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According to the Centers for Medicare & Medicaid Services (CMS), the definition of telemedicine under Medicaid is “the use of medical information exchanged from one site to another via electronic communications to improve a patient’s health.” (accessed Mar 20, 2009).  Electronic communication means “the use of interactive communications equipment that includes, at a minimum, audio and video equipment permitting two-way, real time interactive communication between the patient, and the physician or practitioner at a distant site.”  Id.  Often the terms e-health, cybermedicine, and telemedicine are used interchangeably or are confused, but the main distinction relates to the amount of interaction that occurs between individuals and health care practitioners.  E-health is described as “an emerging field in the intersection of medical information, public health and business, referring to health services and information delivered or enhanced through the Internet and related technologies.”  Gulick, G., 12 Alb. L.J. Sci. & Tech. 351, 355 (2002).  If an individual seeks and receives personalized medical information from a physician over the Internet, this type of interaction is called cybermedicine.  Fleisher & Dechene, Telemedicine and E-Health Law 1-6 (ALM Properties, Inc., Law Journal Press) (2004).  Therefore telemedicine is a broader concept than cybermedicine, and e-health encompasses them both.

Telemedicine has been developing for over thirty-five years, but has received greater scrutiny in the past two decades due to increased governmental support and the need for greater access and affordable care.  Federation of State Medical Boards of the United States, A Model Act to Regulate the Practice of Medicine Across State Lines (April 1996), available at

Many legal issues are raised by the practice of telemedicine, and while some are common to all areas of healthcare, others are unique to telemedicine.


The Tenth Amendment reserves licensure power to the states, and all states have a method for licensing health care providers that practice within their borders.  U.S. Const. amend. X.  This individual state right has been upheld in numerous court cases.  Sulentic, A., Crossing Borders: The Licensure of Interstate Telemedicine Practitioners, 25 J. Legis. 1, 4 (1999); see Dent v. West Virginia, 129 U.S. 114 (1889); Dean Milk Co. v. Madison, 340 U.S. 349 (1951).

The Supreme Court has found that “the states have a compelling interest in the practice of professions within their boundaries, and that as part of their power to protect the public health, safety, and other valid interests, they have broad power to establish standards for licensing practitioners and regulating the practice of professions.”  Gade v. Nat’l Solid Wastes Mgmt. Assoc., 505 U.S. 88 (1992).  The only limitation on this power is the Commerce Clause, which allows the federal government to regulate interstate trade.  Under antitrust laws, health care has been found to be interstate trade and therefore able to be regulated by federal law.  States, however, have still maintained control over health care licensing within their borders, despite this acknowledgement of federal power because they have the authority to regulate the use of interstate telemedicine due to its impact on the health and welfare of its citizens.  FSMB;  Therefore, states have the ability to specifically define the “practice of medicine,” regulate its practice through their licensure laws, and include in those laws certain restrictions on the practice of medicine across state lines if it involves the health and welfare of their citizens.

Certain states have a general definition of the practice of medicine that seems to imply inclusion of telemedicine, while others have revised their definition of the practice of medicine to specifically include telemedicine.  See Ind. Code § 25-22.5-1-1.1(a)(4) (2008).  States with specific laws in place to address telemedicine have taken a variety of approaches to deal with out-of-state physicians practicing within their borders.  Texas permits a medical specialist to provide “episodic consultations” using telemedicine if those consultations are requested by a physician in Texas who is in the same medical specialty.  Tex. Occ. Code §151.056 (2007).  Since 1995, other states have passed laws that require full licensure in order to practice telemedicine within their borders.  Another method of regulating out-of-state physicians practicing telemedicine is through the use of limited licensure, which allows physicians to apply to practice in a state without a full license, but limits the practice to a specific scope of services.  In Montana, for example, telemedicine may not be practiced without obtaining a specific telemedicine license from the State Board of Medical Examiners.  Mont. Code Ann. §37-3-341 (2007).  California has yet another approach whereby certain interstate telemedical consultations are permissible, as long as the practitioner does not open an office and does not have ultimate authority over the care of the patient.  Cal. Bus. & Prof. Code § 2060 (2008).  The physician with ultimate authority over the patient must be licensed to practice medicine in California and obtain the informed consent of the patient for the use of the telemedicine services.  Id. § 2290.5 (2008).

