, he said.

"The biggest benefit is that using telehealth visits for routine question and answer can help deal with physician backlog and be convenient for the patient," Frohlich said, adding that health plans tend to adopt billing practices led by the CMS.

(Source: Modern Healthcare, July 2, 2008)

New Study Finds Telehealth Can Reduce Costs for Chronic Disease Care

Health plans can cut costs for businesses and employees by encouraging frequent phone or Web-video conversations between chronic-disease patients and doctors or nurses, University of Missouri research suggests. With chronic diseases generating 70 percent of U.S. health costs, they offer nearly $1.5 billion a year to be cut.

The telehealth interactions bring important symptoms to light earlier, "triggering early intervention from providers and reducing the need for patient hospitalization," said Bonnie Wakefield, a nursing school professor who studied patients who had been hospitalized with heart failure. Those with phone or video follow-ups "significantly delayed hospital readmission rates" compared to those without.

"People who suffer from chronic illnesses usually wait three to six months between office appointments," Wakefield said. Nurses who check in regularly with patients "provide a sense of security. Patients discuss concerns on a frequent basis, and nurses give advice and detect problems that the patient might not notice."

The result, she said, is fewer and shorter hospital stays, "lower health care costs" and patients who better "manage their diseases and ultimately feel better."

The report, "Home Telehealth for Heart Failure," will be published in the Journal of Telemedicine and e-Health.

(Source: Dayton Daily News, June 9, 2008)

New Legislation Would Expand Medicare Reimbursement to Urban and Suburban Areas

Congressmen Mike Thompson (D-CA) and Kenny Hulshof (R-MO) introduced legislation that would increase the number of health facilities that offer telehealth services to Medicare recipients.

Telehealth, the delivery of health services via telecommunications, is a proven method for doctors and patients to effectively communicate from separate locations. This technology is an important resource for transmitting medical advice, information and imaging, but Medicare reimbursement for telehealth services is currently limited to rural areas and specific types of health facilities.

The Thompson-Hulshof legislation would expand Medicare reimbursement to urban and suburban areas and include more facilities, like skilled nursing facilities and home health services. It will also allow doctors to monitor patients remotely.

"People in rural Congressional Districts like ours often have to travel long distances to see a specialty physician," said Thompson. "We know that telehealth technologies are an effective way to bring high-quality, affordable healthcare to Americans, no matter where they live. This legislation will make sure Medicare recipients can access telemedicine technology in more cities and towns and in more health facilities. As healthcare becomes more expensive, telehealth technology is a great way to help people get the care they need."

"Telehealth has the potential to make the best treatments and medical professionals available to any American," said Hulshof. "This legislation has broad support from the medical community, as we all share the same goal: to take full advantage of medical and technological advances to save lives and keep people healthy. Telehealth also has great potential to save billions of taxpayer dollars, so this bill is truly a win-win."

The legislation also provides $30 million in grant funding to help health facilities pay for the telehealth equipment and to expand telehealth support services.

Telehealth has shown it provides better management of chronic diseases, reduces emergency room admissions and lowers healthcare costs. Telehealth services can also play an important role in addressing the epidemic of physician shortages in rural America by bringing physician specialty services to remote communities. In addition, faster diagnoses enabled by telehealth allow patients to get care more quickly.

(Source: Redwood Times, June 11, 2008)

New Economic Analysis of Email-Based Telemedicine Available

Email-based telemedicine has been reported to be an efficient method of delivering online health services to patients at a distance and is often described as a low-cost form of telemedicine. A new study by researchers at the Center for Online Health at the University of Queensland, Australia, finds that the service may be low-cost if the healthcare organization utilizes their existing email infrastructure to provide their telemedicine service. When the workload exceeded 5216 email consultations per annum, there were savings made when a purpose-written email application was used.

Many healthcare organizations use commercial-off-the-shelf (COTS) email applications. COTS email applications are designed for peer-to-peer communication; hence, in situations where multiple clinicians need to be involved, COTS applications may be deficient in delivering telemedicine. Larger services often rely on different staff disciplines to run their service and telemedicine tools for supervisors, clinicians and administrative staff are not available in COTS applications. Hence, some organizations may choose to develop a purpose-written email application to support telemedicine.

