Budget Reconciliation and the Future of Telehealth Expansion Waivers: What’s at Stake?
With the telehealth expansion waivers authorized under the American Relief Act of 2025 set to expire on March 31, 2025, Congress faces a pivotal moment in healthcare policy. As the Republican-led 119th Congress leverages budget reconciliation to pursue spending and tax reforms, the future of telehealth hangs in the balance. The decisions made in the coming months will determine whether millions of Americans retain access to essential virtual care services.
A Republican trifecta taking power in Washington, party leaders are confident in their ability to pass major spending and tax reform in what President-elect Trump hopes will be “one big, beautiful bill.” Despite not having a filibuster-proof Senate majority, Republicans can still achieve many of their legislative goals through the process of budget reconciliation, which is shaping up to be one of the 119th Congress’ top priorities.
What is Budget Reconciliation?
Budget reconciliation is a procedural tool in Congress designed to expedite budget-related legislation. It allows bills that impact spending, revenue, and the federal debt to bypass the Senate filibuster and pass with a simple majority. While powerful, reconciliation is limited by the Byrd Rule, which prevents extraneous provisions from being included. Provisions must directly affect federal spending or revenue and cannot increase the deficit beyond the specified budget window.
A provision is considered to be extraneous if it falls under one or more of the following six definitions:
it does not produce a change in outlays or revenues or a change in the terms and conditions under which outlays are made or revenues are collected;
it produces an outlay increase or revenue decrease when the instructed committee is not in compliance with its instructions;
it is outside of the jurisdiction of the committee that submitted the title or provision for inclusion in the reconciliation measure;
it produces a change in outlays or revenues which is merely incidental to the non-budgetary components of the provision;
it would increase the deficit for a fiscal year beyond the “budget window” covered by the reconciliation measure;12 and
it recommends changes in Social Security.
Given these restrictions, reconciliation provides an efficient but narrowly focused pathway for addressing budgetary concerns—including health policies tied to telehealth funding and Medicaid.
What Might We Expect from the Bill?
As of writing, Congress is still drafting the bill. A list of policy options has been published, many of which are health related. Policies with potential impact on digital health include:
Site-neutral payments: Under this payment structure, Medicare would pay the same for a service regardless of site, whether it’s at a physician’s office, ambulatory surgical center, or hospital outpatient. MedPAC has recommended expanding site-neutral payment policies while protecting certain services only available in hospital outpatient settings. Hospitals argue that this framework would reduce access to care, which could include telehealth services.
Rolling back Medicaid expansion: The Affordable Care Act provided for additional funding for states who expanded Medicaid eligibility, a process commonly referred to as Medicaid expansion. Medicaid expansion has seen an association with an increased access to telehealth services – one study found a 54% increase in telemental health utilization in expansion states compared to nonexpansion states.
Other Medicaid cuts: Other proposed policies aimed at reducing Medicaid payments will also impact telehealth through reimbursement and enrollment eligibility. These include:
Per capita caps: These would set Medicaid funding to be based on the size of the state’s Medicaid enrollee population, and not in line with its health spending. “While it sets an annual upper limit on federal spending per beneficiary, a per capita cap approach allows for federal funding to increase when enrollment in state’s Medicaid program rises during the year.”
Lower FMAP Floor: Federal Medical Assistance Percentage (FMAP) refers to funding for state Medicaid programs from the federal government. Current law requires that the federal government’s share of Medicaid expenditures be at a minimum of 50%.
The Role of Telehealth Expansion Waivers
Telehealth expansion waivers, introduced during the COVID-19 pandemic, revolutionized access to healthcare. They temporarily removed geographic and originating site restrictions, allowed audio-only telehealth for certain services, and broadened the provider scope for virtual care. These changes:
Increased Access: Millions of Americans, especially those in rural and underserved areas, gained access to critical healthcare services.
Reduced Barriers: Vulnerable populations benefitted from more flexible care options, including those without reliable broadband access.
Expanded Coverage: Medicaid and Medicare beneficiaries experienced a surge in virtual care utilization, particularly for behavioral health.
However, without Congressional action, these waivers will expire, potentially reversing much of this progress.
Challenges to Maintaining Telehealth Expansion
1. Budgetary Constraints
The reconciliation process emphasizes reducing federal expenditures, placing telehealth-related funding at risk. Medicaid and Medicare telehealth reimbursement policies could be subject to cost-cutting measures as lawmakers seek to balance budgets.
