CMS Made Video Supervision Permanent. Your Excisions Still Need You On-Site.

Why the 2026 supervision rule everyone celebrated skips the procedures dermatologists bill.

Last week, a San Francisco telehealth company agreed to pay $3,325,000 to resolve allegations that it billed Medicare, Medicaid, and TRICARE under the NPIs of providers who never performed or supervised the care, and failed to supervise the NPs and PAs who actually saw the patients. Circle Medical's case started as a whistleblower complaint from a former insider. 

That is the cleanest recent example of the rule most practices treat as paperwork. Incident-to is a presence rule, not a billing format. When you bill an NP's or PA's service under a physician's NPI at 100% of the fee schedule, you are telling Medicare the physician was in the office suite and immediately available the moment that service happened. If the physician was on a plane, at another location, or even across the parking lot in a different building, the supervision condition was never met and the claim is false. The HHS-OIG put it plainly in the Circle Medical release: submitting claims under another provider's identity "undermines the integrity of our federal health care programs." 

This is not a dormant rule. OIG opened a Work Plan audit titled "Medicare Part B Payments for Incident To Services" on November 15, 2024, in progress and estimated to complete in FY2026. The regulator is examining exactly this question right now, in a year when False Claims Act recoveries hit a record $6.8 billion, over $5.7 billion of it from health care.

Here is where most of the field heard good news and stopped reading. The CY2026 Medicare Physician Fee Schedule final rule (CMS-1832-F, effective January 1, 2026) made virtual direct supervision permanent. A supervising physician can now satisfy "immediately available" through real-time, two-way audio and video (audio-only does not qualify). There is no sunset date this time; the flexibility that came and went through the COVID era is now settled policy. A physician can supervise many office incident-to services from a screen.

Read the carve-out and the story changes. The current text of 42 CFR 410.26(a)(2) allows virtual presence "for services without a 010 or 090 global surgery indicator." Services carrying a 010 or 090 global period are excluded, and for those the physician still has to be physically present in the suite. In dermatology, that carve-out covers the core of the practice: excisions, destructions, and complex repairs. The procedures that build a derm P&L are precisely the ones the new flexibility does not touch. The headline covers the stable follow-up visit, not the excision in the next room.

A JAAD analysis of Medicare data found that NPs and PAs independently billed 11.51% of all dermatologic procedures, roughly 4.2 million, with injections, simple repairs, and biopsies leading the list. That list splits cleanly along the global-period line. Injections, biopsies, and simple repairs carry a 0-day global, so they sit outside the carve-out and can now run under video supervision. Step up to an excision, a destruction, or an intermediate or complex repair and the code carries a 010 or 090 global, which puts it back inside the carve-out and keeps the physician on-site. Where a repair lands on that line decides whether it pays, the same intersection we covered in Why Your Repair Claims Aren't Getting Paid. Derm runs on midlevels doing procedural work, and the higher-acuity end of that work is where the presence rule bites hardest. We walked through the basic mechanics in Incident-To or Incident-Oops?; the 2026 rule is the update that changes half of it.

The mechanism explains why this will not loosen. A 010 or 090 global surgery code bundles the procedure and its follow-up into a single payment built around the assumption that the billing practitioner personally performs the work. CMS valued those codes on hands-on performance, not oversight. You cannot satisfy a "you did this procedure" payment with "I watched on video," so the agency left physical presence intact for anything carrying a global period, while routine office E/M services, which carry no global indicator, were safe to let go virtual. The line tracks the difference between supervising a visit and performing a procedure.

Dermatology lands almost entirely on the procedure side of that line, and the clinical pattern makes it worse. Incident-to at 100% requires a physician-established plan for that specific problem, with the NPP managing a stable continuation. In derm, almost every new or changing lesion is arguably a new problem, a new diagnosis that needs physician involvement that day to bill at the physician rate. A "while I'm here" exam quietly converts an incident-to-eligible follow-up into one that is not. The same midlevel claim gets pressure from the commercial side too, where credentialing and rendering-provider hygiene decide whether it pays at all (see the 3 documents BCBS wants before it pays your midlevels).

Medicare catches presence gaps after payment, not before, and the proof is in your own records. Auditors line up incident-to claim dates against the physician's appointment calendar, travel records, and EHR login timestamps, and a claim on a day the physician had no appointments is the smoking gun. It is the same audit logic OIG has already run on Modifier 25, reading the documentation against what the codes claim happened. Because incident-to overpayments get extrapolated across a multi-year claim universe, a 15-point-per-visit issue compounds into a six- or seven-figure demand. As Circle Medical showed, a former employee who knows who was actually in the building is its own detection channel.

Clarity RCM manages revenue cycle for 200+ dermatology practices across 42 states. It's all we do. See how we work.