CMS CY 2026 Physician Fee Schedule

Every year, the Centers for Medicare and Medicaid Services releases an update to the Medicare Physician Fee Schedule (PFS). If you’re a therapist or behavioral health provider, this rule quietly shapes how you get paid, what services Medicare will cover, and how much documentation and reporting are required to stay compliant.

Summary

• Expect stability, not disruption: The CY 2026 Physician Fee Schedule includes modest per-code payment adjustments, with no sweeping reimbursement cuts for most therapy and behavioral health services.
• Telehealth and virtual supervision are here to stay: CMS has permanently embedded telehealth flexibilities and allows direct supervision via real-time audio-video, supporting hybrid and remote practice models.
• Documentation remains critical: medical necessity, accurate coding, modifier use (including KX), and clear telehealth records remain central to compliance and audit risk reduction. Enrolling in an insurance billing course for therapists can help providers enhance their knowledge.
• Policy direction matters beyond Medicare: Even providers who rarely bill Medicare should pay attention, as PFS updates often influence private payer rates, documentation standards, and practice expectations. An EHR like TheraPlatform can help therapists streamline billing.

The CY 2026 Physician Fee Schedule Final Rule takes effect January 1, 2026. While it does not overhaul Medicare, it introduces several changes that directly affect therapy providers, mental health clinicians, and rehab professionals.

Big picture: What this rule is and why it matters

The Medicare Physician Fee Schedule (PFS) is the rule CMS uses to determine how Medicare pays for most outpatient services nationwide. This includes a wide range of services that mental health clinicians and rehabilitation providers deliver every day, such as psychotherapy and psychiatric care, physical therapy, occupational therapy, speech-language pathology services, evaluations, treatment sessions, and certain remote or technology-supported services.

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Even if you do not bill Medicare frequently, the PFS often influences private insurance rates, documentation standards, and broader expectations around clinical care delivery.

Each year, CMS updates the Physician Fee Schedule to reflect changes in law, healthcare delivery trends, and policy priorities. The CY 2026 Physician Fee Schedule Final Rule, which takes effect on January 1, 2026, continues many of the themes clinicians have seen over the past several years rather than introducing sweeping structural changes.

CMS is aiming for incremental adjustments that balance payment stability with longer-term shifts toward value-based care, expanded access, and standardized oversight.

One of CMS’s primary goals for 2026 is to implement modest payment updates rather than large increases or cuts. This includes adjustments to the Medicare conversion factor and refinements to how services are valued.

For most therapists and behavioral health providers, this translates into relatively small changes at the code level rather than dramatic reimbursement swings. CMS has emphasized payment stability, particularly considering ongoing workforce strain and access challenges across behavioral health and rehabilitation services.

Another major focus of the 2026 rule is the continued expansion and normalization of telehealth and virtual supervision.

CMS has moved beyond treating telehealth as a temporary pandemic accommodation and is instead embedding many virtual flexibilities directly into Medicare policy. This includes maintaining coverage for certain telehealth services, clarifying which services remain eligible when delivered remotely, and permanently allowing direct supervision requirements to be met through real-time audio-video technology.

For clinicians working in hybrid or partially remote models, these decisions have meaningful implications for staffing, scheduling, and compliance.

CMS is also continuing its broader shift toward value-based care and outcomes tracking, primarily through the Quality Payment Program. While not all therapists and behavioral health clinicians are directly subject to MIPS or Alternative Payment Models, the underlying direction is clear: CMS expects stronger alignment between services provided, measurable outcomes, and documentation that demonstrates clinical effectiveness.

Over time, this emphasis influences how care is recorded, reviewed, and reimbursed, even for providers who are not actively participating in value-based programs.

Finally, the 2026 rule reinforces CMS’s ongoing effort to standardize documentation and billing expectations across settings and service types. There are no major new documentation requirements, but CMS continues to signal that medical necessity, accurate coding, appropriate modifier use, and clear records, especially for telehealth and extended therapy services, remain central to compliance.

In practice, this means clinicians should expect continued scrutiny around whether services are supported by the clinical record, rather than new or unfamiliar administrative hurdles.

Altogether, the CY 2026 Physician Fee Schedule signals continuity more than disruption. For clinicians, the practical takeaway is that Medicare payments are shifting slightly, telehealth and virtual supervision are firmly established, and documentation quality matters.