2. Policy Fragmentation
Achieving consensus within the Republican majority is a significant hurdle. While some members advocate for cost-saving measures like per capita Medicaid caps and a lower FMAP floor, others recognize the long-term savings and improved outcomes associated with sustained telehealth funding.
3. The Byrd Rule’s Constraints
Provisions to extend telehealth waivers could be deemed incidental under the Byrd Rule. For instance, arguments that telehealth improves patient outcomes or increases access may not meet the rule’s strict budgetary focus, jeopardizing inclusion in the reconciliation bill.
4. State-Level Implications
Proposals such as rolling back Medicaid expansion and implementing per capita caps would disproportionately impact states with expanded Medicaid programs. These states often rely heavily on telehealth to serve low-income and rural populations, meaning cuts could deepen healthcare disparities.
5. Congressional Timelines
The expiration date of March 31, 2025, leaves a narrow window for action. With competing legislative priorities, securing attention for telehealth provisions will require significant advocacy and coordination.
What’s Next? A Positive Path Forward for Telehealth
To ensure telehealth expansion remains a cornerstone of U.S. healthcare, a multi-step strategy is essential:
Step 1: Educate Policymakers (January – February 2025)
Action: Fund research to encourage the proper and accurate scoring for CBO, continue to reach out and target members of Congress and their staff, emphasizing the value of telehealth in improving outcomes and reducing costs.
Key Message: Highlight the role telehealth plays in addressing rural health disparities, behavioral health needs, and access to care for vulnerable populations.
Step 2: Secure Bipartisan Support (February – Early March 2025)
Action: Build collaborative efforts and messaging with organizations to present unified recommendations.
Key Message: Advocate for telehealth as a fiscally responsible solution that reduces long-term healthcare spending.
Step 3: Align with Budget Reconciliation Timelines (March 2025)
Action: Push for inclusion of telehealth waiver extensions in the reconciliation bill by demonstrating direct budgetary impacts, such as reduced hospital readmissions and emergency room visits.
Key Message: Focus on fiscal benefits and compliance with the Byrd Rule to ensure provisions withstand scrutiny.
Step 4: Contingency Planning (March 2025)
Action: Develop state-level policies to sustain telehealth funding in the event federal waivers expire. Advocate for state Medicaid programs to adopt telehealth-friendly reimbursement structures.
Step 5: Implement and Monitor (Post March 2025)
Action: Partner with health systems and telehealth providers to monitor outcomes, ensuring the long-term success of expanded telehealth policies.
Why Telehealth Matters: The Stakes Are High
Failure to extend telehealth waivers could result in:
Reduced access for rural and underserved populations.
Decreased behavioral health support, as telehealth plays a critical role in mental health care delivery.
Strained health systems, particularly in Medicaid expansion states that rely on telehealth to manage high patient volumes.
Conversely, securing a path forward for telehealth will:
Improve health equity across the U.S.
Reduce overall healthcare costs through early intervention and improved chronic disease management.
Drive innovation in digital health technologies and care delivery models.
What Happens Next?
It is unlikely that all of the policy options listed will make it into the final bill. House Speaker Mike Johnson is confident that a single bill can be passed within the first half of 2025, but others in the party including Senate Majority Leader John Thune are pushing for multiple, smaller bills. If the bill doesn’t get any Democratic support, Johnson can only afford to lose two votes in the House, a difficult prospect for some of the bill’s more controversial policies.
The expiration of telehealth expansion waivers presents a critical opportunity for Congress to affirm its commitment to equitable healthcare access. Through strategic advocacy, coalition-building, and a data-driven approach to budget reconciliation, stakeholders can ensure that telehealth remains a cornerstone of modern healthcare delivery.
Join the Conversation
Don’t miss CTeL’s webinar on January 21, 2025, at 2:00 PM ET, where experts will delve into the implications of budget reconciliation for telehealth and explore actionable strategies to ensure the future of virtual care. Register now at CTeL Webinar Registration to gain valuable insights and take part in shaping the dialogue around telehealth policy. Additionally, support CTeL’s critical cost impact research by providing financial contributions. Your support enables CTeL to deliver Congress the evidence they need to make informed decisions and preserve equitable access to telehealth services for all Americans.