By: Christopher Parrella, Esq., CPC, CHC, CPCO
Parrella Health Law, Boston, MA.
A Health Care Provider Defense and Compliance Firm

CMS has issued its CY 2026 Medicare Physician Fee Schedule (PFS) Proposed Rule (CMS-1832-P), and it’s loaded with structural payment updates, compliance shifts, and strategic priorities aimed at transforming Medicare Part B. While rulemaking is always subject to change, many of these proposed policies align with bipartisan cost-containment goals, prior rulemaking trends, and CMS’ administrative modernization agenda making their final adoption likely.

Here’s what healthcare providers, especially those in outpatient, behavioral health, and diagnostic services, need to pay attention to:

1. Telehealth Gains Ground: Virtual Supervision Permanent

   CMS proposes:

   • Eliminating frequency caps for telehealth visits in inpatient and SNF settings.
   • Making virtual (video-based) direct supervision permanent for most incident-to services.
   • Streamlining telehealth service additions by removing the distinction between provisional and permanent codes.

   If finalized, practices offering remote services must review supervision workflows and update compliance policies to reflect this shift.

2. Behavioral Health Integration: Add-On Payments Proposed

   CMS proposes three new G-codes as add-ons to Advanced Primary Care Management (APCM) services for:

   • Collaborative Care Model (CoCM)
   • Behavioral Health Integration (BHI)

   This is part of the administration’s larger chronic care initiative under the “Make America Healthy Again” Executive Order. Behavioral health providers and integrated primary care clinics should prepare to code these services with precision.

3. Skin Substitutes: The 1000% Growth Problem

   Medicare spending on skin substitutes ballooned from $252M (2019) to over $10B (2024). CMS proposes:

   • Bundling payment for skin substitutes into application procedure rates.
   • Aligning payments based on FDA regulatory categories (PMA, 510(k), HCT/P).

   Compliance Note: Expect increased scrutiny and reimbursement caps. Providers using high-cost grafts in-office should review their purchasing and compliance practices immediately.

4. Digital Therapeutics for ADHD and Mental Health

   Payment will now cover FDA-approved Digital Mental Health Treatment (DMHT) devices for ADHD. CMS also seeks input on expanding coding for broader digital tools used in behavioral care.

   Tip for Tech-Enabled Providers: Document integration of these tools into treatment plans to ensure audit readiness.

5. Fraud & Abuse Safeguards Embedded in Reimbursement Policy

   CMS is targeting fraud at the data and manufacturer level with:

   • Clarifications on ASP calculations
   • New definitions for bundled discounts and bona fide service fees
   • Gene therapy procurement payment reforms

Parrella Take: Fraud-and-abuse enforcement is increasingly baked into rate-setting. Practices must tighten documentation and stay alert to coding traps that may evolve under these new rules.

What’s Not Final Yet But Might Be

While the final rule won’t publish until later this year, much of CMS’ proposal echoes past rulemaking and policy signals from MedPAC, GAO, and DOJ. Given CMS’ interest in:

• Modernizing rate-setting using auditable data
• Expanding behavioral health access
• Cracking down on price inflation and fraud

…it’s safe to say many of these proposals will survive in the final rule, especially telehealth supervision, behavioral health codes, and efficiency adjustments.

Final Thoughts
The 2026 PFS rule isn’t just about rates, it’s a directional shift. From integrating digital health and behavioral care to reducing inflated RVUs and bundling costs, CMS is signaling that value, not volume, is king.

Now’s the time to:

• Audit your service mix
• Rethink telehealth workflows
• Examine your RVU exposure
• Review vendor contracts and reimbursement dependencies

We’ll continue to monitor public comments and rule finalization but the direction is clear.

Need help aligning your practice with the 2026 PFS proposed rule?

Contact Parrella Health Law at 857.328.0382 or email Chris directly at cparrella@parrellahealthlaw.com. Let’s ensure your compliance and reimbursement strategy stays ahead of the curve.