Welcome to DZA’s latest reimbursement newsletter—and guess what? If you didn’t know by now the government is finally back open and Congress didn’t waste a second. They passed House Resolution (H.R.) 5371, a bill that keeps key Medicare adjustments and telehealth flexibilities alive for certain hospitals, Critical Access Hospitals (CAHs), Rural Health Centers (RHCs), and Federally Qualified Health Centers (FQHCs). In this edition, we break down what was extended, how CMS instructed the Medicare Administrative Contractors (MACs) to restore many of the suspended payments, and what steps your facility needs to take.
Telehealth Services
The following COVID-era telehealth flexibilities have been extended through January 30, 2026:
- RHCs and FQHC as distant sites: these clinics may continue serving as telehealth distant-site providers and bill with G2025. Without this extension, they would be limited to serving only as originating sites.
- Home as an originating site for all Medicare beneficiaries: Medicare continues to allow the home as an originating site under this extension, but no originating-site facility payment is made for these services (except for special cases where home was already an approved originating site, e.g., certain stroke or end-stage renal disease services).
- Eligible practitioners: the extension continues the authority for an expanded list of providers—such as physical therapists, occupational therapists, speech-language pathologists, and audiologists—to furnish telehealth services. These practitioners may keep delivering care remotely through video or other approved digital platforms.
- Audio-only services: recognizing the necessity for flexibility in communication methods, certain telehealth services can be provided via audio-only communication.
- Mental health services: the requirement for an in-person visit before mental health services was delayed and can be provided via telehealth, an in-person visit with the provider within six months of the initial visit, and subsequent intervals.
- Hospice recertification: hospice providers can conduct the required face-to-face recertification visits via telehealth.
CMS has instructed MACs to mass-adjust any claims that were underpaid or denied because telehealth rules temporarily expired on October 1, 2025. Claims returned with CARC 16 / RARC M77 (professional claims) are now fully payable—you may resubmit these claims.
Previously, MACs had instructed providers to append the GY modifier to indicate that services were statutorily non-covered during the lapse. With this extension, those services are now considered covered, so the prior GY-modifier instruction is rescinded.
Providers should also identify any beneficiaries who paid out-of-pocket for services that are now retroactively payable, refund those amounts, and submit the corrected claims to Medicare.
Since CMS did not introduce new modifiers or condition codes tied to this extension, continue using:
- G2025 for RHC/FQHC distant-site services. Note: G2025 is a billing code used specifically for RHCs and FQHCs serving as telehealth distant sites. It allows these clinics to bill for the professional service provided remotely when they are the provider location (distant site).
- Modifier 95, where typically required. Note: modifier 95 is used on claims to indicate that a service was provided via synchronous telehealth—that is, real-time audio/video interaction between the patient and provider. HOWEVER, it is not needed for RHC/FQHC distant-site billing with G2025, because that already identifies the telehealth site.
- Standard telehealth POS and modifiers for other practitioners.
So, brass tacks—what does this really mean?
If you held telehealth claims—release them now.
If CMS returned telehealth claims—resubmit them now.
If you charged patients—refund and rebill Medicare.
Low-Volume Adjustment Payment (LVA)
Rural hospitals (not CAHs) with less than 3,800 discharges and greater than 15 miles from another PPS hospital are eligible for additional payments for low patient volumes. These additional payments, called low-volume payments, were extended through January 30, 2026, preventing an “October 1 cliff” at the start of the federal fiscal year 2026.
Eligible hospitals will continue receiving the add-on automatically for the first four months of fiscal year 2026. However, after January 30, 2026, the adjustment reverts to its original statutory rules, meaning when the “permanently in statute” version kicks back in, rural hospitals will have to have less than 200 total discharges (not 1,600) and be greater than 25 miles (not 15) from another hospital.
CMS instructed the MACs to perform mass adjustments to correct any underpayments for eligible low-volume hospitals for claims processed using outdated pricer logic during the shutdown. Hospitals do NOT need to resubmit claims.
Most MACs require a request letter every fiscal year. Unless your MAC explicitly told you otherwise, assume you must submit a fresh, formal request. For the DZA hospitals this applies to: we’ve got you covered and will be sending out request letters. If you’re unsure, let us know— we can assist with this request.
Ambulance Add-Ons
Providers and hospitals that rely on ambulance transport, particularly in rural areas, are eligible to receive additional on-payments. Long-standing ambulance add-ons were extended through January 30, 2026: 2% for urban transports, 3% for rural transports, and 22.6% (commonly referred to as 26%) for super-rural transports.
Urban, rural, and super-rural areas are defined by population density and location. Urban areas are inside metropolitan statistical areas (MSAs). Rural areas are outside MSAs and cover larger, less-populated regions, while super-rural areas include the sparsest rural regions, or CMS-defined as the lowest 25th percentile of population density.
The MACs are instructed to mass-adjust base rate and mileage factor claims underpaid during the shutdown. No action is needed by providers but expect to see retroactive corrections on future remits.
Important note: these ambulance add-on payments are based on the type of ambulance transportation and the originating site where the patient is picked up (as in the ZIP code). Read that last part again—where the patient is picked-up matters.
Low Wage Index Hospital Policy
Beginning in 2020, CMS implemented the low wage hospital policy, aimed to boost the wage index values for PPS hospitals, mostly rural, that had lower wage index values. This policy has been extended for fiscal year 2026 (October 1, 2025, through September 30, 2026).
Due to the lapse on October 1, 2025, any inpatient claims processed without the geographic wage index floor will be mass-adjusted by MACs. Hospitals do not need to submit anything; all corrections are automatic. If you’re a low-wage index PPS hospital, expect retroactive increases.
This policy is budget neutral, meaning the total pool of inpatient PPS payments is adjusted so that increases for low-wage hospitals are offset by small decreases elsewhere.
Medicaid DSH Cuts
The scheduled reductions in federal Medicaid DSH payments (which had been set to take effect in 2025) are delayed under recent continuing resolution language, affecting PPS hospitals that serve large numbers of Medicaid and uninsured patients and rely on federal Medicaid DSH payments.
Hospitals have more time to plan and adjust their budgets rather than absorbing immediate reductions, BUT these cuts are not cancelled—hospitals should still anticipate that reductions will return later (e.g., January 2026 or beyond) unless Congress acts again.
Sequestration
Congress also extended Medicare sequestration. The continuing resolution tweaks the fiscal year 2032 timing, so hospitals get 11 months of the 2% cut and one blissful month of freedom.
Closing
All in all, the continuing resolution gives us some temporary certainty. If you have any questions or need further assistance, please contact us or reach out to a DZA reimbursement consultant today.
Tristi Cohelan
Principal
