To improve the provision of telehealth services under the Medicare Program, to provide grants for the development of telehealth networks, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Telehealth Validation Act 
of 2001''.

SEC. 2. EXPANSION AND IMPROVEMENT OF TELEHEALTH SERVICES.

    (a) Expanding Access to Telehealth Services to All Areas.--
            (1) In general.--Section 1834(m), as added by section 
        223(b) of the Medicare, Medicaid, and SCHIP Benefits 
        Improvement and Protection Act of 2000 (114 Stat. 2763A-487), 
        as enacted into law by section 1(a)(6) of Public Law 106-554, 
        is amended in paragraph (4)(C)(i) by striking ``and only if 
        such site is located'' and all that follows and inserting 
        ``without regard to the geographic area where the site is 
        located, and includes an entity that participates in a Federal 
        telemedicine demonstration project that has been approved by 
        (or receives funding from) the Secretary of Health and Human 
        Services as of December 31, 2000.''.
            (2) Store and forward technology.--Such section is further 
        amended in paragraph (1) by striking ``in the case of any 
        Federal telemedicine demonstration program conducted in Alaska 
        or Hawaii,''.
    (b) Increasing Types of Originating Sites.--Paragraph (4)(C)(ii) of 
such section 1834(m) is amended by adding at the end the following new 
subclauses:
                                    ``(VI) A skilled nursing facility 
                                (as defined in section 1819(a)).
                                    ``(VII) An assisted living 
                                facility.
                                    ``(VIII) A board and care facility.
                                    ``(IX) A school.
                                    ``(X) A county mental health 
                                clinic.
                                    ``(XI) The residence of an 
                                individual enrolled under this part.
    (c) Facilitating the Provision of Telehealth Services Across State 
Lines.--
            (1) In general.--For purposes of expediting the provision 
        of telehealth services, for which payment is made under the 
        Medicare Program, across State lines, the Secretary of Health 
        and Human Services shall, in consultation with representatives 
        of States, physicians, health care practitioners, and patient 
        advocates, encourage and facilitate the adoption of provisions 
        allowing for multistate practitioner licensure across State 
        lines.
            (2) Definitions.--In paragraph (1):
                    (A) Telehealth service.--The term ``telehealth 
                service'' has the meaning given that term in 
                subparagraph (F) of section 1834(m)(4) of the Social 
                Security Act (42 U.S.C. 1395m(m)(4)).
                    (B) Physician, practitioner.--The terms 
                ``physician'' and ``practitioner'' has the meaning 
                given those terms in subparagraphs (D) and (E), 
                respectively, of such section.
                    (C) Medicare program.--The term ``medicare 
                program'' means the program of health insurance 
                administered by the Secretary of Health and Human 
                Services under title XVIII of the Social Security Act 
                (42 U.S.C. 1395 et seq.).

SEC. 3. GRANT PROGRAM FOR THE DEVELOPMENT OF TELEHEALTH NETWORKS.

