Telehealth Policy 2026: Medicare Extensions, Interstate Compacts, and What Every Therapist Should Know

On February 3, 2026, President Trump signed the Consolidated Appropriations Act of 2026. Buried in a sprawling budget package that temporarily ended a government shutdown was a provision therapists had been watching anxiously: Medicare's COVID-era telehealth flexibilities were extended — again — through December 31, 2027.

This is the sixth time since 2020 that Congress has extended these flexibilities rather than making them permanent. The pattern has become so predictable that health law attorneys have published pieces with titles like "Congress Creates Yet Another Cliff for Medicare Telehealth Extensions (and We're Running Out of Metaphors)" (Epstein Becker Green, 2026).

For therapists who depend on telehealth, the recurring uncertainty is exhausting. But underneath the extension cycle, two structural changes are reshaping private practice in ways that will outlast any single budget deal: a set of Medicare provisions that became permanently expanded, and a pair of interstate licensing compacts that are quietly extending multi-state practice rights to tens of thousands of therapists who couldn't legally see out-of-state clients just five years ago.

The temporary extension matters. The permanent changes and the compact expansion matter more.

The 2026 budget package extended many Medicare telehealth rules temporarily — but not everything. Several provisions affecting mental health providers specifically were made permanent under earlier legislation and are not subject to the recurring extension cycle.

Medicare Telehealth Rule	Status	Expires
Marriage and family therapists as Medicare distant site providers	Permanent	Never
Mental health counselors as Medicare distant site providers	Permanent	Never
No geographic restrictions for behavioral/mental telehealth originating site	Permanent	Never
Patient's home as originating site for behavioral health	Permanent	Never
No in-person visit requirement before first mental health telehealth session	Temporary	December 31, 2027
Audio-only telehealth for Medicare patients	Temporary	December 31, 2027
Federally Qualified Health Centers as distant site for telehealth	Temporary	December 31, 2027

The permanent provisions are significant and underappreciated. MFTs and mental health counselors — historically excluded from direct Medicare billing — can now permanently bill Medicare for telehealth services from any location, including the patient's home. This isn't going away regardless of what happens with future budget negotiations.

The temporary provisions are the ones to watch. The in-person visit requirement — which would mandate that Medicare patients see their telehealth therapist in person within six months of beginning virtual care — has been waived since the pandemic. If Congress lets the December 31, 2027 deadline lapse without action, that requirement snaps back into effect. For practices with a significant Medicare caseload, that's a material change to how intake works.

The legislation that would end the extension cycle permanently is the CONNECT for Health Act (H.R. 4206 / S. 1261). Introduced in the 119th Congress, it has accumulated remarkable bipartisan support: 212 House co-sponsors and 71 Senate co-sponsors as of mid-2026 (Alliance for Connected Care, 2026).

If passed, the CONNECT for Health Act would:

• Permanently eliminate Medicare geographic restrictions on telehealth originating sites
• Permanently establish the patient's home as an eligible originating site
• Permanently repeal the six-month in-person requirement for mental health telehealth
• Permanently expand the list of eligible telehealth providers — including therapists, social workers, and other behavioral health professionals
• Remove audio-only telehealth expiration, which is particularly important for elderly and rural Medicare patients

Despite the co-sponsor count, the bill hasn't advanced to a floor vote. The dynamic in Congress has been to include telehealth extensions in must-pass budget bills rather than passing standalone telehealth legislation — which is why the CONNECT for Health Act keeps getting re-introduced with broad support but limited movement.

The practical implication for therapists: don't plan your practice around Congress making this permanent in the next 18 months. The December 31, 2027 deadline will likely generate another extension negotiation, another set of late-night budget bill riders, and another temporary extension. Plan for continuity of the temporary rules through 2027; watch closely in late 2027 for what the next cycle produces.

The Medicare extension debate gets most of the telehealth policy attention, but it's not the most consequential structural change underway. That distinction belongs to the interstate licensing compacts — state-level agreements that allow therapists to practice across state lines without obtaining a separate license in every state.

This is a fundamentally different kind of policy reform. Medicare telehealth rules govern payment — whether insurers will reimburse a session conducted by video. Licensing compacts govern legality — whether a therapist is permitted to see a client in another state at all. The two operate on separate tracks. A therapist could be licensed to see clients across 35 states via an interstate compact and still need to navigate Medicare's reimbursement rules for those sessions separately.

