CMS Proposes to Restrict Outsourced Remote Monitoring Services Under Medicare

On July 16, the Centers for Medicare & Medicaid Services (CMS) published the CY 2027 Medicare Physician Fee Schedule proposed rule (91 FR 43842). Citing program integrity concerns, recent Department of Health and Human Services, Office of Inspector General (HHS-OIG) oversight findings, and an effort to curb fraud, waste, and abuse, CMS proposes to significantly restrict Medicare payment for remote physiologic monitoring (RPM) and remote therapeutic monitoring (RTM) services when those services are performed by contractor personnel rather than clinical staff employed by the billing practice. If finalized, the rule would take effect Jan. 1, 2027.

CMS Proposes New Medicare Billing Requirements for RPM and RTM Services

CMS proposes three guardrails for RPM and RTM services billed under the Physician Fee Schedule:

• Established-patient requirement: RTM services would be limited to established patients of the billing practitioner.
• Initiating visit: Practitioners reporting RPM or RTM would be required to furnish a separately reportable initiating visit at the onset of monitoring services.
• Employed-staff requirement: Medicare payment would be permitted only when (1) RPM or RTM clinical monitoring services are performed by a “direct employee” of the practitioner or the practitioner’s practice, (2) services provided by clinical staff are under the general supervision of the billing practitioner, and (3) all other “incident to” requirements are met.

Importantly, CMS has not proposed an outright ban on RPM/RTM technology vendors. The restriction targets Medicare payment for contractor-furnished clinical monitoring services. It does not prohibit vendors from supplying devices, software, dashboards, connectivity, analytics, or other nonclinical infrastructure to practices.

In addition to the employed-staff requirement, CMS is proposing to reduce the valuation of RPM/RTM services on the basis that monitoring devices may be available at a reduced cost compared to CMS’s initial estimates. CMS is also soliciting comment on bundling the existing RPM and RTM CPT codes into four new HCPCS G-codes. The proposed valuation reduction would affect providers even if they keep monitoring in-house, including those providers described above as less directly impacted by the employed-staff requirement.

Which Providers and Remote Monitoring Vendors Would Be Affected?

Physician practices and other Medicare Part B billing practitioners that rely on vendor personnel to perform monitoring, patient communications, treatment-management functions, or documentation of time would be directly affected if this proposal is finalized. Outsourced monitoring vendors whose staff perform patient-facing or clinical monitoring functions on behalf of billing practices are also directly affected, while vendors supplying only devices, platforms, or analytics without furnishing clinical staff may be less directly impacted but should nonetheless take the opportunity to review their standard contracts and service descriptions for potential exposure.

Why CMS Is Restricting Outsourced RPM and RTM Services

CMS’s proposal is driven largely by program integrity concerns. In its September 2024 report, “Additional Oversight of Remote Patient Monitoring in Medicare Is Needed” (OEI-02-23-00260), HHS-OIG found that Medicare RPM utilization increased dramatically from 2019 to 2022 and that a staggering 43% of enrollees receiving RPM did not receive all required service components. In a subsequent report, HHS-OIG determined that 2024 Medicare payments for RPM exceeded $500 million. HHS-OIG also raised concerns about unscrupulous companies enrolling beneficiaries in RPM regardless of medical necessity through cold calls and advertising.

If finalized, practices currently outsourcing clinical monitoring functions to third-party vendors may need to restructure workflows, bring monitoring staff in-house, or transition to technology-only vendor arrangements. Vendor agreements should be reviewed for staffing responsibilities, billing support obligations, patient solicitation controls, audit rights, indemnities, and regulatory-change termination provisions.

How Providers and Vendors Can Prepare for the Proposed CMS Rule

• Map current RPM and RTM workflows to identify who performs each billable function and whether any contractor or vendor personnel perform clinical monitoring tasks tied to Medicare billing.
• Review service agreements for staffing responsibilities, documentation obligations, regulatory-change termination rights, and indemnification provisions.
• Evaluate whether employment, staffing, or technology-only models may be needed to maintain Medicare billing eligibility if the proposal is finalized.
• Consider submitting comments to CMS seeking clarity on contractor definitions, leased-employee arrangements, MSO/PEO staffing models, device and software support carve-outs, and transition relief. The comment period ends at 11:59 p.m. ET on Sept. 14, 2026.
• Seek regulatory counsel to assess Medicare reimbursement, fraud and abuse, vendor contracting, and operational implications of the proposed RPM/RTM restriction.

Key Takeaways on the Proposed CMS RPM and RTM Rule

The CY 2027 Physician Fee Schedule proposed rule represents CMS’s most significant regulatory action targeting remote monitoring services to date. Providers and vendors alike should monitor the rulemaking process, assess the operational and financial implications of the proposed restrictions and valuation changes, and consider submitting comments to CMS before the Sept. 14, 2026, deadline. If you have questions about how this proposed rule may affect your organization or would like assistance preparing comments, please contact your Barnes & Thornburg attorney.