Corporate Practice of Medicine

The corporate practice of medicine doctrine, which began in the early 1900s, states that only individuals can practice medicine.  Mars, S., 7 Health Matrix 241, 248 (Winter 1997).  The doctrine varies from state to state but generally prohibits the employment of doctors by unlicensed individuals or by corporations that are not formed and owned by doctors.  Monnich, B., 42 B.C.L. 455, 466 (Mar. 2001).  Only a small number of state statutes explicitly prohibit the corporate practice of medicine, and so more often the prohibition against corporations practicing medicine is merely implied through interpretation of state medical practice acts and licensure requirements, as well as public policy concerns.  Mars, supra at 247.  There are common exceptions to the corporate practice of medicine doctrine allowing organizations to enter into employment contracts with physicians.  These exceptions include professional corporations, not-for-profit hospitals, health maintenance organizations, teaching hospitals, and industrial organizations.  


Credentialing in the healthcare field is a process where institutions evaluate and verify the qualifications of health care providers for medical staff appointment, to delineate privileges, and to determine whether the practitioner has the relevant qualifications to provide certain services to patients.  Blum, J., HC Law Monthly 3 (Mar. 2000).  One question with respect to telemedicine is whether the physician providing the telemedical services must not only be credentialed at their own institution, but also the institution of a physician requesting the services.  Fleisher & Dechene, supra at 1-20.  In 2004, the Joint Commission on Accreditation of Health Care Organizations (JCAHO) revised its hospital standards and included specific credentialing standards for telemedical providers. These standards allow an institution to rely on the credentialing process of the telemedical provider’s institution in certain circumstances and if it is also a JCAHO accredited facility.  JCAHO, Comprehensive Accreditation Manual for Hospitals (2004).  


Telemedicine presents various reimbursement issues, such as new technology reimbursement, Medicare and Medicaid reimbursement, and private payer reimbursement.  Reimbursement coverage decisions for new technology involve an evaluation of whether the service is investigational, whether the service may result in overutilization, and whether or not it is cost-effective.  Fleisher & Dechene, supra at 8-3.  Generally third party payers will not reimburse for services if the FDA has not approved the technology and it is not accepted as standard medical care, but are more likely to reimburse for technology that replaces or improves existing technology rather than technology that leads to additional procedures for patients.  If the technology is not cost-effective for the third party payer, it is unlikely to be reimbursed.  Id. at 8-4. 

Medicare Part A provides coverage for institutional services including hospital services, skilled nursing facilities, hospices, and home health agencies. The payments for these services are done through a prospective payment system. Therefore, as long as the use of telemedicine services is not restricted by the conditions of participation for the facility, then it can be included as part of the services provided under the prospective payment system without any additional costs to the Medicare program.  Id. at 8-6 and 8-8; see Medicare Part A.

Most telemedicine reimbursement questions relate to Medicare Part B.  The federal government has enacted several laws intended to encourage the development of state-run telemedicine programs.  Fleisher & Dechene, supra at 368.  Congress passed the Balanced Budget Act of 1997, which required CMS to pay for telemedicine consultations beginning January 1, 1999.  There is now reimbursement for certain telemedical consultation provided to Medicare Part B recipients living in certain designated areas.  Reimbursement is shared between the referring physicians and consulting physicians for treatment provided to Medicare Part B beneficiaries.  Id. at 368-9. 

