The CY 2027 Proposed Physician Fee Schedule: The Biggest RTM Overhaul Yet

On July 14, CMS released the CY 2027 Proposed Medicare Physician Fee Schedule. This year, there are three things PT leaders cannot afford to ignore: another payment cut, a proposed end date for traditional MIPS, and the most consequential set of remote therapeutic monitoring proposals since the codes were created in 2022. 

Comments are due September 14, 2026. Keep in mind that everything below is proposed, not final. And none of it takes effect unless it is finalized in the final rule coming out in early November. 

2026 payment increases may be rolled back in 2027

For clinicians who qualify as participants in an advanced alternative payment model, the proposed CY 2027 conversion factor is $33.17, a 1.19 percent decrease from this year. For everyone else, it is $32.84, a 1.68 percent decrease. 

The one-year 2.5 percent increase Congress provided for 2026 expires in December, and the statutory updates of 0.75 and 0.25 percent, combined with a 0.53 percent budget neutrality adjustment, leave us with a proposed negative adjustment. 

Last year brought the first conversion factor increase in six years. This proposal will hand most of that increase back to CMS. For practices managing rising labor costs on already thin margins, this can mean more pressure on staffing, hiring, and, ultimately, patients' access to care. The APTA is more hopeful however, that certain adjustments to how practice-expense is calculated could benefit PT reimbursement and reduce the impact of this proposed cut. 

The KX modifier threshold is proposed to rise to $2,540 for physical therapy and speech-language pathology services combined, up from $2,480, with a matching amount for occupational therapy, and the targeted medical review threshold would sit at $3,000.

Proposed end date for traditional MIPS reporting

After years of discussion, CMS is proposing to sunset traditional MIPS, meaning that beginning with the CY 2029 performance period, MIPS Value Pathways would become the only way to report. If your organization is still reporting traditional MIPS, you now have a reason to change over to MVP. During 2027 and 2028, consider refinements to your data process and consider flexible new options for collecting outcomes that aren’t locked to one platform.

The quality measure inventory also gets a substantial cleanup, with 180 measures proposed for 2027, including 20 removals and 10 additions. CMS proposes a new "MIPS core measure" designation and requires clinicians to report at least one core measure, with small practices exempt from the new requirement. The performance threshold holds at 75 points.

The Rehab MVP is being renamed and modified. CMS proposes to rename the Rehabilitative Support for Musculoskeletal Care MVP to simply "Rehabilitative Support MVP" and to modify all 27 existing MVPs to include core measure selections for each. CMS says a "2027 Proposed and Modified MVPs Guide" is coming soon to the QPP Resource Library. The five new PROMIS-based functional measures are the likely candidates, which are:

• Neck: PROMIS Pain Interference or NDI

• Upper extremity: PROMIS UE or QuickDASH

• Back: PROMIS PI or MDQ

• Lower extremity excluding knee: PROMIS PF or LEFS

• Knee: PROMIS PF or KOS

Each measure will be scored against a risk-adjusted Predicted Moderate Clinical Improvement threshold. These measures represent a shift away from legacy FOTO measures to PROMIS.

RTM: three new conditions of payment

Prompted by two OIG reports on remote monitoring billing (OIG, 2024; OIG, 2025), CMS is proposing three new conditions of payment that could apply to RTM beginning January 1, 2027, if finalized, but CMS leaves the timeline unclear in the proposed rule:

First, RTM could only be furnished to established patients, extending a requirement that already applies to remote physiologic monitoring. CMS's reasoning is that a practitioner with an established relationship has the history and examination findings needed to determine whether monitoring is clinically appropriate. The OIG found that some practices billed remote monitoring for patients they had no prior relationship with, and this proposal responds to that directly (CMS, 2026).

Second, RTM would require an initiating visit—a separately billable, face-to-face visit (in person or via telehealth) furnished by the billing practitioner at the onset of services, during which RTM is actually discussed with the patient and consent is obtained. CMS doesn’t indicate that this would be different from a visit for a therapy evaluation that completed the device setup and education, but we’ll have to validate that once the final rule is released. 

Third, and the most unusual of the proposals, CMS discusses and requests comment on allowing payment for RTM only when it is furnished by clinical staff employed by the billing practitioner or the practice. Third-party monitoring companies staffed by clinicians with no relationship to the patient or the care team may no longer qualify. Staff would not need to be physically on site, and general supervision would still apply, but fully outsourced remote monitoring could be in jeopardy. 

Every one of these proposals targets monitoring that has become detached from an actual care relationship and responds directly to the OIG’s concerns: cold calls, absent oversight, and services that were billed but never meaningfully delivered. All themes relate to the administration’s desire to crack down on fraud and inappropriate payments. AOTA is aligned with CMS on the importance of the patient-provider relationship in their article on the proposed rule, “[...] RTM is most effective when it is integrated into the occupational therapy process and used to support ongoing clinical decision-making, treatment progression, and patient management. AOTA has previously expressed concerns about certain third-party RTM models in which monitoring services may be furnished by individuals who are not involved in the patient's therapy episode, have not evaluated the patient, and may not have access to the therapy medical record or plan of care.”

RTM: payment pressure and a possible code consolidation

CMS states that it believes the RTM setup code (98975) and the device supply codes, including the musculoskeletal codes 98977 and 98985, may be overvalued, citing a persistent lack of data. The rule discusses revising the practice expense inputs behind those codes accordingly. 

CMS also discusses and is seeking comment on simplifying the six-code RTM family into just two codes, one for setup and patient education, and one monthly bundled code requiring at least two days of data transmission or access, 20 minutes of treatment management, and one real-time interactive communication. 

That structure would eliminate billing device supply on its own, and it would eliminate the 10-minute management tier finalized just last year. CMS poses this as a comment solicitation rather than a formal proposal, but CMS says plainly that it could finalize the new codes after reviewing comments. Read it as a preview of where the agency wants remote monitoring to go: fewer codes, full service delivery every month, no partial credit.

What to do before September 14

We highly recommend that providers and organizations comment on the proposed fee schedule and engage with CMS directly. There are many proposals this year that will heavily impact rehab organizations from a payment, quality, and services perspective. Additionally, CMS requests specific comments on the bundling of the codes as GRTM1 and GRTM2, valuation of RTM devices, and prohibition on external staffing.

Review the proposed rule (CMS-1848-P) and submit comments by September 14, 2026. CMS is redrawing the boundaries of remote monitoring. Make sure the PT perspective is in the record before the decisions are final!

A note from Medbridge: We want to let our readers know that RTM features across the Medbridge platform will be updated in accordance with the changes outlined in the final rule to ensure that providers and organizations will be able to continue to bill Medicare and other payers for RTM services.