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Changes in health care policies, demographics, and technology have presented new opportunities for the delivery of medical care services and information to rural communities. Telemedicine—the use of electronic information and communications technologies to provide and support health care when distances separates the participants—is one technology that has impacted the efficiency of delivery of rural health care services. This paper presents an overview of the telemedicine technologies, government involvement in support of telemedicine, evaluation efforts to date for these technologies, and issues that need to be addressed in designing an economic-based framework to evaluate the net benefits of telemedicine technologies to rural communities and consumers. An evaluation framework needs to be capable of quantifying the tradeoffs among access to health care services, the costs of delivery of a given level of services, and changes in the quality of the service that is being delivered via electronic communications; and how these tradeoffs shift as the level of telemedicine and the technology changes. The framework that is proposed is based on models of consumer behavior that incorporate discrete choices among quality differentiated sites. Evaluating Telemedicine in Rural Settings: Issues and Applications Over the last decade, changes in health care policy, demographics and technology have presented opportunities for new types of medical care delivery. Telemedicine is one example of a technology application that has begun to change the way health care facilities do business. Economic evaluation of telemedicine technologies is useful to health care policy in general and to better understand how telemedicine implementation affects the dynamics of rural health care. This paper presents an overview of telemedicine technologies that is a prerequisite for the design of an economic framework for evaluating the impacts of telemedicine technologies. The focus is on quantifying the benefits of telemedicine in rural settings. Section I discusses recent definitions of telemedicine and the rationale for conducting economic evaluations. Section II provides a historical perspective of the use and range of telemedicine and identifies government involvement on both state and national levels. Section III reviews telemedicine evaluation efforts to date. Section IV introduces an economic evaluation framework, focusing on issues that need to be addressed in quantifying the benefits of telemedicine to rural communities and subsequent data requirements. The final section of the paper provides concluding comments.