As the novel coronavirus spread like wildfire in the U.S. from the first confirmed case in January to hundreds of thousands of infections in March, patients stopped going to hospitals and doctor's offices amid widespread stay-at-home orders. But the need for healthcare didn't go away.

"For a long time, the biggest battle for telehealth in general was: Is this real? This is a cool concept, but when do folks start using this?," Stephanie Davis, senior health IT analyst at SVB Leerink, told Healthcare Dive. "For better or for worse, the pandemic solved that."

The coronavirus kicked the digitization of the healthcare industry up to light speed, cramming a decade of regulatory change and consumer adoption into roughly a month and a half. States and the federal government hastily cut barriers and hundreds of companies angled to use the boost to their advantage.

"There are generations where nothing happens. There are decades where nothing happens. And there are weeks when decades happen," Roy Schoenberg, CEO of Amwell, told Healthcare Dive. "And that's exactly what we've gone through."

Virtual care visits skyrocketed beginning in March, with the majority of users trying it out for the first time. Vendors reported daily visit highs in the tens of thousands, from provider Teladoc's 20,000 visits a day to Amwell's one-day high of 40,000 visits, sending vendors rushing to onboard more doctors.

Before the pandemic, McKinsey estimated the total annual revenues of all U.S. telehealth companies at $3 billion. Now, the consultancy estimates $250 billion of the nation's health spend could eventually be digitized. Frost & Sullivan predicts seven-fold growth in the industry by 2025.

​But as states began to gingerly reopen their economies over the last month or so, patients trickled back into doctor's offices. Vendors saw usage drop off in May and June, though no companies were willing to share specific figures with Healthcare Dive around the decline.

But now, visits are beginning to pick up again as infections rise in the South and West, leading some states to pause or roll back openings.

The country's seven-day average of new COVID-19 cases surpassed 60,000 for the first time on July 14, with hotspots in states like Texas, California and Arizona. Vendors report telehealth usage in a geographic area seems to correlate with its COVID-19 case load.

"We're definitely seeing that reflected in our visit volume," Robin Glass, president of San Francisco-based telehealth provider Doctor on Demand, told Healthcare Dive.

'Those silly rules'

The biggest near-term question mark for the future of the industry is whether Washington will codify temporarily relaxed regulations that spurred unprecedented adoption. CMS has been paying for telemedicine services in federal programs for years, but with significant strings attached.

Following the declaration of a national public health emergency, the Trump administration changed more than 30 policies, allowing Medicare to temporarily reimburse telehealth on par with in-office visits and raising payments for audio-only visits. CMS now allows more than 100 additional services through telehealth.

Telehealth providers had always served the Medicare population through direct-to-consumer pathways or Medicare Advantage, but a large swath of the 40 million Americans in traditional Medicare were closed off to the service.

That all changed in March.

In the week ended March 7, only 11,000 Medicare beneficiaries used telehealth. By the week ended April 25, 1.7 million elderly and disabled Americans in Medicare were using it, CMS told Healthcare Dive — a monumental increase of 15,354% in less than two months.

And vendors are taking advantage: In May, Doctor on Demand became the first telehealth provider to offer virtual healthcare, including COVID-19 testing and diagnosis, to Part B beneficiaries.

Telehealth players and providers have clamored for the administration to keep some, if not all, of the changes. But the most sweeping flexibilities require Congress to step in.

CMS can't ax the two biggest restrictions on use and reimbursement mandated by the Social Security Act: the geographic requirement mandating a beneficiary live in a rural area, and the originating site requirement mandating they travel to a local medical facility to receive virtual care.

"A lot of these restrictions before didn't make sense or were kind of dumb, frankly," Brandon Welch, CEO of vendor doxy.me, told Healthcare Dive. "The government is realizing, those silly rules, we don't need to bring those back."

If Congress doesn't allow HHS to determine exemptions, the moment the national emergency is lifted, all new Medicare payment for telehealth disappears. There's broad bipartisan support from top Trump administration officials and lawmakers, though no firm consensus yet on which to keep after the pandemic eases.

Among the most likely?

