California Could Become National Model for Telemedicine

Underserved populations face both geographic and economic barriers when it comes to accessing health care. Telemedicine can help reduce these barriers by connecting patients and providers over great distances. Evidence suggests that in the long run, telemedicine can help cut health care costs by increasing efficiency, boosting preventive care and reducing hospital visits. Despite these benefits, telemedicine has yet to see widespread adoption.

California was one of the states that pioneered telemedicine use in the 1990s and enacted one of the first state laws regarding reimbursement. Given the state’s size and high percentage of residents living in rural areas, California is well positioned to become a model for the rest of the country in its telemedicine use. However, to seize this opportunity, more providers in the state must be willing to veer from traditional in-person office visits, and lawmakers must work to alleviate some of the adoption barriers.

“I think California is unusual at the moment in that there’s a huge amount of interest in telemedicine just in the last two or three years, and it’s been driven greatly by the governor,” Peter Yellowlees, professor of psychiatry and director of academic information systems at the UC-Davis Medical Center, said.

Gov. Arnold Schwarzenegger (R) since July 2006 has issued three executive orders to advance health IT and telemedicine efforts. Meanwhile, California voters in late 2006 passed Proposition 1D, which provides the University of California with $200 million for medical education programs, particularly telemedicine. In addition, California recently provided $25 million through the PacifiCare/United HealthCare Foundation to fund telemedicine programs.

Despite this statewide momentum, some say telemedicine is not catching on as quickly as they’d like.

Neil Solomon — founder and president of NAS Consulting, a California-based health care consulting firm — said, “I just see that in the field of telemedicine, we’re doing some great things, but there’s a whole lot more we could be doing.” He added, “I think eventually we’ll get there, but it’s going to take a long time.”

What’s the Hold Up?

Experts say telemedicine can help eliminate health care disparities, increase access to quality care and reduce costs in the long run. California and other states throughout the country are putting money toward advancing the use of the technology, but we’ve yet to see widespread adoption, and many physicians are still reluctant to participate in telemedicine programs.

Despite progress and government money, a number of adoption barriers still remain.

Cost. “While the initial and ongoing investment required for telemedicine can be costly due to equipment, connectivity and support needs, telemedicine has the potential to be on par with the costs of an in-person visit,” Jenny Kattlove — health policy manager at The Children’s Partnership, a not-for-profit group that aims to ensure that all children receive access to quality health care — wrote in an e-mail. She added that the cost of telemedicine depends on volume, meaning the more telemedicine visits conducted, the lower the cost per visit.

For example, a cost analysis of a TeleKidcare program in Kansas found that when more than 200 telemedicine consultations were conducted across 10 school sites in one year, the average cost per visit dropped to less than $150, making it competitive with a traditional office-based visit, according to Kattlove.

Yellowlees added that cost “used to be a major barrier, but it’s not such a great barrier now.” He said that providers now have access to relatively inexpensive broadband Internet connections and videoconferencing systems. “Clearly, there are much more expensive systems available, but most doctors aren’t going to pay for those,” Yellowlees said.

Kattlove noted, “As the cost of technology continues to decrease and more patients use this tool to access care, it is expected that telemedicine will become even more economical.”

Reimbursement. As of 2005, 34 states provided some level of Medicaid reimbursement for health services provided through telemedicine, and California has some of the most generous reimbursement policies in the country, according to an issue brief by The Children’s Partnership, called “Meeting the Health Care Needs of California’s Children: The Role of Telemedicine.” In addition, five states, including California, required private payers to reimburse physicians for telemedicine use. However, Kattlove said, “California needs to clarify and update its telemedicine rules so telemedicine visits are fully reimbursed by Medi-Cal and private payers.”

Regulatory. There are several state and federal laws that limit providers’ ability to use telemedicine. For example, physicians must be licensed in the states where their patients are located. Solomon said that in a state as large as California, which includes one-tenth of the U.S. population and at last one-tenth of the country’s physicians, the regulation isn’t as huge an issue. “You do have some market dynamics that could work in our state alone but not as broadly elsewhere,” he said. Yellowlees added that the current law makes cross-state telemedicine difficult but that medical boards and licensing authorities are moving in the right direction by working on agreements to allow for cross-state telemedicine.

Also in California, state law requires an established doctor-patient relationship before providers can prescribe medication. “The Medical Board of California has defined that as almost for sure needing a face-to-face visit before you can have a patient-doctor relationship,” Solomon explained.

Yellowlees said that when he conducts telepsychiatry visits from UC-Davis with rural residents, he does not prescribe medication. He explained, “What I do is write a series of recommendations for prescribing, and the local physicians do all the prescribing.” Yellowlees said that he expects those rules “to be gradually changed over time as people get more confident” with the technology.

Change. Perhaps the biggest barrier of all is change. Many providers are reluctant to invest in technology and make significant management changes when the traditional method of treating patients seems to be working just fine.

For referring physicians, the benefit to the patient has to be high and the burden and inconvenience to the practice must be low, Solomon explained. He added, “If there are specialists in the community already to which the primary care doctor is comfortable referring [patients], they don’t see any reason to change their referral networks.”

Procedure-oriented specialists’ livelihood depends on their ability to actually perform procedures. “Telemedicine slows that down,” Solomon said, adding that most procedure-oriented specialists “don’t see a strong benefit” in telemedicine and think that “it’s a nonstarter.” He noted, however, that a good setting for telemedicine among procedure-oriented specialists “is if someone is willing to travel [to where the provider is] to have a procedure done and then needs follow-up visits, which could be done through telemedicine.”

On the cognitive specialist side, there often isn’t a clear demand or need for telemedicine, according to Solomon. “If [providers] see that their practice is full already, they don’t see a real need to change their practice model in order to get more patients,” he said, adding, “They sort of feel like, ‘Well I’m already tapped out, why would I want to make my practice and my life more complicated.'”

The challenge then is to create a business model in which the benefits of telemedicine outweigh the burden on physicians.

The Opportunity in California

Telemedicine advocates across the country are working to alleviate some of these barriers to facilitate widespread adoption, but California is in a unique position to be a model for the rest of the country.

“California is the perfect state to do this in,” Yellowlees said, adding, “Officially, 70% of the state is rural, and it’s a huge state. … So I think the rural geography in California makes it ideal, but I think also there’s an attitude of ‘can do’ in California where people clearly are prepared to try things differently.”

“For California to become a model for the rest of the country, it needs to seize the opportunity that lies before it,” Kattlove said, adding, “And all indicators point to California leaders doing just that.”

Related Topics

Health Industry Insight