2026 CMS Direct Supervision Rule | Medicare Changes

Key Details: The Centers for Medicare & Medicaid Services (CMS) has permanently expanded the definition of “direct supervision” under Medicare to include virtual presence in real-time, two-way audio-visual telecommunications technology for certain services. Effective January 1, 2026, this replaces the historical requirement that a supervising physician be physically present in the office suite for many Medicare Part B services. Additionally, under thePhysician Fee Schedule (PFS), frequency limitations for subsequent inpatient visits, subsequent nursing facility visits, and critical care limitations were removed. This change was adopted under the Calendar Year 2026 Medicare Physician Fee Schedule Rule and aims to modernize supervision requirements while addressing workforce constraints.

Key Elements of the Change

Virtual direct supervision is now permanently allowed under Medicare Part B for certain services, given that the supervising physician is:

1. Immediatelyavailable to provide assistance and direction in real time, and
2. Present via two-way audio and video telecommunication.

Physicians should note that audio-only supervision isnot allowed.

This applies to a broad range of certain Medicare Part B services, including:

1. Incident-to services furnished by auxiliary staff
2. Diagnostic tests that are subject to direct supervision
3. Pulmonary rehabilitation
4. Cardiac and intensive cardiac rehabilitation services

Additionally, physicians should note that certain high-risk surgical procedures with global surgery indicators 010 or 090 still require physical on-site physician presence.

Rural Health Clinics and Federally Qualified Health Centers may also use virtual supervision.

What This Means Operationally for Medical Practices

Physicians no longer must be physically in the office for many supervised services, opening up opportunities to cover multiple locations remotely, optimize physician time, and reduce staffing bottlenecks. Medical practices can also plan for improved access and reduced care delays, which are particularly beneficial for diagnostic services that require supervision or for rural or multi-site practices.

Planning and Conclusion

With this change in the definition of direct supervision, medical practices are encouraged to follow the steps below and to discuss further steps with their advisors:

• EnsureHIPAA-compliant real-time audio-video telecommunication platforms and budget for any additional investments.
• Create written internal control procedures and related policies.
• Implement documentation and audit-ready workflows (e.g., supervision coverage schedules, attestations, or time-stamped logs) to demonstrate supervisory availability if reviewed.
• Review current workflows to ensure they support remote supervision to capture all eligible revenue.
• Determine whether remote supervision can reduce staffing costs and whether physicians can be deployed more efficiently across locations.
• Ensure staffing for surgery days still reflect the physical presence requirements.

Medical practices should also aim to speak with their advisors about the following:

• Conducting an analysis on how expanded direct supervision may increase revenue.
• Identifying underutilized billing opportunities created by remote supervision availability.
• Modeling opportunities for physician time reallocation, including cross-location supervision efficiencies.
• Quantifying staffing cost savings.
• Evaluating the feasibility and financial return of opening or expanding satellite offices supported by virtual supervision.

For more information and expertise, contact Ryan & Wetmore today.

About Danielle Gallo
Senior Manager

Danielle is a Senior Manager based in our Bethesda, MD office. With over 25 years of experience, she provides a variety of tax services to corporations, trusts, partnerships and high net worth individual including: income tax planning and projections, tax return preparation and review, assistance with foreign tax issues, IRS correspondence and representation, and retirement planning. She is a member of the American Institute of Certified Public Accountants (AICPA), AICPA Women in the Profession, the Maryland Association of Certified Public Accountants (MACPA), and holds a CGMA, Chartered Global Management Accountant, designation.