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AI Therapy Laws 2026: What PMHNPs Can Still Use AI For
Seven states now restrict AI in mental health care, and Illinois's law names psychiatric APRNs but not physicians. Here's what PMHNPs can still use AI for.
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TL;DR
- CMS released the CY 2027 Physician Fee Schedule proposed rule on July 14, 2026. Comments close September 14, 2026.
- The proposed conversion factor falls to $33.17 for qualifying APM participants and $32.84 for everyone else, cuts of 1.19% and 1.68%.
- Most of that drop is one expiring statute, not a new policy decision: a one-year 2.50% increase that covered CY 2026 only.
- The in-person visit requirement for Medicare tele-mental health stays waived through December 31, 2027.
- CY 2027 is the final year of the four-year increase to timed psychotherapy work RVUs, which softens the cut for psychiatric practices.
- Any clinician can comment. Patient-access arguments carry weight that percentage complaints do not.
On this page
Two numbers now govern psychiatric Medicare payment in 2027: $33.17 and $32.84.
Those are the conversion factors CMS proposed on July 14, 2026, in the CY 2027 Physician Fee Schedule proposed rule. The conversion factor is the dollar multiplier applied to every service’s relative value units. The higher figure goes to clinicians who qualify as advanced alternative payment model participants. The lower one goes to everybody else, which describes most PMHNPs in solo and small-group practice.
Both are below 2026. That fact drove nearly all the coverage the rule received.
For psychiatric clinicians it is close to the least consequential thing in the document. Two provisions further in matter more. One decides whether a PMHNP can keep treating a patient who has never physically sat in the office. The other is the last installment of a raise to psychotherapy codes that started back in 2024. Both have hard dates attached, and the window to say anything about either one closes September 14.
The Pay Cut Is Smaller Than the Headline
The proposed qualifying-APM conversion factor of $33.17 is $0.40 below the current $33.57, a 1.19% decrease. The non-qualifying factor of $32.84 sits $0.56 under today’s $33.40, down 1.68%.
Neither number reflects a decision to pay psychiatry less. Public Law 119-21 handed the fee schedule a one-year 2.50% conversion factor increase that applied to CY 2026 and nothing after it. When that expires, current law produces a 2.50% reduction against 2026 on its own. CMS then added an estimated +0.53% to account for proposed work RVU changes, which is why the actual proposed cuts land under 2% instead of at 2.5%.
Run it against real revenue. A practice that collected $200,000 in Medicare allowables during 2026, billing the same codes at the same volume, would see roughly $3,360 less at the non-QP factor. A practice at $80,000 loses about $1,340. Real money, and nowhere near the crisis the percentage headlines implied.
The two-factor structure is itself new. Statute split the conversion factor in two beginning in CY 2026, and the 2027 proposal widens the gap between them to 33 cents. For a PMHNP weighing whether APM participation is worth the reporting burden, that gap is the number to watch over the next few years. The mechanics of how these rates translate into a paid claim are covered in Medicare and Medicaid Billing for PMHNPs: A 2026 Reimbursement Guide, and last year’s version of this same annual reckoning is in Medicare 2026: 4 PFS Changes Every PMHNP Must Know.
The Telehealth Waiver Psychiatry Runs On
Buried in the rule is the provision most likely to change how a psychiatric practice actually operates.
For CY 2027, CMS proposed conforming regulatory changes implementing Section 6209(c) of the Consolidated Appropriations Act, 2026, so that in-person visit requirements for mental health visits do not apply to any service furnished through December 31, 2027.
Understanding why that matters means knowing what sits underneath it. Section 1834(m) of the Social Security Act, as amended by the Consolidated Appropriations Act, 2021, requires an in-person, non-telehealth visit within six months before a patient’s first tele-mental health service, plus an in-person visit within 12 months of every service after that. For a telehealth-only practice, that requirement is not a billing inconvenience. It is a structural problem with no clean answer for a patient three hours from the nearest office.
The waiver holds through 2027. Then it is scheduled to end. Practices built entirely on virtual care have about 16 months of certainty and should be planning for both outcomes now, which is the kind of contingency that belongs in the business model discussion in Telehealth-Only PMHNP Private Practice: How to Launch and Scale a Virtual Psychiatric Practice in 2026.
The same law extended CMS authority to pay rural health clinics and federally qualified health centers for non-behavioral-health visits delivered through telecommunications technology, also through December 31, 2027.
The Last Year of the Psychotherapy Raise
Psychiatry has been quietly receiving a raise since 2024, and 2027 is when it finishes arriving.
The CY 2024 final rule increased the valuation of timed behavioral health services by applying an upward adjustment to the work RVUs for psychotherapy codes, phased across a four-year transition. CY 2027 is year four. For a PMHNP whose billing leans on add-on psychotherapy alongside medication management, that increase runs in the opposite direction from the conversion factor cut and partially cancels it.
CMS also proposed extending the same treatment to two more service categories in this final year: smoking and tobacco use cessation, and screening, brief intervention, and referral to treatment. Practices already delivering SBIRT without billing it have a reason to revisit that. Which codes carry which weight is the subject of Medical Billing for PMHNPs in Private Practice: CPT Codes, Modifiers, and Revenue Optimization.
