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Kerry McDermott, MPH

Kerry McDermott, MPH, Federal Communications Commission, Expert Advisor

Good afternoon Chairman Michaud, Ranking Member Brown, and distinguished Members of the Veterans Affairs Subcommittee on Health. My name is Kerry McDermott and I’m a member of the health care team for the National Broadband Plan at the Federal Communications Commission.

As you know, Congress mandated that the FCC prepare a “national broadband plan” that “shall seek to ensure that all people of the United States have access to broadband capability,” and include a strategy for affordability and adoption of broadband.  The FCC was also asked by Congress to address how broadband can be harnessed to tackle important “National Purposes,” including health care.

Improving America’s health and America’s health care system is one of the most important tasks for the nation. Health care already accounts for 17 percent of U.S. gross domestic product (GDP) and by 2020, it will top 20 percent.[1] This is due to many factors but one of the most important is that America is aging. There is a direct correlation between the elderly and chronic disease, which already accounts for 75 percent of the nations health care costs.[2] 5 percent of Medicare beneficiaries, who in most cases have one or more chronic conditions, constitute 43 percent of Medicare spending.[3] By 2040, there will be twice as many Americans older than 65 as there are today.[4] Exacerbating this situation is a health care supply problem. A shortage of tens of thousands of physicians is expected by 2020.[5]

But there’s a set of broadband-enabled health information technologies (health IT), both now and emerging from development, that have the potential to improve clinical outcomes while reducing the cost of care and extending the reach of the limited pool of health care professionals. The New England Healthcare Institute found that remote patient monitoring for heart failure can save up to $6.4 billion annually through reduced hospital readmissions.[6] The Veterans Hospital System’s Care Coordination / Home Telehealth Program (CCHT) for veterans with chronic conditions has resulted in a 19 percent reduction in hospital admissions and a 25 percent reduction in bed days for those who are admitted.[7]

Even though these technologies hold great promise, the US lags behind other developed countries in health IT adoption, with one study ranking it in the bottom half (out of 11 developed countries) on every metric used to measure adoption.[8]

The Broadband Plan identifies some of the barriers that hinder the adoption of broadband-enabled, wireless health solutions and provides specific recommendations the government should undertake to remove these barriers, as well as foster innovation and investment in these new, life-saving devices.

With respect to e-care technologies, these barriers and subsequent proposed solutions fall into three main categories:

  1. The connectivity gap. Broadband is either unavailable or too expensive.
  2. Outdated regulations. Rules that were created when our only interactions with physicians were in their offices—not via remote monitoring and video consultations.
  3. Misaligned economic incentives. The prevailing fee-for-service reimbursement system pays for volume rather than outcomes, and hence prevents reimbursement for many of these technologies.

Let me now discuss each in detail:

The first issue is connectivity, including both broadband at home as well as connectivity to health providers. With respect to the home, the plan estimates that 93 million Americans are not connected to broadband. We estimate that 14-24 million Americans do not have access to broadband where they live, even if they want it. It’s hard to identify what proportion of the 14-24 million, who don’t have the necessary infrastructure, is over the age of 65, let alone veterans. But what we do know is that individuals over the age of 65 are poor adopters of broadband, estimated to be 35 percent as compared to the national average of 65 percent.[9] This is due to multiple reasons such as cost, digital literacy, and perceived lack of relevant digital content delivered over the Internet. In order to respond to these challenges, the plan recommends the launch of a National Digital Literacy Corps and that public and private partners prioritize efforts to increase the relevance of broadband for older Americans. The plan also sets the goal of providing access for every American to robust and affordable broadband service. This will be accelerated by a once-in-a-generation transformation of the Universal Service Fund, which includes the creation of a “Connect America Fund” as well as reforming the Lifeline and Link-Up programs.  Mobile solutions are an important piece of the Broadband Plan’s strategy for home broadband. Some states have materially lower 3G deployment than the national average and the proposed “Mobility Fund” would help bring all states to a minimum level of 3G or better wireless coverage.

