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The Centers for Medicare & Medicaid Services (CMS) allows the use of real-time, two-way audio/video communications technology to satisfy the direct supervision requirement for most Medicare Part B services. This development, stemming from flexibilities first introduced during the COVID-19 public health emergency, is now permanent. Additionally, the Consolidated Appropriations Act, 2026 extended and permanently implemented certain Medicare telehealth flexibilities.

The result is greater patient access to physician extenders in office/clinic settings who perform services under the direct supervision of the physician who are no longer required to be physically present in the office suite and can provide many telehealth services from home. This article addresses the changes implemented in CMS’s final rule, the CAA 2026, and Telehealth FAQs (updated on February 4, 2026).

Background

As a general rule, services personally furnished by nonphysician practitioners (NPP) (e.g., physician assistants, nurse practitioners) are reimbursed at 85% of the physician fee schedule amount for the service. Under Medicare, “incident to” is a special billing provision that allows reimbursement for certain services delivered by NPPs in the office or clinic setting at 100% of the physician fee schedule. Such NPP’s services must be an integral, although incidental, part of the physician’s professional services, meaning there must be a direct, personal professional service furnished by the physician to initiate the course of treatment. In other words, the physician must initially see the patient for the problem or diagnosis at issue before the NPP can bill “incident to” for the same problem or diagnosis.

Importantly, NPP services billed “incident to” are only covered when performed under the direct supervision of the physician. Historically, direct supervision required the supervising practitioner to be physically present in the office suite and immediately available to provide assistance and direction throughout the performance of the service. Between March 31, 2020 and December 31, 2025, CMS introduced temporary flexibilities permitting direct supervision via real-time, two-way audio/video communications technology, effectively allowing a “virtual presence” to fulfill the supervision requirement. These flexibilities were initially implemented in response to the COVID-19 Public Health Emergency and then extended in response to positive feedback regarding improved access and workforce support. Effective January 1, 2026, CMS made this flexibility permanent.

Analysis of the Final Rule

CMS’s final rule established that for most services described at 42 CFR § 410.26, the “immediate availability” component of direct supervision may be satisfied by virtual presence using audio/video real-time communications technology, with the explicit exclusion of audio-only technology. This policy applies to the majority of Medicare Part B services, with specific exceptions for certain surgical procedures (i.e., global surgery indicators 010 or 090) for which in-person supervision remains mandatory due to higher risk. The rule also codified parallel supervision flexibilities for rural health clinics (RHCs) and federally qualified health centers (FQHCs) at § 405.2401(b).

Some stakeholders opposed the permanent change, citing concerns that virtual direct supervision could obscure the role of NPPs in providing services incident to a physician’s services. CMS recognized these concerns but concluded that “the benefits of increased flexibility and access outweigh potential attribution issues.” CMS underscored that, regardless of the new flexibility, supervising practitioners must continue to exercise professional judgment in determining the most appropriate modality for supervision on a case-by-case basis, balancing patient safety, program integrity, and access.

Other Medicare Telehealth Flexibilities

On February 3, 2026, the US administration signed the Consolidated Appropriations Act, 2026, which extended the following Medicare telehealth flexibilities:

Importantly, CMS did not extend in its 2026 Physician Fee Schedule the flexibility for telehealth practitioners to use their currently enrolled location instead of their home address. In a February 4, 2026 FAQ, CMS clarified that “virtual-only telehealth practitioners whose only physical practice location is their home address will need to enroll their home address as a practice location.”

Conclusion

Virtual direct supervision and other telehealth flexibilities present an opportunity to enhance access to care and increase reimbursement, particularly in settings facing provider shortages or serving rural and underserved populations. However, providers should consider whether the shift to greater telehealth flexibility affects their practitioners’ distant site location requirements if their home becomes their only physical practice location.

How We Can Help

Our lawyers have a deep background advising clients on the impacts of changes to Medicare. We stand ready to assist healthcare organizations to carefully review their current supervision protocols and adapt internal policies to leverage the newly permanent virtual supervision flexibility for eligible services. We can also assist organizations utilizing “incident to” billing to remain attentive to documentation and quality of care practices, as increased reliance on virtual supervision may prompt questions regarding service attribution and compliance.