II

104TH CONGRESS

2D SESSION S. 2171

To provide reimbursement under the Medicare program for telehealth services,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 30, 1996

Mr. CONRAD (for himself and Mr. KERREY) introduced the following bill;

which was read twice and referred to the Committee on Finance

A BILL

To provide reimbursement under the Medicare program for

telehealth services, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Comprehensive Telehealth Act of 1996’’.

6 (b) TABLE OF CONTENTS.—The table of contents for

7 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings and purposes.

TITLE I—MEDICARE REIMBURSEMENT FOR TELEHEALTH

SERVICES

Sec. 101. Medicare reimbursement for telehealth services.
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TITLE II—TELEHEALTH LICENSURE

Sec. 201. Initial report to Congress.

Sec. 202. Annual report to Congress.

TITLE III—PERIODIC REPORTS TO CONGRESS FROM THE JOINT

WORKING GROUP ON TELEHEALTH

Sec. 301. Joint working group on telehealth.

TITLE IV—DEVELOPMENT OF TELEHEALTH NETWORKS

Sec. 401. Development of telehealth networks.

Sec. 402. Administration.

Sec. 403. Guidelines.

Sec. 404. Authorization of appropriations.

1 SEC. 2. FINDINGS AND PURPOSES.

2 (a) FINDINGS.—The Congress finds the following:

3 (1) Hospitals, clinics, and individual health care

4 providers are critically important to the continuing

5 health of rural populations and the economic stabil6 ity of rural communities.

7 (2) Rural communities are underserved by spe8 cialty care providers.

9 (3) Telecommunications technology has made it

10 possible to provide a wide range of health care serv11 ices, education, and administrative services between

12 practitioners, patients, and administrators across

13 State lines.

14 (4) The delivery of health services by licensed

15 health practitioners is a privilege and the licensure

16 of health care practitioners and the ability to dis17 cipline such practitioners is necessary for the protec-
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1 tion of citizens and for the public interest, health,

2 welfare, and safety.

3 (5) The licensing of health care practitioners to

4 provide telehealth services has a significant impact

5 on interstate commerce and any unnecessary bar6 riers to the provision of telehealth services across

7 State lines should be eliminated.

8 (6) Rapid advances in the field of telehealth

9 give the Congress a need for current information

10 and updates on recent developments in telehealth re11 search, policy, technology, and the use of this tech12 nology to supply telehealth services to rural and un13 derserved areas.

14 (7) Telehealth networks can provide hospitals,

15 clinics, practitioners, and patients in rural and un16 derserved communities with access to specialty care,

17 continuing education, and can act to reduce the iso18 lation from other professionals that these practition19 ers sometimes experience.

20 (8) In order for telehealth systems to continue

21 to benefit rural and underserved communities, Medi22 care must reimburse the provision of health care

23 services from remote locations via telecommuni24 cations.
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1 (b) PURPOSES.—The purposes of this Act are as fol2 lows:

3 (1) To mandate that the Health Care Financ4 ing Administration reimburse the provision of clini5 cal health services via telecommunications.

6 (2) To determine if States are making progress

7 in facilitating the provision of telehealth services

8 across State lines.

9 (3) To create a coordinating entity for Federal

10 telehealth research, policy, and program initiatives

11 that reports to Congress annually.

12 (4) To encourage the development of rural tele13 health networks that supply appropriate, cost-effec14 tive care, and which contribute to the economic

15 health and development of rural communities.

16 (5) To encourage research into the clinical effi17 cacy and cost-effectiveness of telehealth diagnosis,

18 treatment, or education on individuals, practitioners,

19 and health care networks.
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1 TITLE I—MEDICARE REIM2 BURSEMENT FOR TELE3 HEALTH SERVICES

4 SEC. 101. MEDICARE REIMBURSEMENT FOR TELEHEALTH

5 SERVICES.

6 (a) IN GENERAL.—Not later than January 1, 1998,

7 the Secretary of Health and Human Services (hereafter

8 in this section referred to as the ‘‘Secretary’’) shall make

9 payments from the Federal Supplementary Medical Insur10 ance Trust Fund under part B of title XVIII of the Social

11 Security Act in accordance with the methodology described

12 in subsection (b) for professional consultation via tele13 communications systems with an individual or entity fur14 nishing a service for which payment may be made under

15 such part to a Medicare beneficiary residing in a rural

16 area (as defined in section 1886(d)(2)(D) of such Act) or

17 an underserved area, notwithstanding that the individual

18 health care practitioner providing the professional con19 sultation is not at the same location as the individual fur20 nishing the service to the Medicare beneficiary.