A focus of mine has been the connectivity issues for health care providers. It is imperative that hospitals and physician offices have adequate connectivity as any care that will be delivered to an individual’s home will originate in a health care facility of some description. Our analysis highlighted that some providers are not served by existing “mass-market” broadband infrastructure. Approximately 3,600 small physicians’ offices fall into this gap. Of these, 70 percent are in rural locations. Furthermore, 29 percent of rural health clinics do not have access to adequate mass-market broadband. Larger providers must purchase “Dedicated Internet Access” (DIA) to meet their quality-of-service requirements, but DIA solutions are often at least 4X more expensive than mass-market solutions. This cost issue is further exacerbated by the fact that DIA solutions differ greatly in price, thus preventing all providers from having affordable broadband available to them.

The National Broadband Plan addresses the health care provider connectivity issues by proposing to revamp the FCC’s Rural Health Care Program. The program provides three types of subsidies to public and nonprofit health care providers. It is the largest sustainable fund for health care connectivity within the government. The Commission will be considering ways to make the program more effective without changing the program’s funding cap by creating a permanent infrastructure fund, broadening coverage for monthly recurring costs to all types of broadband services, and expanding eligibility for the program. Importantly, any FCC funding must ensure that broadband for health care providers is resulting in improved health outcomes, and we are working closely with the Office of the National Coordinator to understand the evolving “Meaningful Use” criteria as we consider how such criteria could be incorporated into FCC programs. These proposed changes will enable more institutions to acquire the infrastructure needed to support a realm of health IT solutions, opening the possibility for greater investment and innovation. A Notice of Proposed Rulemaking is expected to be released shortly, opening the formal comment cycle on this proposal to revamp the FCC’s Rural Health Care Program.

The second set of barriers pertains to a range of regulations that prevent e-care solutions from being adopted. State licensing, credentialing, and privileging rules may prevent physicians from providing remote broadband-enabled care across state lines and even at in-state hospitals other than their usual place of work. Patient safety must be addressed by ensuring that physicians are suitably skilled – but regulations must not stifle the innovation and gains promised by health IT. To this end, the Broadband Plan recommends that credentialing, privileging, and licensing rules be re-evaluated. We are pleased that CMS is seeking comments on a proposed rule to revise privileging requirements to allow for the advancement of telemedicine nationwide while protecting the health and safety of patients.

There is regulatory uncertainty regarding the convergence of communications and medical devices. The combination of devices, applications, and communications networks is enabling clinicians and patients to give and receive care anywhere at any time. For example, mobile sensors in the form of disposable bandages and ingestible pills relay real-time health data over wireless connections. Diabetics can receive continuous, flexible insulin delivery through real-time glucose monitoring sensors that transmit data to wearable insulin pumps. Medical body area networks monitor various vital signs and detect the onset of a patient “crash” while in a hospital in time for treatment.

With these new solutions come new challenges. When medical and wireless devices and applications converge, the regulatory lines become blurred. At one end, general-purpose communications devices such as smartphones, wire­less routers, and certain videoconferencing equipment are regulated by the FCC. At the other end, medical devices that critically monitor patient health or provide treatment or therapy are regulated by the FDA.  Devices that do provide critical care and also use communications, such as life-critical wireless devices like remotely controlled drug-release mechanisms, are regulated by both agencies.  In addition, device applications that would not be governed by the FCC but transmit over wireless networks might warrant FDA oversight, while the FCC might have better capability to assess the reliability of their communications capability.

Uncertainty regarding regulatory frameworks and approval processes can discourage private sector innovation and investment, and ultimately delay or prevent the availability of such solutions. The Plan calls for the FCC and the FDA to build on their long history of collaboration to resolve these issues. The agencies are holding a joint public meeting on July 26 and 27, 2010, to address these challenges. We propose to bring together various stakeholders from manufacturers to practitioners to patients to better understand the types of devices and applications that are being introduced, clarify the requirements that apply, and improve the regulatory and approval processes to the extent possible. Our aim at the FCC is to protect patient safety while promoting innovation and investment.

