TTA’s November Futures 3: the good, bad, & ugly continues–CVS adds Glenview to board, controlled Rx telehealth extended, Revere Medical buys CareMax MSO, Oura’s $75M, HHS cybersec scored by GAO, incomplete EHR notes, more!

November 22, 2024 | by | No Comments

 

 

It’s an unusual pre-Thanksgiving week focused on significant developments on ongoing Major Stories but little new. CVS Health bends the knee to investor Glenview. Controlled substances telehealth gets a 3rd extension. Revere Medical out of Steward ashes snaps up a broken MSO. Oura partners with Dexcom CGM and gets paid for it! What’s kind of new? HHS comes up short on cybersecurity leadership while accurate EHR notes are short in new VA study.

Government updates: GAO scores HHS on cybersecurity issues; patient issues largely omitted from EHR notes in VA study (Coming up consistently short)
News roundup: CVS Health cedes 4 new board seats to Glenview, Oscar’s strong Q3, telehealth controlled substance prescribing in 3rd extension, new Revere Medical to buy CareMax assets, Oura picks up $75M Dexcom financing and partnership (Further developments on Big Stories)

TTA’s desk is closing early next week due to Thursday’s US Thanksgiving holiday. New articles resume the week of 2 December.

Cue the music…it’s the good, bad, and a ration of ugly this week. An under-the-radar company makes big buys in primary care and MSO. Veradigm might finally get itself sold. DOJ drags UHG to court over Amedisys–after the election. 23andMe continues to perhaps Destination Oblivion. Forward meets Oblivion after eight years. And Ali Parsa, one year after Babylon’s failure, serves up a new AI venture that gets a Gimlety view.

Bad News Roundup updates: UHG/Optum defends Amedisys buy fast via a website, digging deeper into Forward’s fast demise, former Masimo CEO Kiani booted–and sued (One lesson after another)
Bad News roundup: DOJ drops the hammer on UHG-Amedisys, 23andMe lays off 40% and closes therapeutics, Lyra Health lays off 2% in restructuring, Forward primary care + kiosks shuts down abruptly (We aren’t past it yet)
Babylon Health’s Parsa founds new AI medical assistant venture, Quadrivia, one year after Babylon Health’s failure (Parsa’s new AI-powered deal)
M&A action news: Astrana Health buys up Prospect Health for $745M after Centene MSO unit buy, Veradigm nears $1B+ sale, Sword Health lays off 17% of clinicians prepping for IPO using AI instead, Cigna is not buying Humana–really! truly! (M&A comes alive, with a new player)

The Big Race is over, 45 is now 47 come January, and health tech (plus related) news faces future. HLTH’s future is with UK’s Hyve Group. Cerebral faces an expensive DOJ/DEA Judgment Day for its Bad Behavior during the pandemic. 23andMe, CVS, and Walgreens face future survival. And what if in future healthcare sets a goal of zero failures, like aircraft makers and airlines?

News roundup: Cerebral forfeits $3.7M on federal Rx charges, Aetna president named, Stewardship Health sold to Rural Healthcare, Oura buys data company Sparta Science, Brook Health-Linus Health remote cognitive assessment 
Weekend reading: 23andMe’s up in the air future, including genetic data; Walgreens debates What To Stop and Start; what if healthcare pursued a zero-failure rate? (Some reckonings and a future view)
Surprise! HLTH conference group sold to UK’s Hyve Group Limited (Las Vegas barely a wrap)

A post-HLTH deluge of news–as the US rolls up to a major national election. CVS replaces its CEO and debates breaking up. Amwell takes on a new CFO. Decent-sized raises seem to have returned. Cigna isn’t buying Humana–as of now. And has Teladoc turned a corner?

News roundup: Teladoc’s improved Q3, PursueCare resuscitates Pear’s apps, AMA removes 16-day RPM requirement in 2026, PatientPoint intros Innovation Network, PeopleOne’s $32B raise, Cigna-Humana again a no-go (Earnings season and post-HLTH announcements)
Some thoughts on the takeaways from HLTH (Not that many, strangely)
News roundup 23 Oct: views on a CVS breakup and CEO replacement, Amwell’s interesting new CFO, CopilotIQ/Biofourmis merge (updated), raises by HealthEx, Counsel Health, Oshi Health (Will changes at top fix problems?)

As the weather chills, so do prospects for some very well known companies–and investment. Walgreens plans to shrink its retail footprint by 1,200 over the next three years, “monetize” VillageMD. CVS is exiting most of its infusion business. UHG stock, earnings hammered on Change Healthcare hack, Federal payment cuts. Masimo v. Apple patent slugfest continues with wins for both. DEA kicks the can on telehealth waivers into next year–maybe. FTC and DOJ chill M&A with more demanding Premarket Notification rule for M&A. The spot of good news–baby monitoring Owlet has its mojo back.

News roundup 16 Oct: Walgreens shuts 1,200 stores–500 in ’25, CVS exiting core infusion biz, Masimo v. Apple update, DEA recommends 3rd telehealth extension, Change hack costing UHG $705M, Owlet back in NYSE compliance (So many denouements..and only one good)
FTC drops the hammer on premerger notification requirements–what will be M&A and investment effects? (We told..and tell you so, no frills)

It’s unconfirmed, but CVS may be considering a breakup. Teladoc’s latest reorg puts its COO out to pasture. IPOs may revive by next year for ‘overdue for exit’ companies. In CEO Land, one former CEO strikes back at the Senate holding him in contempt, while another one, having lost her board, now can easily take 23andMe private. ATA announces 2025 Nexus and call for papers. And some new fundings and products…and why can’t VA stop stubbing its toe on Oracle EHR issues, or staff diving into politicians’ health records?

News roundup: Omada Health files S-1 for IPO in 2025–and a look at 2024 healthcare IPOs, Philips debuts new smart baby monitor, ActiveAlert launches in UK, ATA Nexus 2025 calls for speakers, abstracts (An small IPO revival?)
Breaking: another exit at Teladoc, with COO resigning effective 31 December (Something about ships? Spirals? Musical chairs?)
Industry news short takes: fundings for Qure.AI, Centivo, Rippl, Surescripts; M&A closings for GE Healthcare-Intelligent Ultrasound, LetsGetChecked-Truepill. And is Hinge Health going public soon?
Two ‘oops’ at VA: OIG finds VA, Oracle performance misalignments, makes 9 recommendations; VP candidates’ EHR records improperly accessed by VA employees (Enough already!)
Two follow ups: Steward Health CEO resigns–and sues the Senate HELP committee, Wojcicki will take 23andMe private (Time to take the yachts for a long trip?)
Now CVS Health may be reviewing ‘options’–including a possible breakup–report (PBM and health plan troubles)

Steward’s CEO will likely face prosecution on criminal contempt of Congress for not showing up at a hearing, Stefano Pessina’s net worth down by 97% as Walgreens tanks, and Joe Kiani, after founding Masimo 35 years ago, is booted from the board and ankles–now it’s up to Politan.  

What’s next for: Steward CEO now in criminal contempt of Congress; Walgreens’ Pessina’s fortune vanishes by 97%; Masimo’s Kiani now a man without a company

It’s the last week of summer and this Editor has been catching up all over. While away, there have been buys, M&A, and yet another PE ‘smush’ merger. In developing stories, the Masimo-Politan proxy war ends and Steward’s CEO no-show may result in charges–both on Thursday. Congress and the industry argue over continuing telehealth prescribing waivers. And it’s hard to see a future for a broke 23andMe controlled by its founder/CEO–and with a board that just exited today. 