21 (b) METHODOLOGY FOR DETERMINING AMOUNT OF

22 PAYMENTS.—Taking into account the findings of the re23 port required under section 192 of the Health Insurance

24 Portability and Accountability Act of 1996, including

25 those findings relating to the clinical efficacy and cost-ef-
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1 fectiveness of telehealth applications, the Secretary shall

2 establish a methodology for determining the amount of

3 payments made under subsection (a), including the cost

4 of the consultation service, a reasonable overhead adjust5 ment, and a malpractice risk adjustment.

6 (c) ADDITIONAL ANALYSIS INCLUDED IN REPORT.—

7 Section 192 of the Health Insurance Portability and Ac8 countability Act of 1996 is amended—

9 (1) by inserting ‘‘and telehealth’’ after ‘‘tele10 medicine’’ each place it appears, and

11 (2) by redesignating paragraphs (2) and (3) as

12 paragraphs (3) and (4), respectively, and by insert13 ing after paragraph (1) the following new para14 graph:

15 ‘‘(2) include an analysis of—

16 ‘‘(A) how telemedicine and telehealth sys17 tems are expanding access to health care serv18 ices,

19 ‘‘(B) the clinical efficacy and cost-effective20 ness of telemedicine and telehealth applications,

21 ‘‘(C) the quality of telemedicine and tele22 health services delivered, and

23 ‘‘(D) the reasonable cost of telecommuni24 cations charges incurred in practicing telemedi-
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1 cine and telehealth in rural, frontier, and un2 derserved areas;’’.

3 TITLE II—TELEHEALTH

4 LICENSURE

5 SEC. 201. INITIAL REPORT TO CONGRESS.

6 Not later than July 1, 1997, the Secretary of Health

7 and Human Services shall prepare and submit to the ap8 propriate committees of Congress a report concerning—

9 (1) the number, percentage and types of practi10 tioners licensed to provide telehealth services across

11 State lines, including the number and types of prac12 titioners licensed to provide such services in more

13 than 3 States;

14 (2) the status of any reciprocal, mutual recogni15 tion, fast-track, or other licensure agreements be16 tween or among various States;

17 (3) the status of any efforts to develop uniform

18 national sets of standards for the licensure of practi19 tioners to provide telehealth services across State

20 lines;

21 (4) a projection of future utilization of tele22 health consultations across State lines;

23 (5) State efforts to increase or reduce licensure

24 as a burden to interstate telehealth practice; and
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1 (6) any State licensure requirements that ap2 pear to constitute unnecessary barriers to the provi3 sion of telehealth services across State lines.

4 SEC. 202. ANNUAL REPORT TO CONGRESS.

5 (a) IN GENERAL.—Not later than July 1, 1998, and

6 each July 1 thereafter, the Secretary of Health and

7 Human Services shall prepare and submit to the appro8 priate committees of Congress, an annual report on rel9 evant developments concerning the matters referred to in

10 paragraphs (1) through (6) of section 201.

11 (b) RECOMMENDATIONS.—If, with respect to a report

12 submitted under subsection (a), the Secretary of Health

13 and Human Services determines that States are not mak14 ing progress in facilitating the provision of telehealth serv15 ices across State lines by eliminating unnecessary require16 ments, adopting reciprocal licensing arrangements for

17 telehealth services, implementing uniform requirements

18 for telehealth licensure, or other means, the Secretary

19 shall include in the report recommendations concerning

20 the scope and nature of Federal actions required to reduce

21 licensure as a barrier to the interstate provision of tele22 health services.
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1 TITLE III—PERIODIC REPORTS

2 TO CONGRESS FROM THE

3 JOINT WORKING GROUP ON

4 TELEHEALTH

5 SEC. 301. JOINT WORKING GROUP ON TELEHEALTH.

6 (a) IN GENERAL.—

7 (1) REDESIGNATION.—The Joint Working

8 Group on Telemedicine, established by the Secretary

9 of Health and Human Services, shall hereafter be

10 known as the ‘‘Joint Working Group on Telehealth’’

11 with the chairperson being designated by the Direc12 tor of the Office of Rural Health Policy.