Lastly, although broadband connectivity and regulatory uncertainties are issues, the greater barrier is on the demand side of the equation. Within a fee-for-service reimbursement system, providers bear the costs of health IT implementation and changes to workflow, but don’t fully capture the economic gains created through improved clinical outcomes. The plan recommends that well-understood use cases of e-care technologies should be incented with outcomes-based reimbursement, similar to the Meaningful Use program for Electronic Health Records. In addition, novel technologies should be tested for their clinical efficacy, as well as within payment model pilots, in order to ascertain their economic value. Given that it will take many years to implement an outcomes-based payment model, reimbursement should be expanded for e-care technologies that will prove system-wide expenditure reductions under CMS’s fee-for-service model. It is imperative that there be economic incentives for physicians of various specialties to collaborate and better manage elderly patients with chronic conditions that often require multiple specialty inputs. In addition, incentives must be aligned to promote the prevention and better management of disease within the community rather than reactively and at greater expense within hospitals. The Plan recommends a dedicated effort by HHS to propose specific programs and reimbursement changes that will help realize the value of e-care technologies. Without reimbursement reform, the market for health IT solutions is limited. This, in turn, inhibits investment and innovation; the FCC believes this trend must be reversed.

There are multiple barriers that must be resolved in order to fully develop the ecosystem of broadband-enabled health IT. The underlying infrastructure must provide a solid foundation to build upon. Yet, technology alone will not solve our health care challenges; it must be coupled with payment reform, innovation in service delivery, and improved regulatory transparency. It is imperative that government action – and inaction – do not hinder investment and innovation. The recommendations of the National Broadband Plan seek to unlock the value of health IT so all citizens may realize its benefits and cost savings. Any government approach to solve these issues must be coordinated—not only across the government, but with the private sector and the entire health care community.

I thank you all for giving me the opportunity to speak today.


[2] Susan Dentzer, Reform Chronic Illness Care? Yes, We Can, 28 HEALTH AFF. 12, 12 (Jan./Feb. 2009), available at



[5] See Health Res. & Serv. Admin., U.S. Dep’t of Health & Human Serv., The Physician Workforce: Projections and Research into Current Issues Affecting Supply and Demand (2008), (HRSA, Physician Workforce); Michael J. Dill & Edwa rd S. Salsberg, Ass’n of Am. Med. Coll., The Complexities of Physician Supply and Demand: Projections Through 2025, at 6 (2008) (estimating a shortage of 124,000 physicians by 2025), (download report from this page).

[6] New England Healthcare Institute, Research Update:  Remote Physiological Monitoring (Jan. 2009), available at

[7] Adam Darkins et al., Care Coordination/Home Telehealth: The Systematic Implementation of Health Informatics, Home Telehealth, and Disease Management to Support the Care of Veteran Patients with Chronic Conditions, 10 Telemed. & e-Health 1118, 1118 (2008), available at

[8] CATHY SCHOEN & ROBIN OSBORN, THE COMMONWEALTH FUND, THE COMMONWEALTH FUND 2009 INTERNATIONAL HEALTH POLICY SURVEY OF PRIMARY CARE PHYSICIANS IN ELEVEN COUNTRIES 10 (2009), Count of 14 functions includes: (1) electronic medical record; (2, 3) electronic prescribing and ordering of tests; (4–6) electronic access to test results, Rx alerts, and clinical notes; (7–10) computerized system for tracking lab tests, guidelines, alerts to provide patients with test results, and preventive/follow-up care reminders; and (11–14) computerized list of patients by diagnosis, by medications, and due for tests or preventive care.

[9] Chapter 9, “Adoption and Utilization”, National Broadband Plan.