Proposed CY 2026 Medicare Physician Fee Schedule Rule Signals Support for Digital Health Advancement

On July 14, 2025, the Centers for Medicare and Medicaid Services (CMS) issued the calendar year (CY) 2026 Medicare Physician Fee Schedule (MPFS) Proposed Rule (Proposed Rule). This client alert focuses on the proposed increased telehealth flexibilities and other digital health proposals under the Proposed Rule, including flexibilities for digital mental health treatment (DMHT). CMS is seeking comments on the CY 2026 MPFS by September 12, 2025.

CMS took significant steps promoting services provided via digital health, aligning with the Make America Healthy Again (MAHA) initiative advanced by the Trump Administration and led by Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. Notably, the Proposed Rule introduces a simplified process for adding new codes to be covered by Medicare when the services are provided via telehealth, proposes expanding the types of conditions eligible for DMHT reimbursement to include attention-deficit hyperactivity disorder (ADHD), and invites public comment on additional digital health reimbursement avenues for other chronic diseases and disorders. We describe each of these proposals in more detail below.

Telehealth services code list

Adding new services to the Medicare Telehealth Services List

CMS proposes simplifying its process for reviewing requests to add to the Medicare Telehealth Services List (Telehealth List), emphasizing that practitioners – given their in-depth knowledge of beneficiaries’ clinical needs – are best positioned to determine whether a service should be provided via telehealth for a particular patient. Physicians and practitioners are encouraged to continue evaluating both the safety and clinical benefits of providing a service via telehealth to justify its use. Throughout the Proposed Rule, CMS emphasizes that inclusion on the Telehealth List does not imply that a service is appropriate for telehealth in all circumstances, and practitioners should utilize their judgment on a case-by-case basis.

The Proposed Rule outlines a new three-step process for reviewing additions to the Telehealth List:

1. Determine whether the proposed telehealth service is separately payable under the MPFS
2. Determine whether the telehealth service is subject to the provisions of Section 1834(m) of the Social Security Act, and
3. Review the elements of the service as described by the Healthcare Common Procedure Coding System (HCPCS) code and determine whether a practitioner can furnish each element using an interactive telecommunication system (as defined by CMS).

This new process removes the requirement to evaluate services for “permanent” or “provisional” status, as well as the need to demonstrate that the telehealth service provides the same clinical benefit as in-person care.

Under this proposal, CMS would no longer need to categorize services on the Telehealth List as “permanent” or “provisional.” Instead, services added to the Telehealth List will be permanent, except for the removal of certain services based on CMS internal review or feedback received by interested parties in accordance with the Social Security Act. Accordingly, if finalized, all such services currently on the Telehealth List would become permanent fixtures.

Further, CMS proposes to permanently remove telehealth frequency limits for subsequent inpatient visits, subsequent nursing facility visits, and critical care consultations, which removes requirements for in-person encounters after a certain number of visits.

Proposed new telehealth codes, clarification of DMHT, RTM, and RPM

CMS proposes adding multiple-family group psychotherapy and group behavioral counseling for obesity to the Telehealth List, finding that these codes met the three-step test outlined above. However, CMS did not agree that all proposed services should be added to the Telehealth List. Specifically, CMS stated in the Proposed Rule that other requests, including certain dialysis codes, home international normalized ratio (INR) monitoring, and telehealth-specific evaluation and management (E/M) service codes (98000-98015), did not meet the criteria outlined in the process for adding new services to the Telehealth List, with some failing at step one and others failing at step two.

Additionally, CMS clarified that the telehealth rules do not apply to DMHT, remote physiologic monitoring (RPM), and remote therapeutic monitoring (RTM) services, as these services are inherently non-face-to-face services. Specifically, CMS emphasized that it has historically interpreted Section 1834(m) of the Social Security Act as applying only to services ordinarily furnished in person. Therefore, certain services delivered using telecommunications technologies do not fall under the definition of telehealth services because they do not inherently require face-to-face communications. Accordingly, these categories of services fall outside the scope of a Medicare telehealth service as defined by the Social Security Act and would not meet step two of the new process.

Telehealth supervision

In response to overwhelming support, CMS proposes extending its policy regarding remote supervision via telehealth technologies, which was first introduced during the COVID-19 public health emergency and recently finalized for a certain subset of services in the CY 2025 MPFS Final Rule. Under this proposal, services requiring direct supervision of a physician or other supervising practitioner could be met through real-time audio and visual interactive telecommunications (excluding audio-only). This relaxed supervision policy will apply to:

1. Applicable incident-to services under § 410.26
2. Diagnostic tests under § 410.32
3. Pulmonary rehabilitation services under § 410.47, and
4. Cardiac rehabilitation and intensive cardiac rehabilitation services under § 410.49.

