Medicare's 2027 Final Rule: What Changes for Therapists in January

The rule landed on a Wednesday

On Wednesday, November 4, 2026, CMS posted the final 2027 Medicare Physician Fee Schedule (opens in a new tab). By that evening the trade press had its headline. Fierce Healthcare (opens in a new tab) led with steeper pay cuts than CMS had proposed in July. Physician groups like MGMA were quick to criticize it.

If you're a therapist who bills Medicare, you probably caught a version of that headline too. And honestly, it's fair to feel a little worn out by now. Every fall brings a new rule, a new number and a new deadline to keep track of. Counselors and marriage and family therapists have only been able to bill Medicare directly since January 1, 2024, and it's already been a bumpy few years.

Thing is, most of what was written this week was written for doctors. Surgeons, dermatologists, primary care. Therapists sit in a different spot in this rule, and a couple of the changes that matter most to you barely made the news.

So here's the therapist version. What actually changes on January 1, what stays the same, and what's worth doing in the eight weeks between now and then.

First, the cut everyone's talking about

Medicare doesn't set a dollar price for each service directly. Every code gets a number of relative value units (RVUs), and those units get multiplied by one shared dollar amount called the conversion factor. When the conversion factor drops, every code drops with it.

For 2027, it drops. Here's what CMS finalized:

Source: CMS final rule fact sheet (opens in a new tab)

If you're in solo or small group practice, you're almost certainly in the first row.

Why is it going down? Mostly because a temporary boost is ending. Congress gave the fee schedule a one-year 2.5% increase for 2026 only, and CMS's own fact sheet says outright that it won't carry into 2027. The small built-in yearly updates (0.25% for most clinicians) don't come close to filling that gap.

It's also a deeper cut than the one on the table this summer. The July proposal had the conversion factor falling about 1.68% (opens in a new tab). The final number is 2.31%.

If the story ended here, it'd be a straightforward pay cut. For therapists, it doesn't end here.

The part most headlines skipped: your codes are getting their last raise

This goes back to 2023. In the 2024 fee schedule, CMS decided that psychotherapy and other timed behavioral health services had been undervalued for years. It raised the work RVUs on those codes. But instead of doing it all at once, it spread the increase over four years (opens in a new tab).

2024 was year one. 2027 is year four, the last one. The final rule confirms it, and it even folds two more services into this final step: smoking and tobacco cessation counseling, and SBIRT (screening, brief intervention and referral to treatment).

So two things are happening to your Medicare rates at the same time on January 1:

• The conversion factor goes down 2.31%. That hits every code.
• The RVUs on psychotherapy codes go up for the last time. That only hits behavioral health codes.

Which one wins? For most therapists, probably the raise. When CMS released the July proposal, its own estimates had clinical social work up 12% and clinical psychology up 11% (opens in a new tab) overall, while dermatology and ENT faced cuts of 9%. That's the reverse of what the headlines suggest.

One honest caveat. Those percentages came from the proposed rule, and the final cut turned out deeper than proposed. CMS publishes updated specialty estimates with the final rule, so the final numbers will likely be a bit lower. I'd treat them as a direction, not a promise. The direction still looks good for therapists.

And a second one. This was the final year of the transition. From 2028 on, there's no scheduled psychotherapy raise left to soften future conversion factor cuts. If Congress doesn't step in, next year's rule could feel very different.

Telehealth: the deadline that keeps moving, moved again

If you've seen Medicare clients over video since 2020, you know the in-person rule. It's the requirement that a client see you face to face before telehealth starts, and then at least once a year after that. And you know it has a habit of not arriving.

It was pushed back more than once already. Most recently, the Consolidated Appropriations Act, 2026 moved it from January 30, 2026 to January 1, 2028 (opens in a new tab). The final 2027 rule now writes that into Medicare's regulations: the in-person requirement doesn't apply to mental health services delivered by telehealth through December 31, 2027 (opens in a new tab).

So for all of 2027, nothing changes for your telehealth-only Medicare clients. Audio-only visits stay covered through the end of 2027 as well, per the same law (summary here (opens in a new tab)).