The researchers conducted a cost-minimization analysis of two different service models for establishing and operating an email service. The first service model used a COTS email application and the second used a purpose-written telemedicine application.

The actual costs used in the analysis were from two organizations that originally ran their counseling service with a COTS email application and later implemented a purpose-written application. The purpose-written application automated a number of the tasks associated with running an email-based service. The researchers calculated a threshold at which the higher initial costs for software development were offset by efficiency gains from automation.

They also performed a sensitivity analysis to determine the effect of individual costs on the threshold.

The cost of providing an email service at 1000 consultations per annum was AU$19,930 using a COTS email application and AU$31,925 using a purpose-written application. At 10,000 consultations per annum the cost of providing the service using COTS email software was AU$293,341 compared to AU$272,749 for the purpose-written application.

The threshold was calculated at a workload of 5216 consultations per annum. When more than 5216 email consultations per annum are undertaken, the purpose-written application was cheaper than the COTS service model.

The full analysis was published by the open access journal BioMed Central and the full report is available for free download [pdf].

(Source: BioMed Central, May 22, 2008)

FCC Extends Subsidized Funding of Some Rural Health Initiatives

The Federal Communications Commission has extended for three years the eligibility of certain rural health care provider organizations to receive subsidized funding of their telehealth/telemedicine initiatives under the federal telecommunications universal service program. The FCC in March 2005 changed its definition of "rural" health care facilities and temporarily grandfathered some organizations that technically no longer qualified for the subsidies. The FCC has extended that grandfather period to 2011, according to a final rule published April 10 in the Federal Register.

Acting under a request from the American Telemedicine Association, the FCC noted "in its petition, ATA identifies multiple health care facilities that participate in telehealth communications networks in Nebraska and Montana that would be adversely affected by the loss in universal service rural health care funding if the new definition of rural were applied to their rural health care funding applications," the FCC noted in the rule. "This, in turn, would serve only to endanger the continued availability of telemedicine and telehealth services that these health care facilities provide."

Consequently, the FCC believes more time is needed to evaluate the effect of the new definition before any providers lose eligibility. Further, the FCC is in the midst of a major, heavily funded telehealth pilot program with 69 rural health organizations. The program is designed to help facilitate creation of a nationwide broadband telehealth network linking rural and urban providers.

(Source: Health Data Management, April 10, 2008)

HRSA Seeks Development of Audiology Telemedicine Diagnostic Protocol

HRSA has issued a Sources Sought/Market Survey to locate firms with the capability to develop a model infant audiology diagnostic protocol using telemedicine. This will help professionals provide diagnostic services in rural areas. Audiology as a profession has been slow to adopt telemedicine, but it is now becoming necessary and more feasible to use telemedicine since inexpensive interactive video systems are now available.

Preliminary research suggests that telemedicine models might prove to be effective for audiologists to use to deliver hearing services to locations where no services now exist. This is vital because diagnostic audiology needs to occur between the ages of one to three months after a baby fails to pass a follow-up screening. However, only half of the infants referred are generally evaluated due to the shortage of pediatric audiologists and equipment. Data shows that an infant with a significant hearing impairment who receives intervention by six months of age will perform significantly better in language development than the infant who is identified after six months of age.

The goal is to place diagnostic equipment in a spoke site of an existing telemedicine network. Audiologists at the hub site would then observe the correct use of the equipment, interpret the results, and interact with the families.

The methodology, once demonstrated could be spread through the National Center for Hearing Assessment and Management. NCHAM has a regional network of pediatric audiologists operating throughout the U.S.

This Sources Sought notice is for information and planning purposes only and is not a solicitation announcement for proposals. For more information please see the Sources Sought announcement posted on www.fbo.gov on April 11, 2008.

(Source: Federal Telemedicine Update, April 15, 2008)

Distance Learning and Telemedicine Grants Application Deadline Approaches

The deadline for applying for a 2008 grant for the USDA Distance Learning and Telemedicine Program (DLT) is April 14, 2008. The DLT Grant Program was authorized by the 1990 Farm Bill to provide grants to rural schools and health care providers. The DLT Grant Program is specifically designed to meet the educational and health care needs of rural America through the use of advanced telecommunications technologies.

