CO MODIFIER · CY2026 THERAPY THRESHOLD

The OTA CO Modifier and the 2026 Therapy Threshold: What Actually Hits Your Remit

Here is the short version. When an occupational therapy assistant furnishes more than the de minimis share of a service, you append the CO modifier, and Medicare pays that line at 85 percent of the fee schedule amount. That is a flat 15 percent haircut on every affected unit. Separately, once a patient's OT allowed charges cross the annual KX modifier threshold, every further claim needs the KX attestation and documentation to back it up. Miss either one and the money either never posts or gets clawed back.

85%

Paid rate on OTA-furnished units under CO

10%

De minimis line: over it, CO applies

Required above the annual OT threshold

Run your own numbers

The real paid difference, line by line

Plug in the Medicare allowed amount you actually see for a service, how many of those visits a patient gets in a year, and where they sit against the threshold. The panel does the 15 percent math and flags the exact point the KX documentation burden starts.

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OTA / CO Payment & KX Threshold Model

Medicare allowed amount per visit

Use your MAC's PFS locality amount for the service. This is a placeholder, not a quoted rate.

OT visits this patient per year

Drives the annualized impact of the CO reduction.

OT allowed charges billed year to date

Cumulative incurred OT expenses that count toward the threshold.

CY2026 KX threshold (OT)

CMS indexes this each year in the Physician Fee Schedule final rule. The $2,410 default is the CY2025 published figure. Confirm the current CY2026 amount in your MAC's release before you rely on it.

Paid if OT furnishes

$90.00

Paid under CO (85%)

$76.50

Reduction per visit

$13.50

Annual impact / patient

$324.00

Progress to KX threshold $1,600 / $2,410

$810 of OT allowed charges remain before the KX modifier and medical necessity documentation are required on every subsequent claim.

When does CO actually apply

The de minimis 10 percent decision

The CO modifier is not "OTA touched the patient, so reduce it." It hinges on the de minimis standard CMS set: the modifier is required only when the assistant furnishes more than 10 percent of a given service. Below that line, the service bills clean at the full rate.

Who furnished the service

Measure the OTA's share of the therapeutic minutes for each timed or untimed unit.

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≤10

10 percent or less

De minimis. No CO modifier. The line pays at the full fee schedule amount.

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>10

More than 10 percent

Append CO. The line is paid at 85 percent. Document the split so the choice is defensible.

Side by side

Same service, three outcomes on the remit

Illustrative on a $90.00 allowed amount. Your locality figure changes the dollars, not the percentages.

Scenario	Modifier	Paid rate	On $90.00	What to watch
Occupational therapist furnishes the service	none	100%	$90.00	Full amount. Standard documentation.
OTA furnishes 10% or less (de minimis)	none	100%	$90.00	No reduction, but keep proof of the minute split on file.
OTA furnishes more than 10%	CO	85%	$76.50	Flat 15% reduction per affected unit. Add KX once past the threshold.

Cited by name

The 2026 guidance this rests on

CMS CY2026 Physician Fee Schedule Final Rule

Sets the conversion factor and updates the annual therapy (KX) threshold amounts for occupational therapy. Confirm the current-year OT threshold here before you code against it.

CMS · CY2026 PFS

The CO assistant payment reduction

Services furnished in whole or in part by an occupational therapy assistant are paid at 85 percent of the otherwise applicable amount, a policy in effect since January 1, 2022 under the Bipartisan Budget Act of 2018. CO is the OTA modifier; CQ is its PTA counterpart.

CMS · CO / CQ policy

The KX modifier and therapy threshold

Once a patient's incurred OT expenses exceed the annual threshold, the KX modifier attests that services above it are reasonable and necessary, with documentation in the record to support it. A separate targeted medical review threshold sits at $3,000.

CMS · KX & MR threshold

AOTA billing and supervision guidance

The American Occupational Therapy Association publishes practitioner guidance on applying the CO modifier, calculating the de minimis share, and meeting OTA supervision requirements. Pair it with the CMS rule when you build your internal policy.

AOTA · Coding & billing

The 15 percent adds up quietly. We make sure none of it slips.

Across a full OT caseload, the CO reduction and a missed KX flag are exactly the kind of small, repeatable leaks that never show up in a monthly summary until the recoupment letter does. ASP-RCM's occupational therapy billing team builds the minute-split documentation, threshold tracking, and modifier logic into the workflow, so every affected line is coded right the first time and every claim above the threshold carries its KX attestation. You keep what you earned.

Talk to our OT billing team →