News roundup: Owlet expands to EU, mPulse buys Zipari, New Mountain PE merges 3 payment integrity firms in $3B smush, Candid Health’s $29M raise, Oura buys Veri, Bloomer Tech’s cardio bra (M&A activity revives, as does Owlet. Oura doing just fine)
23andMe settles 6.9M data breach lawsuit for $30M. Breaking–all seven independent directors quit ($30M the best they could get–and the board throws the towel at Wojcicki)
Rounding up follow ups: Walgreens shareholder suit on pharmacy performance, Steward CEO no-shows Senate committee, Masimo-Politan proxy fight has court win for Politan–vote on for 19 September (Walgreens’ misery never ends. Masimo nears its end.)
US telehealth controlled substances prescribing waiver may expire at year’s end; DEA may further restrict (Controversy on continuing virtual prescribing of Schedule II)

One more jumbo deal announced before Labor Day–Evolent Health’s acquisition bids from payer Elevance Health as well as at least three large private equity firms, in a deal that could top $4 billion. (Sensibly, their CEO is cleaning up his stock option portfolio.)

Evolent Health talking major acquisition by payer Elevance, private equity (Could be over $4B)

Counting down before the Labor Day holiday, one large deal of note sneaks through–LetsGetChecked’s $525M deal for Truepill. SVB’s latest report confirms the ‘valuation trap’ for the overvalued companies of the 2020-22 period but that investment is crawling back. Generative AI is much talked about but no one is comfortable with it. And two surprising survivals–NeueHealth and Stewardship Health.

Truepill to be acquired by LetsGetChecked for $525 million (Throwing in together to survive?)
Signs of life: another view on healthcare investments and exits as of mid-year (SVB’s 14th POV)
Are patients and physicians ready for generative AI? How will it be most acceptable? (Resembles telehealth’s early days on the early curve)
“I will survive” updates: NeueHealth survives Q2 with small net loss, Steward sells off Stewardship Health practices to private equity firm for $245M (Dodging disaster)

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News roundup: CVS Health cedes 4 new board seats to Glenview, Oscar’s strong Q3, telehealth controlled substance prescribing in 3rd extension, new Revere Medical to buy CareMax assets (updated), Oura picks up $75M Dexcom financing and partnership

November 19, 2024 | by

This pre-Thanksgiving week stuffs the turkey, not with giblets and savory fillings, but with Big Developments on the Big Stories of the past few weeks.

CVS feeds the crocodile, gives Glenview Capital four new seats on the board. CVS’ startling move with the hedge fund Glenview Capital Management that adds Leslie Norwalk, Glenview CEO Larry Robbins, Guy Sansone, and Doug Shulman, expands their board of directors to an unwieldy 16. According to the CVS release, Norwalk, from Epstein Becker Green, will join the Health Services Committee. Sansone, CEO of H2 Health, will join the Audit Committee.  Shulman, chairman/CEO of OneMain Holdings, will join the Management Planning and Development Committee. It’s unknown whether Robbins will need to join a committee given his prime position.

Despite CVS’ lack of confirmation after their reported breakup/spinoff discussions that kicked off October [TTA 1 Oct], it’s apparent to anyone with clean glasses that Glenview is driving multiple changes at the company including the ouster of CEO Karen Lynch even after she took direct control of Aetna. She was replaced by a CVS ‘lifer’, David Joyner, head of CVS Caremark. Glenview owns 1% of CVS stock as of last report in October, according to the Wall Street Journal, but that 1% accounts for over $700 million of its $2.5 billion war chest. That gives them cause for concern–and leverage.

The board appears to be looking towards maximizing performance now, not later. The new executive chair of CVS Health, Roger Farah, from the release: “In our discussions with the leadership at Glenview, we agreed that we can deliver greater value from our integrated businesses to all of our stakeholders, including our customers, consumers, colleagues, and shareholders.” New faces tasked with quick turnarounds include group president Prem Shah and at the head of shaky Aetna, Steve Nelson from ChenMed [TTA 8 Nov]. That means achieving profitability and cash flow at a very tough time for nearly all insurers. CNBC, Becker’s

How Centene did it after a similar move by Politan Capital Management. Since early 2022, Centene has been selling off in pieces what turned out to be an abundance of ancillary, only partly digested businesses, such as Ribera Health, Magellan, Apixio, and most recently their MSO/ACO organizer Collaborative Health Systems [TTA 13 Nov, 5 May 2023, 30 July 2022], along with a deep portfolio of real estate such as a projected Charlotte HQ, all bought by the late CEO Michael Neidorff. These ‘fat pads’ were easy cuts along with several thousand people. CVS Health, however, may not have the padding that Centene had to generate ready cash from willing buyers as it has the reputation of being fairly lean. Their big missteps may have been in 2022 (FOMO Time) pursuing a management-led Big Objective of entering brick-and-mortar and buying never-profitable Oak Street Health primary care for $10 billion, buying home health’s Signify Health for $8 billion, and investing $100 million in Carbon Health, all at inflated post-pandemic prices with the latter two having significant issues within their lines of business. 

The proposal of splitting up the company sounds drastic to achieve profitability. It may be a ‘worst case scenario’ thrown out to keep the crocodile sated. Much depends on how both Glenview Capital and Mr. Market behave next year with the opportunities presented, while facing a new administration and HHS and CMS heads without ties to or fondness for payers. 

Meanwhile, Oscar Health, helmed by Aetna’s former and ousted head Mark Bertolini, posted a strong Q3 closing September 30. Versus prior year, their revenue went up 68% to $2.4 billion, medical loss ratio remained fairly stable at 84.6%, up 80 basis points (bps=.01%), and expenses improved by 3.6%, but importantly they narrowed their net loss to $54.6 million, or $(0.22)  of earnings per share, a $10.8 million improvement. Revenue for the year was adjusted upward to the $9.2 billion to $9.3 billion range, $200 million above the prior range of $9.0 billion to $9.1 billion. It’s quite a turnaround from the dancing-with-disaster Oscar of only 18 months ago. Look hard, there’s a schadenfreude-ish smile on the middle guy’s face….  Oscar release

DEA extended telehealth prescribing of controlled substances for a third round. The kicking the can down the road was easily predicted last month. The “Third Temporary Extension of COVID-19 Telemedicine Flexibilities for Prescription of Controlled Medications” exited the registry of the White House Office of Management and Budget (OMB) 14 November. On the 15th, the rule was posted to the Federal Register and officially published today (19 Nov). It gives the Drug Enforcement Administration (DEA) a clean extension of the pandemic time flexibilities on Schedule II-V remote prescribing. The industry will wait and see if the incoming Trump 47 administration will bring this up to Congress to repeal, as by a whisker the extension fell outside the 60-day vacate window. But it’s not a hot button issue and is very likely to continue into 2025. FierceHealthcare, ATA release

CareMax goes into Chapter 11, agrees to sell to the new Revere Medical. The senior healthcare provider based in Miami filed Chapter 11 on 17 November but already has entered an agreement to sell assets to Revere Medical, formerly Stewardship Health, sold out of Steward Health’s bankruptcy to Brady Health Buyer, an entity of Rural Healthcare Group-Kinderhook Industries [TTA 8 Nov]. The sale that had to be planned for some time is part of a restructuring plan approved by the company’s secured lenders, commonly called a pre-packaged bankruptcy. Revere is acquiring CareMax’s management services organization (MSO) and ACO assets, including the Medicare shared savings program (MSSP) part of its MSO business that supports about 80,000 Medicare beneficiaries. CareMax will wind down and exit their Medicare Advantage and ACO REACH businesses which will take some time, likely 2026. The operating clinic business assets will go to a third-party buyer. Further restructuring is part of a restructuring support agreement (the “RSA”) with lenders holding 100 percent of the Company’s secured debt obligations, according to the 17 November release. Becker’s  Update: CareMax was related to Steward Health as the exclusive value-based managed service organization (MSO) for Steward Health Care’s Medicare network. Steward’s failure was the final crack that broke CareMax’s back, as it had been losing money for several years, according to Paul Rundell, CareMax’s chief restructuring officer. Not helpful was their leasing many of their properties from real estate investment trust Medical Properties Trust, same as Steward.  HealthcareDive   And where in the world is Dr. de la Torre, Steward’s CEO?