Based on congressional hearings and draft bills, including the bipartisan Protecting Access to Post-COVID-19 Telehealth Act: ending site origination and geographic requirements, and allowing Medicare to continue broad telehealth reimbursement. Less likely is continued lack of enforcement of HIPAA penalties, which has allowed doctors to use platforms like Zoom, FaceTime and Skype to see patients during the emergency.

Concerns about privacy have dogged telehealth from the start, and bringing non-HIPAA-compliant platforms into the mix hasn't helped assuage worries that clinical information isn't being used appropriately, experts say. Consumer platforms arguably don't have the same protections and certifications as devoted telehealth platforms — and vendors don't want low-cost alternatives that could entice users away from their offerings.

"I don't think anyone wants to relax the HIPAA rules long-term,"Teladoc COO David Sides told Healthcare Dive.  

And Cowen analysts don't think permanent change will be enacted until the second iteration of the 21st Century Cures act, sometime next year. But if Congress doesn't intervene, CMS has some authority over what services can be delivered via telehealth. 

CMS could, for example, permit audio-only telehealth services or clarify that physicians can provide remote patient monitoring services to patients with chronic conditions. The agency already permanently allowed the use of virtual care in home health late June, though it can't be reimbursed as a visit.

More changes will likely come with the publication of the Medicare physician fee schedule, which historically runs in July.

"Were we to make these permanent, they would show up as proposals in that proposed rule," Emily Yoder, an analyst with CMS' Division of Practitioner Services, said at a virtual briefing run by the Connected Health Initiative earlier this month.

Another regulatory barrier vendors are hankering to modify is the patchwork state licensure system, which largely forbids providers operating in one state to see patients in another, virtually or otherwise.

Dozens of states began offering emergency licensing for qualified medical personnel amid the coronavirus, though many have significant caveats. Vendors argue a quick removal of the licensures post-COVID could harm continuity of care for patients, and the industry's largest trade group, the American Telemedicine Association, has lobbied for a federal licensure system greenlighting providers nationwide.

Experts say it's unlikely state licensure goes away completely, as it keeps physicians accountable to their state medical boards. However, the pandemic has proved the importance of having a backup plan in place to allow providers more license portability in event of the next public health emergency.

And federalization could happen down the road, whether through a national credentialing process similar to that used by the Department of Veterans Affairs or multistate compacts allowing doctors to apply for a license in another state through an expedited process. Almost 30 states already participate in such a compact for physicians.

It's difficult to predict what the regulatory landscape will look like coming out of the pandemic, but experts say it's hard to see the U.S. going back to the previous potpourri of federal and state rules and regulations.

"It's going to be interesting to see how, or if, our nation and individual states try to go back to a pre-regulatory telehealth framework after this," Pat Carroll, CMO of telehealth startup Hims & Hers, told Healthcare Dive.

The parity problem

The pandemic has also been an interesting experiment for how far America's private payers are willing to go in covering telehealth. Most major commercial insurers, following Medicare's lead, have expanded what services can be offered virtually and waived cost sharing for consumers, though most organizations are extending the relaxations month-to-month, not permanently.

Like in Medicare, the allowances and higher reimbursement led to striking adoption. Compared to the same time last year, commercial telehealth claim lines increased by 4,334% in March and 8,335% in April, according to nonprofit FAIR Health.

Before COVID-19, reimbursement for telehealth grew at a snail's pace: Medicare expanded coverage for its Medicare Advantage beneficiaries on a code-by-code basis. Commercial payers and self-funded employers allowed virtual consultations generally only for urgent care or behavioral health needs. State laws began to evolve to incentivize telehealth commercially in Medicaid — but restrictions remained.

The majority of states have laws that govern how private insurers reimburse for telehealth. However, only five require commercial payers to cover services provided via telehealth the same way they would reimburse for in-person services, according to the Center for Connected Health Policy.

Vendors and some doctors want universal parity after COVID-19, arguing paying the same for telehealth and in-person services could cut down on the costs of operating brick-and-mortar locations. Facility fees paid by the federal government could drop sharply if doctors pivot to telehealth in large numbers, and doctors would have less overhead in staffing and rent.

However, analysts say it's unlikely, due to the worry telehealth would be used as a precursor to, or in addition to, in-person services, instead of as a replacement for them.