But here's what I'd keep in mind. Delayed isn't cancelled. As written, once the rule kicks in, a client needs an in-person mental health visit within the six months before their first telehealth session, and then at least one every 12 months (opens in a new tab) while they keep getting care by telehealth.

Could Congress push it again? Maybe. It has before. But planning your 2028 around another delay is a gamble, especially if you're fully remote or your Medicare clients live far from your office. That's a 2027 problem worth solving early, not in December 2027.

We wrote more about what this rule means for how you describe telehealth on your website in this earlier post.

Three smaller changes worth knowing about

None of these will change your week. But depending on how your practice is set up, one of them might matter.

Collaborative care pays a little more. If your practice works alongside primary care under the Psychiatric Collaborative Care Model (CoCM), CMS finalized higher work RVUs for those codes and updated the pay rates for the Behavioral Health Care Manager role (CMS (opens in a new tab)). That's the role many counselors and social workers fill in integrated care.

Group visits get their own codes. Medicare had no code that described a shared medical appointment until now. The final rule creates one, plus an add-on code for extra time. CMS framed it around chronic disease care and noted that group settings can help with social isolation and loneliness. It's aimed at medical visits for now, not group psychotherapy, which already has its own codes. Still, it's worth watching if your group practice runs groups alongside a medical partner.

Psychiatry practices: the complexity add-on becomes a modifier. If you have psychiatrists or psychiatric nurse practitioners billing E/M visits, the old G2211 add-on code becomes modifier B1. It now adds 16% to the base visit instead of a flat amount (CMS (opens in a new tab)). Your billing team will want to update their workflow before January.

And one thing that didn't change, which is good news in its own quiet way. Medicare coverage for clinical psychologists, clinical social workers, mental health counselors and marriage and family therapists stays as it is (opens in a new tab). No new hoops for who can bill.

What I'd do before January 1

You don't need to overhaul anything. But a few small things now will save you a confusing January.

In your practice

• Look up your actual 2027 rates. The conversion factor is only part of the math, since your locality and your specific codes matter too. CMS posts the 2027 rate files on its fee schedule page (opens in a new tab). Check your most-billed codes (for most therapists that's 90834, 90837 and 90791).
• Update the fee schedule in your EHR or billing software so claims for January 1 dates of service use the new rates.
• Check your commercial contracts. Some insurers set their rates as a percentage of Medicare. If yours does, this rule touches those payments too.
• Make a short list of Medicare clients you only see by telehealth. You don't need to do anything with it yet. But by late 2027 you'll want to know who would need an in-person visit if the rule kicks in on January 1, 2028.
• If you have psychiatric prescribers, tell your biller about the G2211-to-B1 switch now.

On your website

In my experience, this is where a lot of practices quietly lose Medicare clients. People in their 60s and 70s (and their adult kids helping them) often search for a therapist who takes Medicare, land on a site, and can't tell in ten seconds whether that's you.

• Say it clearly. "We accept Medicare" belongs on your fees or insurance page, and ideally in your homepage FAQ too. Name the license types on your team that can bill it.
• Date your telehealth promise. Something like "Medicare clients can continue seeing us by video through 2027" is honest and specific. Avoid wording that suggests telehealth will always be available with no in-person visit.
• Make in-person easy to find. If you'll need to offer yearly in-person sessions from 2028, your office address, parking and accessibility details should be easy to spot, and an in-person appointment type should be bookable online.
• Update your directory profiles. Make sure Medicare is ticked on Psychology Today and anywhere else you're listed. People can filter by insurance there, and you don't want to vanish from that list.

If you'd like a second pair of eyes on any of this, we're happy to look at your site with you. Our free strategy call is 30 minutes, no pitch unless you ask for one.

Getting ready for 2027?

Whether it's making Medicare clear on your site or getting your telehealth wording right before the rules shift, we can help. Book a free 30-minute call

This post explains a federal payment rule for general information. It isn't legal or billing advice, so confirm details for your own practice with your biller or Medicare Administrative Contractor.