The looming end to the telehealth boom

Former U.S. Medicaid CMO Dr. Andrey Ostrovsky outlines how tech entrepreneurs, investors and digital-transformation leaders can impact a legislative fix and enable long-term telehealth access.
By Andrey Ostrovsky, MD
11:04 am

About the author: Dr. Andrey Ostrovsky is the former chief medical officer of the U.S. Medicaid program. He is now the managing partner at Social Innovation Ventures where he invests in and advises companies and nonprofits dedicated to eliminating disparities. (See his relevant portfolio investments here.) He is also a practicing pediatrician.

The COVID-19-induced state of Public Health Emergency (PHE) has been the most catalytic event for digital health that I have seen over my last decade of working at the intersection of healthcare, technology and policy. As a CMS colleague of mine recently described, we have advanced telehealth by five years in a period of five weeks. Of the dozen state Medicaid leaders that I have spoken with over the last five months, all agree that the telehealth flexibilities must continue. However, with the looming end to PHE in the coming week, much of the telehealth boom is set to bust

In my conversations with Senate staff over the past two weeks, it has become clear that Senate Majority Leader Mitch McConnell has begun work on the COVID-19 phase four legislative package, primarily based out of the Senate Finance Committee, and that a Senate GOP bill is expected to be released this month. The reconciliation between the Senate bill and the recent HEROES Act passed by the House will likely be the last legislative window to permanently expand telehealth access and payment parity before the election.

Millions of lives and billions of investor dollars are at stake, and investors, healthcare leaders and technologists have a fleeting opportunity to shape the trajectory of healthcare innovation for the next decade by making their voices heard. 

How the telehealth boom began

The growth in telehealth was not just kicked off by consumer demand, but rather by a fundamental shift in reimbursement. With the declaration of the PHE, CMS invoked 1135 waivers permitting the largest payer in the world to introduce payment flexibilities that would otherwise be prohibited by law. Some of the changes, like waivers of the requirement for originating sites to be a clinical setting and relaxed privacy rules, led to common modalities like FaceTime to be used for billable healthcare visits.

Last week, I had two CEOs email our boards with a misleading article claiming HHS will renew the PHE. The boards were lulled into a false sense of security because HHS spokesman Michael Caputo only suggested intent to extend the PHE through a passive-aggressive tweet. If other inaccurate information from this administration, including Trump’s attempts to discredit Dr. Tony Fauci and to hide COVID-19 hospitalization data from the public, is indicative of the truthfulness of Caputo’s tweet, then it is very possible the PHE will not be renewed. Based on my conversations with HHS leadership, I predict a 40% likelihood that the PHE will not be renewed. We cannot let that happen. 

What is at stake if the telehealth boom busts

If the PHE expires by the end of July, entrepreneurs and investors who backed telehealth may have done so in vain. With $3.1B invested in the last quarter, this has been the best-funded quarter in digital health history, largely driven by investment in telehealth. The public markets also reflect similar trends, with 162% growth in Teladoc’s stock YTD, 269% growth in Zoom stock YTD and an IPO filing by American Well. When the 1135 waivers expire, Teladoc’s stock and American Well’s IPO hopes will almost certainly plummet. All of this telehealth investment may just be irrational exuberance if the PHE goes away.

More importantly, the expiration of the 1135 waivers will have an adverse effect on elderly, poor, and minority populations, given that Medicare and Medicaid will suffer the greatest regression in payment flexibilities. Commercial payers will likely still benefit from substantial flexibility because their main federally-mandated constraint on telehealth is the Office of Civil Rights' (OCR) HIPAA enforcement discretion.

In a COVID-19 era when Medicare data clearly show widening racial and economic disparities, failing to permanently change telehealth payment policy is an act of legislative and regulatory negligence. During heightened awareness of the Black Lives Matter movement, removal of the PHE will be yet another widening of the gap of health outcomes for minority individuals, who are disproportionately served by public payers due to systemic drivers of inequality. Congress has an opportunity to remove those systemic barriers permanently. 

We need a legislative, not regulatory, fix

Even the CMS administrator admits we cannot go back to the way telehealth used to be pre-COVID-19, noting telehealth “could improve health outcomes and reduce overall health care spending.” However, CMS regulation and deregulation processes are slow, and outside of COVID-19, CMS has taken a restrictive regulatory stance on digital health regardless of who has been in the White House.

For instance, despite strong supporting evidence for the Medicare Diabetes Prevention Program (MDPP), only in-person MDPP was approved by CMS rather than digital DPP, severely limiting access to this evidence-based intervention. Additionally, reimbursement of evidence-based, FDA-approved digital therapeutics has been precluded by CMS’s residual fear from a Supreme Court hand-slap whereby the high court ruled against some CMS procedural missteps in Allina v. Azar

Patients cannot wait for CMS’s pace, nor for its post-tribunal PTSD to wear off. A legislative route to a PHE extension and permanent telehealth flexibility is key to avoiding the aforementioned human and financial losses.

Call to action

To impact the health of those who rely on telehealth services and maintain health-tech innovation, reach out to Majority members of the finance committee (contact info) and request this language be incorporated into their phase four COVID-19 legislation package.

Remind them that 30 of their fellow senators are already supportive of expanded telehealth services. Remind them that a bipartisan group of senators just introduced legislation to increase access to telehealth for substance use disorder treatment. Remind them that another bipartisan group of House representatives just introduced legislation that can serve as an excellent template for their Senate bill. Remind them that there is a groundswell of support for similar provisions from more than 340 industry organizations

There are a few important nuances and limitations to consider. First, a legislative fix must happen, but it will take at least three months for regulations to be written thoughtfully. This is why your senatorial ask must include a directive to HHS to extend the PHE for at least three to six months so that patient access to telehealth services does not go away while a permanent fix is being put in place.

Second, telehealth is not a panacea, but it is very much a part of the full stack needed to empower Americans to thrive and have the flexibility in healthcare that has proven to meet the needs of millions of patients.

Third, we need more research to quantify the impact of telehealth, but research constraints should not impede action, much in the same way we should not wait for research to know to step outside to get out of a burning building.

Finally, I am an investor in multiple digital health companies and I have a financial interest in greater reimbursement for them, so take everything I say with a grain of salt, but consider my words, because people’s lives may depend on it.

The telehealth boom does not have to bust. You can make your voice heard. Spend 10 minutes to shape the next 10 years of American healthcare.

Editor's note: A previous version of this article incorrectly referred to 1135 waivers as "1,135 waivers" due to an editing error.


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