Telehealth In Turmoil—Here's All That's Changing On October 1

When the pandemic shut down many in-person medical appointments, telehealth became a lifeline. But the “emergency” federal rule change that made virtual visits possible is set to expire at the end of the month, and if Congress doesn’t act, millions could see restrictions to online options.

Virtual care options have become widely popular in recent years, with some surveys showing that more than half of Americans have had at least one telehealth visit by 2024, compared to less than 10 percent prior to the pandemic. Physicians support the technology as well, with about 80 percent offering virtual visits, while less than 20 percent did prior to 2020, according to the American Medical Association (AMA).

That rapid shift was possible because Medicare temporarily changed its rules to cover video and phone visits, even when patients were in different states or had never met their doctor in person. Now, with those flexibilities set to expire, more than 350 organizations, including hospitals, tech companies, patient advocates and the U.S. Chamber of Commerce are urging Congress to extend or make the changes permanent.

“It is essential that Congress act swiftly to prevent the expiration of Medicare telehealth services this September, providing sufficient lead time to ensure continuity of care and avoid disruptions,” the organizations stated in an August 11 letter. “Both patients and practitioners seek assurance that services will remain available, as they have for the past five years.”

What’s Changing on Oct. 1

If Congress does not act, phone-only visits will no longer be covered for most types of care. Patients may once again need to travel to a clinic or hospital first to qualify for future virtual visits. Specialists, such as physical therapists and speech pathologists, could lose the ability to bill for online appointments. And community providers, including rural health clinics, would no longer be able to offer many home-based telehealth services. Even mental health care, one of the biggest success stories of the pandemic, would face new limits, with patients required to have an in-person visit before continuing therapy online.

While these changes technically apply only to Medicare, the ripple effects could be much wider. Private insurers and state Medicaid programs often follow Medicare’s lead when setting their own coverage policies, so if Medicare tightens its rules, commercial plans may do the same.

The Business Impact

Telehealth didn’t just change how people see clinicians, it created whole new business models and fueled billions in investment and revenue growth for telehealth companies.

The biggest winner has been mental health, which has been the No. 1 use of telehealth nationally across commercial insurance for the past two years, according to FAIR Health’s claims tracker. In early 2025, mental health again topped all telehealth diagnoses in every U.S. region.

Other telehealth companies benefited as well from the pandemic-era rule changes. Hims & Hers, an online health and wellness subscription service, reported nearly $1.5 billion in revenue in 2024, about a ten-fold increase since 2020. Teladoc, a virtual care network for general and specialty medicine, also expanded rapidly, with $2.6 billion in annual revenue in 2024, more than double its pre-pandemic level.

And while the bleak financial environment has slowed the flow of healthcare IPOs to a trickle, some telehealth companies were able to break through the morass, including Hinge Health, a digital clinic for joint and muscle pain, and Omada Health, an online program for diabetes and chronic disease management.

Overall, as patient demand for telehealth increases, digital health companies have become one of the few bright spots in healthcare investing, raising $6.4 billion in the first half of 2025, even as funding for biopharma, medtech, and diagnostics has fallen sharply in a multi-year slump.

The Stress Test

Despite the impending telehealth cliff, most providers are not ready for a sudden return to pre-pandemic rules. A Black Book Research survey of more than 400 telehealth providers found that 71 percent are only “somewhat prepared” or “not prepared” for the change. Meanwhile, nearly two-thirds of clinicians anticipate disruptions if the rules are allowed to expire.

If the rules revert, the healthcare system that has relied upon virtual care for five years will face a significant stress test, said Doug Brown, founder of Black Book Research.

"Providers have scaled telehealth rapidly since 2020 in response to demand and regulatory flexibility," Brown said in a news release. Without Congressional action before September 30, “healthcare organizations face serious risks: service disruption, compliance failures, and a reversal of progress on equitable access to care.”