However, CMS declined to extend the relaxed supervision standard to teaching physicians billing for services provided by residents. Rather, CMS proposes a return to the pre-COVID-19 policy requiring the physician’s physical presence during critical portions of the resident-furnished services in order to qualify for Medicare payment. Additionally, the virtual direct supervision policy does not apply to any service that has a global surgery indicator of 010 or 090.

DMHT devices

CMS recognizes the prevalence of chronic illnesses, including mental health disorders. In the CY 2025 MPFS final rule, CMS established Medicare payment for DMHT devices when provided as part of professional behavioral health services and used in conjunction with ongoing care under a behavioral health treatment plan. In order for a DMHT device to be payable under the MPFS, the following criteria must be met:

1. The DMHT device must be cleared, approved, or granted de novo authorization by the Food and Drug Administration (FDA)
2. The billing practitioner must incur the cost of the DMHT device furnished to the beneficiary
3. The furnishing of the DMHT device must be incident to the billing practitioner’s professional services and in association with an ongoing behavioral health treatment under a plan of care by the billing practitioner, and
4. The patient must have a mental health condition diagnosis pursuant to 21 CFR 882.5801, although the billing practitioner does not need to be the diagnosing provider.

Under the Proposed Rule, CMS proposes expanding its payment policies for HCPCS codes G0552 (initial DMHT supply and initial education on device use), G0553 (first 20 minutes of treatment management services) and G0554 (each additional 20 minutes of monthly treatment management services) to include payments for FDA-cleared DMHT devices to assist in the treatment of ADHD, as set forth under 21 CFR 882.5803. This expansion would create additional opportunities for reimbursement for those FDA DMHT devices used to treat ADHD or any of its individual symptoms, subject to meeting the billing requirements set forth above, provided that the patient remains under the supervision of a clinician.

CMS signaled in the Proposed Rule that it intends to explore coverage of digital devices for the following conditions:

• Gastrointestinal conditions under 21 CFR 876.5960
• Sleep disturbances associated with psychiatric conditions under 21 CFR 882.5705, and
• Fibromyalgia symptoms (to be codified under 21 CFR 882.5804).

CMS is also seeking comment on coding and payment for a broader range of digital tools that support a healthy lifestyle as part of an overall mental health treatment plan, as well as digital therapeutics use to treat or manage symptoms of other chronic diseases.

While CMS continues to support the use of digital health tools in the treatment of mental health conditions, it has declined to establish national pricing for DMHT devices. Instead, pricing will remain under the discretion of the Medicare Administrative Contractor.

However, CMS recognized the rapid evolution of digital device technology and acknowledged that future updates to its payment policies and pricing mechanisms for these devices may be necessary. CMS indicated that it would continue to solicit comments from the public and the Current Procedural Terminology (CPT) Editorial Panel to support access to vital services.

Amendments to RPM and RTM codes

Following the CPT Editorial Panel’s approval of RPM and RTM codes in 2024 that allow for data collection over a period of 2–15 days, CMS now proposes to add these new codes for coverage. Prior codes required at least 16 days of data collection within a 30-day period.

CMS also proposes new codes for provider review of RPM or RTM data involving less than 20 minutes of review, consistent with recommendations from the American Medical Association (AMA).

AI and SaaS

Notably, CMS also asked industry stakeholders to provide comments on payment strategies for artificial intelligence (AI) and Software as a Service (SaaS), acknowledging that its current payment systems are outdated for advancing software. Specifically, CMS requests alternative pricing strategies for SaaS and AI technologies, how it should value physician work when providers use SaaS and AI, and how the technologies are used to treat chronic disease.

Key takeaways

• New, streamlined process for requesting services to be added to the Telehealth List
• Elimination of provisional versus permanent designations to the Telehealth List
• Expanded services where direct supervision may be provided via the availability of immediate two-way audio-visual communication
• Expanded coverage for DMHT devices to be used for ADHD, with requests for comments on additional conditions, coding, reimbursement for other types of digital therapeutics, and digital tools assisting with the treatment of chronic conditions
• Additional RPM and RTM codes covering fewer data collection days and provider review minutes
• Requests for comments on payment strategies for AI and SaaS technologies in healthcare

Learn more

We will continue to review these and other initiatives impacting physicians and other healthcare providers as we await the Final Rule.

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