Finland’s Oura health tracker ring now discloses where the money’s coming from. Oura picked up $75 million from Dexcom in a Series D funding round, their first since a $100 million Series C in May 2021 and an undisclosed venture round the following year. Their total financing is $223 million and the valuation at $5 billion. Dexcom and Oura are also in partnership to integrate Dexcom glucose data with vital signs, sleep, stress, heart health, and activity data from Oura Ring. The two-way integration will flow data between Dexcom and Oura products, including Dexcom glucose biosensors, Dexcom apps, Oura Ring and the Oura App. Oura release, FierceHealthcare Oura purchased Sparta Science earlier this month and metabolic tracker Veri in September. Veri, however, works with the Abbott FreeStyle Libre to guide users to the right foods, habits, and timing versus common health metrics such as sleep for their bodies. 

News roundup 16 Oct: Walgreens shuts 1,200 stores–500 in ’25, CVS exiting core infusion biz, Masimo v. Apple update, DEA recommends 3rd telehealth extension, Change hack costing UHG $705M, Owlet back in NYSE compliance

October 16, 2024 | by

A roundup of chickens coming home to roost? But some chickens are just happy to come home.

Walgreens’ Mound of Misery just grew a little higher. The headlines today were all about Walgreens’ closing 1,200 stores over the next three years. Their current store location roster is about 9,000, according to their website. 500 of these will be closed during their upcoming FY2025.  Their release stated this would be “immediately accretive to adjusted EPS and free cash flow”. (Were they making any money at all?) This helped to give their share price a nice bump from $9 to above $10 at market close today. Last year, Walgreens’ shares were priced above $22.

Q4 (closing 31 August) closed with a 6% boost in retail sales. However, losses were $3.0 billion versus a net loss of $180 million in the prior year’s Q4. The reasons cited in their release were a higher operating loss, a $2.3 billion non-cash charge for valuation allowance on deferred tax assets primarily related to opioid liabilities recognized in prior periods, and a non-cash impairment charge related to equity investment in China. The operating loss related to a non-cash goodwill impairment charge for CareCentrix. 

The full year was not cheery. Sales were $147.7 billion, an increase of 6.2% from a year ago (in constant currency, 5.7%). But losses in their FY2024 were $14.1 billion, a stunning increase of 104.5% compared to prior year.

VillageMD is being monetized along with other assets. “CEO Tim Wentworth said in the earnings call that the company is focused on “monetizing non-core assets to generate cash,” naming VillageMD as an example, to focus on its core retail pharmacy business.” HIStalk 16 Oct Can Walgreens shrink itself to profitability? Fierce Healthcare

Over at CVS, they’re doing their own shrinking. CVS is closing its core infusion services business, with plans to either close or sell 29 related regional pharmacies. Infusion services were bought from Coram LLC in 2013 for $2.1 billion. This Reuters exclusive was based on an 8 October memo and confirmed by a CVS press representative. Patients relying on antibiotics, drugs supporting muscular health, and intravenous nutrition services will be transferred to other providers. CVS will continue to provide certain services: specialty medications and enteral nutrition, or tube feeding, at pharmacies in Minnesota, Pennsylvania and San Diego, with nationwide nursing services. Hat tip to HIStalk 16 Oct.

Masimo wins one big patent challenge, loses one (or four), to Apple. 

The Win: Apple had sued Masimo in the US District Court of Delaware for patent infringement of Apple’s utility patent 10,942,491 B2 (“the ‘491 patent”). Masimo was charged as violating Apple’s patent on 19 features. Masimo appealed to the Patent Trial and Appeal Board (PTAB) of the US Patent and Trademark Office (USPTO) for an inter partes review (IPR) of the patent on the grounds of ‘unpatentability’, a very high proof. Masimo succeeded in this, rendering Apple’s ‘491 patent useless. Apple can appeal but the likelihood of success against the PTAB ruling that required three administrative patent judges to review, at this level of proof, is low. In this Editor’s view, this may spur other developers to come up with innovations now that these 19 features have been deemed unpatentable.

The Loss (I think): In review in the Delaware District Court are four complicated lawsuits between the two combatants, with Apple’s premise that Masimo has infringed upon other patents. Masimo alleged “inequitable conduct” by Apple in their patent filings with the PTO, essentially alleging fraudulent filings on multiple patents. Apple has been granted a summary judgment on Masimo’s claims, throwing them out.

Interestingly, Masimo–never shy to announce wins versus their foe Apple under the prior leadership of Joe Kiani–has remained strangely mum. (Perhaps everyone is waiting for the takeover dust to settle?) Will the ‘new’ Masimo be so combative against Apple? A far more detailed analysis for the patent mavens is in Strata-gee. A very large hat tip and bow to their editor, Ted Green, who writes about marketing primarily in the audio/visual business but has been 100% on top of The Masimo Saga–thank you!

To no one’s surprise, DEA kicks the telehealth waiver can down the road–for the third time. The Drug Enforcement Administration (DEA) sent to the White House’s Office of Management and Budget (OMB) a proposed rule to extend telehealth prescribing of Schedule II and higher controlled substances without changes. These waivers which removed the in-person examination requirement under the Ryan-Haight Act were instituted during the Covid pandemic and extended twice [TTA 11 Oct 23, 11 May 23] with a final expiration of 31 December 2024. In September, reports indicated that DEA not only wanted to restore prior restrictions but also wished to introduce additional ones. However, their timing (September!) given Federal standards of publishing draft rules and lengthy comment periods before a final rule was impossible to be achieved by year’s end. [TTA 13 Sept]

Whether OMB will approve the extension (to a date that cannot be confirmed since the text is unavailable, but reportedly one year) is not certain, as it may be disputed by the Department of Health and Human Services (HHS). Since the waiver is due to expire at the end of the year, this may help to assure the multitude of mental health and other telehealth companies dependent on legal remote diagnosis and prescribing controlled substances that their businesses can continue. FierceHealthcare

UHG didn’t have a happy quarter either due to Change. The total hit to UnitedHealth Group of the Change Healthcare hack is now estimated at $705 million, or 75 cents a share. Their 2025 guidance on profit is a lackluster $30 per share–below Wall Street estimates of $31.18. Government plans’ cuts in payments for Medicare Advantage plus and low state payment rates for Medicaid are affecting UHG as well as nearly every other payer. UHG’s share price on the news reacted negatively, falling 9% and dragging down other payers as well. UHG must rue the day they bought Change Healthcare, as it has been largely bad news ever since. CNBC

And winding up on a happy note–Owlet is back in good graces with the NYSE. Last year, they faced a NYSE notification that they were out of compliance with the $50 million minimum valuation of the company over a consecutive 30-day trading day period. They are now in compliance and their Class A shares can trade without the ‘BC’ black mark and no longer be listed as such on the NYSE website. The NYSE will be following its standard procedure of a 12-month follow-up on compliance. Release, Mobihealthnews

The baby sock and baby monitoring company has had a rough couple of years between a cracked SPAC (2021), FDA notifying them at the end of 2021 that they considered the Smart Sock a medical device, forcing the company to pull it from distribution [TTA 4 Dec 21], mounting losses, layoffs, and rebuilding with an FDA-cleared BabySat and enhanced Dream Sock [TTA 21 June 23]. Usually, this concatenation of events means the company either shuts or sells, but Owlet has done neither and bootstrapped itself. Revenue in their Q2 ending 30 June was up 58% year over year with a narrower operating loss of $2.2 million, compared with $6.7 million in prior year. It recently expanded their European distribution of the Dream Sock after CE Mark certification in May to a total of 11 countries [TTA 18 Sep]. 