Two compacts are reshaping multi-state practice for mental health providers:

• PSYPACT (Psychology Interjurisdictional Compact) — for licensed psychologists
• Counseling Compact — for licensed professional counselors and mental health counselors

Their trajectories, timelines, and scope differ significantly — and both matter for how private practice therapists think about geography, website strategy, and client acquisition.

PSYPACT — the Psychology Interjurisdictional Compact — has grown from a concept to a functioning multi-state framework with remarkable speed. As of June 2026, 42 jurisdictions are full participating members: 40 states, the District of Columbia, and the Commonwealth of the Northern Mariana Islands (PSYPACT Commission, 2026).

Montana became the most recent addition in October 2025. The holdout states are notable for their size:

• California — No PSYPACT legislation enacted or pending
• New York — Legislation has been introduced but not enacted
• New Mexico — No active legislation
• Oregon — No active legislation

For psychologists licensed in a participating state, PSYPACT offers two pathways. The APIT (Authority to Practice Interjurisdictional Telepsychology) permits telepsychology across all participating states. The TAP (Temporary Authorization to Practice) allows up to 30 days of temporary in-person practice per year in any participating state. Both require obtaining an E.Passport through ASPPB and are renewed annually.

The practical significance for private practice psychologists is considerable. A psychologist licensed in Texas who obtains an APIT can now legally see clients in Florida, Colorado, Ohio, Massachusetts, and 36 other participating states via telehealth — without state-by-state licensing applications, fees, and waiting periods that previously took months per state. For client acquisition, this means geographic reach that was simply unavailable before the compact era.

What PSYPACT doesn't fix: insurance credentialing in each state is still separate. Being legally authorized to practice telepsychology in a state via PSYPACT does not automatically make you in-network with that state's insurance payers. For cash-pay and out-of-network practices, this distinction doesn't matter much. For insurance-accepting practices, the compact simplifies licensure while leaving credentialing work intact.

The Counseling Compact — covering licensed professional counselors, licensed mental health counselors, and similar designations — is at an earlier stage than PSYPACT, but the trajectory is clear.

As of June 2026, the Compact is live in six states: Arizona, Georgia, Indiana, Louisiana, Minnesota, and Ohio. Indiana became the most recent state to activate on June 8, 2026 (Counseling Compact Commission, 2026). An additional 32 states and the District of Columbia have enacted the legislation and are completing the technical and administrative steps needed to begin issuing and receiving privileges.

The math here is important: with 32 states in the pipeline behind 6 active ones, the Counseling Compact is likely to reach PSYPACT-scale participation within two to three years. The legislative barrier is already cleared in those states — the remaining steps are operational. Counselors who track this compact's timeline are watching state-by-state activation announcements, not legislative votes.

The Counseling Compact's scope is worth understanding clearly:

• Who it covers: LPCs, LMHCs, LPCCs, and equivalent independent counseling licensees
• Who it does not cover: Licensed clinical social workers (LCSWs), marriage and family therapists (MFTs), art/music/dance therapists, and other non-counseling licenses
• What it enables: Cross-state telehealth practice and expedited home-state licensure when moving states

For the mental health professions that aren't yet covered by a compact — social workers, MFTs — the policy picture is less developed. Social work interstate compact legislation exists but is at an even earlier stage than the Counseling Compact. MFTs have no active interstate compact framework at scale. For those disciplines, the primary multi-state option remains individual state licensing — still workable, still slow.

To understand the current telehealth landscape clearly, it helps to hold these two policy tracks in mind simultaneously — because they're often conflated in therapist conversations about telehealth.

Policy Dimension	Federal (Medicare)	State Compacts
What it governs	Medicare reimbursement for telehealth sessions	Legal authorization to practice across state lines
Who is affected	Therapists with Medicare patients	All therapists seeking multi-state clients (regardless of payer)
Current status	Extended through December 31, 2027 (temporary)	PSYPACT: 42 jurisdictions; Counseling Compact: 6 active, 32+ pending
Path to permanence	CONNECT for Health Act (not yet passed)	Already structurally permanent via state legislation
Private-pay impact	Minimal — Medicare rules don't affect cash-pay clients	Full — compact privileges apply regardless of how clients pay

A psychologist with an APIT through PSYPACT can legally see a self-pay client in Massachusetts, Texas, and Colorado simultaneously, regardless of Medicare's current rules. Those same sessions aren't covered by Medicare telehealth flexibilities anyway unless the client is a Medicare beneficiary — which is a separate question from the compact authorization.

