e-Texas e-Texassmaller smarter faster governmentDecember, 2000
Carole Keeton Rylander
Texas Comptroller of Public Accounts

Recommendations of the Texas Comptroller

Chapter 8: Health and Human Services

Expand the Use of Telemedicine to Help Disabled Children


Seriously ill and disabled children enrolled in Texas’ Children with Special Health Care Needs Program (CSHCN) and related state programs often need to travel to specialty medical centers to receive expert care and consultations. Travel can be hard for parents, take a health toll on children, and can be costly for the state. Texas should use telemedicine to provide cost-effective care to children with special health care needs. Telemedicine will increase families’ satisfaction with medical care and improve customer service in essential services.


The Texas Department of Health operates the Children with Special Health Care Needs Program (CSHCN), which pays for physician services, drug benefits, hospitalization, and other medical costs for disabled children in families whose incomes are 200 percent or less of the federal poverty level. About 5,300 children received care through this program in 1999.[1] CSHCN pays for medical treatment of these children who are seriously ill, often with cancer, heart defects, or other chronic disabling conditions. They sometimes need to travel to specialty medical centers or physicians to receive expert care and consultations. Travel can be hard for parents, take a health toll on the children, and can be costly for the state.

Telemedicine services are not covered by CSHCN, but could be used to provide certain beneficial health services in the CSHCN program. This would minimize travel costs reimbursed by the state and reduce the physical and mental stress to families. Presently, families and their disabled children travel to designated CSHCN health care providers to receive care. This may involve significant planning by the family, taking into consideration the health of the child, obtaining special medical care or transportation during the trip, or making parents take time off from their jobs. CSHCN pays for transportation to the medical expert and for room and board while the family is away from home. A recent assessment of Medicare telemedicine reimbursements found that a typical Medicare beneficiary would have had to make a round trip of 197 miles (median number) to receive medical care in an urban center if they had not had local telemedicine facilities.[2]

Telemedicine Examples

There is no doctor, hospital, or clinic in the small community of Hart, Texas. But a pediatrician from the Texas Tech University Health Sciences Center visits children every Wednesday, and another doctor visits via a telemedicine satellite link on Fridays. The school nurse, Retta Knox, has used her resources to piece together a number of health services for children. Knox said that prior to the implementation of the telemedicine link, “...the kids were always sick and missed lots of school....” The telemedicine and medical connections with Texas Tech have helped provide rapid treatment for a third-grader’s ruptured appendix and a diagnosis of diabetes for a teenager.[3]

Reimbursement for telemedicine has been expanded in recent years. Now, 17 states authorize Medicaid reimbursement for physician consultations and other services.[4] The 1996 Comptroller’s Texas Performance Review, Disturbing the Peace, recommended allowing Medicaid to reimburse for telemedicine services, and state law was changed to allow the service. Some states have laws requiring private health maintenance organizations or health service plans to reimburse for telemedicine services. Under the federal Balanced Budget Act of 1997, the federal Medicare program has begun paying for consultations in areas designated as health professional shortage areas.[5]

The University of Texas Medical Branch (UTMB) in Galveston provides telemedicine consultations for children with special health care needs who live in Nacogdoches and Jefferson Counties. Almost all of approximately 113 children in the program have multiple diagnoses like spinal bifida, cerebral palsy, seizure disorders and others. UTMB reports that Medicaid reimburses physician consultation services for children who are Medicaid-eligible only if specific conditions are met. Generally, the conditions include provisions regarding the type of medical provider who provides the teleconsultation; where the provider is located; whether the services are consultative in nature or involve evaluation and management; and other criteria.[6]

Medicaid will not pay for care provided via telemedicine when a number of different types of providers see a disabled child. For example, a severely disabled child may need to see a specialty physician, an occupational therapist, a respiratory therapist, or another type of therapeutic practitioner, but Medicaid will not reimburse a telemedicine provider for the entire number of services provided. However, if the child travels to the medical center, Medicaid will pay for the additional services, including the cost of transporting the child to the center.

These conditions tend to limit Medicaid reimbursement for telemedicine. Providers will not provide Medicaid telemedicine services if they do not receive reimbursement, as they would have if they provide the services in a traditional medical office setting. In fact, Medicaid reimburses about $20,000 per quarter or less for telemedicine services statewide.[7] Due to Texas Medicaid’s overly restrictive terms, potential costs savings from transporting patients and other savings have been minimized.

The health insurance provided under the new Children’s Health Insurance Program (CHIP) also does not cover telemedicine consultations for children with special health care needs.[8] The federal Balanced Budget Act of 1997 created CHIP to improve insurance coverage for low-income children. In addition to expanding Medicaid eligibility for teenagers under CHIP, Texas designed a state CHIP insurance plan for children in families with incomes of up to 200 percent of the federal poverty level. Texas receives a federal match, about 72 percent for 2001, to help families purchase insurance coverage for their uninsured children.