    (a) In General.--The Secretary of Health and Human Services (in 
this section referred to as the ``Secretary''), acting through the 
Director of the Office for the Advancement of Telehealth (of the Health 
Resources and Services Administration), shall make grants to eligible 
recipients (as described in subsection (b)(1)) for the purpose of 
expanding access to health care services for individuals in rural 
areas, frontier areas, and medically underserved areas through the use 
of telehealth.
    (b) Eligible Recipients.--
            (1) Application.--To be eligible to receive a grant under 
        this section, an eligible entity described in paragraph (2) 
        shall, in consultation with the State office of rural health or 
        other appropriate State entity, prepare and submit to the 
        Secretary an application, at such time, in such manner, and 
        containing such information as the Secretary may require, 
        including the following:
                    (A) A description of the anticipated need for the 
                grant.
                    (B) A description of the activities which the 
                entity intends to carry out using amounts provided 
                under the grant.
                    (C) A plan for continuing the project after Federal 
                support under this section is ended.
                    (D) A description of the manner in which the 
                activities funded under the grant will meet health care 
                needs of underserved rural populations within the 
                State.
                    (E) A description of how the local community or 
                region to be served by the network or proposed network 
                will be involved in the development and ongoing 
                operations of the network.
                    (F) The source and amount of non-Federal funds the 
                entity would pledge for the project.
                    (G) A showing of the long-term viability of the 
                project and evidence of health care provider commitment 
                to the network.
        The application should demonstrate the manner in which the 
        project will promote the integration of telehealth in the 
        community so as to avoid redundancy of technology and achieve 
        economies of scale.
            (2) Eligible entities.--An eligible entity described in 
        this paragraph is a hospital or other health care provider in a 
        health care network of community-based health care providers 
        that includes at least two of the organizations described in 
        subparagraph (A) and one of the institutions and entities 
        described in subparagraph (B) if the institution or entity is 
        able to demonstrate use of the network for purposes of 
        education or economic development (as required by the 
        Secretary).
                    (A) The organizations described in this 
                subparagraph are the following:
                            (i) Community or migrant health centers.
                            (ii) Local health departments.
                            (iii) Nonprofit hospitals.
                            (iv) Private practice health professionals, 
                        including community and rural health clinics.
                            (v) Other publicly funded health or social 
                        services agencies.
                            (vi) Skilled nursing facilities.
                            (vii) County mental health and other 
                        publicly funded mental health facilities.
                            (viii) Providers of home health services.
                    (B) The institutions and entities described in this 
                subparagraph are the following:
                            (i) A public school.
                            (ii) A public library.
                            (iii) A university or college.
                            (iv) A local government entity.
                            (v) A local health or nonhealth-related 
                        business entity.
        An eligible entity may include for-profit entities so long as 
        the recipient of the grant is a not-for-profit entity.
    (d) Preference.--The Secretary shall establish procedures to 
prioritize financial assistance under this section based upon the 
following considerations:
            (1) The applicant is a health care provider in a health 
        care network or a health care provider that proposes to form 
        such a network that furnishes or proposes to furnish services 
        in a medically underserved area, health professional shortage 
        area, or mental health professional shortage area.
            (2) The applicant is able to demonstrate broad geographic 
        coverage in the rural or medically underserved areas of the 
        State, or States in which the applicant is located.
            (3) The applicant proposes to use Federal funds to develop 
        plans for, or to establish, telehealth systems that will link 
        rural hospitals and rural health care providers to other 
        hospitals, health care providers, and patients.
            (4) The applicant will use the amounts provided for a range 
        of health care applications and to promote greater efficiency 
        in the use of health care resources.
            (5) The applicant is able to demonstrate the long-term 
        viability of projects through cost participation (cash or in-
        kind).
            (6) The applicant is able to demonstrate financial, 
        institutional, and community support for the long-term 
        viability of the network.
            (7) The applicant is able to provide a detailed plan for 
        coordinating system use by eligible entities so that health 
        care services are given a priority over non-clinical uses.
    (e) Maximum Amount of Assistance to Individual Recipients.--The 
Secretary shall establish, by regulation, the terms and conditions of 
the grant and the maximum amount of a grant award to be made available 
to an individual recipient for each fiscal year under this section. The 
Secretary shall cause to have published in the Federal Register or the 
``HRSA Preview'' notice of the terms and conditions of a grant under 
this section and the maximum amount of such a grant for a fiscal year.
    (f) Use of Amounts.--The recipient of a grant under this section 
may use sums received under such grant for the acquisition of 
telehealth equipment and modifications or improvements of 
telecommunications facilities including the following:
            (1) The development and acquisition through lease or 
        purchase of computer hardware and software, audio and video 
        equipment, computer network equipment, interactive equipment, 
        data terminal equipment, and other facilities and equipment 
        that would further the purposes of this section.
            (2) The provision of technical assistance and instruction 
        for the development and use of such programming equipment or 
        facilities.
            (3) The development and acquisition of instructional 
        programming.
            (4) Demonstration projects for teaching or training medical 
        students, residents, and other health profession students in 
        rural or medically underserved training sites about the 
        application of telehealth.
            (5) The provision of telenursing services designed to 
        enhance care coordination and promote patient self-management 
        skills.
            (6) The provision of services designed to promote patient 
        understanding and adherence to national guidelines for common 
        chronic diseases, such as congestive heart failure or diabetes.
            (7) Transmission costs, maintenance of equipment, and 
        compensation of specialists and referring health care 
        providers.
            (8) Development of projects to use telehealth to facilitate 
        collaboration between health care providers.
            (9) Electronic archival of patient records.
            (10) Collection and analysis of usage statistics and data 
        that can be used to document the cost-effectiveness of the 
        telehealth services.
            (11) Such other uses that are consistent with achieving the 
        purposes of this section as approved by the Secretary.
    (g) Prohibited Uses.--Sums received under a grant under this 
section may not be used for any of the following:
            (1) To acquire real property.
            (2) Expenditures to purchase or lease equipment to the 
        extent the expenditures would exceed more than 40 percent of 
        the total grant funds.
            (3) To purchase or install transmission equipment off the 
        premises of the telehealth site and any transmission costs not 
        directly related to the grant.
            (4) For construction, except that such funds may be 
        expended for minor renovations relating to the installation of 
        equipment.
            (5) Expenditures for indirect costs (as determined by the 
        Secretary) to the extent the expenditures would exceed more 
        than 20 percent of the total grant.
    (h) Administration.--
            (1) Nonduplication.--The Secretary shall ensure that 
        facilities constructed using grants provided under this section 
        do not duplicate adequately established telehealth networks.
            (2) Coordination with other agencies.--The Secretary shall 
        coordinate, to the extent practicable, with other Federal and 
        State agencies and not-for-profit organizations, operating 
        similar grant programs to pool resources for funding 
        meritorious proposals.
            (3) Informational efforts.--The Secretary shall establish 
        and implement procedures to carry out outreach activities to 
        advise potential end users located in rural and medically 
        underserved areas of each State about the program authorized by 
        this section.
    (i) Prompt Implementation.--The Secretary shall take such actions 
as are necessary to carry out the grant program as expeditiously as 
possible.
    (j) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $40,000,000 for fiscal year 
2002, and such sums as may be necessary for each of the fiscal years 
2003 through 2008.