In December 2000, Congress passed the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act which expanded the available originating sites of the service, as well as the eligible rural areas, removed the requirement that the prescribing physician be present during the teleconsultation, and provided full reimbursement for the consulting physician.  Medicare, Medicaid, and State Children’s Health Insurance Program (SCHIP) Benefits Improvement and Protection Act of 2000, Pub. L. No. 106-554, 1(a)(6), 114 Stat. 2763 (2000); see 42 C.F.R. § 410.78 (2009). 

The Medicare Improvements for Patients and Providers Act of 2008 was passed into law on July 15, 2008.  This act included an expansion of the originating sites of telehealth services that can be reimbursed under Medicare.  The originating site is the location of the patient receiving the telehealth services, and now includes skilled nursing facilities, community mental health centers, and hospital-based or critical access hospital-based renal dialysis centers (including satellites).  42 U.S.C. § 1395m(m)(4)(C) (2008).  The originating sites must still be in a rural health professional shortage area, in a county that is not included in a Metropolitan Statistical Area, or an entity that is participating in a federal telemedicine demonstration project.  See McMenamin, et al., Regulatory Perspectives on Telephone-Based Cross-Coverage: Principles for Decision-makers, Spotlight: Ideal Telehealth Consultation Service (2009),]

Under Medicare Part C, any HMO participating in the Medicare + Choice program (now titled Medicare Advantage) can cover services that are not ordinarily covered by Medicare.  

Medicaid is run at the state level, but the federal government sets forth certain minimum requirements. If these requirements are met by the state, then the federal government will contribute to the cost of running the program. While the federal statute that sets forth the requirements for state-run Medicaid programs does not specifically address whether reimbursement for telemedicine is permissible, there are requirements that by their very nature would limit the use of telemedicine. Medicaid programs can only reimburse for providers that meet the Medicare conditions for participation. For example, there are certain services that explicitly require the physician to be present with the patient in order for services to be reimbursed.  Additionally, Medicaid may only reimburse for practitioners operating within the scope of their license, which means that the practitioners need to be cognizant of the licensing requirements in their home state and the patient’s state.  Otherwise it is in the state’s discretion to reimburse under Medicaid for telemedical services.  Fleisher & Dechene, at 8-17.  CMS encourages states to create payment schemes that incorporate telemedical technology and provides examples for how the services can be reimbursed, such as reimbursing the physician at the distant site and reimbursing a facility fee to the originating site.  Although the federal Medicaid statute does not recognize telemedicine as a distinct service, CMS has stated that a state should submit a state plan amendment to CMS for approval if it would like to reimburse for telemedicine.  CMS, supra.  

Generally, private third party payers determine what they want to cover and the extent of their coverage, but that is limited by any state law that requires reimbursement from private insurers.  Fleisher & Dechene, supra at 8-23.  Some states do require private insurers who are soliciting customers in their states to offer some form of coverage for telemedicine services.  Venable, S., 54 Emory L. J. 1183, 1209 (Spring 2005). 


A telemedical malpractice case raises a variety of new issues, including who owes the patient a duty of care and what standard of care applies to telemedicine.  Fleisher & Dechene, supra note 4, 1-31.  Telemedicine also raises jurisdictional questions because a practitioner may be considered to be practicing medicine not only in the state in which he/she resides, but also in the state the patient resides.  Id. at 1-35.  Certain states have addressed this issue by explicitly requiring telemedicine practitioners to submit themselves to their state laws in order for the practitioner to receive a license to perform telemedical services for patients within their borders.  Id. at 1-35; see 225 ILCS 60/49.5 (2009); Minn. Stat. § 147.032 (2008). 