13 (2) MISSION.—The mission of the Joint Work14 ing Group on Telehealth is—

15 (A) to identify, monitor, and coordinate

16 Federal telehealth projects, data sets, and pro17 grams,

18 (B) to analyze—

19 (i) how telehealth systems are expand20 ing access to health care services, edu21 cation, and information,

22 (ii) the clinical, educational, or admin23 istrative efficacy and cost-effectiveness of

24 telehealth applications, and
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1 (iii) the quality of the services deliv2 ered, and

3 (C) to make further recommendations for

4 coordinating Federal and State efforts to in5 crease access to health services, education, and

6 information in rural and underserved areas.

7 (3) PERIODIC REPORTS.—The Joint Working

8 Group on Telehealth shall report not later than Jan9 uary 1 of each year (beginning in 1998) to the Con10 gress on the status of the Group’s mission and the

11 state of the telehealth field generally.

12 (b) REPORT SPECIFICS.—The annual report required

13 under subsection (a)(3) shall provide—

14 (1) an analysis of—

15 (A) how telehealth systems are expanding

16 access to health care services,

17 (B) the clinical efficacy and cost-effective18 ness of telehealth applications,

19 (C) the quality of telehealth services deliv20 ered,

21 (D) the Federal activity regarding tele22 health, and

23 (E) the progress of the Working Group’s

24 efforts to coordinate Federal telehealth pro25 grams; and
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1 (2) recommendations for a coordinated Federal

2 strategy to increase health care access through tele3 health.

4 (c) TERMINATION.—The Joint Working Group on

5 Telehealth shall terminate immediately after the annual

6 report filed not later than January 1, 2002.

7 (d) AUTHORIZATION OF APPROPRIATIONS.—There

8 are authorized to be appropriated such sums as are nec9 essary for the operation of the Joint Working Group on

10 Telehealth on and after the date of the enactment of this

11 Act.

12 TITLE IV—DEVELOPMENT OF

13 TELEHEALTH NETWORKS

14 SEC. 401. DEVELOPMENT OF TELEHEALTH NETWORKS.

15 (a) IN GENERAL.—The Secretary of Health and

16 Human Services (hereafter referred to in this title as the

17 ‘‘Secretary’’), acting through the Director of the Office of

18 Rural Health Policy (of the Health Resources and Services

19 Administration), shall provide financial assistance (as de20 scribed in subsection (b)(1)) to recipients (as described in

21 subsection (c)(1)) for the purpose of expanding access to

22 health care services for individuals in rural and frontier

23 areas through the use of telehealth.

24 (b) FINANCIAL ASSISTANCE.—
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1 (1) IN GENERAL.—Financial assistance shall

2 consist of grants or cost of money loans, or both.

3 (2) FORM.—The Secretary shall determine the

4 portion of the financial assistance provided to a re5 cipient that consists of grants and the portion that

6 consists of cost of money loans so as to result in the

7 maximum feasible repayment to the Federal Govern8 ment of the financial assistance, based on the ability

9 to repay of the recipient and full utilization of funds

10 made available to carry out this title.

11 (3) LOAN FORGIVENESS PROGRAM.—

12 (A) ESTABLISHMENT.—With respect to

13 cost of money loans provided under this section,

14 the Secretary shall establish a loan forgiveness

15 program under which recipients of such loans

16 may apply to have all or a portion of such loans

17 forgiven.

18 (B) REQUIREMENTS.—A recipient de19 scribed in subparagraph (A) that desires to

20 have a loan forgiven under the program estab21 lished under such paragraph shall—

22 (i) within 180 days of the end of the

23 loan cycle, submit an application to the

24 Secretary requesting forgiveness of the

25 loan involved;
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1 (ii) demonstrate that the recipient has

2 a financial need for such forgiveness;

3 (iii) demonstrate that the recipient

4 has met the quality and cost-appropriate5 ness criteria developed under subparagraph

6 (C); and

7 (iv) provide any other information de8 termined appropriate by the Secretary.

