DEA Proposal Jeopardizes Digital Providers, Limits Access to Care, Behavioral Health Insiders Warn

The new telehealth restrictions proposed by the Drug Enforcement Administration (DEA) last week struck a sour chord with several industry stakeholders.

Many industry insiders condemned the move as out of touch and even dangerous, jeopardizing telehealth models’ effectiveness in behavioral health. Still, the proposal is not set in stone, and parts of it could change after it goes through its public comment phase.

Some industry experts say that the DEA is out of compliance with a long-standing mandate to create a special registration process to allow some providers to prescribe controlled substances via telehealth without in-person exams.

“The same people who always get hurt are going to continue to get hurt,” Jordan Hansen, CEO and co-founder of St. Paul, Minnesota-based YourPath, told Behavioral Health Business. “We just seem incapable of learning from past mistakes.”

YourPath is a virtual medication-assisted treatment (MAT) and population health services provider.

Still, the initial proposed rules could change before it becomes effective, with some industry observers seeing the austere proposal as more of a starting place for discussion than an intentional walk-back of telehealth use in prescribing controlled substances.

On Feb. 24, the DEA released proposed rules that essentially end all controlled substance prescribing via telehealth without a prior in-person examination. The proposed rules offer limited exceptions for 30-day supplies of specific medications, specific requirements on in-person exams and referrals, and create new industry terms and other administrative requirements.

The DEA ostensibly presented the rules as a bridge from the public health emergency (PHE) flexibilities that allowed telehealth in behavioral health to flourish to a new era of permanent regulation.

But as presented, the rules appear to be both more restrictive and complicated than the pre-COVID application of the Ryan Haight Act, the law that directs telehealth prescribing of controlled substances. It also seems aimed at bringing to heel unscrupulous health care providers seeking to exploit the prescribing flexibilities allowed during the pandemic.

“You had a lot of telebehavioral health companies that were created during the pandemic; there’s always going to be growing pain,” Jéna Grady, counsel with the law firm Nixon Peabody, said. “At the least, the initial proposed rules are somewhat of a knee-jerk reaction to some of the hiccups we saw. … If you’re a rural patient, you’re not going to be a non-rural patient after 31 days. You’re still going to be having a hard time getting to a prescriber and an in-person exam.”

Jeopardizing patients and businesses

A core part of all telehealth models is the ease of access to care, especially in circumstances where providers aren’t or can’t be present — making telehealth inflexible limits its ability to solve access-to-care challenges.

The United States generally faces a health care workforce shortage, meaning several communities don’t have the providers, especially mental health providers, in place to meet the needs of the community.

Further, the impacts of the new rule are proportional to a patient’s or a business’ reliance on controlled substances.

For Talkiatry, the new proposed rules would not have a major impact on its patients since controlled substances are relevant only to a small number of their patients, Dr. Georgia Gaveras, the company’s co-founder and chief medical officer, told BHB.

“We didn’t build this business in order to focus on controlled substances,” Gaveras said. “It doesn’t hinge on that. It’s just a part of what we do.”

New York City-based Talkiatry provides telehealth access to psychiatric services. The organization raised a $37 million funding round in January 2022.

Still, Gaveras is skeptical of the in-person exam requirement. It opens up additional costs for patients who may have co-pays or other cost-sharing requirements to see a provider in person and adds a potential hurdle that patients may struggle to overcome.

“It is a process for patients to see me as a psychiatrist,” Gaveras said. “I don’t know necessarily what going to that [in-person examination] and then coming to me qualitatively changes about the care.”

During 2020, a 16- to 20-times increase in telehealth utilization led to an overall increase in mental health utilization among commercial health plan members despite the lockdowns that essentially eliminated in-person care, according to one study.

Other data shows that high telehealth utilization rates for behavioral health remained even after most government restrictions were lifted on in-person care and even continued to grow as a share of all telehealth visits, according to the Kaiser Family Foundation.

In the years leading into the pandemic and following its onset, record-setting amounts of investment poured into the coffers of startups seeking to meet the unmet demand for behavioral health that COVID revealed and worsened. Annual investment into digital health generally more than tripled from 2019 to 2021, reaching $29.1 billion, and mental health funding quintupled during the same period to $5.1 billion, according to Rock Health.

Some of the companies that secured major investments and headline built their business model around prescribing controlled substances, including the behavioral health tech company Cerebral. Founded at the end of 2019, the San Francisco-based digital mental health company rocketed to the heights of emblematic Silicon Valley tech startup fame and had a highly public and rocky come down in the year since.