The traditional elements of a medical malpractice case that a plaintiff must show are: (1) the existence of a physician-patient relationship and the physician’s duty to act according to accepted professional standards of care; (2) a breach of that duty; and (3) that breach was the proximate cause of the plaintiff’s injury.  There is support for the concept that physical contact with the patient is not required for a duty to exist, and the greater the degree of the interaction between the patient and physician (ex. virtual face-to-face meetings), the more likely it is that a physician-patient relationship with be found to exist.  Fleisher & Dechene, supra note 4, 1-48.  When a physician goes beyond a simple consult, and is interpreting test results or making a diagnosis or informed analysis, then this will likely establish the physician-patient relationship.  In addition to questions surrounding what standard of care should be applied to a telemedicine physician, there is also the question of when the use of a telemedical consult might itself be considered the standard of care.  Certain states have regulations that address specifically the standard of care that should apply in the case of telemedicine treatment.  Id. at 1-51; see 10 Colo. Code Regs. § 2505-10(8.200.4) (2009); 22 Tex. Admin. Code § 174.4 (2009).  In 2001, the Federation of State Medical Boards of the United States (FSMB) published “Model Guidelines for the Appropriate use of the Internet in Medical Practice.”  In addition to requiring appropriate licensure, these guidelines also specify that the telemedical treatment must be held to the same standard as face-to-face settings.  Guidelines for Appropriate Use of the Internet in Medical Practice (2002), available at

Informed Consent

Certain states statutorily require consent of patients for telemedical care.  In these circumstances, not only should patients be informed of the risks/benefits of different treatment or procedure options, but they also need to be informed of the risks and benefits related to the use of telemedicine, including issues associated with privacy.  Fleisher & Dechene, at 1-56 and 1-57; see Cal. Bus. & Prof. Code § 2290.5 (2008); Ariz. Rev. Stat. § 36-3602 (2008). 

Privacy and Security of Patient Health Information

The Health Insurance Portability and Accountability Act of 1996  (HIPAA) was passed by Congress in order to improve the portability and continuity of patient care.  Office for Civil Rights, OCR Privacy Brief: Summary of the HIPAA Privacy Rule (May 2005), available at

HIPAA required the establishment of national standards for electronically maintaining patient medical and health information, including privacy of the information, restrictions on the exchange of health information electronically, and secure medical records.  Venable, at 1213.  All of a person’s “individually identifiable health information,” including information in written, electronic, or spoken form between healthcare providers, is protected under the HIPAA Privacy Rule.  45 C.F.R. § 160.103 (2009).  States also have laws related to patient privacy, and while HIPAA may set national standards it does not preempt state laws unless HIPAA is more stringent.  Therefore telemedicine practitioners will need to be cognizant of the various potential state privacy standards with which they may be required to comply while conducting the practice of telemedicine within and across state lines.  DHHS, HRSA, Office for the Advancement of Telehealth, 2001 Telemedicine Report to Congress 5 (January 2001). 

Miscellaneous Federal Regulations

The Food & Drug Administration (FDA) and the Federal Communications Commission (FCC) also play a role in telemedicine regulation.  The FDA is tasked with ensuring the safety and effectiveness of telemedicine medical devices and software.  Id. at 5-6.  The Food, Drug, and Cosmetics Act gives the FDA the authority to regulate the hardware and software that comprise telemedical devices through its authority to regulate medical devices intended for diagnosis or treatment.  21 U.S.C. § 321(h) (2009). 

The FCC was established by the Communications Act of 1934, and has the authority to regulate interstate and international communications by radio, television, wire, satellite and cable.  About the FCC, available at (accessed Feb. 3, 2009).  The Telecommunications Reform Act of 1996 charged the FCC with developing communications infrastructure to enhance telemedical applications in rural areas.  Gulick, supra at 368. 

Fraud and Abuse Laws

The use of telemedicine may be subject to the fraud and abuse laws if the use directly or indirectly generates reimbursement from a federal health program. For example, proposed arrangements that involve equipment leases or the provision of free telemedical equipment with referral sources would require evaluation under the fraud and abuse laws.  See Advisory Op., OIG, HHS No. 98-18 (Nov. 25, 1998), available at; Op. Letter, OIG, HHS (July 3, 1997), available at

