CMS PFS Final Rule

Telehealth vendors, health systems, and clinicians are seeing opportunities to further expand delivery of reimbursable telehealth services since CMS issued its (CY) 2021 Medicare Physician Fee Scale final rule on December 1, 2020,1 amping up the velocity for telehealth growth.

The COVID-19 pandemic led to more flexible payer reimbursement of telehealth use, driving a 4347% growth in telehealth claims to private insurers year-over-year.2 Pertinent specifically to Medicare beneficiaries,  preliminary data indicate over 24.5 million out of 63 million beneficiaries and enrollees received a Medicare telemedicine service between mid-March and mid-October 2020.3  The transformative benefits of telehealth have enabled many patients to address acute and chronic health concerns while minimizing infection risks.

With this recent final rule, CMS established permanent Medicare beneficiary coverage for services that included group psychotherapy, low-intensity home visits, and psychological and neuropsychological testing.4.  Another welcome permanent change expanded patient access to telehealth within nursing facilities, with reimbursement for nursing facility telehealth visits permitted once every 14 days instead of the once every 30-day limit prior to the pandemic.5 Temporary coverage was also finalized for an array of services through the end of the calendar year when the COVID-19 Public Health Emergency ends. These services included high-intensity home visits, emergency department visits, specialized therapy visits, and nursing facility discharge day management.4

Multistakeholder Support

This CMS rule has been well-received by the American Telehealth Association, with its CEO, Ann Mond Johnson, declaring, “This final rule is yet another clear indication that telehealth has become a permanent part of our healthcare system…” With patients and clinicians becoming increasingly familiar with telehealth, the American Medical Association is advocating for additional policies to ensure broad and appropriate access, including coverage parity (fair payment requirements that insurers cover telehealth by all contracted physicians), broadband expansion to cover geographic gaps, and initiatives to support digital literacy.5.  AHIP has noted that health insurance providers have supported federal and state policy changes to accelerate telehealth adoption,7 and in January 2021 supported re-introduction to the Senate of the Ensuring Parity in MA for Audio-Only Telehealth Act. This legislation addresses access problems to broadband Internet services experienced by many Medicare Advantage enrollees, who rely on phone calls for virtual home care.8.  The current pandemic-infodemic crisis that facilitates public and private stakeholder collaborations will create more momentum for telehealth investment, innovation, and expansion as tactics to mitigate in-person contact in the care continuum.

Market Landscape

The telehealth market is presently rather fragmented, with a varied assemblage of more than 250 companies, representing  “white hot” opportunities for investment, mergers, and acquisitions in 2021.9  So far, investors include Johnson & Johnson, with their 2020 investment in direct-to-consumer telehealth company Thirty Madison.10  Thirty Madison is considered a niche specialty telehealth company, offering telehealth visits and online prescriptions for drugs treating conditions such as hair loss and acid reflux that are part of the Johnson & Johnson’s therapeutic portfolio. Other entities either investing or considering investments in telehealth include insurers such as Aetna, Anthem, Cigna, Humana, and United Health, and national pharmacy chains CVS and Walgreens. Not to be overlooked is Teladoc, which has made multiple acquisitions, including Livongo, specializing in telehealth management of chronic conditions.9  Not to be excluded from investing in innovative telehealth platforms are health systems, with nearly half (49%) of those participating in a recent survey citing virtual care as a top innovation priority with the onset of COVID-19. Most reporting health systems in that survey will continue or expand telehealth services in 2021.11

Opportunities for Pharmaceutical Manufacturers

Telehealth presents multiple opportunities for pharmaceutical manufacturers that include facilitating clinical trials, forging new access channels, and creating innovative bundles of services, devices, and therapies. For example, clinical trials can leverage telehealth to overcome Social Determinants of Health (SDOH) by circumventing access barriers to patient recruitment and participation, by giving guidance to address health literacy issues, by providing remote patient monitoring, and by offering patient and caregiver preventive care and support.

New access channels can be created or strengthened through strategic alignments with telehealth companies offering evaluation and online prescription of therapies aligned with portfolios, and early identification, and digital management and tracking of side effects and adverse events. In this digital age of social network amplification, it is in the interests of manufacturers, their partners, and societal stability to connect with consumers, before they connect with the courts or retreat into the forbidding recesses of Internet rabbit holes. Therapies, remote devices, apps and instruction can potentially be bundled with telehealth services on digital platforms, to facilitate seamless access to care for patients with chronic conditions.

Manufacturers should monitor the dynamic telehealth landscape, to anticipate new opportunities for strategic partnerships and engagements. Additional insights can be gained by using telehealth hubs to collect real-world data and generate real-world evidence to foster more treatment innovation. Quantitative and qualitative research (eg, surveys and virtual insights forums) can also facilitate understanding of the evolving policies, priorities, challenges, and unmet needs of health systems, plans, employers, ACOs and other alternative payment models, and to form value-based alliances to support therapeutic access through telehealth.

In conclusion, the COVID-19 pandemic-infodemic will continue to accelerate the adoption of “point-of-care everywhere” interventions beyond traditional care locations. Telehealth hubs as alternatives to traditional in-person patient care will drive digital innovations by offering manufacturers opportunities to develop new direct-to-consumer relationships, by supporting clinicians with better tools to optimize care and efficiency, and by promoting patient and clinician connectivity and safety, in support of the Quadruple Aim.


  1. Centers for Medicare & Medicaid Services. Final Policy, Payment, and Quality Provisions Changes to the Medicare Physician Fee Schedule for Calendar Year 2021. Published December 1, 2020. Accessed February 4, 2021.
  2. Telehealth Growth During COVID-19. Published July 7, 2020. Accessed February 4, 2021.
  3. Centers for Medicare & Medicaid Services. Trump Administration Finalizes Permanent Expansion of Medicare Telehealth Services and Improved Payments for Time Doctors Spend With Patients. Published December 1, 2020. Accessed February 4, 2021.
  4. JD SUPRA. Executive Summary: Tracking Telehealth Changes State-by-State in Response to COVID-19—December 2020. Accessed February 4, 2021.
  5. American Medical Association. Can Telehealth Access Survive the Pandemic? These Policies Are Key. Accessed February 4, 2021.
  6. Health IT News. Industry Responds to CMS PFS Final Rules. Accessed February 4, 2021.
  7. AHIP. Bridging the Digital Divide for Consumers. Accessed February 4, 2021.
  8. AHIP. New Bill Allowing Audio-Only Health Encounters Will Improve Access to Care for Millions of Seniors. Published January 27, 2021. Accessed February 4, 2021.
  9. Mergers & Acquisitions. M&A Forecast 2021: Telehealth Is Suddenly the Norm, and Deals Follow. Published January 6, 2021. Accessed February 4, 2021.
  10. FIERCE Healthcare. Why Johnson & Johnson Is Investing in This Niche Telehealth Startup. Published August 17, 2020. Accessed February 4, 2021.
  11. FIERCE Healthcare. How COVID-19 Shifted Healthcare Executives’ Technology Priorities and What to Expect in 2021. Published October 21, 2020. Accessed February 4, 2021.