New CMS “incident-to” telehealth rules for 2026

Martin Merritt, JD

An exception exists under CMS billing rules, allowing a physician to bill under the physician’s NPI number, for work done by a “mid-level” or Non-Physician Provider (NPP). Ordinarily, the NPP would be listed as the “rendering” provider and reimbursement would be at 85% of the physician rate.

But NPPs can act as “physician extenders” if certain rules are followed for “incident-to” billing, which allow the physician to capture 100% of the physician rate. Typically, in addition to the requirement that the physician first establish the physician-patient relationship and the plan of care, the physician must also “directly supervise” the NPP.

The question then arose, “what about telehealth?” Can the physician provide direct supervision telemedically? 

42 CFR 410.26 The new rule for “incident to” billing is effective after December 31, 2025 (meaning, beginning in 2026),does allow for “direct supervision” to be handled via telehealth. As noted in the rule, “direct supervision” differs from “general supervision” under Rule 410.26 in that under “general supervision” (when permitted) the physician can write the order and then leave the building. The physician’s presence in the is not required during the performance of the procedure that was ordered by the physician.

Subsection (a) provides the definitions, and subsection (b) is the rule:

§ 410.26 Services and supplies incident to a physician's professional services: Conditions.

(a) Definitions. For purposes of this section, the following definitions apply:

(1) Auxiliary personnel means any individual who is acting under the supervision of a physician (or other practitioner), regardless of whether the individual is an employee, leased employee, or independent contractor of the physician (or other practitioner) or of the same entity that employs or contracts with the physician (or other practitioner), has not been excluded from the Medicare, Medicaid and all other federally funded health care programs by the Office of Inspector General or had his or her Medicare enrollment revoked, and meets any applicable requirements to provide incident to services, including licensure, imposed by the State in which the services are being furnished.

(2) Direct supervision means, except as provided in paragraphs (a)(2)(i) and (ii) of this section, the level of supervision by the physician (or other practitioner) of auxiliary personnel as defined in § 410.32(b)(3)(ii). For the following services furnished after December 31, 2025, the presence of the physician (or other practitioner) required for direct supervision may include virtual presence through audio/video real-time communications technology (excluding audio-only):

(i) Services furnished incident to the services of a physician or other practitioner when provided by auxiliary personnel employed by the billing practitioner and working under their direct supervision and for which the underlying Healthcare Common Procedure Coding System (HCPCS) code has been assigned a PC/TC indicator of `5'.

(ii) Office or other outpatient visits for the evaluation and management of an established patient that may not require the presence of a physician or other qualified health care practitioner.

(3) General supervision means the service is furnished under the physician's (or other practitioner's) overall direction and control, but the physician's (or other practitioner's) presence is not required during the performance of the service.

. . .

(b) Medicare Part B pays for services and supplies incident to the service of a physician (or other practitioner).

(1) Services and supplies must be furnished in a noninstitutional setting to noninstitutional patients.

(2) Services and supplies must be an integral, though incidental, part of the service of a physician (or other practitioner) in the course of diagnosis or treatment of an injury or illness.

(3) Services and supplies must be commonly furnished without charge or included in the bill of a physician (or other practitioner).

(4) Services and supplies must be of a type that are commonly furnished in the office or clinic of a physician (or other practitioner).

(5) In general, services and supplies must be furnished under the direct supervision of the physician (or other practitioner). Designated care management services can be furnished under general supervision of the physician (or other practitioner) when these services or supplies are provided incident to the services of a physician (or other practitioner). Behavioral health services can be furnished under general supervision of the physician (or other practitioner) when these services or supplies are provided by auxiliary personnel incident to the services of a physician (or other practitioner). The physician (or other practitioner) supervising the auxiliary personnel need not be the same physician (or other practitioner) who is treating the patient more broadly. However, only the supervising physician (or other practitioner) may bill Medicare for incident to services.

(6) Services and supplies must be furnished by the physician, practitioner with an incident to benefit, or auxiliary personnel.

(7) Services and supplies must be furnished in accordance with applicable State law.

(8) A physician (or other practitioner) may be an employee or an independent contractor.

(9) Claims for drugs payable administered by a physician as defined in section 1861(r) of the Social Security Act to refill an implanted item of DME may only be paid under Part B to the physician as a drug incident to a physician's service under section 1861(s)(2)(A). These drugs are not payable to a pharmacy/supplier as DME under section 1861(s)(6) of the Act.

Martin Merritt is a health lawyer and health care litigator at Martin Merritt PLLC, as well as past president of the Texas Health Lawyers Association and past chairman of the Dallas Bar Association Health Law Section. He can be reached at Martin@martinmerritt.com.