Effectiveness of Telemedicine

A recent study of the University of Georgia’s telemedicine program established that families find telemedicine an acceptable way of receiving pediatric subspecialty consultation services for their children with special health care needs when the telemedicine is used as one part of an integrated treatment program for the child. The study’s authors argued that a statewide telemedicine system would reduce the cost of delivering medical care to CSHCN patients by improving access to subspecialty pediatric care and by decreasing transportation time and costs.[9]

A telemedicine study involving the Physician’s Family Health Center in Cuero, Texas demonstrated that each telemedicine consultation saved an average of $122 in travel costs. Dr. Dan Dugi, a family practitioner at the health center, and HealthCare Vision, Inc. studied telemedicine consultations in clinics in Nixon, Kenedy, and Cuero. More than 60 percent of patients surveyed during the study indicated that telemedicine allowed them to see a physician earlier, and 20 percent said that the video consultations prevented lost work time.[10]


  1. Texas law should be amended to require the Texas Department of Health to reimburse certain telemedicine costs for children with special health care needs under the Children with Special Health Care Needs Program.

Under this recommendation, state law would be amended to require Children with Special Health Care Needs Program (CSHCN) to develop policies allowing reimbursement for telemedicine. Reimbursements would be equal to the amounts those providers currently receive for care delivered when a disabled child visits a medical center or physician’s office. Reimbursement for multiple services provided by different providers in a single instance would be allowed when it is cost-effective to do so, compared to the cost of reimbursement for individual providers and travel and transportation costs. CSHCN should consult with UTMB, other major Texas telemedicine hub sites, the state Medicaid Office, the Texas Health and Human Services Commission (HHSC), and major CSHCN providers in developing the policies.

  1. Texas law should be changed to require the Health and Human Services Commission to expand the use of telemedicine in Medicaid and the Children’s Health Insurance Program for children with special health care needs.

HHSC would be required to develop cost-effective policies for reimbursing telemedicine services from Medicaid and Children’s Health Insurance Program (CHIP) for children with special health care needs. The policies would include allowing reimbursement for multiple health care providers to provide telemedicine services at the same time.

Fiscal Impact

The fiscal impact of these recommendations cannot be estimated. Some savings would result from decreased travel, food, and lodging costs currently paid by CSHCN, and transportation costs paid by Medicaid. Long-term savings should result from more timely treatments and comprehensive reviews of the medical requirements of children with special health care needs.

[1 ] Memorandum from Lori Roberts, Texas Department of Health, Children with Special Health Care Needs (CSHCN) Program, to Jack Baum, associate commissioner, Community Health and Resources Development, Texas Department of Health, June 15, 2000.

[2 ] US Department of Health and Human Services, Health Resources and Services Administration, “Medicare Reimbursement for Telehealth: An Assessment of Telehealth Encounters January 1, 1999 – June 30, 1999, Preliminary Report,” by Joe Tracy, Thelma McClosky-Armstrong, Rob Sprang, and Sam Burgiss (Washington, DC, October 15, 1999) (http://telehealth.hrsa.gov/pubs/reim2000.htm). (Internet document.)

[3] Barry Shlachter, “Nurse Provides Care by Using Telemedicine,” Fort Worth Star Telegram (February 20, 2000), p. 18.

[4] US Health Care Financing Administration, “States Where Medicaid Reimbursement of Services Utilizing Telemedicine is Available” (http://www.hcfa.gov/medicaid/telelist.htm). (Internet document.)

[5] National Conference of State Legislatures, “Telemedicine,” by Marla Rothouse and Elana Mintz, Denver, Colorado, May 23, 2000. (Issue brief.)

[6] Email from Patricia Jakobi, Center for Telehealth and Distance Education, University of Texas Medical Branch, Galveston, Texas, September 8, 2000.

[7 ] Telephone interview with Kay Gharemani, Texas Health and Human Services Commission, Austin, Texas, July 6, 2000.

[8] Telephone interview with Dr. John Hellerstedt, Medical Director, Children’s Health Insurance Program, Austin, Texas, November 2, 2000.

[9 ] Warren Karp, R. Kevin Grigsby, Maureen McSwiggan-Hardin, Suzanne Pursley-Crotteau, Laura N. Adams, Wyndolyn Bell, Max E. Stachura, and William P. Kando, “Use of Telemedicine for Children with Special Health Care Needs,” Pediatrics (April 2000), pp. 843-847.

[10] Presentation by Dr. Dan Dugi, Jr., at the Conference on Rural Telemedicine as a Clinical Tool, sponsored by the Center for Rural Health Initiatives, Austin, Texas, July 7, 2000.

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