From payment to practice: What OT practitioners need to know about the 2027 Medicare Physician Fee Schedule Proposed Rule

On July 14, 2026, the Centers for Medicare & Medicaid Services (CMS) released the proposed Calendar Year (CY) 2027 Medicare Physician Fee Schedule (MPFS), which outlines changes to Medicare Part B payment policies affecting occupational therapy (OT) and other outpatient services. The proposed rule not only establishes payment rates for OT services beginning January 1, 2027, but also includes proposed policy changes that, if finalized, could impact beneficiary access to care, provider administrative requirements, including quality reporting, and opportunities to expand the role of OT within Medicare.

AOTA’s summary highlights the provisions most relevant to OT practitioners, explains their potential impact on practice and patient access, and identifies areas where advocacy may be needed before policies are finalized.

Conversion factor and overall policy impact on payment

Occupational therapy reimbursement under the MPFS is determined by both the relative value units (RVUs) assigned to services and the conversion factor (CF) that translates those RVUs into payment. For CY 2027, CMS projects a 1.68% decrease in the non-qualifying APM conversion factor, which applies to most OT practitioners. This decrease is largely due to the expiration of a temporary 2.5% payment increase enacted by Congress for CY 2026, which expires on December 31, 2026.

Despite the lower CF, occupational therapy is projected to experience a modest overall increase in Medicare reimbursement related to several technical policy changes proposed by CMS, most notably reforms to the practice expense methodology discussed in more detail below. If these policy proposals are finalized, OT is projected to see an approximately 3% increase in RVUs, which offsets the reduction in the CF, resulting in a small net positive payment impact overall.

Ultimately, the impact on individual practitioners will vary based on their specific mix of services, but the CY 2027 proposed rule is notable because, for more than a decade, meaningful increases in RVUs for OT services have generally required a formal code revaluation process. In contrast, CMS is proposing methodology changes that improve the value of OT services without requiring practitioners to seek revaluation of individual codes. This demonstrates both the importance of longstanding AOTA advocacy on technical payment policies and the significant influence that seemingly small changes in Medicare payment methodology can have on reimbursement. At the same time, it serves as a reminder of how fragile the current payment system remains; even when OT services receive higher RVUs, reductions in the conversion factor can substantially limit the resulting payment gains. AOTA continues to advocate for systemic change to stabilize the MPFS and reduce the outsized impact policy changes have on OT reimbursement.

Telehealth

As a result of congressional action in the Consolidated Appropriations Act, 2026, OT practitioners continue to be recognized as Medicare telehealth providers through December 31, 2027. This extension preserves beneficiary access to OT services delivered via telehealth and provides additional time for Congress and CMS to consider longer-term telehealth policies. The law also directs CMS to establish two new telehealth reporting modifiers, BB and BC, to identify certain telehealth service arrangements. The two modifiers will be used to distinguish between telehealth services furnished through certain third-party virtual telehealth platform arrangements, and/or telehealth services furnished incident to a physician's professional service.

Technical policy updates

The CY 2027 Medicare Physician Fee Schedule (MPFS) proposed rule includes several important technical policy changes that could affect how occupational therapy services are valued and reimbursed under Medicare.

Indirect Practice Cost Index (IPCI) reform

CMS is proposing to remove the Indirect Practice Cost Index (IPCI) from the physician fee schedule practice expense (PE) methodology used to value Medicare services. The IPCI is a step in CMS's valuation formula that adjusts practice expense RVUs based on specialty-level practice cost data.

AOTA has previously raised concerns with CMS about the impact of the IPCI on occupational therapy reimbursement. Because of historically lower aggregate practice expenses than many physician specialties, the IPCI can inadvertently reduce the PE value assigned to OT services because the formula favors specialties with historically higher practice expenses, redistributing PE RVUs away from lower-practice-expense specialties. This valuation formula byproduct keeps OT services toward the bottom of the payment hierarchy regardless of improvements in code-level valuation.

Eliminating the IPCI is an important step toward a more equitable PE methodology that reflects the actual resources needed to provide OT services by removing a longstanding payment methodology that tended to suppress the value of services furnished by lower-practice-expense specialties such as occupational therapy. Based on AOTA's impact analysis, removal of the IPCI from the valuation calculation accounts for a substantial portion of the approximately 3% increase in OT RVUs projected by CMS. As a result, this policy change is a key driver of the positive reimbursement impact projected for OT services in CY 2027.

