What the 2027 Medicare Proposed Rule Means for Your PT Clinic

By Brianna Hall, Director of Development, Medical Billing Center

Every summer, CMS releases a proposed rule for the following year’s Medicare Physician Fee Schedule. Most clinic owners hear about it secondhand, months later, after it’s already final. By then there’s nothing left to do but adapt.

This year is different , and the window to actually influence what gets finalized is still open.

On July 14, 2026, CMS released the proposed rule for Calendar Year 2027. It contains some of the most significant proposed changes to Medicare payment and therapy policy in recent years. The comment period closes on September 14, 2026. That means right now, before this rule is locked in, is exactly the time to understand what’s in it.

Here’s what PT clinic owners need to know.

The Conversion Factor Is Being Cut Again

After 2026 gave PT clinics their first meaningful payment increases in five years, 2027 is proposing to take some of it back.

CMS is proposing to reduce the non-qualifying APM conversion factor by 1.68% in CY 2027 compared to CY 2026. Most outpatient PT clinics fall into the non-APM category, meaning they would feel the larger cut. Holland & Knight

There is a partial silver lining specific to physical therapy. Proposed changes to the relative value units for PT-specific CPT codes may offset some of the conversion factor reduction for therapy providers, meaning the net impact for PT clinics could be less severe than the headline number suggests. But this is still a proposed rule, and the final numbers won’t be confirmed until later this year.

The concern: This is the pattern clinic owners have lived with for years, one step forward, one step back. When adjusted for inflation, PT reimbursement is already down around 40% since 2002 on key CPT codes. Another cut, even a modest one, compounds a problem that has been building for over two decades.

What you can do: This is exactly the kind of issue worth commenting on. Individual clinic owners describing the real-world impact of continued payment cuts carry weight, especially right now, when CMS has indicated it places higher emphasis on personal insights from individual providers than form letters.

RTM Third-Party Vendor Restrictions

Remote Therapeutic Monitoring has been a growing revenue opportunity for PT clinics. The 2026 rule made it easier to qualify for RTM billing by lowering the data transmission threshold.

The 2027 proposed rule threatens to upend that entirely.

CMS is proposing to require that RTM services be furnished only to:

• Established patients
• Practitioners reporting RTM services must furnish a separately reportable initiating visit in association with the onset of RTM services
• Only allow payment for RTM services when performed by clinical staff employed by the practice, not when those services are delivered by contractors. APEX

In plain terms: if a third-party platform is providing the clinical staff component of your RTM program, that arrangement would no longer qualify for Medicare billing under this proposed rule.

There is an important distinction worth understanding. The proposed changes would not impact the ability of providers to purchase software and technical services from third-party vendors. The platform itself, the app, the data collection, those can still come from outside your practice. What cannot come from a third party, if this rule is finalized, is the clinical staff time involved in managing and billing those RTM codes. Distilinfo

The concern: Many PT clinic owners built their RTM workflows around third-party platforms precisely because they didn’t have the internal bandwidth to manage it themselves. Health tech leaders are warning that many providers cannot build their own RTM programs by the January 1, 2027 deadline, and that many Medicare beneficiaries will lose access to services that are helping them avoid hospitalizations. For small independent PT practices especially, this change could effectively end their ability to bill RTM for Medicare patients.

What you can do: Do not cancel your RTM platform subscriptions yet. This is proposed, not final. The industry is pushing back hard and the comment period is still open. If RTM billing is part of your revenue model, submitting a comment describing how this change would affect your clinic and your patients is one of the most direct ways to influence the final rule. CMS has specifically said personal provider experiences carry significant weight in this year’s comment review process.

MIPS Is Being Phased Out and MVPs Are Becoming Mandatory

If you participate in Medicare’s quality reporting program, this change deserves your attention well before 2029.

CMS proposes to sunset traditional Merit-based Incentive Payment System reporting in 2029 and transition clinicians toward MIPS Value Pathways, which CMS calls a more clinically meaningful specialty-focused reporting option. American Physical Therapy Association

For PT clinics, the relevant pathway is the Rehabilitative Support for Musculoskeletal Care MVP, currently voluntary, but effectively becoming the required path once traditional MIPS reporting ends.

Beginning with the CY 2029 performance period, MVPs would be the only MIPS reporting option for clinicians who don’t participate in a MIPS APM. Mondaq

The concern: Quality reporting is already one of the most confusing and time-consuming administrative burdens for PT clinic owners. Transitioning to a new reporting framework requires preparation, training, and system updates.

What you can do: Start familiarizing yourself with the Musculoskeletal MVP now.

The KX Modifier Threshold Is Going Up

CMS proposes increasing the CY 2027 KX modifier threshold from $2,480 to $2,540, reflecting the proposed 2.5% Medicare Economic Index update. The targeted medical review threshold would remain unchanged at $3,000. SPRY

Once a patient’s cumulative therapy charges reach the threshold, the KX modifier must be applied to every subsequent claim for that patient in that calendar year — certifying that continued care is medically necessary. Failing to apply it correctly results in denied claims.

The concern: The threshold increase is small, $60, and does not meaningfully reduce the administrative burden of tracking every patient’s running total throughout the year. For clinics seeing high volumes of Medicare patients, the tracking and documentation requirements around KX modifier compliance remain a real operational challenge.

What you can do: Make sure your EMR or billing system has alerts set to flag when patients are approaching the threshold. This is a straightforward operational fix that prevents entirely avoidable denials.

Telehealth Is Extended

CMS confirms that most telehealth flexibility policies are extended through December 31, 2027, and audio-only telehealth authority is extended through January 1, 2028. AHA

That’s good news for clinics that have built telehealth into their service model. But the enrollment requirement introduced in 2026 remains in place, every location from which telehealth services are delivered, including home offices, must be formally enrolled in PECOS as a practice location.

The concern: This is one of the quietest denial risks in PT billing right now. A clinician doing telehealth from a location that isn’t enrolled in PECOS will have their claims denied automatically — not because the care was inappropriate, but because of an administrative gap that most clinic owners don’t know exists.

What you can do: Verify every telehealth service location is properly enrolled in PECOS now. This is a ten-minute fix that prevents ongoing claim denials.

Your Voice Actually Matters Here, Use It Before September 14

Every year, CMS proposes a rule. Every year, most clinic owners find out what changed after it’s already final. This year, the comment window is still open, and CMS has specifically signaled that individual provider comments describing real-world impacts carry more weight than form letter submissions.

If any of these proposed changes would affect your clinic, your patients, or your ability to continue practicing sustainably, now is the time to say so. You don’t need to be a policy expert. You need to describe your specific situation clearly and honestly.

The comment period closes September 14, 2026. Comments can be submitted directly at regulations.gov.

APTA also has advocacy resources and tools to help members submit comments. If you’re not already connected to APTA’s advocacy network, this is a good time to get involved.