On July 14, 2025, the Centers for Medicare & Medicaid Services (“CMS”) issued the proposed Medicare Physician Fee Schedule Rule for Calendar Year (“CY”) 2026. Building on the temporary flexibility first introduced during the COVID-19 public health emergency and subsequently extended through December 31, 2025, CMS now proposes to adopt—on a permanent basis—a new definition of “direct supervision” that would permit a supervising physician and non-physician practitioners to satisfy the “immediate availability” requirement through two-way, real-time audio and visual telecommunications.

This proposed change comes after years of requests from the diagnostic radiology industry and their professional organizations that CMS make the flexibility permanent. CMS annually extended the flexibility in its Physician Fee Schedule rule, every time indicating that it would further study the need for the flexibility and its impact on patient safety and quality of care. If included in the final rule, the proposed change would be a major step forward for the diagnostic radiology community.

Supervision of Diagnostic Tests

Medicare regulations provide that diagnostic tests must be performed under the appropriate level of supervision (i.e., general, direct, or personal, depending on the nature of the test) by a physician, or—only for Level 2 tests requiring contrast—by a nurse practitioner, clinical nurse specialist, physician assistant, certified registered nurse anesthetist, or certified nurse-midwife, to the extent that those non-physician practitioners are authorized to supervise diagnostic tests under their scope of practice and applicable state law. Diagnostic tests performed in Independent Diagnostic Testing Facilities (“IDTFs”) must be supervised by a physician with proficiency in the performance and interpretation of the tests performed by the IDTF.

Direct Supervision Requirements

Certain Level 2 diagnostic tests, such as MRI or CT with contrast, require direct supervision. Historically, direct supervision means that the supervising physician (or other supervising practitioner) must be physically present and immediately available in the office suite during the performance of the diagnostic test.

In response to the COVID-19 pandemic, CMS temporarily amended the definition of “direct supervision,” allowing a supervising practitioner to be “immediately available” using two-way, real-time audio and visual technology. This flexibility, initially set to expire with the end of the COVID-19 public health emergency, allowed physicians and other supervising providers to remotely provide direct supervision, as long as they were virtually present and immediately reachable and able to provide assistance throughout the performance of the test by using real-time audio and visual communications technology. The flexibility did not allow supervising practitioners to be available via audio-only communications or asynchronous communications (e.g., phone calls or secure messaging platforms).

Building on Incremental Flexibility

Following the expiration of the COVID-19 public health emergency, CMS extended this direct supervision flexibility through the end of 2024. CMS extended the flexibility again through December 31, 2025, in the CY 2025 Physician Fee Schedule final rule. In that rulemaking, CMS declined to make the virtual direct supervision flexibility permanent for all services but did adopt its proposal to make virtual direct supervision permanent for a limited subset of services, including “incident to” services. In making this decision, CMS stated that further review was necessary to evaluate patient safety and quality concerns related to virtual supervision.

In response to overwhelming support and requests to extend this flexibility permanently for a wider set of services than the ones finalized in the CY 2025 Physician Fee Schedule final rule, CMS now proposes to expand the permanent adoption of virtual direct supervision in the office (including IDTFs) setting under 42 C.F.R. § 410.32(b)(3)(ii), as follows:

Direct supervision in the office setting means that the physician (or other supervising practitioner) must be present in the office suite and immediately available to furnish assistance and direction throughout the performance of the service.  It does not mean that the physician (or other supervising practitioner) must be present in the room when the service is performed. 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) for services without a 010 or 090 global surgery indicator.

The global surgical indicators 010 and 090 refer to a Medicare payment concept that bundles the payments for a surgical procedure and related services performed by physicians that are part of the same group practice of the same specialty into a single payment. It covers routine follow-up care related to recovery and management of complications that do not require a return trip to the operating suite.

The Future of Virtual Direct Supervision in Radiology Community is Bright, but with Nuances

CMS’s proposal is widely viewed as an unequivocal step forward for the diagnostic radiology community. Yet the regulatory horizon is not without clouds. As noted in our Reed Smith Viewpoint article from last week, excitement in the radiology community for this proposal is tempered by recent statements made by the Drugs and Contrast Media Committee of the American College of Radiology (“ACR”) and the American Society of Radiologic Technologists (“ASRT”). Each organization released new guidance that could complicate implementation, particularly regarding the ASRT’s amended standards that require radiologic technologists to administer contrast and other medications only when a licensed practitioner is physically present.

Additionally, modifications to certain state laws to remove obstacles to virtual supervision—such as requirements that the supervising physician be physically present—are necessary in some states. For example, California law allows for virtual supervision of MRI with contrast but still requires a physician to be physically present when a radiologic technologist administers contrast with X-ray and CT. Similarly, Washington state regulation requires a radiologic technologist to administer contrast under the supervision of a physician who is quickly and easily available on the premises. Notably, there is legislation pending in both California and Washington that would amend these state rules to allow for virtual supervision of contrast.

Submitting Comments on the Proposed Rule

CMS is inviting comments on the proposed direct supervision definition and other features of the proposed rule. There are numerous issues of concern to radiologists and the diagnostic radiology community in the proposed rule, including “efficiency adjustments” that cut reimbursement for certain radiology services and diagnostic tests.  Also, some industry observers are concerned about CMS’s proposal to significantly reduce physician practice expense work RVUs for services performed in facility settings. Comments are due by September 12, 2025.

We expect radiology industry stakeholders will submit extensive comments on the proposed rule. 

Reed Smith will continue to follow developments concerning virtual supervision regulations.  If you have any questions about this client alert, seek guidance specific to your business or would like help submitting comments on the proposed rule, please do not hesitate to contact the author or your health care attorneys at Reed Smith.