Equipment price updates for OT services

CMS is proposing several updates to equipment prices used in the practice expense methodology for code valuation, based on submitted invoices reflecting more current market costs. Because equipment costs are one component of PE RVUs, changes in equipment pricing can affect the valuation of services that utilize that equipment. Two proposed equipment price updates are particularly relevant to occupational therapy:

• Aquatic Therapy (CPT 97113) – CMS proposes to update the price of the aquatic therapy pool equipment item from $36,000 to $192,171.88. Because aquatic therapy pools are a direct PE input for valuing CPT 97113, this change could increase the PE value assigned to aquatic therapy services.
• Ultrasound Wound Therapy (CPT 97610) – CMS proposes to decrease the equipment price associated with ultrasound wound therapy from $320 to $100. This lower equipment cost may result in a corresponding decrease in PE RVUs for the service.

Coding proposals

Biofeedback coding and valuation

CMS is proposing to update the biofeedback code family for CY 2027, including revising existing codes, establishing values for a new add-on code, and confirming billing designations important to practitioners who furnish biofeedback services. Most notably, CPT revised 90901 to describe the initial 15 minutes of biofeedback training furnished by a physician or other qualified health care professional and created a new add-on code to report each additional 15 minutes of biofeedback training.

The proposed biofeedback code family now includes:

• 90901 – Biofeedback training by any modality (e.g., EMG, EEG, ECG); initial 15 minutes of direct patient contact
• 90X03 – Biofeedback training by any modality (e.g., EMG, EEG, ECG); each additional 15 minutes of direct patient contact [Note: CPT code 90X03 is a placeholder code assigned during the rulemaking process and will be replaced with a permanent numeric CPT code before publication of the CY 2027 MPFS final rule]
• 90912 – Biofeedback training, perineal muscles, anorectal or urethral sphincter, including EMG and/or manometry, when performed; initial 15 minutes of one-on-one contact with the patient
• 90913 – Biofeedback training, perineal muscles, anorectal or urethral sphincter, including EMG and/or manometry, when performed; each additional 15 minutes of one-on-one contact with the patient

CMS is proposing to finalize the American Medical Association (AMA) Health Care Professionals Advisory Committee (HCPAC) recommendations for the work RVUs assigned to CPT codes 90901 and 90X03. CMS is also proposing to adopt the PE inputs recommended by HCPAC and the AMA Relative Value Scale Update Committee (RUC) for all four biofeedback codes without refinement. These recommendations reflect the active participation of nonphysician provider organizations, including AOTA, through the HCPAC, which serves as the primary mechanism for occupational therapy, physical therapy, speech-language pathology, and other nonphysician professions to provide direct input into the AMA code valuation process. Through its representation on the HCPAC, AOTA helps ensure that the resources, clinical work, and practice expenses associated with OT services are appropriately considered in the development of payment recommendations.

Remote Therapeutic Monitoring (RTM)

Several significant policy changes to Remote Therapeutic Monitoring (RTM) services that could affect OT practitioners who furnish and bill these services are proposed. CMS states that these proposals are intended to address program integrity concerns, strengthen patient oversight, and ensure that remote monitoring services are used as intended.

Proposal to limit RTM to established patients

To reduce fraud, CMS is proposing to require that RTM services be furnished only to established patients. CMS believes practitioners should have an existing clinical relationship with a patient—including relevant history, assessment findings, and knowledge of the patient's condition—before ordering and managing remote therapeutic monitoring under a treatment plan or therapy plan of care. CMS wants to require a face-to-face initiating visit before RTM services begin, which must be furnished by the billing practitioner to assess whether RTM is clinically appropriate, discuss the service with the patient, and obtain consent for the service.

An OT evaluation should satisfy this requirement, although CMS has not specifically identified OT evaluation codes as qualifying initiating visits in the proposed rule. AOTA will seek further clarification in their submitted comments.

Restrictions on third-party staffing arrangements

CMS is also proposing to restrict billing for RTM services to services furnished by clinical staff employed by the billing practitioner's practice. Under the proposal, time spent by contractors or third-party remote monitoring companies would no longer count toward RTM billing.

From AOTA's perspective, RTM is most effective when it is integrated into the occupational therapy process and used to support ongoing clinical decision-making, treatment progression, and patient management. AOTA has previously expressed concerns about certain third-party RTM models in which monitoring services may be furnished by individuals who are not involved in the patient's therapy episode, have not evaluated the patient, and may not have access to the therapy medical record or plan of care. At the same time, AOTA recognizes that many OT practitioners and providers currently rely on third-party vendors to support RTM implementation and service delivery; this policy change could have an impact on clinic workflows and future access to RTM services. CMS is seeking comments on how frequently RTM services currently rely on third-party companies and how prohibiting those arrangements could affect patient access to RTM services. AOTA is currently reviewing this proposal and evaluating both the potential benefits and challenges it may create for OT practitioners, providers, and patients.