The confusion between these tracks causes therapists to underestimate their actual multi-state reach. A counselor in an active Counseling Compact state who focuses only on "can Medicare reimburse this?" is missing the more foundational question: "Am I legally authorized to see this out-of-state client?" For the six active Counseling Compact states, that authorization is increasingly available. For the 32 states in the pipeline, it's coming.

These policy changes have real implications for how therapists structure and market their practices — and for what "practice geography" even means in 2026.

According to the APA's 2023 Practitioner Pulse Survey, 67% of psychologists now offer telehealth, and 77% plan to continue their current level of telehealth use going forward (APA, 2023). Video conferencing is the primary modality for 96% of telehealth providers. For psychologists already doing this work, PSYPACT's 42-jurisdiction reach means the geographic ceiling on their virtual practice has been removed — subject to the insurance credentialing caveat.

A few concrete things to reconsider if you're in an active compact state:

• Website geography. If you practice in 30+ states, your website should reflect that. A page that describes you as a "Minnesota therapist" undersells your actual reach to potential clients in Wisconsin, South Dakota, and North Dakota — all of whom you can legally see if Minnesota is your PSYPACT home state. Telehealth marketing strategy changes significantly when geography expands from one metro to an entire region.
• Specialty pages by condition, not location. When you can see clients anywhere in the compact, competing on location becomes less important than competing on specialty. "Online OCD therapist" or "telehealth EMDR specialist" reach clients searching by need across your entire compact footprint.
• FAQ content for AI discovery. "Can I see a therapist in another state by video?" and "Do I need a therapist licensed in my state for telehealth?" are questions being asked frequently in AI search tools. A website that answers them clearly — and accurately explains your compact credentials — is answering the exact question a potential client is asking ChatGPT or Perplexity before they visit any therapist's website.
• Credentialing strategy. PSYPACT opens the legal door for insurance-accepting practices; credentialing still needs to walk through it state by state. If you're building toward a multi-state insurance caseload, map your credentialing priorities against the states where your specialty has the most demand — not just the states closest to home.

WebsiteTherapy builds structured data and AI discoverability into every therapist website from the ground up — including the kind of specialty-focused content that helps compact-authorized therapists get found across their full geographic reach, not just in their home state. See how it works.

The telehealth policy landscape will keep moving. Three things worth tracking through the December 31, 2027 Medicare extension deadline:

The CONNECT for Health Act's window. With 212 House and 71 Senate co-sponsors, the bill has the votes in theory. The obstacle is floor time and the preference for bundling telehealth into larger legislation. The closer the 2027 cliff gets, the more pressure builds for a standalone vote — or another budget-bill extension. Watch for movement in Q3 and Q4 of 2027.

Counseling Compact state activations. The 32 states in the pipeline are completing administrative steps, not waiting for legislation. Announcements of new active states will come throughout 2026 and 2027 as each state's compact commission completes its systems work. If your state is one of the 32, you may be a year or less away from compact eligibility.

PSYPACT's notable gaps. California has the largest number of licensed psychologists of any state and remains outside PSYPACT. New York has pending legislation. If either state enacts PSYPACT legislation, compact coverage approaches near-universal national reach for psychologists — a significant moment for the profession. Neither looks likely in the immediate term, but both are worth watching.

DEA telemedicine rules for psychiatrists. Prescribing controlled substances via telehealth — the ability to prescribe stimulants for ADHD or benzodiazepines via video rather than in-person — remains in regulatory limbo under separate DEA rulemaking. This doesn't directly affect non-prescribing therapists, but it shapes the referring relationships and blended care models that psychologists, counselors, and social workers participate in. The DEA's final rule on telemedicine prescribing (still pending as of mid-2026) will clarify whether telehealth-only psychiatric practices remain viable at scale.

The consolidation happening in therapist billing platforms and the continued movement toward private pay both interact with the compact expansion in ways that favor independent practice — and specifically, independent practices with the web infrastructure to be found across the geography their licenses now cover. The features that matter most for compact-authorized therapists are the ones that make a specialty visible beyond a single city.