Understanding these changes helps providers anticipate how policy decisions translate into everyday clinical work, billing accuracy, and long-term practice sustainability.

Reimbursement changes: What happens to pay rates

Medicare payments are increasing slightly

For 2026, Medicare payments under the Physician Fee Schedule increase modestly overall.

The exact rate depends on whether a provider participates in certain value-based payment models, but for most therapists and behavioral health clinicians, this means:

• A small increase compared to 2025
• No dramatic reimbursement cuts across the board

This increase reflects congressional adjustments layered on top of CMS’s annual update.

Why some services may still feel flat

CMS finalized a new efficiency adjustment that slightly reduces the “work value” assigned to many services. The idea is that over time, clinicians become more efficient.

However, most time-based services, which include many therapy and psychotherapy codes, are not affected by this adjustment. That means many PT, OT, SLP, and mental health services are largely protected.

Still, practices should expect minor differences by code, not sweeping changes.

Facility vs. non-facility settings

CMS continues to adjust how it accounts for overhead costs in different settings.

What this means in practice:

• Private practices and outpatient clinics may see slightly better payment alignment for services provided in-office
• Hospital-based outpatient settings may see comparatively lower professional payments for the same service
• For clinicians, this doesn’t change how you treat patients, but it may influence business decisions around where services are delivered.

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Therapy thresholds and the KX modifier

For 2026, CMS updated the annual therapy spending thresholds to:

$2,480 for Occupational Therapy

$2,480 combined for Physical Therapy and Speech-Language Pathology

Once a beneficiary exceeds these amounts, providers must use the KX modifier to indicate that continued services are medically necessary.

Important reminders:

• The KX modifier does not guarantee protection from audit
• Documentation must clearly support the need for continued care
• Functional limitations, progress, and updated goals should be evident in the record

CMS also maintains higher medical review thresholds beyond the KX level, meaning that not every KX claim is automatically flagged for review. Still, clear documentation remains critical.

Telehealth: What continues and what changes

CMS has made clear in the CY 2026 Physician Fee Schedule that telehealth is no longer being treated as a temporary workaround or emergency-only option.

Instead, telehealth is now firmly established as a legitimate way to deliver certain Medicare-covered services, including many behavioral health services and some therapy-related care.

While not every service can be provided remotely, CMS continues to refine which services are eligible and under what conditions, signaling long-term support for virtual care models rather than a rollback to pre-pandemic rules.

For 2026, many commonly used services remain on the Medicare Telehealth Services List, meaning they can still be billed when delivered via telehealth if all requirements are met. This is particularly relevant for mental health clinicians, where psychotherapy, diagnostic assessments, and medication-related services continue to have telehealth pathways.

For therapy providers, telehealth remains more limited and code-specific, but CMS continues to recognize its role in increasing access, especially for follow-up care, education, and certain monitoring services.

CMS continues to require real-time, interactive audio-video communication for most telehealth services.

While audio-only services are allowed in limited situations, particularly in behavioral health, audio-video remains the standard for meeting Medicare telehealth requirements.

Notably, CMS has emphasized that telehealth services must meet the same clinical, ethical, and documentation standards as in-person care. Providing care remotely does not lower the bar for medical necessity, treatment planning, or clinical justification, and documentation should clearly reflect the same level of clinical decision-making that would occur during an in-office visit.

Virtual direct supervision is now permanent

One of the most impactful updates in the CY 2026 rule for therapy and behavioral health practices is CMS’s decision to permanently allow direct supervision via live audio-video technology. Before recent years, “direct supervision” typically required the supervising clinician to be physically present in the same location.

CMS has now finalized the ability to meet direct supervision requirements virtually, when the supervisor is immediately available through a real-time audio-video connection.

This change is especially significant for modern practice models. It supports hybrid practices in which supervising clinicians who may not be on-site every day, group practices that rely on centralized or remote supervision, and therapy models that include assistants or services billed under “incident-to” rules. For behavioral health organizations and rehabilitation clinics alike, this flexibility helps address staffing shortages, geographic barriers, and scheduling challenges without compromising oversight requirements.

However, while supervision can now occur virtually, CMS has been clear that this flexibility does not reduce accountability. Supervising clinicians must still be appropriately credentialed, immediately available, and actively engaged in oversight.