Separately, the rule proposes two new HCPCS codes for advance care planning furnished by clinical staff under direct supervision of the billing practitioner, a change relevant to any psychiatric practice serving older adults or working alongside palliative teams.
What Most People Get Wrong
The common reading is that a 2.5% statutory cut means every specialty absorbs 2.5%. That is not how the formula works.
Payment equals RVUs times the conversion factor, adjusted geographically. The conversion factor is uniform across all of medicine. RVUs are not. A specialty whose core codes are being revalued upward can come out ahead of the headline number, and psychiatry is in exactly that position through 2027 because of the psychotherapy transition. Two clinicians can read the same rule and face genuinely different math depending on whether they bill mostly E/M, mostly psychotherapy add-ons, or a mix.
The second misread is one of priority. Payment changes are gradual and survivable. The telehealth provision is binary. A waived in-person requirement and an enforced one are different practices, not different margins, and the difference shows up as patients you can or cannot legally continue treating.
“The conversion factor is the number everyone reacts to, and it’s the one you have the least control over. The provision that decides whether you can keep seeing a patient who lives four hours from your office is the one worth reading twice.” — Lindsay Hill, DNP, PMHNP-BC
Third: this is a proposal, not law. CMS issued it for comment. The final rule typically lands in the fall, and provisions do shift between the two versions. Treating July’s numbers as settled is how practices end up budgeting against figures that changed in November.
How to Comment Before September 14
The rule was published in the Federal Register on July 16, 2026 as document 2026-14327. Comments close September 14, 2026, and they are submitted through Regulations.gov or directly from the Federal Register listing.
Anyone can file one. No organization, no attorney, no trade association membership required.
Most individual comments accomplish nothing because they argue about the percentage. CMS has heard that argument. What agencies respond to is a specific provision paired with a specific consequence:
- Name the provision and cite it. “Section 6209(c) conforming changes, in-person requirements for mental health visits” beats “the telehealth rules.”
- State your setting and your panel. Rural, urban, telehealth-only, community mental health, and how many Medicare patients you carry.
- Give one concrete access consequence with a number. How many current patients would lose care if the in-person requirement resumed, and how far they would have to drive.
- Propose something. An alternative, an exception, a phase-in beats objection alone.
Half a page written from a real panel does more than a signature on a form letter. Comments are public and permanent, so leave out anything that could identify a patient.
The Bottom Line
The 2027 proposal asks psychiatric practices to absorb a payment reduction under 2% while handing them the last year of a psychotherapy revaluation and 12 more months of telehealth flexibility. On balance, that is a milder year than the headline number suggested.
The date to mark is not January 1, 2027. It is December 31, 2027, when the tele-mental health in-person waiver is scheduled to lapse. Any practice whose patient relationships depend on that waiver has roughly 16 months to build a plan that survives without it.
One concrete step this week: pull your 2026 Medicare volume, multiply your total allowables by 1.68%, and write that dollar figure somewhere you will see it during budgeting. Then open the rule and read the telehealth section yourself. It runs a few paragraphs and it is the part that decides who you can still treat.
Building a practice that can absorb a policy year like this one?
The Psych NP Fellowship is a 12-month clinical mentorship for new and early-career psychiatric nurse practitioners, covering the clinical judgment and the business decisions that keep a practice steady when reimbursement moves.
Frequently Asked Questions
When does the 2027 Medicare Physician Fee Schedule take effect?
It applies to services furnished on or after January 1, 2027. CMS issued the proposed rule on July 14, 2026 and normally releases the final rule in the fall, so the numbers described here can still change before they are binding.
How much is Medicare cutting PMHNP payment in 2027?
CMS proposed a conversion factor of $32.84 for clinicians who are not qualifying APM participants, down 1.68% from $33.40, and $33.17 for those who are, down 1.19% from $33.57. What any individual practice loses depends on its code mix, because the conversion factor is only one half of the payment formula.
Will PMHNPs have to see Medicare telehealth patients in person in 2027?
No. CMS proposed conforming changes so that in-person visit requirements for mental health visits do not apply to services furnished through December 31, 2027. The underlying statute requires an in-person visit within six months before a patient’s first tele-mental health service and one within 12 months of each service after that, but that requirement stays switched off through 2027.
Why are there two Medicare conversion factors now?
Statute created them beginning in CY 2026. One applies to qualifying alternative payment model participants and one applies to everyone else, and the gap between the two widens in the 2027 proposal.
Does the psychotherapy work RVU increase still apply in 2027?
Yes. The CY 2024 final rule raised work RVUs for timed psychotherapy codes across a four-year transition, and CY 2027 is the last year of it. CMS also proposed folding smoking and tobacco cessation and SBIRT services into that final year.
Can an individual PMHNP submit a comment on the rule?
Yes. Public comments are open to anyone, not only trade associations, and they are submitted through Regulations.gov. Comments on this rule close September 14, 2026.
This content is for educational purposes and does not replace individualized clinical judgment or supervision.
About the author
Lindsay Hill, DNP, PMHNP-BC is the founder of the Psych NP Fellowship, a 12-month clinical mentorship program for new and early-career psychiatric nurse practitioners. She is a published contributor to Psychiatric Times, past President of the Arizona APNA Chapter, and co-founder of the Psych NP Network.