Cerebral landed a head-turning $4.8 billion valuation on a $300 million Series C investment round. The company has raised $462 million, according to Crunchbase.

How Cerebral marketed medication management — specifically Adderall, a branded ADHD medication and controlled substance — and allegedly viewed medications as a patient retention tool sparked criticism and scrutiny from the public and law enforcement bodies such as the DEA (who also scrutinized Done Global Inc.) and the U.S. Attorney’s Office for the Eastern District of New York.

The company announced in May 2022 that it would end most controlled substance prescribing except for a fledgling MAT program for opioid-use disorder (OUD). It would quietly shut that down too and transition patients to other providers in November 2022. That came out along with recent news of its third round of layoffs in recent months.

DEA’s frustrating history with MAT

Companies that rely on telehealth to increase access to the OUD treatment buprenorphine are especially impacted by the proposed rule because it is a controlled substance.

The rules allow for the prescription of a 30-day supply of buprenorphine without first performing an in-person exam. However, an exam would be required before additional buprenorphine can be prescribed and that initial prescription would have to include a special label. That special label is meant to signify that the prescription is written according to this new exception.

“That reg could result in a mark, a stigma, on prescription issued as a result of telemedicine consults,” Nathaniel Lacktman, partner at the law firm Foley & Lardner LLP, told BHB. “We know that a number of pharmacies are already, and have been refusing to fill telemedicine prescriptions as a result of telemedicine consults and I think that this risks it continuing.”

Lacktman predicts that the special labeling will lead to widespread industry confusion and will act as a “dog whistle” that will lead providers to pull back on telehealth use.

Further, Lacktman and others point out that the DEA is out of compliance with congressional will with this new rule regarding buprenorphine and other controlled substances.

Since the Ryan Haight Act was enacted in 2008, the DEA has been obligated to create a special registration process allowing telehealth prescribing of controlled substances without in-person visits. This mandate was reaffirmed a decade later in the SUPPORT for Patients and Communities Act of 2018. The DEA claims the new rules fulfill the obligations.

The DEA claims in the text of the proposed rules that they are “consistent with, and fulfills, DEA’s obligations under both the Ryan Haight Act and the SUPPORT Act.”

This is widely disputed.

“It appears that the DEA is defying Congress here and we hope Congress responds,” Dr. Brian Clear, chief clinical officer at Bicycle Health, told BHB. “In the details of the rule, the DEA claims that a special registration process for medication for OUD would be too difficult, but we know our partners at [the American Telehealth Association] have advanced thoughtful, effective solutions to that process — so it’s hard to understand why the DEA arrived at this conclusion.”

Boston-based Bicycle Health was founded in 2017 and focuses on virtual MAT for OUD. Last year, it raised $55 million.

Lacktman similarly maintains that the rules as proposed don’t satisfy what Congress called for in the SUPPORT Act and suggests that legal action from the industry may be required to force the DEA to comply.

Similarly, Ben Maclean, general counsel for the virtual addiction treatment provider Boulder Care, told BHB that the proposed rule highlights DEA’s struggle with its dual role as a law enforcement agency and as a regulatory body and its preference to act as the former.

“[For years] they have been asked and required by Congress to implement a telemedicine registration. They have entirely abdicated their responsibility and this rulemaking continues that pattern,” Maclean said. “They have shown neither the interest nor the proclivity for issuing coherent rulemaking around providing care.”

Boulder Care is a Portland, Oregon-based MAT provider that treated OUD and alcohol use disorder (AUD). It closed a $50 million funding round in July 2022.

Maclean called the move “draconian” and said he views the rules as being “skeptical of telehealth as a modality and at least in part driven by ongoing DOJ investigations into a couple, particular telemedicine-based providers.”

The move also appears inconsistent with other parts of the federal government, even its ultimate leader: President Joe Biden.

During both of his state of the union addresses, Biden called for more to be done to address opioid overdose deaths. This year, his administration said it will “further expand access to treatment by working with medical professionals to make prescribing proven treatments, including buprenorphine for [OUD], part of routine health care delivery” in supplemental materials released just before Biden’s address.

An estimated 107,500 people have died from drug overdoses — about 75% from opioid overdoses — in the 12 months ending in August 2022, according to the latest Centers for Disease Control and Prevention (CDC) estimates.

Near the end of 2022, the Substance Abuse and Mental Health Services Administration (SAMHSA) proposed a rule allowing for additional flexibilities with buprenorphine and methadone induction over telehealth for certain providers called opioid treatment programs (OTPs).