US telehealth controlled substances prescribing waiver may expire at year’s end; DEA may further restrict

September 13, 2024 | by

Current waivers end 31 December without DEA, Congressional action. The Drug Enforcement Administration (DEA) apparently through inaction, will allow the current virtual prescribing flexibilities impacting Schedule II and higher drugs to expire at the end of year. These waivers which removed the in-person examination requirement under the Ryan-Haight Act were instituted during the Covid pandemic and extended twice [TTA 11 Oct 23, 11 May 23] with a final expiration of 31 December 2024.

Reportedly, the DEA is not only wishing to reinstate the status quo ante, but also reportedly wants to institute additional restrictions. However, any draft rule that would reimpose or changes restrictions has not been put out for the public comment period, review, and final rule implementation which typically takes anywhere from 60 to 120 days, well past year’s end. Last year, when a draft rule was released for comment, nearly 40,000 comments were received.

At the time of the 2023 extension that kicked this particular can down the road into the end of a presidential election year, DEA had stated that they would use 2024 to finalize telemedicine prescribing rules, but no action has been taken. Since then, the Department of Justice has filed multiple charges of Medicare and Medicaid fraud and illegal distribution of controlled substances against seven Done Global employees [TTA 3 July and prior], with investigations pending on practices by provider Cerebral and pharmacy Truepill. 

Under the aegis of the American Telemedicine Association (ATA), a coalition of 330+ organizations have again written as of Tuesday 10 September to the current administration and both houses of Congress to 1) extend the waivers for two years, as part of the end of the Federal fiscal year (starting 1 Oct) package, and 2) use the time for DEA to “to fulfill its congressional mandate to establish a special registration pathway that balances access to medically necessary care with appropriate enforcement.” The rationale centers on the lack of time, but strongly around the availability of psychiatrists throughout most of the US–there are none in half of US counties especially in rural areas. (The average MD psychiatrist is well over 50, nearing retirement, and not well reimbursed for his or her time–which is why med school grads in heavy debt don’t gravitate to the specialty.) What is not stated is that many if not most telepsychiatry providers do not have models that will support in-person evaluations as required without waivers.

There are no public actions or responses either by Congress or by the DEA as of today (13 September).

ATA press release, Biden Administration letter, House letter, Senate Leadership letter, Healthcare Dive

ATA Action, ATA’s trade organization and advocacy arm, has also formed a political action committee (PAC), ATA Action PAC. Its stated purpose is to support incumbent Federal candidates including Congressmembers who support their goals in virtual care policy. Candidates on the Federal or state levels will not receive support.  Release

Short takes: follow up on Cano Health’s survival moves, eMed transitioning Babylon Health UK but Babyl Rwanda shuts, DEA extends telehealth prescribing for controlled substances thru 2024

October 11, 2023 | by

Cano Health takes the reverse stock split option to stay solvent. In Cano’s latest telenovela episode, a familiar stratagem for companies to drive up a dangerously low share price is to reverse stock split, usually in a large ratio. Cano is facing delisting on the NYSE as its shares traded, as of 11 September, below the $1 minimum for 30 days. [TTA 29 Sept]  Shareholders are being asked to approve a 1 for 60 ratio with the board having the right to adjust it down to 1-for-5 and up to 1-for-100, for both Class A and B common stock. At the current share price of $0.21, a new share’s value would be $12.60. No meeting date has been set, though the press release bluntly states that 30% shareholder ITC Rumba, LLC and the 20% held by current and former members of management and the board intend to vote in favor of it, achieving the necessary simple majority. 1:60 does sound last-ditch, reminiscent of Babylon Health’s late 2022 moves in a 1 for 25 exchange, before attempting to go private–and we know how that turned out. Release

eMed transitioning Babylon Health services in the UK. A check on Babylon Health’s UK website provides FAQs for current users. It leads with promises to expand digital-first primary care services on this registration page for visits, and to develop a chronic care management service starting with medical weight management using Wegovy. The FAQs also state there will be no disruptions to GP at Hand. There is a rebranding (left/above) that sunsets the Babylon name but retains the stylized heart. 

Babyl Rwanda‘s separate website and the eMed pages for Babyl Rwanda are still up, but a local report from 24 September states that the company has ceased operations in Rwanda. As of August, the government was scrambling to find buyers and to maintain operations to 2.4 million Rwandans. “According to Julien Mahoro Niyingabira, the Rwanda Health Communication Centre (RHCC) Division Manager, the Ministry of Health is in discussions with Babyl Rwanda to ensure continuity of services despite the closure of Babylon Health.” How that will be possible without a buyer to pay employees and maintain the operation is debatable. The New Times (Rwanda)

As for the US, the Babylon Health US site also remains up and intact with a small disclaimer at the top that US services are no longer available and to contact your health plan. It is the same as on our last visit on 14 September. It is odd to see, after another month, that no one has disabled the US services or corporate pages such as Investors. This is possibly because the architecture for the US pages are off the UK site (the tab at top has the eMed logo) and nobody is in the US operation to take down the pages. The US operation, in Chapter 7 bankruptcy liquidation, is now in the tender hands of the US bankruptcy courts, where filings, documentation, and processes move slowly indeed with no further public news.

And when you can’t decide, extend. The Drug Enforcement Administration (DEA) and Health and Human Services (HHS) once again are extending Covid-time flexibilities for prescribing controlled substances through 2024.  After 38,000 comments on the proposed changes to rules after the last extension in May, DEA and HHS punted again on reimposing Ryan-Haight Act restrictions that would require in-person evaluations/visits prior to prescribing. This allows clinicians to prescribe Schedule II–V controlled medications via audio-video telemedicine encounters, including Schedule III–V narcotic controlled medications approved by the Food and Drug Administration (FDA) for maintenance and withdrawal management treatment of opioid use disorder. Final rules will be timed for Fall 2024. Another year’s breathing room for  6 Oct DEA announcement, Federal Register 10 October “Second Temporary Extension of COVID-19 Telemedicine Flexibilities for Prescription of Controlled Medications”, Healthcare Dive

Mid-week roundup: DEA extends telehealth prescribing waiver to November; telehealth usage continues to erode; NextGen EHR hacked, 1M records breached

May 11, 2023 | by

The answer: 11 November. The question: how long was the Drug Enforcement Administration (DEA) planning to extend their telehealth waiver of in-person prescribing requirements on Schedule II and higher controlled substances?  Both the DEA and the Substance Abuse and Mental Health Services Administration (SAMHSA) issued the “Temporary Extension of COVID-19 Telemedicine Flexibilities for Prescription of Controlled Medications”rule on 9 May before the Public Health Emergency (PHE) expired on 11 May. It’s a six-month reprieve for the beleaguered telemental health providers/prescribers and their patients–and sure to be hotly debated over the next few months as a final rule must replace the temporary extension rule and the Ryan-Haight Act isn’t going away. DEA release, TTA 4 May

FAIR Health’s tracking of telehealth medical claims has languished in the Fives–as in 5%–since last year. February is the latest month of tracking and it declined from 5.9% in January to 5.5% in February. Again, the vast majority of claims are for mental health codes (66.7%) far ahead of diagnosis #2, acute respiratory diseases and infections, where Covid-19 once resided. However, the latter accounted for 25.6% of asynchronous (store and forward) telehealth diagnoses. A new metric on the report is audio-only telehealth, which is only slightly more popular in rural versus urban areas. The greatest difference from the national norm is in the West, where February telehealth claims were 7.6%. Monthly national summary, FAIR Health main page for monthly and regional summaries.

