I 
108TH CONGRESS 
1ST SESSION H. R. 1940
To improve the provision of telehealth services under the Medicare Program, 
to provide grants for the development of telehealth networks, and for 
other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 1, 2003
Mr. OSE (for himself, Mr. THOMPSON of California, and Mr. OTTER) intro-
duced the following bill; which was referred to the Committee on Energy 
and Commerce, and in addition to the Committee on Ways and Means, 
for a period to be subsequently determined by the Speaker, in each case 
for consideration of such provisions as fall within the jurisdiction of the 
committee concerned 
A BILL 
To improve the provision of telehealth services under the 
Medicare Program, to provide grants for the development 
of telehealth networks, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Medicare Telehealth 
Validation Act of 2003’’.
SEC. 2. EXPANSION AND IMPROVEMENT OF TELEHEALTH 
SERVICES. 
(a) EXPANDING ACCESS TO TELEHEALTH SERVICES 
TO ALL AREAS.—
(1) IN GENERAL.—Section 1834(m) of the So-
cial Security Act (42 U.S.C. 1395m(m)) 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 partici-
pates in a Federal telemedicine demonstration 
project that has been approved by (or receives fund-
ing from) the Secretary of Health and Human Serv-
ices 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 Ha-
waii,’’. 
(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 or other publicly funded mental 
health facility. 
‘‘(XI) The residence of an indi-
vidual 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 pay-
ment 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 pa-
tient advocates, encourage and facilitate the adop-
tion 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 ‘‘Sec-
retary’’), acting through the Director of the Office for the 
Advancement of Telehealth (of the Health Resources and 
Services Administration), shall make grants to eligible re-
cipients (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 con-
taining such information as the Secretary may re-
quire, 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 popu-
lations within the State. 
(E) A description of how the local commu-
nity or region to be served by the network or 
proposed network will be involved in the devel-
opment 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 redun-
dancy of technology and achieve economies of scale. 
(2) ELIGIBLE ENTITIES.—An eligible entity de-
scribed 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 sub-
paragraph (A) and one of the institutions and enti-
ties 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 cen-
ters. 
(ii) Local health departments. 
(iii) Nonprofit hospitals. 
(iv) Private practice health profes-
sionals, including community and rural 
health clinics. 
(v) Other publicly funded health or so-
cial services agencies. 
(vi) Skilled nursing facilities.
(vii) County mental health and other 
publicly funded mental health facilities. 
(viii) Providers of home health serv-
ices. 
(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 sec-
tion 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 under-
served 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 under-
served areas of the State, or States in which the ap-
plicant 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 pro-
mote greater efficiency in the use of health care re-
sources. 
(5) The applicant is able to demonstrate the 
long-term viability of projects through cost participa-
tion (cash or in-kind). 
(6) The applicant is able to demonstrate finan-
cial, 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 INDI-
VIDUAL 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 fa-
cilities including the following: 
(1) The development and acquisition through 
lease or purchase of computer hardware and soft-
ware, 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 in-
struction for the development and use of such pro-
gramming equipment or facilities. 
(3) The development and acquisition of instruc-
tional programming. 
(4) Demonstration projects for teaching or 
training medical students, residents, and other
health profession students in rural or medically un-
derserved training sites about the application of tele-
health. 
(5) The provision of telenursing services de-
signed to enhance care coordination and promote pa-
tient self-management skills. 
(6) The provision of services designed to pro-
mote patient understanding and adherence to na-
tional guidelines for common chronic diseases, such 
as congestive heart failure or diabetes. 
(7) Transmission costs, maintenance of equip-
ment, 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-ef-
fectiveness 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 equip-
ment to the extent the expenditures would exceed 
more than 40 percent of the total grant funds. 
(3) To purchase or install transmission equip-
ment 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 deter-
mined by the Secretary) to the extent the expendi-
tures would exceed more than 20 percent of the total 
grant. 
(h) ADMINISTRATION.—
(1) NONDUPLICATION.—The Secretary shall en-
sure that facilities constructed using grants provided 
under this section do not duplicate adequately estab-
lished telehealth networks. 
(2) COORDINATION WITH OTHER AGENCIES.—
The Secretary shall coordinate, to the extent prac-
ticable, 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 2004, and such sums as may 
be necessary for each of the fiscal years 2005 through 
2010. 
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 Work-
ing Group on Telemedicine is—
(A) to identify, monitor, and coordinate 
Federal telehealth projects, data sets, and pro-
grams; 
(B) to analyze—
(i) how telehealth systems are expand-
ing access to health care services, edu-
cation, and information; 
(ii) the clinical, educational, or admin-
istrative efficacy and cost-effectiveness of 
telehealth applications; and 
(iii) the quality of the telehealth serv-
ices delivered; and 
(C) to make further recommendations for 
coordinating Federal and State efforts to in-
crease 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 tele-
health. 
(c) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated such sums as are nec-
essary for the Joint Working Group on Telemedicine to 
carry out this section.
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