On November 9, 2026, CMS issued the CY 2027 Medicare Physician Fee Schedule Final Rule (“PFS”). The PFS finalizes several changes discussed in our previous article that will significantly affect those in the remote physiologic monitoring (“RPM”) and remote therapeutic monitoring (“RTM”) space.

Direct Employee Requirement Delayed

In July, CMS proposed barring third-party outsourcing of RPM and RTM services and, despite heavy pushback (including from a bipartisan group of 32 House lawmakers), finalized the restriction effective January 1, 2029. Beginning on that date, practitioners may bill RPM and RTM codes only if the services are performed by clinical staff who are direct employees of the practitioner or the practitioner’s practice; services performed by staff contracted through third-party companies will not be billable. In the interim, CMS plans to issue sub-regulatory guidance on what other clinical staff arrangements may be appropriate.

As noted in our previous article, it is unclear who qualifies as a “direct employee,” and the final rule does not resolve the question. CMS also did not substantively respond to commenters who asked why this requirement is stricter than the incident-to rules under 42 C.F.R. § 410.26, which permit services furnished by employees, leased employees, and independent contractors.

CMS did, however, clarify several related points:

• Clinical staff need not always be physically located within the practice, and the beneficiary need not be on-site to receive remote monitoring services. 
• Clinical staff time spent on RPM or RTM services counts if the staff are under the billing practitioner’s general supervision and all other incident-to requirements are met.
• Practices may still obtain devices, software, connectivity, data hosting, cybersecurity, implementation support, technical assistance, and interoperability services from outside vendors, so long as those vendors do not supply staff time.

Nonetheless, CMS kept the direct employee requirement, explaining that the two-year delay gives practices time to hire and train staff for in-house remote monitoring workflows. In the meantime, practices must continue to comply with existing remote monitoring billing rules, including incident-to requirements.

Initiating Visit Requirement

CMS finalized the initiating visit requirement as proposed. Beginning January 1, 2027, RPM and RTM may not be billed until the billing practitioner furnishes a face-to-face visit, either in person or via telehealth. Practices relying on telehealth for initiating visits should note that current statutory telehealth flexibilities are scheduled to end on December 31, 2027, and CMS stated that it lacks authority to extend them; absent further legislation, the use of telehealth for initiating visits would be limited. These telehealth flexibilities have been extended numerous times by Congress, which raises the question of whether CMS would take a similar approach and delay the direct employee requirement discussed above in the same manner.

The visit need not be solely for remote monitoring, but remote monitoring services must be discussed during the visit. CPT codes that do not involve a face-to-face encounter with the billing practitioner, or that are not separately payable under Medicare, cannot serve as the initiating visit. Although some commenters requested exemptions (e.g., for beneficiaries aligned to ACOs), CMS did not finalize any.

CMS also clarified that:

• There is no limit on the time between the initiating visit and the start of monitoring, provided RPM or RTM is discussed at the visit.
• CMS did not define when remote monitoring services are considered to begin (i.e., their “onset”).
• A new initiating visit is not required for routine changes (e.g., change in device, a clinical change, or a change in billing practitioner within the same practice).
• Beneficiaries already receiving remote monitoring services before January 1, 2027, do not need an initiating visit to continue those services, so long as all other service requirements are met.

Other Finalized Rules

CMS also addressed the following:

• Effective January 1, 2027, RTM services may be furnished only to established patients, consistent with the existing requirement for RPM services. A beneficiary may be considered an established patient once the initiating visit requirement is met.
• CMS will consider comments on potentially bundling existing RPM and RTM CPT codes into four new HCPCS G-codes for possible future rulemaking.

Key Takeaways

1. Prepare now for the changes taking effect January 1, 2027. This may require review of existing policies and procedures to ensure documentation and billing processes will remain compliant.
2. Begin preparing for the direct employee requirement, while developing contingency plans in case CMS further delays the rule.
3. Review existing vendor agreements to determine which third-party arrangements will, and will not, be affected by the outsourcing ban.
4. Watch for the sub-regulatory guidance CMS previewed in the PFS.