Changes to practice expenses

While not proposing specific changes at this time, CMS expresses concern that several RPM and RTM codes—including RTM device supply codes 98976, 98977, 98978, 98984, 98985, and 98986—may currently be overvalued because the agency lacks reliable information regarding the actual devices being used and the costs providers pay for them. CMS is seeking detailed information about typical RTM and RPM devices, including hardware, software, discounts, subscription arrangements, and real-world pricing data.

For RTM treatment management codes 98980 and 98981, CMS is proposing to remove practice expense inputs while maintaining the current work RVUs and work times. CMS's rationale is that these services primarily reflect practitioner time and clinical decision-making and do not typically involve significant clinical staff, equipment, or supply costs beyond those already captured in the work component of the codes. For OT practitioners who bill RTM, this means the PE portion of the total RVU for 98980 and 98981 could decrease, resulting in a slightly lower payment for those codes.

Potential restructuring of RTM coding

CMS is also considering a substantial restructuring of RTM coding and is seeking comment on replacing the current RTM code set with two new HCPCS G-codes:

• GRTM1 – RTM initial setup and patient education
• GRTM2 – Monthly RTM services, including device supply, data transmission, and treatment management

Under this approach, multiple existing RTM service components would be bundled into a simplified coding structure. CMS believes this could reduce administrative burden and ensure beneficiaries receive all required service components. CMS is specifically seeking feedback on both the code structure and the proposed valuation of the proposed codes.

Health coaching

CMS's growing emphasis on prevention, wellness, self-management, and behavior change is reflected in its proposal to establish payment for health and well-being coaching services, including CPT codes 0591T (individual initial assessment), 0592T (individual follow-up session), and 0593T (group coaching). CMS describes these services as patient-centered interventions that use goal setting, motivational strategies, education, accountability, and behavior change techniques to help individuals achieve sustainable improvements in health and well-being—concepts that align closely with OT interventions.

Under the proposal, health and well-being coaching services may be billed by a supervising practitioner when furnished by appropriately trained auxiliary personnel under direct supervision. CMS proposes that individuals providing the service hold recognized credentials in health coaching, health education, nurse coaching, or certain evidence-based wellness programs. CMS has not proposed recognizing OT licensure, education, or expertise in behavior change, habit formation, self-management, and health promotion as a qualifying credential, and AOTA plans to address this issue in its comments.

This proposal stems from a request for information included in last year's proposed rule. In response, AOTA provided evidence and resources highlighting OT's role in promoting healthy behaviors, chronic disease management, and overall well-being.

Caregiver Training Services (CTS)

CMS is also seeking feedback on the valuation and coding structure of Caregiver Training Services (CTS) codes finalized in the CY 2025 MPFS. These services include G0541 (initial 30 minutes of individual caregiver training in direct care strategies), G0542 (each additional 15 minutes), and G0543 (group caregiver training in direct care strategies) that support patients with ongoing conditions and help reduce complications. Importantly, these services allow practitioners to educate and train caregivers directly on strategies needed to safely support the patient's care at home without the patient present.

CMS is asking whether these G-codes for direct care strategies should continue to be reported through dedicated CTS codes or whether the resources associated with these services are already reflected in other Medicare services, such as evaluation and management (E/M) visits. This question is particularly important for OT practitioners because CTS services are furnished to caregivers without the patient present and therefore serve a fundamentally different purpose than a traditional E/M visit, which focuses on direct patient evaluation and management. In addition, while OT practitioners may report CTS codes, they generally cannot bill E/M services. As a result, any future effort to incorporate CTS into E/M services could limit access to these services for both therapy providers and Medicare beneficiaries who rely on caregiver training interventions.

AOTA is particularly concerned about this proposal, given its ongoing advocacy on caregiver training billing. In recent years, AOTA has urged CMS to address implementation challenges associated with CPT codes 97550 (Caregiver training in strategies and techniques to facilitate the patient’s functional performance in the home or community, initial 30 minutes) and 97551 (each additional 15 minutes) including the Medicare claims processing Disposition 11 edit, which requires the full initial 30 minutes or full additional 15-minute increment of caregiver training to be furnished before the relevant service can be reported. AOTA has consistently raised concerns that this policy does not reflect how caregiver training is often delivered in clinical practice and may create unnecessary barriers to the use of these services. Rather than addressing those concerns, the CY 2027 proposed rule raises the possibility of additional changes to the CTS code family that could further negatively affect how CTS codes are reported and reimbursed.

