On July 16, 2026, the Centers for Medicare & Medicaid Services (CMS) published the Medicare and Medicaid Programs; CY 2027 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies proposed rule in the Federal Register. Among its most consequential provisions for the telehealth industry, CMS proposed eliminating Medicare payment for remote physiologic monitoring (RPM) and remote therapeutic monitoring (RTM) services furnished by outsourced third-party vendors, effective January 1, 2027, if finalized.
Proposed Elimination of Third-Party RPM/RTM Outsourcing
Under the proposed rule, RPM and RTM services would be required to be furnished by direct employees of the billing practitioner or practice. Clinical staff would not be required to work at the practice’s physical location, but they must be direct employees working under the billing practitioner’s general supervision and meeting all other “incident to” requirements at 42 C.F.R. § 410.26. Practices would no longer be permitted to count services performed by clinical staff contracted through a third-party remote monitoring company toward Medicare billing for RPM or RTM codes.
CMS states that RPM and RTM services have historically been outsourced to third-party companies that provide services via telephone or online contact only, using staff with “little to no established relationship with the beneficiary or care team.” CMS believes such outsourcing “can fragment care, lead to insufficient involvement and oversight of the billing practitioner, or result in services that do not actually represent or facilitate all required aspects of RPM or RTM services.”
The proposal relies significantly on findings from the HHS Office of Inspector General (OIG), including the reports Billing for Remote Patient Monitoring in Medicare and Additional Oversight of Remote Patient Monitoring in Medicare Is Needed.
Key OIG findings cited by CMS include:
- Approximately 43% of Medicare enrollees who received RPM in 2022 did not receive all three required components (patient education/setup, device supply, and treatment management);
- Companies “cold calling” beneficiaries to solicit unneeded remote monitoring services;
- Lack of transparency regarding “incident to” billing; and
- OIG recommendations that CMS add safeguards, identify companies billing for the services, and collect information about who ordered the monitoring.
CMS additionally proposes that RPM or RTM services must be initiated by the billing practitioner during a separately billable face-to-face visit (in-person or via telehealth). During this initiating visit, the practitioner must discuss the monitoring with the patient, determine whether RPM or RTM is clinically appropriate , and obtain patient consent. If RPM/RTM is not discussed with the patient at the visit, the visit cannot qualify as the initiating visit. Moreover, CPT codes that do not involve a face-to-face visit by the billing practitioner, or that are not separately payable under Medicare, cannot serve as the initiating visit.
CMS also proposes to extend the established-patient requirement(already applicable to RPM) to RTM services as well. This addresses OIG findings that some practices lacked a prior relationship with patients for whom they billed remote monitoring. Going forward, both RPM and RTM would require that the patient be an established patient of the billing practitioner or practice.
This proposed rule represents a potentially transformative shift in the regulatory landscape for companies whose business models rely on providing remote monitoring services to and on behalf of billing practitioners and practices. If finalized, many telehealth and remote monitoring companies may need to reevaluate their staffing models, vendor relationships, and compliance strategies.
Telehealth Flexibilities Under the CY2027 Proposed Rule
In addition to the RPM/RTM initiating visit and established-patient requirements discussed above, the proposed rule extends several telehealth flexibilities enacted through the Consolidated Appropriations Act:
Geographic and Originating Site Flexibilities
Extending flexibilities that remove geographic restrictions on originating sites, expanding the list of acceptable originating sites, and expanding the array of practitioners eligible to furnish telehealth services through December 31, 2027.
Mental Health Telehealth In-Person Visit Delay
Delaying the in-person visit requirement for mental health services furnished via telehealth through January 1, 2028.
Audio-Only Telehealth Flexibilities
Extending flexibilities allowing audio-only Medicare telehealth services through January 1, 2028.
Practical Steps: How to Monitor the Rule and Prepare
The CMS CY2027 Physician Fee Schedule proposed rule presents significant changes for telehealth and remote monitoring companies. The combination of the outsourcing restriction and new initiating visit requirements could fundamentally alter the operating models of companies in this space. Telehealth and RPM-focused companies should consider taking the following steps as CMS reviews public comments and finalizes the rule:
- Assess how the proposed rule would affect your current RPM/RTM staffing and vendor arrangements;
- Evaluate whether to submit comments to CMS before the September 14, 2026 deadline and, if so, develop an effective comment strategy;
- Develop a contingency compliance plan ahead of the proposed January 1, 2027 effective date; and
- Navigate the evolving regulatory landscape for telehealth services, including the new telehealth reimbursement requirements and Telehealth Services List additions.
How Frier Levitt Can Help
If finalized, these proposed changes could significantly reshape how telehealth companies and healthcare providers deliver and bill for remote patient monitoring services. Frier Levitt advises telehealth companies, physician practices, digital health platforms, healthcare providers, and remote monitoring vendors on Medicare reimbursement, regulatory compliance, operational strategy, and healthcare transactions. Our attorneys help clients evaluate the impact of proposed CMS rules, assess staffing and vendor arrangements, develop compliance strategies, prepare and submit comments to CMS, and navigate evolving Medicare telehealth requirements.
Frequently Asked Questions About CMS’s Proposed 2027 RPM and Telehealth Changes
Does CMS’s proposed rule ban outsourced Remote Patient Monitoring (RPM) services?
No. The proposal would not prohibit outsourcing altogether, but it would prohibit Medicare billing for RPM and RTM services performed by outsourced third-party clinical staff that are not direct employees of the billing practitioner or practice.
When would these changes take effect?
If finalized, the proposed changes would become effective on January 1, 2027.
Who would be affected by the proposed rule?
The proposal could affect physician practices, telehealth companies, remote monitoring vendors, digital health companies, hospitals, and any organization that furnishes or supports Medicare RPM or RTM services.
Would patients need an in-person visit before RPM or RTM begins?
Not necessarily. CMS proposes that the initiating visit may occur either in person or via Medicare-covered telehealth, provided all proposed requirements are satisfied.
Can organizations comment on the proposed rule?
Yes. CMS is accepting public comments on the proposed rule through September 14, 2026 before issuing a final rule.
What should telehealth companies do now?
Organizations should evaluate their staffing models, vendor relationships, billing workflows, and compliance programs to understand how the proposed rule could affect their Medicare remote monitoring operations if finalized.