Documentation should clearly support that supervision requirements were met, particularly when services are provided by assistants or auxiliary staff. In other words, CMS has removed a logistical barrier but not the expectation of responsible clinical supervision.

Tele-rehab, teletherapy, and remote monitoring: Still available, still specific

Remote care options such as tele-rehab, teletherapy, and Remote Therapeutic Monitoring (RTM) remain covered under Medicare coverage in 2026, but CMS maintains a very clear stance that coverage is code-specific, not blanket approval for all remote services.

For therapists, this means that some services may be appropriate for remote delivery, while others must still be provided in person to be reimbursable.

CMS expects providers to confirm eligibility each year because the Medicare Telehealth Services List can change annually. Clinicians should not assume that a service covered in one year will automatically remain covered the next. This is especially important for practices that rely heavily on telehealth or remote monitoring as part of their care model.

When billing remote services, documentation must clearly include patient consent, the technology used, and the clinical rationale for delivering the service remotely. CMS expects the medical record to show why remote delivery was appropriate for the patient and how it supported treatment goals. This applies across behavioral health, therapy, and monitoring services, and is an area where incomplete documentation can increase audit risk.

Telehealth coverage continues to expand gradually, but CMS has been explicit that it is expanding in a controlled and targeted way. For clinicians, the takeaway is that telehealth remains a viable and supported part of care delivery, but only when services are billed correctly, documented thoroughly, and aligned with current CMS guidance.

Quality Payment Program (QPP): What most clinicians need to know

MIPS is still here, but CMS is aiming for stability

For clinicians participating in Medicare’s Quality Payment Program, CMS kept the performance threshold unchanged for 2026.

If you are already reporting under MIPS, expect continuity, not major disruption.

Value pathways are expanding

CMS continues to push clinicians toward MIPS Value Pathways (MVPs), structured reporting tracks focused on specific clinical areas.

Some rehabilitation and behavioral health-related pathways were updated for 2026.

If you are in a group practice or ACO, your organization may select the pathway for you. Solo clinicians should confirm whether participation applies to them.

Documentation and compliance: What CMS is watching

While CMS is not introducing major new documentation rules, the expectations remain firm:

Documentation must clearly support medical necessity

This includes:

• Functional deficits
• Treatment goals
• Progress over time
• Justification for continued services
• This is especially important when:
• Using the KX modifier
• Billing telehealth services
• Providing high-frequency or extended therapy episodes

Telehealth documentation still matters

For telehealth services, records should clearly note:

• Services were provided via telehealth
• The technology used
• That supervision requirements were met (when applicable)

CMS has made telehealth easier to provide, but not easier to document poorly.

What clinicians should do now

1. Review your common codes

Make sure your most frequently used CPT/HCPCS codes:

• Are still covered
• Are billed with the correct modifiers
• Align with updated fee schedule values

2. Double-check telehealth workflows

Ensure that:

• Your EHR captures telehealth details clearly
• Supervisory relationships are documented appropriately
• Staff understand when in-person vs virtual supervision applies

3. Stay connected to your professional association

One of the most reliable ways to stay compliant with CMS rules, without having to read hundreds of pages of federal regulations, is to stay connected to your professional association.

National therapy and mental health organizations routinely analyze CMS rules as soon as they are released and translate them into specialty-specific guidance that is far more practical than CMS source documents.

These organizations often:

• Break down complex CMS rules into plain language
• Identify how changes affect specific CPT codes and service types
• Clarify documentation and supervision expectations
• Flag enforcement risks before audits or reviews begin
• Advocate on behalf of clinicians when policies create access or workforce problems

For many clinicians, association guidance becomes the primary way they understand how Medicare policy applies to real-world practice.

American Physical Therapy Association (APTA)

APTA provides a detailed analysis of the Physician Fee Schedule as it relates to physical therapy services, including:

• Payment rate changes by CPT code
• Therapy threshold updates and KX modifier guidance
• Telehealth and supervision policy implications for PTs and PTAs
• Advocacy updates related to Medicare access and workforce concerns

APTA is also a key source for understanding how CMS policy changes affect rehabilitation providers, particularly where statutory limitations remain.