NextGen’s EHR/practice management system hacked, 1.05 million patient records breached. Information stolen included patient name, dates of birth, addresses, and Social Security numbers. This was revealed in a filing with the Maine attorney general’s office since it included over 4,000 Maine residents. The hack of the NextGen Office system took place between 29 March and 14 April 2023. It’s been a bad year for NextGen’s IT and security teams, as it also experienced a short-term ransomware attack in January by AlphV/BlackCat. (The two couldn’t be related…could they?) No word yet on class action lawsuits or Federal penalties.  TechCrunch

Mid-week roundup: CVS-Oak Street closes, DEA extends controlled substance telehealth waiver, Bright Health selling CA MA plans, Talkspace, Teladoc turnarounds? (updated)

May 4, 2023 | by

CVS closed its $10.6 billion deal for Oak Street Health, well before the anticipated end of 2023. It picks up 169 primary care offices in 21 states–and an unprofitable operation that clocked a loss last year of $510 million without much of a change till 2025. The quick closing was likely spurred by both the Department of Justice (DOJ) and the Federal Trade Commission (FTC) letting their antitrust challenge period expire at the end of March with nary a whimper. DOJ and FTC, the latter which has been remarkably ‘pixelated’ of late on privacy issues with GoodRx and Teladoc’s BetterHelp, evidently passed on ‘egg on the face’ and let the ovoid land squarely on Elizabeth Warren’s Senate desk. She had asked FTC to ‘carefully scrutinize’ the deal. Shareholders received a tidy $39 per share. OSH will remain a multi-payer practice and now-former CEO Mike Pykosz will lead the company under CVS’ new healthcare delivery arm. This follows on CVS’ closing of Signify Health [TTA 30 March].  CVS release, FierceHealthcare Our prior gimlety coverage of CVS/OSH: 16 Feb, 2 March, Unlike OSH, CVS had a strong Q1 with $2.1 billion in profit, slightly down from 2022’s $2.4 billion, and an 11% boost in revenue. FierceHealthcare

DEA in-person prescribing requirements on Schedule II and higher controlled substances postponed indefinitely. The proposed rule would have added back in-person requirements for telehealth prescribing of controlled substances after the official end of the Public Health Emergency and its in-person waivers on 11 May. On 25 April, the DEA filed a draft temporary rule with the Office of Management and Budget for the extension. The Ryan Haight Online Pharmacy Consumer Protection Act of 2008 requires that Schedule II medications and narcotics (including Adderall and Ritalin) require an in-person prescription, while Schedule III or higher medications, including buprenorphine, Ambien, Valium, Xanax and ketamine can be prescribed for 30 days via telehealth but would require an in-person visit before a refill. The DEA was deluged with 38,000 comments and advocacy pressure from ATA. The change has also thrown a wrench in the works of online mental health companies which prescribe many of these drugs. FierceHealthcare  Updated–The ATA has weighed in favorably about the DEA postponement. Kyle Zebley, executive director of ATA Action, stated in their release that “Our hope is that the DEA will use the time of an extension to be responsive to the concerns of telehealth advocates, patients, and the American people to create rules that ensure access to clinical care that is not inappropriately restricted.”

Bright Health put its California Medicare Advantage plans up for sale. The company, staring down at bankruptcy [TTA 7 Apr, 20 Apr] does not yet have a buyer for the MA plans. When they are sold, it will be Bright’s exit as a health insurer, as it has exited MA plans in Florida and exchange plans everywhere else–in a flurry of state investigations ranging from Tennessee to Texas. Bright plans to focus on its provider arm, NeueHealth. Healthcare Dive

Talkspace narrowed its loss, increased revenue. The telemental health provider narrowed its Q1 net loss to $8.8 million compared to 2022’s $18.3 million in Q4 2022 and $20.4 million in Q1. Revenue increased to $33.3 million versus last year’s Q1 of $30.2 million. Their source of business has shifted to B2B with a 71% increase, a sharp departure from their formerly dominant consumer segment which has declined 40%.  Their 2023 forecast revenue is $130-135 million. It is still facing a Nasdaq delisting as trading below $1.00 per share and a class action lawsuit on subscription renewals. Mobihealthnews

Teladoc also waxed positive, ‘beating the Street’ with Q1 revenue growth of 11% to $629 million. This was powered as expected by BetterHelp, Teladoc’s direct-to-consumer mental health business. Their revenue grew to $279 million, a 21% increase. Teladoc’s enterprise business also had a 5% boost to almost $350 million. Their weight loss business is expected to be another net positive income generator, but not affecting results until 2024 as it won’t be introduced until Q3 [TTA 21 April]. The road to profitability will be a long one, as losses this quarter were $69.2 million, but compared to last year’s $6.7 billion writedown of Livongo, it’s positively smooth. Healthcare Dive

Mid-week roundup: Pear Therapeutics’ Chapter 11; Workit Health pinkslips 100; Outcome Health principals convicted of $1B fraud

April 13, 2023 | by

Pear Therapeutics ran out of runway and is in the drink. On Friday, CEO Corey McCann announced in a post on LinkedIn that the company filed for Chapter 11 bankruptcy and has laid off 170 employees, including him. Dr. McCann will continue on the board and as a compensated consultant, while chief operating and financial officer Christopher D.T. Guiffre will remain through the Chapter 11 process along with about 15 employees to manage the asset sale process, limited operations, and transition on behalf of the debtors.

According to their Securities & Exchange Commission (SEC) 8-K filing, terminated employees were paid through April 7, 2023, received two weeks’ salary as severance, and were asked to sign a separation agreement, which includes a general release of claims against the company resulting in a $1.2 million charge.

Only last month, Pear announced that it was exploring ‘strategic alternatives’ including a sale or being acquired. According to the release, the debtors are still seeking a sale of the whole business or to part out specific assets. Now such sales and the bidding process must be approved by the US Bankruptcy Court in Delaware. Release  The sale is anticipated for May.

Another behavioral health casualty in a model that proved unworkable. Pear developed and marketed Prescription Digital Therapeutics (PDTs) concentrated in behavioral health and substance use including opioid use disorder. While these seemed to be accepted by providers, patients, and some payers, payment didn’t materialize from the last, according to Dr. McCann’s LinkedIn post. According to Forbes, “There were more than 45,000 prescriptions written for Pear’s products in 2022, but only around half were filled and the company was able to collect payment for only 41% of those.” The other factors were price and reimbursement. Pear’s products averaged $1,195, which took them out of private payment. Only a limited number of commercial insurers and Medicaid plans would pay for them. Medicare did not. In 2022, Pear reported an operating loss of $123.4 million on $12.7 million in revenue, which doesn’t fly in 2023.

