The Trump administration proposed major changes to Medicare payment policies that will block third-party vendors from remote patient monitoring. The changes, health tech leaders say, will significantly disrupt services that help patients manage conditions like diabetes and hypertension.
The policy change, tucked inside a hefty Medicare physician pay draft rule released this week, marks a shift that will have far-reaching implications for RPM companies, primary care physicians, hospitals and health systems by eliminating third-party vendors.
The Centers for Medicare and Medicaid Services (CMS) issued Medicare Part B payment policy changes for physicians under the calendar year 2027 Physician Fee Schedule draft rule on Tuesday that outlined sweeping changes to Medicare payment and value-based care programs.
An unpublished PDF version of the 1,592-page proposal can be found here.
Medicare is aiming to tighten the rules around remote physiologic monitoring (RPM) and remote therapeutic monitoring (RTM). Under the draft rule, Medicare will only allow payment for RPM or RTM services when furnished by clinical staff employed by the practice, effective January 1, 2027.
If finalized, for the purposes of billing Medicare, the RPM and RTM codes could not be billed in cases where the service is not performed by clinical staff of the billing practitioner and will not allow contracting out to third-party companies, regulators wrote in the draft rule.
The change was driven by CMS' concerns about program integrity and vendors offering low-quality care. The proposed rule cites a September 2024 HHS Office of Inspector General report that called for more oversight to ensure that remote patient monitoring is being used and billed appropriately. OIG found that the use of remote patient monitoring in Medicare increased dramatically from 2019 to 2022, but about 43% of enrollees who received these services did not receive all three components of it.
Payments for remote patient monitoring jumped 31% from $408 million in 2023 to $536 million in 2024, according to a 2025 report. In 2024, nearly 1 million enrollees received these services, up 27% from 2023.
"We believe outsourcing RPM/RTM services to a third party can fragment care, lead to insufficient involvement and oversight of the billing practitioner, or result in services that do not actually represent or facilitate all required aspects of RPM or RTM services," regulators wrote in the proposed 2027 PFS rule.
Provision of these services by entities "having only a loose association with the treating practitioner can detract from longitudinal, patient-centered care," regulators wrote. CMS argues that RPM and RTM services delivered by third-party contracted clinical staff may not provide sufficient physician oversight or clinical integration to justify billing.
Many primary care providers, hospitals and health systems work with third-party RPM vendors because they do not have the resources or infrastructure to provide these services in-house, said Christopher Adamec, executive director of the industry group Alliance for Connected Care.
The proposed requirements would make it difficult for providers to offer RPM services, particularly small and rural providers with limited resources and budgets, health tech leaders said.
Remote monitoring services require providing devices to patients, data integration, machine learning and analytics capabilities to parse the data and clinical teams to monitor the data, intervene and provide care management services.
"What we see in these programs is a dramatic reduction in unnecessary hospitalizations because it's an early warning system," Adamec said.
If the policy changes are enacted, "many Medicare beneficiaries will lose access to services that are keeping them out of the hospital right now," Adamec asserted.
Many providers cannot build their own RPM programs in six months given the January 1, 2027 deadline for the policy changes to go into effect, he noted.
"Prohibiting vendors is going to mean that healthcare providers are given the choice of either ending these programs or building all that capability in-house. I think that we're going to see the majority choose to end the capabilities versus trying to build it in-house. There are some health systems that have their own capabilities in-house. I think that they still want to have the option to choose a vendor, even if they have chosen to build their own significant capabilities," Adamec said.
RPM vendors "exist for a reason," he added, as these capabilities are too difficult for most providers to build their own programs. "A vendor often is a shovel-ready capability when they need it, rather than taking years to develop and build the infrastructure to support something," he said.
Contrary to CMS' characterization of third-party vendors having a "loose association with a treating practitioner," Adamec said many RPM companies are tightly integrated with the ordering provider. "They are truly part of a coordinated care team for the patient," he said.
Cadence, a leading provider of remote patient monitoring, works with more than 20 health systems and treats more than 100,000 active patients. In a statement to Fierce Healthcare, the company said Cadence shares CMS’s goal of eliminating low-quality, disconnected and fraudulent remote patient monitoring programs.
"The proposed rule does not distinguish between low-quality RPM and clinically integrated programs like ours that are helping health systems manage chronic disease, reduce avoidable hospitalizations and emergency visits, and expand access to care," company executives said in the statement.
"A blanket direct-employment requirement would make it harder for even the country’s largest health systems to deliver RPM at scale. If they cannot do it, smaller and rural providers certainly cannot," Cadence executives noted.
Restricting access to clinically integrated RPM will result in more untreated chronic disease and ultimately higher downstream Medicare costs, Cadence said.
One Mayo Clinic study found that Cadence's model drove a 27% reduction in hospital admissions and a $1,302 per-patient annual reduction in total cost of care. A study published in the Journal of the American College of Cardiology found that Cadence's remote patient care hypertension program led to a 70% improvement in blood pressure control for hypertension patients.
CMS said it wants public comment on the proposal, specifically on how often third-party billing currently occurs and how this policy, if finalized, could impact access to remote monitoring services.
Prior to the 2027 PFS draft rule, many companies and industry groups recommended actions for CMS to take to eliminate low-value RPM utilization. In letters to CMS in 2024 and last year, Cadence advised CMS to require ACO participation to align incentives, require 24/7 clinical support to ensure rapid response and avoidance of unnecessary hospitalizations and require documentation regarding clinical integration, implementation of evidence-based protocols and ongoing clinical performance.
The Remote Monitoring Leadership Council urged CMS to take additional steps to support remote patient monitoring, including issuing more billing guidance and best practices, developing a long-term payment framework for RPM device codes, recognizing the added complexity of patients with multiple chronic conditions and promoting consistent RPM coverage across traditional Medicare and Medicare Advantage.
"There is a recognition among the community that there are some lower-quality RPM providers out there. The solution, though, isn't to eliminate the services. The solution is to add some additional guardrails that address the practices that CMS is concerned about," Adamec said.
The RPM policy changes are a sharp contrast to recent moves by regulators and Congress to expand access to tech-enabled care. CMS expanded RPM billing last year. The $50 billion Rural Health Transformation Program, enacted by Congress last year, supports health tech innovation, including scaling remote patient monitoring services. This week, the House Ways and Means Committee advanced a legislative healthcare package that included a bill, the Rural Patient Monitoring Access Act, that establishes a national floor for RPM reimbursement.
Under the Trump administration, CMS has made a big push into tech-enabled, outcomes-driven care models including the ACCESS and MAHA ELEVATE models as well as the Health Tech Ecosystem initiative.
The draft Physician Fee Schedule rule included other changes related to RPM programs, including that RTM services can only be furnished to established patients. CMS said the requirement would help ensure practitioners have an established relationship with patients and sufficient clinical knowledge to appropriately order and manage RTM services.
CMS also would require providers to see patients in a separately reportable initiating visit before billing for RPM or RTM services.