9 (C) CRITERIA.—As part of the program

10 established under subparagraph (A), the Sec11 retary shall establish criteria for determining

12 the cost-effectiveness and quality of programs

13 operated with loans provided under this section.

14 (c) RECIPIENTS.—

15 (1) APPLICATION.—To be eligible to receive a

16 grant or loan under this section an entity described

17 in paragraph (2) shall, in consultation with the

18 State office of rural health or other appropriate

19 State entity, prepare and submit to the Secretary an

20 application, at such time, in such manner, and con21 taining such information as the Secretary may re22 quire, including—

23 (A) a description of the anticipated need

24 for the grant or loan;
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1 (B) a description of the activities which the

2 entity intends to carry out using amounts pro3 vided under the grant or loan;

4 (C) a plan for continuing the project after

5 Federal support under this section is ended;

6 (D) a description of the manner in which

7 the activities funded under the grant or loan

8 will meet health care needs of underserved rural

9 populations within the State;

10 (D) a description of how the local commu11 nity or region to be served by the network or

12 proposed network will be involved in the devel13 opment and ongoing operations of the network;

14 (E) the source and amount of non-Federal

15 funds the entity would pledge for the project;

16 and

17 (F) a showing of the long-term viability of

18 the project and evidence of provider commit19 ment to the network.

20 The application should demonstrate the manner in

21 which the project will promote the integration of

22 telehealth in the community so as to avoid redun23 dancy of technology and achieve economies of scale.

24 (2) ELIGIBLE ENTITIES.—An entity described

25 in this paragraph is a hospital or other health care
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1 provider in a health care network of community2 based providers that includes at least—

3 (A) two of the following:

4 (i) community or migrant health cen5 ters;

6 (ii) local health departments;

7 (iii) nonprofit hospitals;

8 (iv) private practice health profes9 sionals, including rural health clinics;

10 (v) other publicly funded health or so11 cial services agencies;

12 (vi) skilled nursing facilities;

13 (vii) county mental health and other

14 publicly funded mental health facilities;

15 and

16 (viii) home health providers; and

17 (B) one of the following, which must dem18 onstrate use of the network for purposes of

19 education and economic development (as re20 quired by the Secretary):

21 (i) public schools;

22 (ii) public library;

23 (iii) universities or colleges;

24 (iv) local government entity; or
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1 (v) local nonhealth-related business

2 entity.

3 An eligible entity may include for-profit entities so

4 long as the network grantee is a nonprofit entity.

5 (d) PRIORITY.—The Secretary shall establish proce6 dures to prioritize financial assistance under this title con7 sidering whether or not the applicant—

8 (1) is a health care provider in a rural health

9 care network or a provider that proposes to form

10 such a network, and the majority of the providers in

11 such a network are located in a medically under12 served, health professional shortage areas, or mental

13 health professional shortage areas;

14 (2) can demonstrate broad geographic coverage

15 in the rural areas of the State, or States in which

16 the applicant is located;

17 (3) proposes to use Federal funds to develop

18 plans for, or to establish, telehealth systems that will

19 link rural hospitals and rural health care providers

20 to other hospitals, health care providers and pa21 tients;

22 (4) will use the amounts provided for a range

23 of health care applications and to promote greater

24 efficiency in the use of health care resources;
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1 (5) can demonstrate the long term viability of

2 projects through use of local matching funds (cash

3 or in-kind); and

4 (6) can demonstrate financial, institutional, and

5 community support for the long-term viability of the

6 network.

7 (e) MAXIMUM AMOUNT OF ASSISTANCE TO INDIVID8 UAL RECIPIENTS.—The Secretary may establish the maxi9 mum amount of financial assistance to be made available

10 to an individual recipient for each fiscal year under this

11 title, and establish the term of the loan or grant, by pub12 lishing notice of the maximum amount in the Federal Reg13 ister.

14 (f) USE OF AMOUNTS.—

15 (1) IN GENERAL.—Financial assistance pro16 vided under this title shall be used—

17 (A) with respect to cost of money loans, to

18 encourage the initial development of rural tele19 health networks, expand existing networks, or

20 link existing networks together; and

21 (B) with respect to grants, as described in

22 paragraph (2).