This is quite a change from the heady days of 2021, when Pear went public on Nasdaq via a SPAC in December, raising about $175 million in additional funding. A sign of trouble was that the raise was far less than the anticipated $400 million. At that time, Pear was valued at about $1.6 billion. Prior to the SPAC, they had raised about $284 million through Series D funding (Crunchbase)  Mobihealthnews, MedCityNews

Another virtual behavioral health company facing loss of business is Workit Health, This is due to the Drug Enforcement Administration’s (DEA) planned return to the in-person visit requirement for Schedule III-V non-narcotic controlled medications. Workit is a virtual therapy/treatment company for alcohol, stimulant, and opioid abuse, a crowded field. The company, rationally, is cutting 100 staff in anticipation of a drop in activity. To date, it has over $130 million in funding through a Series C, not a lot.  Behavioral Health Business  Also TTA 15 March on the DEA rule debate

Outcome Health–the other late 2010’s scandal after Theranos–had its denouement in a Federal court in Chicago yesterday (11 April). Convicted of $1 billion in fraud were:

  • Rishi Shah, 37, the co-founder and former CEO of Outcome Health: five counts of mail fraud, 10 counts of wire fraud, two counts of bank fraud, and two counts of money laundering
  • Shradha Agarwal, 37, the former president of Outcome: five counts of mail fraud, eight counts of wire fraud, and two counts of bank fraud
  • Brad Purdy, 33, former chief operating officer and chief financial officer: five counts of mail fraud, five counts of wire fraud, two counts of bank fraud, and one count of false statements to a financial institution

Each count carries specific maximums of between 10 to 30 years which are usually served concurrently. Sentencing for the three executives and for three other employees who had pleaded guilty to lesser charges will be at a date to be determined. SEC charges are pending against the executives, along with Ashik Desai, former chief growth officer, who testified against his former bosses in the criminal trial and was one of the three who pleaded guilty.

Outcome delivered patient education on screens in doctor’s offices and circa 2016 was one of the hottest companies in Chicago. During the pandemic, it merged with PatientPoint. Their problem was inflating their ad delivery numbers to their sponsors such as Pfizer, Biogen, and Sanofi. This puffery included third-party analyses of the ads’ effectiveness, e.g. for prescriptions written. This was exposed by the Wall Street Journal in October 2017. Advertiser makegoods and clawbacks from lenders in the millions resulted. TTA 29 Jan 2018   But the executive crew above plus the other three employees concealed the under-delivery problem, faked revenue numbers, and presented them for debt financing plus equity funding in 2016-17 that rewarded them richly–thus the Federal fraud charges. Mobihealthnews, FierceHealthcare, DOJ release  TTA’s coverage from that time here

Let’s hope for more cheerful news out of HIMSS next week.

News from ATA 2023: debate over DEA in-person prescribing requirement, winners of Telehealth Innovators Challenge, 2024 board chair announced

March 15, 2023 | by

The American Telemedicine Association’s annual conference, ATA2023, which wrapped two weekends ago, had some major debates, awards, and some board changes.

Special ‘listening’ session on DEA’s proposed changes on telemedicine prescribing of controlled substances. This would resume the in-person visit requirement for Schedule III-V non-narcotic controlled medications. A 30-day limit on a prescription would be permitted for a telehealth remote visit and prescription, but an in-person visit would be required during that period or thereafter before any renewal. The DEA proposed rule issued 24 February (draft here) includes allowing care to be delivered uninterrupted for 180 days after the end of the public health emergency (PHE) ending 11 May, but then requires an in-person physician visit. ATA opposes this new requirement for patients who were prescribed these medications solely during telehealth during the PHE (release 25 Feb). Public comment on the proposed rule is open for 30 days (27 March). A representative of the DEA was in the audience for the Monday 6 March discussion moderated by Kyle Zebley, ATA’s senior vice president of public policy. Other telehealth measures were extended for two years in last year’s passage of the 2023 Federal budget bill [TTA 4 Jan]. Healthcare Finance

Winners were announced for ATA’s Telehealth Innovators Challenge. The four categories and winners were:

Femtech and Women’s Health Winner: SimpliFed. SimpliFed is a virtual breastfeeding and baby feeding provider network that improves access to professional lactation support.

In-patient Care Solutions Winner: Great Speech. Great Speech provides speech therapy through a network of 200+ therapists and adds artificial intelligence (AI) technology and proprietary algorithms.

The Patient Experience: Clearstep Health. Clearstep guides healthcare consumers to the best next steps for care based on their symptoms, insurance, location and preferences via a virtual triage system set up for providers. 

Tools That Deliver Care: Strados Labs. The Strados Cardiopulmonary Platform, using the RESP Biosensor, captures wheezing, coughing, and other lung sounds plus respiratory dynamics, then to a clinician portal supported by machine learning algorithms.

SimpliFed also won the overall Judges’ Choice Award. Oshi Health, a virtual-first gastrointestinal care clinic integrating evidence-based medical care and behavioral health support into a convenient, high-touch, data-driven care model, received the overall People’s Choice Award. Release

Sree Chaguturu, MD, has been named Chair-elect of ATA’s Board of Directors for a two-year term starting May 2024. Dr. Chaguturu is executive vice president and chief medical officer, CVS Health. He has served on the ATA Board of Directors since December 2020. He will follow Kristi Henderson, DNP, CEO, MedExpress and senior vice president of the Center for Digital Health and Innovation for Optum Health, who is now Immediate Past Chair. Release

News roundup: DDoS attacks may be ‘smokescreen’, DEA slams Truepill with ‘show cause’, telehealth claims stabilize at 5.4%, Epic squashes patent troll, Cerner meeting exits KC, MedOrbis, Kahun partner on AI intake

December 22, 2022 | by

Readers won’t get out of 2022 without one last cybercrime…article. DDoS attacks–distributed denial of service–escalated worldwide with Russia’s invasion of Ukraine in February. (Ukraine and military aid is a hot topic this week with President Zelenskyy’s visit to the US and Congress speech.) Xavier Bellekens, CEO of Lupovis, a cybersecurity company and a cyberpsychologist (!), postulates that DDoS attacks, as nasty as they are, may be a smokescreen for far more nefarious and damaging attacks. While IT goes into crisis mode over the DDoS, other attacks and information gathering on systems preparing for future attacks are taking place. Russian cyber groups focus on large organizations and move down the line into the most vulnerable, using both manual and automated approaches. Worth reading given the vulnerability and IT short staffing in healthcare organizations. Cybernews

The fallout from Cerebral and Schedule 2 telehealth misprescribing expands. The Drug Enforcement Agency (DEA) issued a ‘Show Cause’ to online pharmacy Truepill for inappropriate filling of ADHD Schedule 2 medications, including Adderall. A ‘Show Cause’ order is an administrative action to determine whether a DEA Certificate of Registration should be revoked, which could put Truepill out of business. The red flag for the DEA: 60% of  Truepill’s prescriptions–72,000–filled between September 2020 and September 2022 were for controlled substances, including generic Adderall. Truepill was Cerebral’s primary mail order provider, though they also used CVS and Walmart. The company stopped filling Cerebral’s ADHD prescriptions in May 2022.

In the order, the DEA cites that “Truepill dispensed controlled substances pursuant to prescriptions that were not issued for a legitimate medical purpose in the usual course of professional practice. An investigation into Truepill’s operations revealed that the pharmacy filled prescriptions that were: unlawful by exceeding the 90-day supply limits; and/or written by prescribers who did not possess the proper state licensing.”

The company stated in an emailed statement that they were fully cooperating with the investigation. If it does move to a hearing, Truepill’s chances of a successful defense are statistically low.

Truepill also fills prescriptions for Hims & Hers, GoodRx and Mark Cuban Cost Plus Drug Company. It was valued in its 2021 funding round at $1.6 billion. Companies in telemental health and prescribing of Schedule 2 ADHD medications, such as Cerebral and Done Health, are under enhanced scrutiny over their business practices [TTA 1 June]. Mobihealthnews, DEA press release, HISTalk, Digital Health Business & Technology

Telehealth medical claims stabilize. FAIR Health’s latest reports for August and September report that the percent of medical claims coded as telehealth are back up to 5.4%. June and July dropped slightly to 5.2% and 5.3% respectively. Also steady are that the vast majority of claims are for mental health services. In September, they were 66% of diagnoses far ahead of ‘acute respiratory diseases and infections’ at 3.1%. In procedure codes, psychotherapy accounts for over 43%.

