Unpacked: How a looming ‘telehealth cliff’ could impact online health care companies

But at the end of 2024, that temporary exemption is set to expire. In response, the medical, technology and business community have banded together to push for action to avoid the so-called “telehealth cliff.”

“If this happens, we would no longer be allowed to prescribe online, and that’s bonkers,” said Joanna Strober, founder of Midi Health. The virtual care clinic specializes in care for women over 35, particularly for menopause care.

Midi is one of hundreds of health, technology and retail organizations that signed onto a September letter to Senate leaders urging action. Other signers included Hims & Hers, Rocket Doctor and Amazon. It also carried signatures from many health care heavyweights like the American Psychiatry Association, the American Pharmacists Association, Cleveland Clinic and Johns Hopkins University and Medicine.

The Drug Enforcement Administration did not have any update to share with Modern Retail about what it intends to do. But a preliminary regulatory filing from mid-October indicates a potential extension past the December 31, 2024 deadline. That update is currently pending review.

Kyle Zebley, the head of public policy at the American Telehealth Association, told Modern Retail the hope is that extension will be finalized — and then a formal rule can be crafted giving permanent structure to the burgeoning field. “It’s encouraging that public outcry and advocacy have prompted the DEA to act, even if only in part,” Zebley said.

Here’s a breakdown of the threat of the expiration and what lies ahead for telehealth regulations from Capitol Hill.

What happened with the laws

A federal law from 2008 called the Ryan Haight Act meant providers couldn’t prescribe controlled drugs without an in-person medical evaluation performed by a licensed practitioner. But when the spread of Covid-19 constrained health care systems, popularizing telehealth services as an alternative, the DEA created a rule that would allow physicians to prescribe controlled substances without an in-person exam. That exception was extended in May 2023 and again in October 2023.

While the DEA has put forward proposed permanent rules around telehealth prescribing, many health care industry and public officials have opposed them. One such rule in February 2023 received 38,000 public comments, according to Foley and Lardner LLP, most of which were critical. Then in August, Politico reported another proposed rule that the telehealth industry strongly opposed because of the limits it would place on how many virtual prescriptions a provider could make.

The telehealth ramp-up

The rule change dovetailed with a boom in digital health investment. 2021 saw as much as $29.1 billion injected into startups in this space, nearly double the $14.9 billion from the year prior. Some of this was focused on telehealth. Weight loss company Ro, for instance, raised a $500 million Series D to further its national telehealth network. From a consumer standpoint, the popularity of telehealth skyrocketed: A recent Michigan State University study found that telemedicine encounters went up by 75%, from 111.4 million in 2020 to 194.4 million in 2021.

The space remains active; Pitchbook last month reported that the the telehealth space saw $1.5 billion worth of investment in 112 deals in the second quarter of 2024. Midi, which launched in 2021, raised a $60 million series B in April.

Strober said the changes to telehealth prescribing rules during the pandemic allowed Midi to provide patients with hormone therapy, sleep medications or anti-anxiety drugs. The boom was also bolstered by insurance companies that changed their policies to allow coverage of telemedicine services, which is not yet universal.

“Prior to Covid, my company couldn’t have existed,” she said. “But due to the Covid-era laws, you could now provide national health care, which you couldn’t have done before.”

Kantar’s senior director of health and wellness, Amar Singh, said that while the rule change aimed to limit in-person contact to minimize the spread of Covid-19, it also had the effect of popularizing telehealth for its convenience. “It’s more transparent and increases accessibility,” he said. “Anybody can get in there, and it felt very straightforward — $30, $40 or $50 for a telehealth visit.”

The concerns about an expiration

Without an extension — or an eventual final rule — Strober is concerned people won’t be able to access care they’ve come to depend on.

Midi prescribes controlled substances like testosterone to help women with menopause symptoms — something they may not be able to find at a local practice, she said. Midi currently serves around 100,000 patients, and while not all receive controlled substance prescriptions, Strober said access to the medications can be hard to find elsewhere.

“Our patients are very nervous. It changes their lives to get on testosterone, and they really don’t know where they’re going to go to get it in person,” Strober said. “Taking it away from them feels like a step backward.”

If the rule expires and doesn’t get another exemption, telehealth providers that want to continue serving new patients with controlled substances prescriptions would have to get a DEA registration to do so in every state they have patients — or go back to in-person visits. Hoping to drum up more support for the cause, Strober started a Change.org petition to urge an extension, focusing on how telehealth prescriptions specifically aid women. It garnered over 14,000 signatures.

Dr. Sophia Yen, founder of online healthcare company Pandia Health, said her business doesn’t prescribe any of the controlled substances that are at issue. But as a health care provider, she said telemedicine now plays a critical role in alleviating stresses on the in-person health care system.

People who are on medication for ADHD, for example, may need to get a doctor to renew their prescription — and if their dose is stable, it doesn’t necessarily make sense to do an in-person visit.

“The average wait to get into a doctor’s office, especially a specialty, is three to six months,” Yen said. “If you were to make all the visits go through telemedicine and in-person, that would stretch the system even further.”

Concerns around abuse

Part of the delay is due to concerns around access to prescriptions and abuse of the rule. Back in June, the Department of Justice announced the first-ever arrest around telehealth prescribing. The founder and the clinical president of the telehealth company Done are accused of exploiting telemedicine rules to over-prescribe Adderall and other stimulants and allegedly spent millions of deceptive ads. They’re accused of making over $100 million by giving more than 40 million pills, according to the DOJ.

Zebley from the ATA said concerns around people taking advantage of the law shouldn’t overshadow the need to maintain access to care for the millions who use telehealth responsibly. “There will always be bad actors, but we can address those while maintaining access to care,” he said.

Yen from Pandia said restricting overall access won’t necessarily curb abuse. Rather, she would prefer to see more aggressive follow-ups with doctors or work with insurance companies to track claims. “I say go after the individual abusers, not the whole drug category,” she said. “Don’t punish all the patients who do things right.”

What telehealth companies would like to see happen next

Zebley from the ATA said the lack of a clear plan isn’t because of “nefarious intent.” The issue may have simply gotten lost amid competing priorities in a political era rampant with policy fights. But Zebley also said the main goal is to see permanent rules around virtual health care delivery, rather by living extension to extension.

“The DEA might make a third attempt at a workable rule,” he said. “If so, we’ll be navigating a new landscape, potentially with a new administration or new dynamics, which could change the direction of this issue.”

Singh from Kantar said that companies are still facing challenges due to insurance companies not covering telehealth or state laws that dictate whether something has to be a video visit or not. And there are some things that physicians still have to be able to do in person, like get blood pressure or heart rate, that biometric devices aren’t widespread enough to handle remotely.

Still, Sing said he anticipates seeing future regulations that limit what services or prescriptions can be made over telehealth.

“I think we’re going to see more gatekeepers, stricter regulations, and clearer parameters about who can do what,” he said. “Setting guardrails and parameters will be crucial moving forward.”