As part of its calendar year 2026 Medicare Physician Fee Schedule, the Centers for Medicare and Medicaid Services (“CMS”) made permanent a major change to its physician direct supervision rules. Effective January 1, 2026, for services that are required to be performed under the “direct supervision” of a physician or other appropriate practitioner, CMS is permanently adopting a definition of direct supervision that allows the physician or practitioner to provide direct supervision through real-time audio and visual interactive telecommunications. Audio-only communication is insufficient. The supervising physician or practitioner must be available throughout the performance of the entire test or service subject to direct supervision, but does not have to be “on-site” to provide supervision.

Historically, Medicare direct supervision required a physician or appropriate practitioner to be physically present in the office suite (though not in the same room) and immediately available to provide assistance and direction throughout the applicable test or service. During the COVID-19 public health emergency, CMS allowed virtual presence via real-time two-way audio/video to meet this requirement, a policy extended through December 31, 2025. Recognizing the benefits for patient access to care, improved scheduling flexibility, alleviating workforce shortages and care modernization, CMS made permanent the relaxed direct supervision requirements.  

The permanent direct supervision rules are applicable to incident-to services under 42 CFR § 410.26, diagnostic tests under 42 CFR § 410.32, pulmonary rehabilitation services under 42 CFR § 410.47, and cardiac rehabilitation and intensive cardiac rehabilitation services under 42 CFR § 410.49. However, higher-risk surgeries with global surgery indicators 010 (minor, 10-day global) or 090 (major, 90-day global) still require the physical, on-site presence of a physician to ensure patient safety and the ability for rapid on-site intervention. CMS will also allow direct supervision through audio/video real-time communications technology (excluding audio-only) for Rural Health Clinics and Federally Qualified Health Centers. 

 The application of this change is widespread. For example, CMS will pay a physician for the services of auxiliary personnel such as nurses and technicians when furnished “incident-to” the professional services of the physician. One of the requirements for physician incident-to billing is that the service is rendered under the direct supervision of a physician. Historically, this meant that the supervising physician would need to be in the office while the incident-to service was provided. Billing for incident-to services is under the name and billing number of the supervising physician, even if that individual did not order the incident-to service. With the relaxation of the direct supervision requirements, an off-site ordering physician, for example, can bill for the incident-to service (provided that the ordering physician is available through real-time audio and visual interactive telecommunications). This change by CMS not only creates flexibility for the supervision of incident-to services but also allows for increased alignment of the billing of the incident-to service with the ordering physician, thereby allowing the ordering physician to receive compensation credit for the incident-to service.

Another material impact of this change will be with respect to independent diagnostic testing facilities (“IDTF”). Many diagnostic imaging tests (especially with contrast) performed in an IDTF require direct supervision by a physician (most often by a radiologist). At times, IDTFs have struggled to find appropriate physicians who can be physically present in the IDTF office to provide direct supervision throughout the entire imaging service. The increased flexibility resulting from CMS’ change in the definition of direct supervision will make it easier for IDTFs to obtain the necessary physician supervision and therefore increase access to diagnostic imaging.

In light of these changes, healthcare providers should review and update their supervision protocols and compliance policies. Further, providers relying on remote direct supervision should ensure that their telecommunication systems allow for real-time, two-way audio and visual interaction, and that all supervision arrangements are documented in writing in the event of an audit. Healthcare providers should also ensure that the virtual supervision technology is secure and HIPAA compliant since protected health information will be shared. Finally, providers should consult with any applicable accreditation organizations, such as the American College of Radiology and the American Society of Radiologic Technologists, to ensure full compliance.