Paper copies of grant application must be postmarked and mailed, shipped or sent overnight no later than April 14, 2008 to be eligible for FY 2008 grant funding. Late or incomplete applications will not be eligible for FY 2008 grant funding. Electronic copies must be received by April 14, 2008 to be eligible for FY 2008 grant funding.

More information and the FY 2008 DLT application materials may be obtained from and from the DLT website or by contacting the DLT Program at (202) 720-0413.

(Source: USDA Press Release, March 20, 2008)

Telehealth Community Urged to Take Grassroots Action on OAT Funding

Congress is currently in the process of drafting appropriations legislation to provide federal spending for fiscal year (FY) 2009, which will begin on October 1st of this year. Last year, the telehealth community galvanized a strong grassroots advocacy campaign in support of increasing funding for the Office for the Advancement of Telehealth (OAT). Hundreds of individuals and institutions contacted Congress urging that OAT funding be increased. These grassroots efforts resulted in the Senate voting to approve an amendment boosting OAT funding from $6.8 million to $13.8 million. While this increase was unfortunately not retained in compromise negotiations with the House of Representatives, the Senate vote was proof that Congress will act to support telehealth when they hear from constituents in their states and districts.

Members of the telehealth community are urged to reach out to Congress and urge that telehealth receive the support it deserves. A $13.8 million budget for OAT will significantly advance telehealth in the United States.

If you are willing to have your name added to the list of those supporting an increase in telehealth funding, please send an email to info@telehealthleadership.org including your name, title, organization, and address. This information will be used to add your name to the letter. Please also contact your two senators and urge them to add their names to a joint letter being circulated by Sen. Debbie Stabenow of Michigan and Sen. John Thune of South Dakota urging that telehealth funding in the FY 2009 Labor-HHS bill be raised to $13.8 million.

With the telehealth communities grassroots efforts, funding for this critical telehealth agency can be increased.

(Source: Bob Waters, Partner and Chair, Telehealth, E-Health Law & Government Relations Groups Drinker, Biddle & Reath, March 21, 2008)

State Telemedicine News


An Oregon bill that would allow mental health patients in 18 rural counties to receive treatment via teleconferencing has been approved by a Oregon Senate committee, but must clear the budget-writing Ways and Means Committee. The "telemedical access bill" would link patients with licensed mental health specialists via a video link-up from a secure facility.

Local doctors could in turn confer with Oregon Health and Sciences University (OHSU) psychiatrists in Portland for treatment options. OHSU operates a telehealth program that has served, among others, victims of Hurricane Katrina.

The chief sponsor is Sen. Jason Atkinson, R-Central Point, who was elated when the Senate Health Policy Committee sent the measure, SB1100, out Monday evening.

"They (OHSU) found that it's worked fantastically well when the privacy was there, and the physician was in a clinical environment," Atkinson said. "I've got to put that same option in the hands of local providers in outlying areas of Oregon."

He said his bill could provide world-class clinical medical care to rural people.

As originally introduced, the bill included all health services, with an estimated price tag pegged at $900,000 by the Legislative Fiscal Office. As a result, Atkinson scaled it back.

(Source: Medford Mail Tribune, February 13, 2008)



Blue Shield of California Foundation (BSCF) recently announced the award of $13.1 million in grants to nonprofit organizations and programs to improve the quality of patient care through health technology.

The telemedicine related grants include $350,000 to the California Health Foundation and Trust to expand its telemedicine program by increasing the number of telemedicine providers and offering technical assistance to those in the field. Telemedicine is vital in rural, underserved areas.

(Source: BSCF Press Release, February 26, 2008)



The New England Telehealth Consortium has won a $24.7 million grant – the largest single grant awarded – as part of a national Federal Communications Commission program aimed at beefing up rural telecom health efforts. The telehealth consortium consists of 31 members, representing 555 health-care sites in Maine, New Hampshire and Vermont.

The New England consortium award will be used to build an information health-care network throughout New Hampshire, Maine and Vermont. All told, the FCC has dedicated $417 million over three years for rural health efforts at 69 regional or statewide sites across the country.