A patent troll Epically bites the dust. Back in the early to mid-2010s [TTA’s index here], patent trolls (technically non-practicing entities which have no active business) presented a significant threat to early and growth-stage health tech companies. One, MMR Global (which apparently no longer exists), was notorious for buying up EHR and PHR-related patents and then filing patent infringement lawsuits against both small and large healthcare organizations with similar patents–and their users–that were generally monetarily settled. But NPEs are still active. One in south Florida, Decapolis Systems, used the same techniques as MMR Global had, suing in this case multiple Epic customers for patent infringement. Epic not only defended its customers but also sued Decapolis in the US District Court, Southern District of Florida. The court found that both Decapolis patents were invalid, ending what Epic termed ‘vexatious patent litigation’. Decapolis had successfully sued 24 other entities, including other EHRs, which settled. Owned by an inventor, this company will have to find another line of honest business. Epic release, Thomson Coburg

Oracle’s message to Kansas City: no more Cerner meetings for you. And maybe more. Cerner’s site for its annual customer/partner conference since 2007 has been in Kansas City, attracting about 14,000 visitors. Not only will it be integrated into Oracle CloudWorld in Las Vegas, 18-21 September, it’s been retitled Oracle Health with no mention of Cerner. The loss to local KC business is substantial–estimated to be in the $18 million range. While it’s logical to integrate it into the massive CloudWorld conference, it’s also another message to KC after Oracle’s sudden real estate downsizing that Cerner’s presence there will shrink…and shrink..as it’s absorbed into Oracle Health, and further confirmation that the Cerner name is gradually being sunsetted. KansasCity.com, HISTalk

A new (to this Editor) specialty care telehealth company, MediOrbis, is partnering with Kahun for an AI-enabled digital intake tool. This is a chatbot capable of conducting an initial medical assessment. Based on the patient’s answers and Kahun’s database of about 30 million evidence-based medical knowledge insights, it provides a summary for the physician before the telehealth visit and highlights areas of concern. Mobihealthnews  MediOrbis also has partnered with remote care/engagement Independa to add its capabilities to Independa’s HealthHub on their LG TVs.

Ousted Cerebral CEO may sue company, accuses management of scapegoating on Schedule 2 prescribing

November 18, 2022 | by

Troubled telemental health provider Cerebral may face a lawsuit from former CEO Kyle Robertson. Ousted in May when the company’s prescriptions for ADHD patients started to be excluded from pharmacies such as Truepill, CVS, and Walmart for Schedule 2 (potential for abuse and misuse) medications such as Adderall, Ritalin, and Vyvanse [TTA 6 May], Robertson has written a letter to Cerebral demanding access to documents. The types of documents requested, according to (paywalled) Insider, include “possible breaches of fiduciary duty, mismanagement and other violations of law.” Usually, these are a setup to determine whether others on the company board and leadership were the real culprits in business mismanagement, and a prelude to a legal filing.

CBS News obtained a copy of the Robertson letter, in which “Robertson says he was pressured by the company’s investors to “sell more stimulants” and believes his ouster was an effort to “scapegoat” him as these investigations arose.  He was urged by one board member  that “the easier you make it for people to get stimulants, the better for the business and its customers.” and also claimed that an investor told Robertson’s partner the company’s “ADHD business is crushing and it’s a cash cow … Kyle’s got to push this thing further.” Other documents obtained by CBS allegedly detail clinical safety issues, staff “practicing with expired (or) suspended license(s),” and duplicate accounts which could set the stage for overprescribing. Other documents allege lack of training, pushing prescriptions to 95% of patients, and disregarding state regulations putting licenses at risk. [TTA 29 June] The current management, led by David Mou, has denied this all.

Multiple investigations are proceeding. From May on, Cerebral came under investigation by the Federal Trade Commission (FTC) on deceptive advertising and marketing practices, the Drug Enforcement Agency (DEA) as part of increased scrutiny of telehealth providers and pharmacies possibly overprescribing telehealth-generated prescriptions, and most significantly, the Department of Justice (DOJ) subpoenas on allegations of overprescribing. A prior wrongful dismissal lawsuit by Matthew Truebe, Cerebral’s former VP of product and engineering, alleged that the company put growth before patient safety, including prescribing ADHD drugs to 100% of diagnosed patients as a retention strategy. The concatenation of evidence from multiple sources makes a lawsuit by Robertson, who also cites other factors, probable–unless this is being used as a tablespoon to sweeten his severance.

Prior to that, Cerebral was one of the leaders in the still-hot digital mental health category. In December 2021, their $300 million Series C raise led by Softbank boosted their valuation past $4.8 billion, employed 4,500, and had 210,000 patients. In October, they released 400 staff but other reports indicate far more. Also FierceHealthcare

DOJ investigates telemental Cerebral on over-prescribing of controlled medications

May 10, 2022 | by

DOJ dropped an anvil on Cerebral’s head Friday night. Last week’s reports on the Drug Enforcement Agency (DEA) investigation of telemental health provider Cerebral were confirmed on Friday with the official notification that the US Attorney’s Office for the Eastern District of New York had subpoenaed the company as part of their investigation into possible violations of the Controlled Substances Act. According to the Wall Street Journal, the subpoena was issued to Cerebral Medical Group, the corporation it uses to contract with clinicians and provide healthcare services. The company is fully cooperating with the investigation by the Department of Justice, which includes turning over records pertaining to their prescribing of controlled substances such as Adderall and Xanax. This has been reported by FierceHealthcare which is citing (paywalled) Insider.

Last week, Cerebral announced that it would stop prescribing controlled substance prescriptions for new ADHD patients as of 9 May. However, they would continue prescribing controlled substances for other mental health conditions, according to a memo from their chief medical officer to their clinician network.

Cerebral’s Saturday statement in response to the subpoena maintains (from FierceHealthcare):

“To be clear, at this time, no regulatory or law enforcement authority has accused Cerebral of violating any law”

and

“Cerebral has dedicated significant time, energy, and resources to ensuring that its policies and procedures regarding the prescription of controlled substances and other medications both are medically appropriate and comply with all applicable state and federal law,” the statement also said. “As a responsible company, Cerebral is continuously improving its systems and practices. The foundation of this company is built on evidence-based, ethical, and compliant practices so that our patients can receive the highest quality of care and achieve the best clinical outcomes.”

The company has done well with the increased demand for mental health services provided via telehealth including remote evaluating and prescribing. In December, their $300 million Series C raise boosted their valuation past $4.8 billion.

Darkening this rosy picture is, as TTA noted last week, that a former VP of product and engineering, Matthew Truebe, has sued Cerebral for wrongful dismissal. According to him, the company put growth before patient safety, including overprescribing medications for ADHD. Other reports indicate that the DEA interviewed other former Cerebral nurse practitioners who felt pressured to prescribe ADHD medication after a short video call. The Verge

Cerebral has also gained notoriety for dodgy advertising claims pertaining to ADHD and other conditions. In January, advertising on TikTok and Instagram was pulled for claims that obesity is “five times more prevalent” among adults with ADHD, and stated that getting treatment for the mental health disorder could help patients “stop overeating.” These followed inquiries by Forbes and NBC News. Also pulled was their Facebook advertising around prescribing Type 2 diabetes medications, GLP-1 agonists, as a “wonder drug” for weight loss. 