Requests for Information (RFIs)

In addition to current policy proposals, the CY 2027 MPFS proposed rule includes several Requests for Information (RFIs) that may help shape future Medicare policy. Although these RFIs do not propose immediate changes, they provide opportunities to highlight OT's role in emerging areas of practice and to advocate for future coding, payment, and coverage policies that could expand access to OT services.

Redesigning primary care to Make America Healthy Again

CMS is seeking input on how Medicare should modernize primary care payment and delivery, with a particular focus on strengthening primary care, expanding technology-enabled care, and improving preventive services. The RFI centers on three broad topics: (1) how Medicare should better support and value primary care services, (2) how technology and artificial intelligence are changing primary care delivery and payment, and (3) whether Medicare should expand prospective payment approaches for primary care. The agency is also exploring how technology and AI could enhance preventive services, improve care coordination, and support more personalized, data-driven care.

As CMS considers the future of primary care, AOTA continues to advocate for greater integration of OT into primary care and preventive care models to improve outcomes and reduce overall healthcare costs. This RFI represents an important opportunity to highlight how OT can help achieve many of CMS's goals.

Community-based palliative care

CMS is seeking feedback on redefining eligibility and care management requirements for future community-based palliative and serious illness services. CMS is exploring whether eligibility should be based on factors such as life expectancy, impact on daily functioning, caregiver burden, or a combination of these criteria. CMS specifically asks how limitations in activities of daily living (ADLs) and broader functional deficits could be used to identify beneficiaries who would benefit from these services.

This RFI represents an important opportunity to highlight OT's role in assessing functional status, supporting ADL performance, reducing caregiver burden, and helping individuals with serious illness maintain independence and quality of life. CMS's focus on function, caregiver strain, and care coordination aligns closely with occupational therapy's expertise and provides an opportunity to advocate for inclusion of functional measures in future palliative care models.

Intensive Lifestyle Interventions (ILIs) to slow progression of Alzheimer’s disease

CMS is considering the potential development of Medicare-covered intensive lifestyle interventions (ILIs) aimed at reducing the risk of Alzheimer's disease and related dementias. The agency is interested in the evidence supporting multi-domain interventions that address factors such as physical activity, nutrition, sleep, stress management, and other lifestyle behaviors; appropriate eligibility criteria; interdisciplinary team members; service intensity and duration; and the role of technology in supporting these interventions.

This RFI presents a significant opportunity to highlight OT's role in lifestyle modification, behavior change, habit formation, self-management, cognitive health, and healthy aging. It also provides an opportunity to demonstrate how OT practitioners can contribute as members of interdisciplinary teams delivering interventions designed to reduce dementia risk and support individuals with mild cognitive impairment or early cognitive decline. AOTA has previously submitted comments to HHS regarding evidence-based support for OT’s role in lifestyle medicine, health promotion, and behavior change, making this RFI another important opportunity to reinforce OT's expertise in helping individuals make and sustain meaningful lifestyle changes that support long-term health and cognitive well-being.

Updates to the Quality Payment Program

The CY 2027 proposed rule includes several significant changes to the Quality Payment Program (QPP) and Merit-based Incentive Payment System (MIPS), including CMS's continued transition to MIPS Value Pathways (MVPs), updates to quality measures and improvement activities, and long-term plans to sunset traditional MIPS reporting. AOTA is currently reviewing the proposed changes to evaluate the potential impact on OT practitioners and organizations. Given the scope and importance of these proposals, a detailed analysis of the CY 2027 MIPS and QPP updates is available in a separate article dedicated to quality reporting and MIPS participation. OT practitioners who participate in MIPS are encouraged to review the companion article for a more comprehensive summary of the proposed changes to MIPS and their implications for occupational therapy practice.

Help shape the future of OT in Medicare

The CY 2027 MPFS Proposed Rule has the potential to shape how occupational therapy services are delivered, accessed, and paid for in the years ahead. Join AOTA’s advocacy efforts by submitting comments to CMS and sharing your story. Your comments can help highlight how proposed payment and coverage policies will affect OT practitioners' ability to provide timely, effective care; support client recovery and participation in meaningful activities; and address the growing needs across the Medicare population. By partnering with AOTA and speaking up during the rulemaking process, you can help ensure that Medicare policies reflect the value of occupational therapy and support beneficiary access to the services they need.

Together, we can advocate for policies that strengthen practice, improve outcomes, and advance access to high-quality care for Medicare beneficiaries.