The New England award will give all qualified rural and urban nonprofit health-care providers in the consortium an 85 percent cost reimbursement for consortium-covered project costs. Projects may include network design, services and equipment to build a broadband telehealth network in northern New England.

The funding will be used to connect providers with high-speed Internet service to allow for such things as faster uploading of patients’ records and better access to health care resources across the state and the nation.

“The goal of the New Hampshire Telehealth Program is to maximize the use of cost-effective telehealth technologies in the Granite State,” said Dr. Louis Kazal, director of the telehealth program. “The FCC award is a major step toward fulfilling that mission.”

According to Jim Rogers, CEO of ProInfoNet and founder of the consortium, the grant is “a huge step forward toward advanced health-care technology in rural New England.”

He said the consortium “will be the least expensive way to bring telemedicine services to Northern New England, since we now have both funding and buying power due to our large numbers and our ability to coordinate services through the New England Telehealth Consortium.”

He said initial sites are expected to be up and running by the summer.

(Source: New Hampshire Business Review, February 15, 2008)



The University of Virginia's telemedicine program is growing. The latest addition allows physicians to examine patients remotely at a Grayson County clinic The University of Virginia started a telemedicine service in 1996 at Lee County Regional Hospital and is now connected to 60 sites. Most of them are in southwest Virginia, which has fewer medical services than the rest of the state.

Officials say physicians have used telemedicine to examine more than 11,300 patients so far. Setting up a telemedicine site can cost up to $25,000 but the patient's bill for an examination is the same as if it were face to face. Special funds are available to pay for patients without insurance.

(Source: Associated Press, February 24, 2008)



Without ever leaving the nursery, babies born at Adena Regional Medical Center in Chillicothe, Ohio, are receiving clinical assessments from specialists an hour away at Columbus' Nationwide Children's Hospital. High-definition videoconferencing capabilities are making the assessments possible via the Ohio Supercomputer Center.

The project enables specialists in Columbus to view distressed newborns with exceptional clarity, examine detailed X-rays, view lab results and consult with attending physicians in Chillicothe in real time.

"Telemedicine dramatically increases the care of our youngest patients," said Dr. John Fortney, medical director for Adena Health System. "If we're looking for help with a diagnosis, someone from Children's -- whether it's a neonatologist or a sub-specialist, such as a pediatric cardiologist -- will see the patient and speak to the attending physician in real time.

"Currently, information is relayed by telephone, which means it's subject to interpretation," Dr. Fortney explained. "With high-definition videoconferencing, specialists can make a more thorough evaluation."

Adena Regional Medical Center was selected for the pilot because the hospital sends more pediatric patients to Nationwide Children's than any other outside of the Columbus metropolitan area. In the center's first year of operation with telemedicine, physicians were able to make quicker and more accurate clinical assessments via videoconferencing, especially regarding the need to transfer these critical care newborns.

"If a baby needs to be moved to our facility, doctors have seen the child, reviewed their diagnostic images and can prepare for the infant's care as soon as he or she arrives," said Stephen Welty, MD, chief of neonatology, Nationwide Childrens Hospital. "Just as importantly, we also use this as a tool to determine if a baby doesn't need to be transferred. Then, the child can stay with family and avoid unnecessary stress."

Recently, the Federal Communications Commission's Rural Health Care Pilot Program awarded $417 million to 69 projects around the nation to "significantly increase access to acute, primary and preventative health care in rural America." Three of those projects serve Ohioans by providing high-speed connections to health care facilities in nearly half of Ohio's 88 counties.

Those three regional telehealth networks will connect to Broadband Ohio's backbone to transport data traffic between regions in Ohio, as well as to use OSCnet to access Internet2, the primary national research and education network in the country. This fulfills a key requirement of the grant -- that the health care traffic be able to flow across the country from Ohio.

"Just as OSCnet provides the higher education community with a backbone that allows it to share critical education material around the state of Ohio, it will provide a network infrastructure to help make the Broadband Ohio initiative a reality for state-supported hospitals to access advanced telemedicine applications," said Stan Ahalt, executive director of the Ohio Supercomputer Center.

(Source: ADVANCE for Health Information Executives, March 1, 2008)

About the author: is the Research Associate for the TIE, specializing in the Programs and Legal databases.


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