The 2026 Medicare policy changes that affect your patients
In late 2025, the Centers for Medicare and Medicaid (CMS) issued a final ruling on the Medicare Physician Fee Schedule for 2026. It primarily focused on updating payment systems and expanding access to care. Effective January 1, it is part of a broader strategy “to create a health care system that results in better quality, efficiency, empowerment, and innovation for all Medicare beneficiaries,” according to CMS.
The main areas affecting psychologists and their patients are about telehealth, reimbursement rates, and updated behavioral health codes.
The general view of the Medicare policy changes is positive in its long-term improvement with telehealth and an increase in reimbursement for several psychological services. However, four codes in particular—96132, 96112, 96170, and 96171—will receive a decrease in reimbursement because of Practice Expense (PE) methodology changes implemented for this year.
CMS modified indirect PE costs to better reflect clinical practices in facility-based services compared to non-facility-based services, recognizing more indirect costs exist for practitioners in an office-based setting and fewer physicians outside of a facility or hospital.
The American Psychological Association (APA) indicated it will continue to address PE methodology changes, hoping that CMS will adopt its recommendations in the future.
In terms of telehealth, it is no longer recognized as just a pandemic-related tool but as a permanent mode of access for behavioral healthcare. CMS stated it is “removing the distinction between provisional and permanent services.”
This includes, but is not limited to, developmental, psychological, and neuropsychological testing services to the permanent Medicare Telehealth Services list. With that telehealth policy change, included are two new codes for multiple-family group psychotherapy and group behavioral counseling for obesity.
CMS also permanently adopted audio/video communication for supervising practitioners but did not extend it to teaching physicians who must still be present for services billed.
Last fall, Kyle Zebley, executive director of ATA Action, the activist arm of the American Telehealth Association, discussed the 2026 changes for the Medicare fee schedule.
“This sends an important message to healthcare providers and patients, that our government leaders value telehealth and are committed to maintaining access to these urgently needed programs.”
CMS also made the distinction that physical health is linked to behavioral health. In making a move to integrate behavioral healthcare into advanced primary care management, it acknowledges that patients with physical chronic health conditions frequently experience related behavioral health concerns and achieve better management and improvement of their physical chronic conditions when these behavioral health concerns are also addressed.
CMS did not adopt certain recommendations made by the APA, specifically a national price for the supply of Digital Mental Health Treatment (DMHT) and Remote Therapeutic Monitoring tools.
The APA said it will continue to advocate for this measure and revisit it. CMS also did not delete, but modified, the code descriptor for the general assessment of social determinants of health (code G0136).
This code was initially introduced in 2024 to assesses things like food, housing, and transport that can affect treatment. Within this code modification, CMS allowed for psychiatric diagnostic evaluation and behavioral health assessment services for the initial visit.
The APA put out a statement in mid-January, saying the organization “unequivocally advocates for federal and state policies that ensure and expand equitable access to comprehensive mental health care for all.”
The APA noted while these Medicare policy changes are a step in the right direction, there is still a long way to go in making solid improvements in behavioral healthcare.