CMS Proposes 2026 Medicare Payment Updates Expanding Digital Health and Telehealth Flexibility
The Centers for Medicare & Medicaid Services (CMS) released proposed updates for the Calendar Year 2026 Physician Fee Schedule (PFS) and Hospital Outpatient Prospective Payment System (OPPS) rules, as of mid-July 2025. These updates detail payment policies affecting physicians, hospital outpatient departments, and ambulatory surgical centers under Medicare. Significant changes aim to expand digital health integration, including telehealth, software-as-a-service (SaaS), and digital therapeutics (DTx). CMS proposes extending reimbursement for digital mental health treatment (DMHT) to include digital therapeutics specifically for ADHD, and is seeking input on payment for additional digital therapy devices addressing gastrointestinal, sleep, and fibromyalgia conditions, alongside digital tools promoting healthy behaviors as part of mental health care.
A key proposal in the PFS rule is the permanent adoption of more flexible supervision standards for Medicare Part B services. This would maintain the COVID-19 emergency provision allowing supervising practitioners to provide direct supervision virtually (via audio/video communication), except for certain surgical services. This change aims to support telehealth practices where clinicians operate remotely across locations. CMS emphasizes professional judgment in determining appropriate supervision on a case-by-case basis.
CMS also recommends permanently removing frequency limits on certain telehealth services that were temporarily relaxed during the Public Health Emergency (PHE), arguing that claims data shows these services are infrequently delivered via telehealth and that practitioners are best positioned to decide telehealth appropriateness.
Recognizing growing use of SaaS in clinical decision support, CMS is soliciting public comments to develop consistent payment methodologies for these technologies across care settings. The 2026 PFS proposal invites feedback on supporting chronic disease prevention and management, including potential coverage for supervised exercise programs, medically tailored meals, health coaching, motivational interviewing, and digital therapeutics addressing chronic conditions.
CMS proposes to simplify the Medicare Telehealth Services List update process by removing complex evidence review requirements and ending provisional/permanent service distinctions. This would streamline adding telehealth services based on practitioner appropriateness rather than strict clinical benefit equivalence to in-person care. Proposed additions to the list include multiple-family group psychotherapy and group behavioral counseling for obesity, with some services like dialysis and certain telemedicine E/M codes declined.
CMS opened a 60-day public comment period on the proposed rules and intends to finalize updates later in the fall of 2025. Digital health companies, payers, providers, and regulatory professionals should monitor these developments closely to assess impacts on reimbursement, compliance, and business operations.
The proposals reflect ongoing efforts to integrate innovative digital health solutions within Medicare payment frameworks, promote telehealth flexibility, and align regulatory policies with evolving clinical practice and technology use. They also underscore CMS’s balanced approach toward oversight and provider discretion in telehealth and digital therapy reimbursement.