Effective January 1, 2026, CMS permanently adopted a new definition of direct supervision for Medicare Part B services. A supervising physician can now meet the immediate-availability requirement through real-time, two-way audio and video technology instead of standing in the office suite. The Calendar Year 2026 Medicare Physician Fee Schedule final rule covers incident-to services billed for work performed by nurse practitioners and physician assistants, and diagnostic tests performed in the practice's own location, but it excludes audio-only coverage outright and still requires in-person presence for any procedure carrying a 010 or 090 global surgery indicator. A telehealth provider that treats the new flexibility as a blanket rule, or that counts a phone call as supervision, is building an audit finding into its own billing record.
CMS Makes Virtual Direct Supervision Permanent
CMS first allowed this flexibility as a pandemic-era exception, then extended it through successive annual Physician Fee Schedule rules rather than making it permanent. The Calendar Year 2026 Physician Fee Schedule final rule, issued October 31, 2025, ends that cycle. Real-time, two-way audio and video supervision is now built into 42 CFR 410.26 on a permanent basis, and does not expire at year-end absent further rulemaking. CMS's own fact sheet on the final rule confirms the technology requirement excludes audio-only communication outright.
What Virtual Presence Can and Cannot Satisfy
Virtual direct supervision lets a physician or other supervising practitioner meet the immediate-availability standard for incident-to services performed by a nurse practitioner or physician assistant, and for diagnostic tests under 42 CFR 410.32, without standing in the same suite as the staff or equipment being supervised. The permanent rule carves out procedures that carry a 010 or 090 global surgery indicator, the minor and major surgical packages, which still require the supervising practitioner's in-person presence for the full procedure. The rule also leaves a separate question untouched: whether the patient's own visit can be conducted by telehealth. Virtual direct supervision governs the supervising practitioner's presence relative to staff and equipment inside the billing location. That is a different rule from the one governing whether a practitioner may see that patient over telehealth in the first place.
The Incident-To Billing Overlap
Telehealth providers who also bill incident-to services for nurse practitioners and physician assistants carry both exposures at once: the supervision question addressed here, and the broader incident-to framework our guide to incident-to billing and the rules auditors apply covers, including the plan-of-care documentation that nonphysician practitioners cannot bill around. Treating the new virtual-presence flexibility as a general relaxation of supervision, rather than a narrow technology substitution with its own exclusions, is the mistake that turns a documentation gap into a recoupment demand across every claim in the lookback period.
The Record That Shows Supervision Happened
Medicare Administrative Contractors and Unified Program Integrity Contractors test direct supervision from the record created at the time of service, not from a later assertion that supervision occurred. A record supporting virtually supervised care should show who the supervising practitioner was, when the service occurred, and that the connection was real-time, two-way, and audio-video for the full duration of the service, consistent with the standard CMS adopted in the final rule. A record that cannot establish continuous audio-video availability throughout the service invites the same scrutiny as a supervising practitioner who was never reachable at all.
A supervising physician's presence can now live on a screen. The record proving that presence lasted the entire service still has to live on paper.
Why Early Legal Counsel Is Critical
It is critical that telehealth providers promptly retain experienced healthcare defense counsel upon receiving an audit notice, a subpoena, an investigative request, or other government inquiry concerning supervision or incident-to billing. Early legal intervention can protect the provider's rights, ensure appropriate responses to government requests, avoid inadvertent admissions, preserve relevant defenses, and allow counsel to communicate with investigators on the provider's behalf. Delaying legal representation can significantly affect the outcome of a matter and expose the provider to unnecessary risk.
How Health Law Alliance Can Help
Health Law Alliance defends telehealth platforms, prescribing physicians, dispensing pharmacies, and ancillary providers across DEA flexibility audits, Ryan Haight Act enforcement, state licensure proceedings, and payor audit defense. Our telehealth defense attorneys handle these matters from the first audit notice through appeal.
Health Law Alliance's attorneys have overseen 2,000+ audits and handled 5,000+ matters, with 25+ years of experience.
If a Medicare contractor has questioned how your practice supervises incident-to services or diagnostic tests, contact Health Law Alliance's telehealth defense attorneys for a free, confidential consultation.
