December 1998 Bulletin

Telemedicine: Progress poses dilemmas

Many questions have been raised about state licensure, reimbursement issues and legal liabilities

Technology development, use outpaces standards, rules

By Susan Koshy and Laura Nuechterlein

First of a series

Telemedicine is making strides in the delivery of health care-as its technology is being used to facilitate patient care, education, research, administration and public health.

Now, hospitals, other medical centers and even prisons have capabilities to transmit high-quality video images such as CT or MRI scans, X-rays, pathology slides, patient records, and prescribe medications in urban and rural areas to provide a timely diagnosis, medication and to perform telesurgery.

Telemedicine also has been an instrumental mechanism for the Academy to broadcast such live interactive teleconferences such as the Sept. 19 Specialty Societies Care Coalition's "First Practice: Strategies for Success," which had 27 host facilities and 275 residents viewing it at such health care institutions as Northwestern Memorial Hospital, Johns Hopkins University and Hospital Wilmer Eye Institute, The Mayo Clinic and the University of Texas Southwestern Medical Center.

Even managed care entities are beginning to view telemedicine as an opportunity to centralize specialists and support primary care physicians in a more cost-effective way.

In spite of all its various applications, many questions have been raised about state licensure, reimbursement issues and legal liabilities.

A growing number of states are examining the need for telemedicine providers to have licensure. Many states require out-of-state physicians who treat or diagnose patients via telemedicine to acquire a special purpose license. Some of these laws contain exceptions for infrequent consultations and medical emergencies.

Yet, legal dilemmas associated with interstate telemedicine practitioners remains a hot issue. The question as to whether it is necessary for practitioners to obtain licensure in the state where telemedicine services are practiced and provided has been vaguely answered and varies as each state has the authority to regulate the practice of medicine. Many states also place restrictions on the frequency of state-to-state consultations and physicians and their frequency and physicians may be required to obtain a license.

There's also a differentiation between medical consultation and the practice of medicine. The actual need to obtain a license is largely dependent upon the nature of the medical service provided. For example, an out-of-state radiologist who interprets a static or dynamic image and has no direct contact with the patient is not viewed as practicing medicine in the state in which the patient is located. However, once the out-of-state physician has direct communication with a patient and a physician-patient relationship is established, this could arguably be viewed as practicing medicine within the patient's state. If the out-of-state physician is consulting with the patient alone or only with the assistance of a paraprofessional, it is highly probable that a state license would be required. Some state statutes require that physicians who have ultimate authority over the care or primary diagnosis of a patient within its boundaries must have a state license.

Here's the various licensure models that states are reviewing to address this issue:

The National Medical Model approach to telemedicine was proposed as an amendment to the Communications Act of 1995 which allows for the preemption of state laws where a physician is conducting consultations by telecommunication. The American Medical Association (AMA) and the Federation of State Medical Boards oppose this amendment, because they believe the enforcement of licensing standards should be left to individual states. Another similar national approach allows Congress to develop a set of minimum criteria for states to implement. The states would implement these rules and would be allowed to develop additional criteria which are consistent with the federal law.

The Mutual Recognition Model allows states to mutually recognize the licenses of other states. An out-of-state physician would be required to give notice to the relevant state medical board of his or her intent to practice medicine within that state's borders. The state medical board would have the option of rejecting an applicant on the grounds that the applicant's qualifications fail to meet the standards under the state's medical practice act. However, a physician's medical registration in one jurisdiction, in most circumstances, should be sufficient to allow him or her to practice in another jurisdiction. Proponents of this model argue that this system allows states to maintain some control while allowing for a less bureaucratic system of licensing. Opponents to this approach argue that this model is insensitive to the local needs, and controls.

The Full Licensure Model requires physicians to obtain a full and unrestricted state license in any state in which the physician practices. This model is currently supported by the AMA. Opponents of this model argue that it protects economic competition within a given state under the guise of protecting the health and welfare of its citizens.

The Limited Licensure Model is a modified approach for state licensure that would require a physician to obtain a limited license in order to practice telemedicine. This approach advocates that a physician who maintains a full and unrestricted license in one state would be eligible to obtain a modified license from another state to practice telemedicine.

The Extended Jurisdiction Licensure Model allows state medical boards to assert their jurisdiction over their own licensed physicians engaged in the practice of medicine in another state. It also allows medical boards to extend their jurisdiction beyond their territories into the territories in which their physicians may practice. Even though this model has the potential to allow for a stronger disciplinary and administrative system because only one state has jurisdiction over the physician, it also has the potential to cause conflicts between state standards, penalties and procedures.

Reimbursement issues

As telemedicine becomes widespread, many payers are now confronted with reimbursement decisions for these services. Many have refrained from making a decision until they determine that teleconsults can effectively substitute for face-to-face consultation services. The Health Care Financing Administration (HCFA) is currently conducting demonstration projects in four states (Iowa, Georgia, North Carolina and West Virginia) to evaluate the practice patterns of telemedicine providers and explore a variety of Medicare reimbursement options.

In addition, the Balanced Budget Act of 1997 includes a provision requiring HCFA to pay for teleconsultation provided to Medicare beneficiaries in rural Health Professional Shortage Areas as of Jan. 1, 1999. HCFA has recently published proposed regulations to implement this law. Under the proposal, only interactive teleconsultation services provided over "real time" audio-video equipment will be reimbursed, and only if the referring practitioner is physically present and participates during the consult.

In addition to Medicare, Medicaid provides reimbursement for telemedicine services in 11 states, and several states have passed laws requiring health maintenance organizations or health service plans to reimburse for telemedicine services. Until more payers recognize these services, however, difficulties with reimbursement will continue to serve as a barrier to the further expansion of telemedicine.

Needless to say, the potential for cost-savings via telemedicine technology is there, in spite of high initial start-up costs of implementing telemedicine initiatives. Proponents of telemedicine believe it will produce savings by keeping persons healthier, reducing incidence of serious illnesses through greater and more timely access to care, reducing patient travel and improving health outcomes.

Yet, given the country's limited experience with telemedicine, it is difficult to illustrate and accurately account for this cost savings. A thorough evaluation of this system of health care delivery must be conducted to truly determine its potential value, practicality and affordability.

Susan Koshy and Laura Nuechterlein are policy analysts in the Academy's department of health policy and practice.

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