On top of tweaking other telehealth rules and putting over $10 billion into behavioral health initiatives, the 2023 omnibus funding bill passed by Congress nixed the so-called DATA waiver, also known as the X waiver, which regulated physicians’ ability to prescribe buprenorphine in the first place.

“It’s interesting — is SAMHSA on the same page as DEA or not?” Grady said. “With the [omnibus bill], we got rid of that DATA waiver. Everyone was thinking, ‘Oh, this is showing what we need to do to make sure people receive buprenorphine where they are.’ Now we have just more obligations on practitioners that I think a lot of people didn’t expect.”

Now what?

The DEA will hold a 30-day public comment period for the proposed rule that expires on March 31.

Several behavioral health insiders say they expect loud and voluminous pushback on the rules. Some expressed hope that the rules as presented were meant to establish a harsher-than-intended baseline of sorts that would allow a more moderate response while maintaining some original regulatory aims.

“There’s got to be some kind of middle ground,” Dr. Reza Hosseini Ghomi, the chief operating officer and co-founder of Frontier Psychiatry, told BHB. “How do we keep it so that you can’t have reckless prescribing — meaning a provider meets someone, know very little about them, spend five minutes with them and then prescribe a controlled substance? That’s not good practice.”

Frontier Psychiatry is based in Bozeman, Montana. It focuses on rural populations and local partnerships. While it accepts most forms of insurance, most of its patients are covered by Medicaid.

“The proposed rule does get towards that. There are definitely flaws in it that will be unnecessarily burdensome,” Ghomi said. “That’s why my general impression [of the proposed rule] is positive because it’s going to at least cause us to really stop and consider how to prescribe in the best interest of the patient.”

Even if a middle ground isn’t achieved, other segments of the Biden administration may be able to bring about their own regulatory maneuvers to maintain telehealth flexibilities for prescribing controlled substances.

Zack Gray, co-founder and CEO of Ophelia Health, suggested that the U.S. Department of Health and Human Services (HHS) could tie present flexibilities that are in place due to the COVID PHE to the longer-running opioid PHE.

New York City-based Ophelia Health has raised $67 million, according to Crunchbase. It solely focuses on treating OUD with MAT via telehealth.

In 2017, the Trump administration declared a public health emergency related to the “opioid crisis.” It has been renewed ever since then. The COVID PHE will expire on May 11.

“My hope is that the DEA’s intent here is to set a conservative standard that can then be overruled by HHS,” Gray told BHB. “There’s a lever in place for the administration to act independently of the DEA to essentially overrule their proposal.”

Such a move would not fundamentally solve the regulatory questions around transitioning from COVID-era exemptions to a permanent regulatory environment. Rather, it would continue the temporary flexibilities and give more time to address telehealth and controlled substance prescribing, at least until the end of the opioid PHE.

Gray noted that added requirements for in-person visits in addition to several new record-keeping requirements related to the proposal would add unfunded administrative burdens for providers to shoulder. This is especially true and dangerous for providers that seek to care for Medicaid patients, who are more at risk of dealing with addiction and have plans that have low reimbursement rates.

“In the best case, it requires us to do even more work in order to get these patients in care and compliant with the in-person requirements,” Gray said. “So, some programs may go out of business, others may simply pull back access. It’s not going to be good for the system.”

Should the new regulations come to pass as presented, many providers said they would be a troublesome burden but not an existential threat to their work.

Leaders at Boulder Care, Frontier Psychiatry, YourPath and Bicycle Health said that in-person visits or referrals were already a part of or contemplated in their business models.

“Despite keeping in-person clinic locations throughout our company’s growth, we have always believed in the promise of telehealth to treat OUD,” Clear said. “[The proposed rules] will definitely disrupt our operations and harm patients, but it won’t stop us from providing care.

“In some ways, it forces us to accelerate our plans to build referral networks. We feel confident we can build a direct referral pathway that will be particularly effective for our insurance patients.”

Clear expressed worries for Bicycle Health’s Medicaid and other Medicaid patients.

Regardless of the potential impacts and outcomes, it’s clear that the direction of regulating telehealth in the post-COVID era is not settled and will likely continue to change for the foreseeable future.

And there may yet be time for the DEA to promulgate a special registration process for certain providers such as virtual MAT providers, Lacktman said. The proposed rules would become effective at the end of the PHE, May 11, and prescribes a six-month window for providers and patients to comply with the rules.

During that timeframe, and even during the present public comment period, Lacktman says there is time and space for the industry to work with the DEA to come up with a middle ground on the proposed rule and establish the long-awaited special registration and have both in place near the end of the year.

“I’m not giving up hope. I’m quite an optimistic person,” Lacktman said. “I believe both are appropriate pathways.”