Health Law Daily Wrap Up, EXPERT INSIGHTS—The Remote Monitoring Reckoning: What CMS's CY 2027 Proposed Rule Means For Providers And Vendors, (Aug 21, 2026)

By Erica J. Kraus, Michael D. Sutton, Arushi Pandya and Elicia Grilley Green of Sheppard, Mullin, Richter & Hampton LLP

Medicare's reimbursement of remote patient monitoring services, beginning in 2019, offered a meaningful patient care opportunity, paying to give patients devices to measure their health data at home and for their care teams to monitor and act on that data between office visits. In 2022, CMS introduced a companion code family for remote therapeutic monitoring ("RTM"), reimbursing providers for monitoring patient-reported therapeutic outcomes such as therapy adherence and response across the respiratory, musculoskeletal, and cognitive behavioral therapy settings.[1] Both code families were expanded repeatedly through rulemaking and CPT panel revisions. Use of these codes has increased rapidly, in part due to the growth of businesses that support providers in offering these services.

This growth has attracted scrutiny, and CMS is now poised to adopt significant revisions to the rules regulating reimbursement of these codes. In its CY 2027 Medicare Physician Fee Schedule Proposed Rule (the "Proposed Rule"), published on July 16, 2026, CMS proposes to: (1) prohibit billing practitioners from relying on vendors to furnish monitoring services; (2) require additional assurances as to the relationship between the billing practitioner and the patient; (3) reduce reimbursement for many codes; and (4) potentially consolidate to a smaller code set.[2]

OIG Reports on Remote Patient Monitoring

The Office of Inspector General ("OIG") issued two reports that raised serious questions about the use of remote monitoring codes and appear to have driven many of the restrictions included in the Proposed Rule.

The first, published in 2024, documented companies cold-calling beneficiaries to enroll them in remote patient monitoring ("RPM") programs and found that approximately 43% of enrollees did not receive all three required service components.[3] The OIG also identified risks such as insufficient staff to properly monitor enrollees and inadequate training on device use.

The follow-up report, issued in 2025, found that some practices billed RPM for patients with whom they had no established clinical relationship, billed for patients already enrolled with other practices, and billed for multiple monitoring devices per month for a single enrollee.[4] Together, the reports described significant deficits in government-reimbursed remote monitoring services.

Changes Included in the Proposed Rule

Limiting Monitoring Services to Direct Employees

Beginning January 1, 2027, CMS would limit reimbursement to RPM and RTM services furnished by clinical staff who are "a direct employee of the practitioner or the practitioner's practice."[5]

CMS observes that many physician practices that bill remote monitoring codes delegated most or all of the monitoring function to outside vendors who supplied devices, managed patient outreach, reviewed data, and employed the clinical staff to perform monitoring. In CMS's view, these types of third-party outsourcing arrangements do not provide the level of oversight and collaboration it expects to justify billing for these services.

Providers could still purchase software platforms and technical tools from outside vendors, but clinical monitoring work would need to be performed by the practice's own employees. CMS clarified that direct employment does not require clinical staff to be physically present at the practice, nor does it require the patient to be on-site; however, clinical staff must be direct employees and must perform monitoring services under the general supervision of the billing practitioner.

Establishing a Clinical Relationship

Two additional proposals address CMS's perceived disconnect between billing practitioners and the patients they monitor. First, CMS proposes an established patient requirement between the billing practitioner and the patient for both RPM and RTM. Second, CMS proposes requiring an initiating visit between the billing practitioner and the patient, conducted in person or via telehealth, before the practitioner begins furnishing RPM or RTM services. The visit would need to include a discussion of monitoring services and be separately reportable.

Reexamining Payment Rates

CMS proposes revising practice expense valuations for certain device supply and set-up codes, on the basis that current reimbursement rates may not accurately reflect actual costs. For treatment management codes, CMS proposes eliminating practice expense inputs, concluding these services are appropriately valued through physician work relative value units. The effect would be a meaningful reimbursement reduction for some commonly billed remote monitoring codes.

Four Codes Instead of Seventeen

CMS is soliciting comments on consolidating all seventeen existing RPM and RTM CPT codes into four new HCPCS G-codes covering RPM and RTM set-up and ongoing monthly monitoring respectively. CMS has not formally proposed adopting the new codes and is using the comment period to gather stakeholder input.

What Comes Next

Comments on the Proposed Rule are due September 14, 2026, and changes adopted in the final rule would take effect January 1, 2027. Practices that currently rely on outsourced monitoring partners would need to evaluate whether and how to restructure their operations, and vendors offering monitoring services would need to consider the impact on their business models.

The comment period closes September 14, 2026, providing an avenue for stakeholders to submit data and other information on clinical workflows, actual device costs, and patient outcomes. The breadth of CMS's proposal and the compressed implementation timeline make this a significant development for affected providers, health systems, and remote monitoring companies.

Erica J. Kraus, Michael D.

Sutton, Arushi Pandya and Elicia

Grilley Green Sheppard,

Mullin, Richter & Hampton

LLP 350 South

Grand Avenue, 40th

Floor Los Angeles 90071

United States

Tel.: +1

E-mail: mbennett@sheppard.com

URL: www.sheppard.com/

(c) Mondaq Ltd, 2026 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com

Footnotes

1 See 87 Fed. Reg. 45,860 (July 29, 2022).

2 See 91 Fed. Reg. 43,842 (July 16, 2026).

3 U.S. Dep't Health and Hum. Servs. Off. of Inspector Gen., Additional Oversight of Remote Patient Monitoring in Medicare Is Needed OEI-02-23-00260 at 9 (issued on Sept. 19, 2024).

4 U.S. Dep't Health and Hum. Servs., Off. of Inspector Gen., Billing for Remote Patient Monitoring in Medicare OEI-02-23-00261 at 3-4 (issued on Aug. 25, 2025).

5 91 Fed. Reg. 43,842, 43,893 (emphasis added).

Attorneys: Erica J. Kraus, Michael D. Sutton, Arushi Pandya and Elicia Grilley Green (Sheppard, Mullin, Richter & Hampton LLP).

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