23 (2) GRANTS AND LOANS.—The recipient of a

24 grant or loan under this title may use financial as25 sistance received under such grant or loan for the
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1 acquisition of telehealth equipment and modifica2 tions or improvements of telecommunications facili3 ties including—

4 (A) the development and acquisition

5 through lease or purchase of computer hard6 ware and software, audio and video equipment,

7 computer network equipment, interactive equip8 ment, data terminal equipment, and other fa9 cilities and equipment that would further the

10 purposes of this section;

11 (B) the provision of technical assistance

12 and instruction for the development and use of

13 such programming equipment or facilities;

14 (C) the development and acquisition of in15 structional programming;

16 (D) demonstration projects for teaching or

17 training medical students, residents, and other

18 health professions students in rural training

19 sites about the application of telehealth;

20 (E) transmission costs, maintenance of

21 equipment, and compensation of specialists and

22 referring practitioners;

23 (F) development of projects to use tele24 health to facilitate collaboration between health

25 care providers;
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1 (G) electronic archival of patient records;

2 (H) collection of usage statistics; or

3 (I) such other uses that are consistent with

4 achieving the purposes of this section as ap5 proved by the Secretary.

6 (3) EXPENDITURES IN RURAL AREAS.—In

7 awarding a grant or cost of money loan under this

8 section, the Secretary shall ensure that not less than

9 50 percent of the grant or loan award is expended

10 in a rural area or to provide services to residents of

11 rural areas.

12 (g) PROHIBITED USES.—Financial assistance re13 ceived under this section may not be used for any of the

14 following:

15 (1) To build or acquire real property.

16 (2) Expenditures to purchase or lease equip17 ment to the extent the expenditures would exceed

18 more than 40 percent of the total grant funds.

19 (3) To purchase or install transmission equip20 ment (such as laying cable or telephone lines, micro21 wave towers, satellite dishes, amplifiers, and digital

22 switching equipment).

23 (4) For construction, except that such funds

24 may be expended for minor renovations relating to

25 the installation of equipment.
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1 (5) Expenditures for indirect costs (as deter2 mined by the Secretary) to the extent the expendi3 tures would exceed more than 20 percent of the total

4 grant funds.

5 (h) MATCHING REQUIREMENT FOR GRANTS.—The

6 Secretary may not make a grant to an entity State under

7 this section unless that entity agrees that, with respect

8 to the costs to be incurred by the entity in carrying out

9 the program for which the grant was awarded, the entity

10 will make available (directly or through donations from

11 public or private entities) non-Federal contributions (in

12 cash or in kind) in an amount equal to not less than 50

13 percent of the Federal funds provided under the grant.

14 SEC. 402. ADMINISTRATION.

15 (a) NONDUPLICATION.—The Secretary shall ensure

16 that facilities constructed using financial assistance pro17 vided under this title do not duplicate adequate established

18 telehealth networks.

19 (b) LOAN MATURITY.—The maturities of cost of

20 money loans shall be determined by the Secretary, based

21 on the useful life of the facility being financed, except that

22 the loan shall not be for a period of more than 10 years.

23 (c) LOAN SECURITY AND FEASIBILITY.—The Sec24 retary shall make a cost of money loan only if the Sec25 retary determines that the security for the loan is reason-
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1 ably adequate and that the loan will be repaid within the

2 period of the loan.

3 (d) COORDINATION WITH OTHER AGENCIES.—The

4 Secretary shall coordinate, to the extent practicable, with

5 other Federal and State agencies with similar grant or

6 loan programs to pool resources for funding meritorious

7 proposals in rural areas.

8 (e) INFORMATIONAL EFFORTS.—The Secretary shall

9 establish and implement procedures to carry out informa10 tional efforts to advise potential end users located in rural

11 areas of each State about the program authorized by this

12 title.

13 SEC. 403. GUIDELINES.

14 Not later than 180 days after the date of enactment

15 of this Act, the Secretary shall issue guidelines to carry

16 out this title.

17 SEC. 404. AUTHORIZATION OF APPROPRIATIONS.

18 There are authorized to be appropriated to carry out

19 this title, $25,000,000 for fiscal year 1997, and such sums

20 as may be necessary for each of the fiscal years 1998

21 through 2004.

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