Occupational Therapy Billing · CY2026 MPFS

When your OTA touches the visit, the payment math changes. Here is the checklist.

Occupational therapy assistants are a smart, compliant way to extend a clinic. The catch is one modifier: CO. Miss it and you invite a takeback; apply it blindly and you leave clean dollars on the table. This page is the decision path, not a lecture.

CO The short answer: append modifier CO to any outpatient OT service furnished in whole or in part by an occupational therapy assistant, once the OTA performs more than 10% of that service. Medicare then pays that line at 85% of the fee schedule amount , a 15% payment differential written into Section 1834(v) of the Social Security Act.

Payment rate

85%

of the fee schedule amount on CO-flagged OT lines. The 15% differential has been live since Jan 1, 2022.

De minimis

10%

The standard: CO is required only when the OTA furnishes more than 10% of the minutes of a given service.

The differential

15%

Reduction applied to the OTA-furnished portion, per the Bipartisan Budget Act of 2018.

OT modifier

CO

Not CQ. CQ is the PTA modifier; CO is occupational therapy. Do not cross them.

The 5-gate CO checklist

Run every OT line through these five gates before it drops to a claim. Only when you reach a gold flag does CO belong on the line.

Is the service an "always therapy" OT code?

Therapeutic activities, self-care/ADL training, therapeutic exercise, manual therapy, and the OT evaluation family are furnished under a therapy plan of care. Codes that are only sometimes therapy still need a therapy modifier (GO) but follow the same assistant logic.

GATE → continue

Did an occupational therapy assistant furnish any part of it?

Fully licensed OT delivered the whole service? No CO. The differential only reaches minutes an OTA personally furnished.

If OT-only → STOP, no CO

Did the OTA furnish more than 10% of the service?

Apply the de minimis standard per service, per unit , not per visit. For timed codes, compare the OTA's minutes against total minutes. 10% or less: no CO. Over 10%: CO is required.

>10% → APPEND CO

Is documentation tying minutes to the person clear?

The chart has to show who furnished what. A note that only says "therapy provided" cannot survive a differential audit. Record OTA minutes distinctly so the 10% test is defensible.

Evidence gate

Have you re-priced the line to 85% expected?

Your expected-payment logic and A/R model must reflect the 15% haircut on CO lines. If your posting still expects 100%, every CO claim looks like a short-pay and clogs the follow-up queue.

RE-PRICE → 85%

How CO reshapes the expected payment

Same CPT, same units , the modifier alone moves the number. Illustrative math on a single CO-flagged unit:

MPFS allowed

100%

CO differential

0.85

Expected pay

85%

Then the beneficiary's 20% coinsurance and any unmet deductible apply to the reduced amount , so patient responsibility drops in lockstep. The CY2026 MPFS conversion factor set in the final rule fixes the dollar figure; the 85% ratio holds regardless of the year's rate.

CO never travels alone: the three-layer stack

On a real OT claim, three CMS mechanics can compound. Model them in this order so your expected pay matches the remit.

LAYER 1 · MPPR

−50%

Multiple Procedure Payment Reduction

When multiple "always therapy" services hit the same day, CMS cuts the practice-expense component of the second and later units by 50%. This bites the PE portion first, before the assistant differential.

LAYER 2 · CO

×85%

Assistant payment differential

The CO reduction applies to the OTA-furnished lines after MPPR has adjusted the PE component. Order matters: modeling CO on the full amount overstates the haircut.

LAYER 3 · KX

Therapy threshold gate

Once annual OT spend crosses the KX threshold set in the CY2026 MPFS final rule (CY2025 reference: $2,410 for OT), append KX to keep claims payable , and be ready for targeted medical review above the higher review threshold.

Don't confuse the two assistant modifiers

The single most common denial we see on this policy is the wrong assistant modifier on the wrong discipline. Keep them straight:

Modifier	Discipline	Trigger	Payment effect
CO	Occupational therapy assistant (OTA)	OTA furnishes >10% of the OT service	Line paid at 85% of MPFS allowed
CQ	Physical therapist assistant (PTA)	PTA furnishes >10% of the PT service	Line paid at 85% of MPFS allowed
GO	Occupational therapy plan of care	Every outpatient OT line, always	No payment change; identifies the benefit
KX	Therapy threshold attestation	Annual OT spend over the KX threshold	Keeps otherwise-capped claims payable

The 2026 guidance this is built on

Real, citable sources , check the current-year figures against the final rule before you configure a fee schedule.

§1834(v)

Social Security Act, Section 1834(v)

Added by the Bipartisan Budget Act of 2018; establishes the 15% payment differential for services furnished in whole or part by therapy assistants, effective for dates of service on or after Jan 1, 2022.

MPFS

CY2026 Medicare Physician Fee Schedule Final Rule

Sets the current conversion factor, the KX modifier threshold, and the targeted medical review threshold for outpatient therapy. The controlling annual source for the dollar figures.

CY2020

CY2020 MPFS Final Rule , de minimis standard

Defines the 10% threshold and the CO / CQ modifiers, applied per service rather than per visit.

Ch. 5

Medicare Claims Processing Manual, Chapter 5

Outpatient rehabilitation / CORF services: therapy modifiers, the KX threshold process, and MPPR application to the practice-expense component of additional units.

MLN

CMS MLN Matters , Therapy Assistant Modifiers

Operational guidance on identifying assistant-furnished minutes and documenting the 10% calculation for audit defensibility.

AOTA

AOTA payment & coding resources

The American Occupational Therapy Association tracks the differential, threshold updates, and OTA supervision rules by year and by state.

The rule is simple. Applying it 4,000 lines a month is where money leaks.

ASP-RCM Solutions builds the CO / CQ / KX logic straight into occupational therapy billing , expected pay set to 85% on the right lines, MPPR sequenced correctly, and the OTA-minutes documentation flagged before a claim ever drops. No takebacks, no phantom short-pays in your follow-up queue.

Pressure-test your OT differential logic →

Occupational Therapy Billing Services · ASP-RCM Solutions

This page is educational and reflects federal policy as published in the CY2026 Medicare Physician Fee Schedule and related CMS guidance. Threshold dollar figures and the conversion factor update annually , confirm the current-year values in the final rule before configuring payer logic. Commercial and Medicaid payers may apply their own assistant-modifier and therapy-threshold policies. Examples are illustrative and do not reference any specific client.