Telemedicine startups' expansion plans hit snag as states roll back pandemic waivers 

Telemedicine startups have pulled a record year of funding, with more than 500 companies securing $13 billion as of Oct. 18. However, with uncertainty surrounding state licensing waivers and reimbursement, some key players are concerned about growth stalling out, The Wall Street Journal reported Oct. 21. 

Six things to know: 

1. Venture capitalists have backed much of the growth startups have seen this year by investing $13 billion in 538 financings of U.S. telemedicine companies through Oct. 18, nearly double the $7.7 billion raised in 2020, according to PitchBook Data. 

2. Startups also were supported by the temporary waivers of restrictions on telemedicine that many states allowed, including the provision letting physicians be licensed in their state to provide virtual care. 

3. Certain states are now letting licensing waivers expire, while others are keeping them in place, which has created a complex regulatory situation, Nathaniel Lacktman, partner with Foley & Lardner LLP and chair of its national telemedicine and digital health industry team, told the Journal

"For telemedicine companies operating on a multistate basis, the idiosyncrasies of state waivers have resulted in near total confusion," he said. 

4. Fifteen states provide an expedited licensure process for out-of-state physicians who want to provide telemedicine to patients in their state, according to Foley & Lardner. This group includes Florida, which let telemedicine waivers expire in July. As a result, out-of-state physicians can no longer provide virtual care to patients in Florida unless they become licensed in the state. 

5. Uncertainty surrounding reimbursement has also been a concern for telemedicine startups, as CMS waived Medicare restrictions at the start of the pandemic that expanded provider reimbursement for virtual care. The restrictions are set to go back into effect after the public health emergency ends. 

6. While some venture capitalists recognized the regulatory uncertainty in telemedicine, they told the Journal that overall the pandemic has made more physicians and patients aware of the benefits of virtual care including convenience and increased access to care. 

"Virtual medicine is here to stay," Andrew Adams, co-founder and managing partner of Oak HC/FT, an investor in Cerebral and other healthcare startups, told the publication.


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