WASHINGTON - Among the remarkable package of rural health care reforms passed as part of the budget agreement last year, and the Telecommunications Act of 1996, were several little-noticed changes that could begin to make telemedicine a viable part of rural life.

Beginning this month, Congress set aside $400 million per year to subsidize the costs of internet, telephone and compressed video connections in designated rural areas - areas where telecommunications costs have made long distance medical consultations prohibitively expensive. And starting next year, Medicare will begin reimbursing health care providers for telemedicine consultations, the first step in making insurance payments routine for such services.

Rural health care advocates hope that cheaper access to technology and Medicare reimbursement will help recruit and retain health care providers in rural areas, while keeping patients who need more advanced care from having to travel hundreds of miles. But more important, by providing ways for small clinics and rural hospitals to stay in business, they could ensure that rural towns remain on the map.

"This is much more than providing a telecom link to a rural hospital. The fiscal stability of these facilities determines the socioeconomic stability of a community," said Jay Sanders, a doctor and chairman of the newly-formed Rural Health Care Corporation. "We could see a rebirth of rural communities if we can keep hospitals from closing."

And by allowing patients to receive checkups and evaluations in their com- munities, health care dollars that formerly would have gone to a large hospital hundreds of miles away can stay in a community, said Thelma McCloskey, director of the Eastern Montana Telemedicine Network. The RHCC was formed as the non-profit administrator of the $400 million in annual telecommunications subsidies. But while it was supposed to begin taking applications for the money this month, Sanders acknowledged that it will be months before it can begin to distribute the money while a new administrative system is established.

"We are very cognizant of the disappointment this will cause, but we want to ensure that the program is sustainable in the future," Sanders said, arguing that mismanaging the money could jeopardize future funding when the current program comes up for renewal in four years.

As the RHCC's experience demonstrates, despite its promise, the touted new age in technology is not without its glitches.

The cost of telecommunications services will remain highfor most providers unless they can join with schools and businesses in their area to produce a higher volume of use to defray costs. Doctors must still cope with a tangle of licensing requirements if they consult across state or administrative boundaries.And the telecommunications subsidies are currently available only to not-for-profit providers - a designation that excludes many of the smallest but most vital rural health care providers.

But despite those drawbacks, telemedicine advocates in Wyoming and elsewhere say there's some reason now for optimism.

Doug Theide, director of the Wyoming Office of Rural Health, said that he has been working with Medicaid, Blue Cross and other large insurers to convince them to begin reimbursing for telemedicine services. Until that happens, utilization of telemedicine will remain small, he' said.

"Most of the time, people wait until Medicare starts paying on it and sets the reimbursement levels before jumping on the bandwagon," he said. He added that despite a lack of reimbursement, several telemedicine projects are underway across the state. Smaller hospitals in Douglas and Lusk have small scale telemedicine projects in development, while the Casper Family Practice Center has its own project on the drawing boards.

Casper radiologist Geoff Smith, a member of Gov. Jim Geringer's telemedicine advisory committee, said that a more important feature of the Telecom act may be its subsidy for internet access. While many people have focused on subsidies for high-bandwidth data and video lines, allowing health care providers access to the internet at the cost of a local call could make more of a difference, he said.While official telemedicine efforts have been slow, Smith said, radiologists and other providers have begun preparing for the day when it will be prevalent by developing standard methods of storing and forwarding medical information.

Sanders agreed, noting that one room wired for compressed video in a rural hospital won't make as much of a difference as the ability of doctors and nurses to get on the internet and send patient records, and digital pictures and sounds, to other doctors.

"When you think about how we do consultations in the real world, it could make a tremendous difference. If I can examine a patient, determine he needs to see a cardiologist and then email him my evaluation, send a video clip of his (electrocardiogram) and an audio clip' of his heart sound, I can keep that patient in my community," Sanders said.