The Stark Law prohibits a physician from referring patients for designated health services to an entity with which the physician has a financial relationship.  42 U.S.C. § 1395nn (2009).  A referral is defined as any “request” for services or items.  The Stark Law is a strict liability statute, but there are exceptions that can be met which take into account legitimate business arrangements.  When entering into a proposed telemedicine arrangement, it is important to be aware of the Stark Law implications.  The Anti-Kickback Statute prohibits offering or soliciting anything of value, directly or indirectly, in return for patient referrals.  42 U.S.C. § 1320a-7b(b) (2009).  There are certain safe harbors whereby if particular requirements are met, the transaction will be presumed legal.  When a transaction or arrangement includes an ownership interest in the facility that actually performs the technical component of services, then the transaction should be analyzed to determine if it falls within a safe harbor.  For example, joint ventures include participants who may make referrals to each other, the terms of the investment and shares in the profits must be evaluated under the fraud and abuse laws.  If the potential referral sources have more favorable terms than other investors who are not expected to make referrals, this raises questions under the Anti-Kickback Statute.  Fleisher & Dechene, supra at 9-37.  State laws may also prohibit kickbacks and physician referrals in certain circumstances, and should be assessed during contemplation of such arrangements. 

Future Direction: Proposals for Alternative Licensing Arrangements

There are many different proposals related to improving access to telemedicine while also maintaining the standards for quality and care that are so important in the medical profession. 

For example, on July 23, 2004, the FTC and Department of Justice issued a joint report entitled “Improving Health Care: A Dose of Competition.”  In this report the agencies recommend that states develop more uniform licensing standards or reciprocity arrangements in order to reduce the barriers to telemedicine, which they believe would reduce the risks of fraud.  A Report by the FTC and the DOJ, Improving Health Care: A Dose of Competition (July 2004), available at

In August 2008, the American Bar Association House of Delegates adopted a proposal that included the recommendation of mutual telemedicine licensure recognition among states.  Therefore physicians with unrestricted licenses in at least one state would be able to fill out a single application to practice telemedicine in all jurisdictions, and could do so as long as the physicians complied with the licensure fees, discipline, and other laws in each jurisdiction in which they practice.  Demetriou, A., ABA Health Law Section, Report to the House of Delegates (Aug. 2008), available at

In April 1996, the FSMB adopted a model act intended to facilitate the practice of telemedicine which requires a special license issued by the state medical board in order to regularly or frequently practice medicine across state lines.  However, it would not allow the physician to physically practice in the state issuing the license without obtaining a full, unrestricted license.  FSMB, at 3.  The goal of the FSMB was to encourage the practice of telemedicine by allowing a more expeditious review for those physicians holding a valid, unrestricted license in another state. 

The creation of a universal standard for the practice of telemedicine through a national licensure program is another alternative that has been proposed.  This uniform licensure system could be administered either at the state or federal level.  Although administration at the federal level raises questions surrounding the state’s right to regulate its professions, the impact of telemedicine on interstate commerce may provide legal justification for this involvement by the federal government.  Venable, at  1203. 


The World Health Organization defines telemedicine as “the delivery of health services, where distance is a critical factor, by health care professionals using information and communications technologies for the exchange of valid information for diagnosis, treatment and prevention of disease and injuries, research and evaluation, and for the continuing health education of health care providers, all in the interest of advancing the health of individuals and their communities.”  Dario, C. et al., Opportunities and Challenges of Ehealth and Telemedicine via Satellite, Eur. J. Med. Res., Supplement Proceedings of ESRIN-Symposia (Dec. 22, 2004), available at

The potential benefits of telemedicine, as set forth in this definition, explain the increasing prevalence of regulatory review, analysis, and ultimately legislation.  In evaluating telemedicine arrangements, it is important to not only consider the unique aspects of the field, but also those legal issues that are common to all areas of healthcare. 


AHLA would like to thank Bridget K. Cougevan, Esq. of the Cleveland Clinic for her hard work in assembling the original content for this article, and Tara Kepler of Haynes and Boone LLP, Michelle Le, and Summer Martin of McKenna Long and Aldrige LLP for their editorial assistance.