American Occupational Therapy Association (AOTA)

AOTA offers Medicare and CMS policy guidance tailored to occupational therapy practice, including:

• Fee schedule summaries focused on OT services
• Documentation and medical necessity guidance
• Telehealth eligibility updates and limitations
• Compliance considerations for OTAs and supervision requirements

AOTA frequently highlights where CMS policy creates practical challenges for OT practice and provides education on how to reduce audit risk.

American Speech-Language-Hearing Association (ASHA)

ASHA provides in-depth Medicare resources for speech-language pathologists, including:

• CPT and HCPCS code updates relevant to SLP services
• Therapy threshold and billing guidance
• Telepractice policies and limitations under Medicare
• Documentation standards for skilled services and continued care

ASHA is especially helpful for understanding how CMS policies affect speech, language, cognitive, and swallowing services, which often have unique documentation expectations.

American Psychological Association (APA)

APA plays a major role in translating CMS policy for psychologists and behavioral health clinicians, including:

• Psychotherapy and assessment code changes
• Telehealth and audio-only behavioral health rules
• Supervision and training-related billing considerations
• Quality Payment Program (QPP) and MIPS guidance

APA also closely tracks behavioral health integration initiatives and emerging CMS payment models that affect mental health providers.

Why this matters in practice

CMS rules often describe what is allowed, but professional associations help clinicians understand what is practically safe, defensible, and sustainable. Many enforcement actions and audits are not triggered by new rules, but by misunderstandings of existing ones.

Staying connected to your professional association helps ensure that:

• You are interpreting CMS policy correctly
• Your documentation aligns with current enforcement priorities
• You hear about policy changes before they affect claims or audits
• Your clinical decisions are supported by specialty-specific guidance

For busy clinicians, these organizations serve as a critical bridge between federal policy and everyday clinical work.

• Medicare payments increase slightly for 2026, with small variations by code
• Time-based therapy and psychotherapy services are largely protected from efficiency cuts
• Telehealth and virtual supervision are now firmly embedded in Medicare policy
• Therapy thresholds and KX modifier rules continue, with strong documentation expectations
• CMS is emphasizing consistency, outcomes, and clean billing, not dramatic new rules

How EHR and practice management software can save you time with insurance billing for therapists

EHRs with integrated billing software and clearing houses, such as TheraPlatform, offer therapists significant advantages in creating an efficient insurance billing process. The key is minimizing the amount of time dedicated to developing, sending, and tracking medical claims through features such as automation and batching. 

What are automation and batching?

• Automation refers to setting up software to perform tasks with limited human interaction.
• Batching or performing administrative tasks in blocks of time at once allows you to perform a task from a single entry point with less clicking.

Which billing and medical claim tasks can be automated and batched through billing software?

• Invoices: Create multiple invoices for multiple clients with a click or two of a button or set up auto-invoice creation, and the software will automatically create invoices for you at the preferred time. You can even have the system automatically send invoices to your clients.
• Credit card processing: Charge multiple clients with a click of a button or set up auto credit card billing, and the billing software will automatically charge the card (easier than swiping!)
• Email payment reminders: Never manually send another reminder email for payment again, or skip this altogether by enabling auto credit card charges.  
• Automated claim creation and submission: Batch multiple claims with one button click or turn auto claim creation and submission on. 
• Live claim validation: The system reviews each claim to catch any human errors before submission, saving you time and reducing rejected claims. 
• Automated payment posting: Streamline posting procedures for paid medical claims with ERA. When insurance offers ERA, all their payments will post automatically on TheraPlatform's EHR.
• Tracking: Track payment and profits, including aging invoices, overdue invoices, transactions, billed services, service providers 

Utilizing billing software integrated with an EHR and practice management software can make storing and sharing billing and insurance easy and save providers time when it comes to insurance billing for therapists.

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Resources

TheraPlatform is an all-in-one EHR, practice management, and teletherapy software with AI-powered notes built for therapists to help them save time on admin tasks. It offers a 30-day risk-free trial with no credit card required and supports mental and behavioral health, SLPs, OTs, and PTs in group and solo practices.

References

CMS CY 2026 Physician Fee Schedule Final Rule Fact Sheet https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2026-medicare-physician-fee-schedule-final-rule-cms-1832-f

CMS Medicare Physician Fee Schedule Overview https://www.cms.gov/medicare/payment/fee-schedules/physician

CMS Quality Payment Program Resource Library https://qpp.cms.gov/resources/resource-library