​"Telehealth has historically faced a Catch-22 where a lack of reimbursement stymies growth, but reimbursement parity with in-person visits undermines the promise of reduced healthcare costs," Danielle Bradnan, an associate at research firm Lux, told Healthcare Dive.

CMS enacted parity in Medicare during the emergency. But agency head Seema Verma has said in interviews CMS will reevaluate payment rates moving forward, especially if Congress gives its blessing to broader telehealth reimbursement.

​"I don’t see it as a one-to-one," Verma told STAT in June.

"It becomes a bit of a political bomb," ​SVB Leerink's Davis said. "I think you probably get somewhere in the middle — close to parity but not all the way."

The next big thing: providers

Before the pandemic, telehealth was largely delivered direct-to-consumer through apps like 98point6 or covered by employers or health plans for their members.

The pandemic forced providers to implement or expand their telehealth offerings to recoup a lost slice of patient revenue. Many are now discovering it's a similar experience to delivering care in the brick-and-mortar setting, a revelation that could drive a sea change in how healthcare is delivered, as some hospitals report jumps in utilization in the multiple-thousand-percentage range.

Despite rising volumes, there's still a wide untapped provider base for vendors. Only 76% of U.S. hospitals had virtual care capabilities before the pandemic, according to the American Hospital Association, but a growing number of tech-savvy facilities are implementing tools for post-surgical followups, or to run a case past a remote specialist for services like teleICU or telestroke.

Teladoc acquired InTouch Health in a $600 million deal that closed earlier this month to grow health system products. InTouch contracts with more than 450 hospitals and health systems, including 30 of the 50 largest U.S. health systems like Kaiser Permanente and HCA.

Amwell, which provides virtual care to patients through its payer clients and also has physician groups and hospitals paying for its platforms, saw active providers on its platform multiply tenfold since January. Doctors at client hospitals and health systems on Amwell's platform increased 1,300% since the start of the pandemic.

But the ROI of telehealth is less clear for small, physician-led practices, experts say, though they've also seen widespread adoption.

Vendor doxy.me had about 70,000 provider clients using its platform prior to the pandemic, running about 12,000 sessions a day. Now, the company has about 700,000 doctors and 1 million video sessions a day.

At one point in the middle of March, doxy.me was adding more users each hour than it added over an entire month before the pandemic, Welch said.

By early April, almost 14% of physicians' weekly visits were being conducted via telemedicine, according to an analysis conducted by Harvard University researchers and health tech company Phreesia, up from basically zero pre-pandemic. 

However, that percentage steadily declined to just 8% by the end of June, a drop researchers said could be due to the high cost and difficultly of implementing telehealth technology.

Some believe telehealth will quickly become adjunct to in-person care again, though perhaps at higher levels. A July analysis by WELL Data Insights estimates telehealth will account for just 15% of total visit volumes over the rest of the year. Most physicians predict fewer than 10% of visits next year will be virtual, according to a July report from Sage Growth Partners.

But industry officials are betting virtual care will be permanently useful for the 45% of Americans with chronic conditions, who may find it dangerous or difficult to head into a hospital for needed care, especially during a pandemic.

"I think that's where the biggest change is going to be," Amwell's Schoenberg said. "The industry's going to morph to create new products that are oriented around managing those patients at home."

There are indications that shift is already occurring: The digital health sector shattered investment records in the first half of 2020 with $6.3 billion in funding, with telehealth receiving the lion's share.

Some $194 million went to Amwell, which is reportedly exploring an IPO for later this year, but hundreds of millions went to the wearables sector, too, as providers look for devices to track the progression of COVID-19 and remotely monitor patients' temperatures, blood pressure, and respiratory and heart rates in their homes.

How much the U.S. is willing to pay for virtual access to healthcare, which vendors will emerge out of the pandemic on strongest footing, whether access will be equitable for all Americans, to what extent telemedicine will replace the in-person encounter — these questions, and more, define the future of a nascent industry. Many will be answered within the next few months.

Either way, one thing is clear: A post-COVID delivery system will include more virtual care than ever before.

"The horse has left the barn here," Davis said. "It's going to be very hard to reverse any of this."