EXECUTIVE SUMMARY

Several fundamental problems continue to impair the delivery of health care in California: (1) health care costs, though showing promising signs of stabilization, continue to face strong inflationary pressures; (2) access to medical care, especially specialty care, is limited and episodic in many rural and poor urban communities ("medically underserved communities") and is getting worse as health care costs escalate; (3) limited access to health care services compromises the quality of health care in medically underserved communities and efforts to control costs threaten to exacerbate quality concerns.

Medically Underserved

The health care system in medically underserved communities faces additional problems because of the concentration of specialty care in urban and suburban areas and because of an underemphasis on health education. The lack of specialty care and health education programs exacerbates the problems of health care access and quality in medically underserved communities. In addition, those practitioners located in medically underserved areas face increasing isolation from their professional peers, making recruiting and retention problems more acute. Medical facilities in medically underserved communities also suffer fiscally from the migration of patients and health care professionals from their communities.

Telemedicine and telehealth,1 broadly defined as the application of information and communication technologies to the practice of medicine and health education, have received considerable attention as a means to address these health care delivery issues. Many states, including Texas, Georgia and Iowa, have moved aggressively to build a communications infrastructure to expand the development of telemedicine networks. These states have seen in telemedicine not only a technology for solving health care delivery problems, but also a technology to promote the export of medical technology and expertise and economic development.

Despite the acuity of its health care problems (including an oversupply of specialist physicians in urban areas), and its leadership in communication and information technology, California has not made significant efforts on a statewide basis to promote telemedicine. Various health care institutions have forged ahead with innovative telemedicine programs, but have been hampered by the lack of governmental and industry support for telemedicine.

Telemedicine: Part of the Answer

The Project was formed nearly eighteen months ago by a diversity of California health care leaders, with financial and administrative support from for-profit and not-for-profit sources, to explore the application of telemedicine to the problems of access, cost, quality, resource distribution and education, especially in medically underserved communities. The Project established a Planning Committee composed of a wide and inclusive array of representatives from health care facilities, physician groups, government officials and information system companies.

Over the course of a year, and from an exhaustive array of experts from medical, technological, business, legal and governmental fields, the Planning Committee sought information on the applicability of telemedicine to the problems identified in California's health care system. The Planning Committee surveyed hundreds of health care facilities throughout the state to develop an accurate picture of the state of telemedicine in California, the barriers facing its practitioners and the potential benefits from the widespread use of telemedicine. The Planning Committee consulted its experts on the best applications of telemedicine, the best means to remove barriers to its implementation and the means to safeguard the technology from compromise.

The findings of the Planning Committee were exceptionally encouraging. Telemedicine has, over the course of four decades of implementation, proven to be clinically effective in an expanding number of medical specialties. Effective use of telemedicine, moreover, does not require technological wizardry. Rather, effective telemedicine programs can be implemented with mature, off-the-shelf technologies, such as personal computer networks using e-mail. Nevertheless, rapid improvements in digital, optical and information technologies have made more potent technologies available to the practitioner, such as high definition video teleconferencing and high resolution scanners.

Cost Reduction: An Example

Just as importantly, these improvements have reduced the cost of telemedicine technologies to the point where their widespread application is feasible. Thus, there are a myriad of options along the spectrum of potential technological applications of telemedicine. As a result, telemedicine holds enormous cost-saving potential to its practitioners and patients. This has spurred several large medical facilities and, more recently, the California Department of Corrections to embark on ambitious plans to build telemedicine networks. For the Department of Corrections, for example, telemedicine will produce substantial cost-savings by avoiding the costs associated with the medical transport of prisoners for specialty care. Increasing numbers of health care providers are finding similar cost-saving applications of telemedicine and realizing that the technology to implement a telemedicine network is proven and affordable.

Organizations which have embarked on telemedicine programs have done so in spite of a number of regulatory and non-regulatory barriers. Reimbursement for telemedicine consultations is one such barrier. The Health Care Financing Administration ("HCFA"), which is responsible for the Medicare program and, in conjunction with state agencies, the Medicaid program, does not reimburse telemedicine consultations except in limited circumstances. Many private insurers are either ignorant of telemedicine or else waiting for HCFA to develop a policy for its comprehensive reimbursement. The recently enacted Health Care Portability Act of 1996 charges HCFA with the responsibility to determine the reimbursement of telemedicine in the Medicare and Medicaid programs in 1997, and HCFA's decision will influence many private carriers and state health programs.

Physician Licensure

There are difficult issues regarding physician licensure and credentialing. Licensing issues arise in out-of-state telemedicine consultations and concern the necessity for out-of-state physicians to obtain medical licensure in every state in which they provide telemedicine consultations. On the one hand, a strict interpretation of licensing requirements would require physicians to obtain multiple licenses to conduct basic telemedicine consultations. On the other hand, a liberal interpretation of licensure requirements may fail to protect state citizens from telemedicine practitioners. Similar issues arise for health care providers with respect to credentialing telemedicine practitioners. The California legislature, with support from the Planning Committee, recently enacted SB 2098 which allows the Medical Board of California to develop regulations to implement a physician registration program for out-of-state physicians. If the regulations are passed it will address the licensure problem by requiring the registration, but not licensure, of out-of-state telemedicine practitioners with the state medical board. California's legislation may serve as a model for other states to balance the legitimate needs of state licensing agencies to protect patients without crippling the development of multistate telemedicine networks.

At the same time it explored the applications of telemedicine, the Planning Committee assisted in the drafting of legislation to reduce certain regulatory barriers to the full implementation of telemedicine. These efforts included not only assistance with SB 2098 regarding physician licensure, but also resulted in the governor signing into law SB 1665, the Telemedicine Development Act of 1996. SB 1665 will remove reimbursement barriers to telemedicine in commercial, Medi-Cal and workers' compensation medical benefit programs by, among other provisions, removing requirements for face-to-face contact between patients and physicians as a precondition of reimbursement.

SB 1665 also addresses privacy and confidentiality concerns in telemedicine. SB 1665 recognizes that there are valid concerns regarding the ability of patients to maintain control over their personal medical information in a telemedical environment. It therefore establishes strict requirements for patient consent to telemedicine consultations and allows a patient to discontinue a telemedicine consultation at any time.

Upon examination, the Planning Committee found that other potential barriers to telemedicine, such as malpractice insurance coverage and liability issues and regulatory requirements for geographical provider location, were not significant and did not necessitate legislative reform. Now that SB 2098 and SB 1665 are law, the Planning Committee is confident that the regulatory barriers to the practice of telemedicine, at least within state boundaries, will not be a significant obstacle to the development of telemedicine networks.