SEC. 4. JOINT WORKING GROUP ON TELEMEDICINE.

    (a) In General.--
            (1) Representation of rural areas.--The Joint Working Group 
        on Telemedicine shall ensure that individuals that represent 
        the interests of rural areas and medically underserved areas 
        are members of the Group.
            (2) Mission.--The mission of the Joint Working Group on 
        Telemedicine is--
                    (A) to identify, monitor, and coordinate Federal 
                telehealth projects, data sets, and programs;
                    (B) to analyze--
                            (i) how telehealth systems are expanding 
                        access to health care services, education, and 
                        information;
                            (ii) the clinical, educational, or 
                        administrative efficacy and cost-effectiveness 
                        of telehealth applications; and
                            (iii) the quality of the telehealth 
                        services delivered; and
                    (C) to make further recommendations for 
                coordinating Federal and State efforts to increase 
                access to health services, education, and information 
                in rural and medically underserved areas.
            (3) Annual reports.--Not later than two years after the 
        date of enactment of this Act and each January 1 thereafter the 
        Joint Working Group on Telemedicine shall submit to Congress a 
        report on the status of the Group's mission and the state of 
        the telehealth field generally.
    (b) Report Specifics.--The annual report required under subsection 
(a)(3) shall provide--
            (1) an analysis of--
                    (A) the matters described in subsection (a)(3)(B);
                    (B) the Federal activities with respect to 
                telehealth; and
                    (C) the progress of the Joint Working Group on 
                Telemedicine's efforts to coordinate Federal telehealth 
                programs; and
            (2) recommendations for a coordinated Federal strategy to 
        increase health care access through telehealth.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary for the Joint Working Group on 
Telemedicine to carry out this section.

Summary: Medicare Telehealth Validation Act of 2001 - Amends title XVIII (Medicare) of the Social Security Act regarding telehealth services to: (1) remove current geographic restrictions on the provision of such services. (2) make eligible for such services an entity that participates in a Federal telemedicine demonstration project approved by or financed through the Secretary of Health and Human Services as of December 31, 2000. (3) add to the facilities authorized to participate in the telehealth program. And (4) direct the Secretary to encourage and facilitate multistate practitioner licensure across State lines to facilitate the program. Directs the Secretary to make grants for expanding access to health care services for individuals in rural areas, frontier areas, and medically underserved areas through the use of telehealth. Requires the Joint Working Group on Telemedicine to ensure that individuals representing the interests of rural and medically underserved areas are members of the Group.