2027 Medicare Fee Schedule for PT, OT & SLP

Every summer, CMS proposes next year's Medicare Physician Fee Schedule (PFS), and every autumn it finalises it. For outpatient physical therapy, occupational therapy and speech-language pathology practices, this rule sets a large share of next year's revenue.

The proposed rule for calendar year 2027 was released in July 2026, with comments due 14 September 2026 (OT Index). The final rule is still to come, so treat everything below as proposed until then.

1. The conversion factor goes down again

The conversion factor turns relative value units into dollars. CMS proposed:

$33.17 for qualifying alternative payment model participants, down 1.19% from 2026
$32.84 for other practitioners, down 1.68%

(OT Index; AHCA/NCAL)

Your actual payment per code also depends on its RVUs and your geographic adjustment, so the net effect will vary by code and location. Model it against your own top billed codes rather than assuming a flat cut.

2. The therapy threshold (KX modifier) rises

CMS proposed raising the annual therapy threshold to:

$2,540 for PT and SLP combined
$2,540 for OT (up from $2,480 in 2026)

The targeted medical review threshold stays at $3,000 through 2027 (AHCA/NCAL; OT Index).

What to do: Make sure your team knows when a patient is approaching the threshold, that documentation supports medical necessity beyond it, and that the KX modifier is applied correctly.

3. Telehealth flexibilities are extended

Most Medicare telehealth flexibilities would continue through 31 December 2027, with geographic and originating-site restrictions still waived through 2027. OT remains an eligible distant-site practitioner through the same date (AHCA/NCAL; OT Index).

That gives clinics another year of certainty for hybrid care, but not a permanent answer. Keep telehealth workflows in place, and avoid building your whole model on rules that are extended one year at a time.

4. Remote therapeutic monitoring tightens

CMS proposed limiting remote therapeutic monitoring (RTM) to established patients, with monitoring started during a separately reportable face-to-face visit. Clinical staff time would need to come from direct employees, not contracted third parties (OT Index).

If you rely on an outsourced RTM vendor, review that arrangement now.

5. New speech-language pathology codes

Several SLP codes would be designated "always therapy" services, and CMS proposed a new pediatric SLP code, GSLPP (AHCA/NCAL). SLP practices should watch the final rule for code values and billing guidance.

A practical checklist before January

Run the numbers. Model 2027 revenue on your 10 most-billed codes once final rates are out.
Protect your schedule. With lower rates per visit, every missed or unfilled slot costs more. Tighten no-show follow-up and waitlist processes.
Review RTM contracts against the proposed staffing rule.
Update threshold tracking in your billing workflow.
Keep telehealth ready for 2027, while planning for change in 2028.
Check the final rule when published, as figures can change from the proposal.

This article summarises the proposed rule for general information and is not billing, legal or financial advice. Confirm details against the final rule and with your billing adviser.