Navigating the Evolving Medicaid Landscape: What the Latest CBO Letter Means for Digital Health and Telehealth

Written By April Noel

A recent letter from key Congressional leaders to the Congressional Budget Office (CBO) signals continued scrutiny and potential shifts in Medicaid policy. For organizations operating in the telehealth, digital health, and virtual care space, understanding these developments is crucial for strategic planning and ensuring continued access to care for vulnerable populations.

Sent on May 7, 2025, from Senators Ron Wyden and Representative Frank Pallone, Jr., to the CBO, the letter specifically requests "Estimates for Medicaid Policy Options and State Responses." While the full details of the policy options being analyzed are not publicly available through this initial communication, the nature of the request from these influential leaders (who chair or rank on committees with significant healthcare jurisdiction) underscores a focus on the future fiscal and operational landscape of the Medicaid program.

This latest correspondence comes at a time of significant attention on government healthcare spending and program integrity. Both Wyden and Pallone have previously raised concerns about issues within government healthcare programs, including the use of prior authorization in Medicare Advantage and the practices of Medicaid Managed Care Organizations (MCOs). These prior actions suggest that policy discussions may revolve around:

  • Program Efficiency and Cost-Effectiveness: Policymakers are continuously seeking ways to ensure taxpayer dollars are spent effectively. The CBO's analysis will likely provide cost estimates for various proposed changes, which could impact reimbursement rates, service delivery models, and the types of services covered under Medicaid.

  • State Flexibility and Accountability: Medicaid is a federal-state partnership, and states have considerable flexibility in designing their programs. The letter's mention of "State Responses" suggests an examination of how states might react to or implement different policy options, which could lead to variations in how digital health and telehealth services are covered and regulated across states.

  • Program Integrity and Oversight: Given previous concerns raised by these legislators regarding MCOs and prior authorization, there may be an interest in policies that enhance oversight and ensure appropriate utilization of services within Medicaid, potentially impacting how digital health and telehealth providers need to document and justify care.

Why This Matters for Digital Health and Telehealth

Medicaid is a vital payer for a significant portion of the U.S. population, including many who stand to benefit most from increased access to care via telehealth and digital health tools. Changes in Medicaid policy, even seemingly minor ones, can have cascading effects on:

  • Reimbursement Models: Alterations to how states or the federal government reimburse for services delivered via telehealth could impact the financial sustainability of virtual care providers.

  • Covered Services: Decisions on which specific digital health and telehealth services are covered under Medicaid, and under what conditions, directly influence market opportunities.

  • Regulatory Requirements: New requirements related to program integrity, data reporting, or quality metrics could necessitate adjustments in technology platforms and workflows.

  • State-Level Variations: Increased state flexibility or differing state responses to federal policies could create a complex patchwork of regulations and coverage rules across the country.

The Broader Policy and Statistical Context

This CBO letter is part of a larger ongoing conversation about the future of healthcare in the U.S., particularly concerning government programs.

  • Current Telehealth Utilization: While overall telehealth use has dipped since the pandemic, it remains strong, particularly in mental health care. In 2023, 88% of psychologists reported offering telehealth services (American Psychological Association [APA], 2025). Insights from Rock Health's 2024 survey showed that 58% of Americans used virtual care in the past year (APA, 2025). Continued access through programs like Medicaid is crucial for maintaining this expanded access. Epic Research (2025) data from February 2025 indicates a 6.7% telehealth utilization rate across all specialties, with mental health at 27.5%.

  • Evolving Federal Policies: Federal policy continues to shape the telehealth landscape (Telehealth Access, 2024). Discussions are ongoing regarding the permanency of many Medicare telehealth flexibilities that were extended beyond the public health emergency. While the Medicaid context differs, federal actions often influence state-level decisions and the overall regulatory environment.

  • Focus on Health Equity: Policymakers are increasingly focused on health equity and addressing disparities in access to care (APA, 2022). Digital health and telehealth are seen as potential tools to bridge gaps, particularly in rural and underserved areas. However, ensuring equitable access requires careful consideration of broadband access, digital literacy, and appropriate reimbursement in programs like Medicaid. A digital healthcare equity approach considers the needs of different populations and ensures solutions are equitable at every phase (Johns Hopkins Bloomberg School of Public Health, 2025).

How CTeL Can Help You Navigate the Impact

The dynamic nature of healthcare policy, as highlighted by this CBO letter and the ongoing legislative discussions, necessitates vigilant monitoring and informed advocacy. Organizations in the telehealth, digital health, and virtual care space need to stay ahead of potential changes to understand their implications and to participate effectively in shaping future policy.

CTeL plays a critical role in this environment. Membership with CTeL provides organizations with:

  • In-Depth Policy Analysis: CTeL experts closely track federal and state legislative and regulatory developments, providing members with timely and detailed analysis of how potential policy changes, like those being analyzed by the CBO for Medicaid, could impact their operations.

  • Access to Resources and Information: CTeL serves as a central hub for information on telehealth and digital health law and policy, offering resources, white papers, and updates that help members understand the complex regulatory landscape, including nuances related to Medicaid.

  • Networking and Collaboration Opportunities: CTeL convenes stakeholders from across the digital health ecosystem, facilitating dialogue and collaboration on policy issues. This allows members to share insights, understand diverse perspectives, and potentially engage in collective advocacy efforts.

  • Guidance on Compliance: As policies evolve, compliance can become more complex. CTeL provides guidance and interpretation of regulations, helping member organizations navigate requirements related to reimbursement, licensure, privacy, and security, which are particularly important in the context of government programs like Medicaid.

  • Advocacy and Policy Shaping: CTeL actively engages with policymakers, providing expertise and advocating for policies that support the responsible and effective deployment of telehealth and digital health technologies. Membership offers a channel to contribute to these advocacy efforts.

In conclusion, the Wyden-Pallone letter to the CBO is a significant indicator that Medicaid policy options are under active consideration at the highest levels of Congress. For those in the digital health, telehealth, and virtual care sectors, staying informed about these potential changes, understanding their potential impact on state programs and reimbursement, and leveraging resources like CTeL membership are essential steps for navigating the evolving landscape and ensuring continued success in delivering innovative healthcare solutions.

Works Cited

April Noel
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