Will this put a damper on the burgeoning area of telemental health and remote prescribing? Stay tuned. Also Becker’s. 

Weekend news and deals roundup: Allscripts closes sale of hospital EHRs, closing out CEO; DEA scrutiny of Cerebral’s ADHD telehealth prescribing; more telehealth fraud; Noom lays off; fundings; and why healthcare AI is only ML

May 6, 2022 | by

That was fast. Allscripts closed its $700 million March sale of its hospital and large physician practice EHRs to Constellation Software Inc. through N. Harris Group. The Allscripts EHRs in the transaction are Sunrise, Paragon, Allscripts TouchWorks, Allscripts Opal, and dbMotion. They reported their Q1 results today. According to HISTalk earlier this week, CEO Paul Black will be stepping down, with President Rick Poulton stepping in immediately. Update–this was confirmed on their investor call Thursday and the transition is effective immediately. No reasons given, but there were no effusive farewells.  Healthcare Dive

A damper on telemental health? Online mental health provider Cerebral, which provides talk therapy, audio/video telehealth, and prescriptions for anxiety, depression, insomnia, ADHD, and other conditions, is finding itself under scrutiny. This week, its main mail fulfillment pharmacy partner, Truepill, stopped filling prescriptions for Adderall, Ritalin, Vyvanse, and other controlled Schedule 2 pharmaceuticals. Cerebral is redirecting current patients with these prescriptions to local pharmacies and as of 9 May, will not prescribe them to new ADHD patients.

Based on reports, the Drug Enforcement Agency (DEA) is looking at Cerebral in particular as part of a wider scrutiny of telehealth providers and pharmacies filling telehealth-generated prescriptions due to allegations of overprescribing. It also didn’t help that a former VP of product and engineering plus whistleblower claims in a wrongful dismissal lawsuit that Cerebral execs wanted to prescribe ADHD drugs to 100% of diagnosed patients as a retention strategy. Bloomberg Law. Unfortunately, Insider is paywalled but you may be able to see a report in the Wall Street Journal. Becker’s Hospital Review, FierceHealthcare

Also troubling telehealth is recurrent fraud, waste, and abuse cases involving Medicare and Medicaid. Back in 2020 the National Healthcare Fraud Takedown took down over 80 defendants in telemedicine fraud [TTA 2 Oct 20, 30 Jan 21]. The Eastern District of NY based in Brooklyn has indicted another physician, an orthopedic surgeon, in a $10 million fraud involving durable medical equipment (DME). In exchange for kickbacks from several telemedicine companies, he allegedly prescribed without examination and with only a cursory telephone conversation DME such as orthotic braces. DOJ release

Some fundings and a sale of note–and a big layoff at a well-known digital health leader:

  • Blue Spark Technologies, an RPM company with a patented Class II real-time, disposable, continuous monitoring body temperature patch good for 72 hours, TempTraq, raised a $40 million intellectual property-based debt solution (??) to fund growth led by GT Investment Partners (“Ghost Tree Partners”) with support from Aon plc (NYSE: AON)  Release
  • Specialty EHR Netsmart acquired TheraOffice, a practice management platform for physical therapy and rehabilitation practices which will be added to its existing CareFabric platform. Neither terms nor management transitions were disclosed in the release.
  • ‘White label’ telehealth/virtual health provider Bluestream Health is implementing its systems in Mankato Clinic, with 13 facilities across southern Minnesota. It’s a rarity–physician-owned and led–and in business since 1916. This also fits into a new telehealth trend–providers working with ‘white label’ telehealth companies and not with the Big 5. Release
  • Ubiquitously advertised (in US) weight-loss app Noom is laying off a substantial number of employees–180 coaches plus 315 more employees. Reportedly they are pivoting away from on-demand text chat to scheduled sessions that don’t require so many people. While profitable in 2020 ($400 million) and with Series F funding of over $500 million in 2021, it’s come under criticism that while its pitch heavily features easy behavioral change achieved through cognitive behavioral therapy (CBT), their real core of weight loss is severe calorie restriction. Engadget
  • Element5, an administrative software provider for post-acute facilities, raised a $30 million Series B from Insight Partners. They claim that their software is AI and RPA (robotic process automation) based. Release, Mobihealthnews

And speaking of the AI pitch in healthcare, a VC named Aike Ho explains why she doesn’t invest in healthcare AI companies because there’s no such thing in healthcare–it’s just machine learning. On that, Ms. Ho and your Editor agree. She also makes the point that the market they address is ancillary and not core services, plus they have difficulty clinching the sale because they don’t relate well to achieving or can’t prove at this stage improved clinical outcomes. Ms. Ho’s looooong series of Tweets is succinctly summarized over at HISTalk (scroll down halfway).

Weekend short takes: ATA, APA call for permanent in-person evaluation waiver, mental healthtech raised $5.5B in 2021, Allscripts sells hospital/large physician EHRs to Harris Group for $700M, Cognizant-Microsoft extends telehealth-RPM

March 5, 2022 | by

72 groups asking for permanent telehealth in-person evaluation waiver prior to prescribing controlled substances. The American Telemedicine Association (ATA), ATA Action, and the American Psychiatric Association (APA) plus 69 other healthcare groups have written the Drug Enforcement Administration (DEA) and the Department of Health and Human Services (HHS) to make the temporary waiver of in-person patient evaluation prior to prescribing controlled substances permanent, and to remove restrictions on patient location. The rationale is to increase access to care, specifically for mental health and substance use disorder treatment. Currently, under the soon-to-be ending COVID-19 public health emergency (PHE), mental health providers can prescribe controlled substances remotely through a telemedicine consult. The letter points out that studies confirm efficacy, clinician and dispensing would remain under current restrictions, and that DEA and HHS can work together to prevent drug diversion. Other signatories include Babylon Health, Teladoc, Zipnosis, One Medical, and Northwell Health. ATA release, ATA/APA letter.

Mental healthtech’s banner 2021 totaled $5.5 billion across 324 international deals. Industry researcher CB Insights found that:

  • Investment was up 139% versus 2020
  • Exits were also up 87% (43 versus 23). Of the 43, there were 35 M&As, five SPACs and three IPOs.
  • US companies dominated in mental health, raising $4.5 billion; EU $651 million, and Asia $289 million
  • Mega-rounds ($100 million+) totaled 15, all US and in Q4, versus four in 2020.

State of Mental Health Tech 2021 Report free download available on the CB Insights page. Mobihealthnews

Allscripts is unloading its declining hospital and large physician practice EHRs to Ottawa-based Harris Group for $700 million in a cash plus contingent deal. The Allscripts EHRs in the transaction are Sunrise, Paragon, Allscripts TouchWorks, Allscripts Opal, and dbMotion. Although the unit generated gross revenue of $928 million in 2021, its revenue was expected to decline 3-4% and EBITDA to shrink 10-15% in 2022. Allscripts is retaining Veradigm, which is growing 6-7% annually, and stated that expected after-tax proceeds of $600 million will be used for share repurchase and potential M&A related to Veradigm. Harris Group acquires and manages computer systems companies in North America, Europe, Asia, and Australia covering four sectors: public, private, healthcare, and utilities. It is owned by Toronto-based Constellation Software. HISTalk reports on the Allscripts investor call, Constellation release

Cognizant announced a collaboration with Microsoft Cloud for Healthcare to extend telehealth and remote patient monitoring (RPM) capabilities for their offerings combining remote patient monitoring and virtual health, utilizing connected devices such as smartwatches, blood pressure monitors, and glucose meters to collect and communicate patient health data to providers. Cognizant release