Physical Therapy billing and revenue cycle, 50-state coverage.

The ladder runs 8 to 22 minutes for 1 unit, 23 to 37 for 2, 38 to 52 for 3, and 53 to 67 for 4, and it continues in 15-minute steps from there. The count that matters is total timed minutes for the discipline for the day, not minutes per CPT code. That distinction is where most units go missing: a visit with 18 minutes of 97110 and 20 minutes of 97112 is 38 total timed minutes and supports 3 units, but a system that rounds each code separately bills only 2. Untimed service-based codes such as an evaluation are billed as one unit regardless of time and never enter the arithmetic. The rule is set out in the CMS Medicare Claims Processing Manual, chapter 5.

For calendar year 2026 the threshold is $2,480 for physical therapy and speech-language pathology services combined, and a separate $2,480 for occupational therapy services. Once a patient's allowed charges pass the applicable line, later claims must carry the KX modifier, which attests that the care is still medically necessary and that the documentation supports it. The threshold is not a cap and it is not a denial. It is an attestation trigger, and a practice that tracks the running accrual per patient never gets surprised by it. The amounts are published by CMS in the annual therapy services threshold update.

The targeted medical review threshold is $3,000 and it sits above the KX line. It applies for 2018 through 2028, after which it is indexed to the Medicare Economic Index. Crossing it makes a claim eligible for review by the Supplemental Medical Review Contractor, but review is targeted rather than automatic: selection weights providers with high denial rates, unusual billing patterns, and other risk signals. In practice the defence is the same discipline that keeps the KX line clean, which is documentation that shows measurable progress toward the goals in the certified plan of care.

The plan of care must be certified by a physician or non-physician practitioner within 30 days of the first day of treatment, and recertified at least every 90 days while care continues. A verbal order has to be followed by a signature within 14 days to be timely. A practitioner may certify for any duration up to 90 calendar days. Visits delivered outside a certified plan are exposed, and because the denial usually arrives weeks later the practice has already spent the chair time. The requirement is in the CMS Medicare Benefit Policy Manual, chapter 15, section 220.1.3.

Direct access and Medicare payment are two different questions. As of July 1, 2025 all 50 states plus the District of Columbia allow provisional or unrestricted direct access to physical therapist services, so in most places a therapist may evaluate and begin treating without a referral under the practice act. Medicare still requires the plan of care to be certified by a physician or non-physician practitioner for the claim to pay. The practical answer is that direct access changes who the patient can walk in to see, and it does not remove the certification step that has to happen before the money arrives.

Effectively all of the high-volume ones. Unit miscounts, a missing KX modifier above the threshold, a lapsed certification or recertification, a missing discipline modifier, and an exhausted authorization or visit count are every one of them knowable before the claim goes out, because the information already sits in the treatment note, the certification calendar, the running threshold accrual and the authorization record. What is left after those controls is a small set of genuine medical necessity disputes, which is what an appeals function is actually for.

Medicare pays outpatient therapy at 80 percent of the allowed charge, with the remaining 20 percent as beneficiary copayment. When the CQ or CO modifier applies, payment is made at 85 percent of that 80 percent, so Medicare's own payment on the line falls by 15 percent. The copayment does not change, which is why CMS states the volume discount factor for CQ and CO lines as 0.20 + (0.80 * 0.85), which equals 88 percent. In plain terms the practice realizes 88 cents of every dollar of allowed charges on an assistant-flagged unit rather than 100 cents, so the exposure to model is 12 percent of allowed charges on the flagged units, not 15 percent of the visit. The arithmetic is set out in the CY 2026 Physician Fee Schedule final rule.

The CQ or CO modifier applies when the assistant furnishes more than 10 percent of a service or of a 15-minute unit of service. Since January 1, 2022 there is an exception worth real money: the therapist may bill the final 15-minute unit in a multi-unit scenario without the modifier when the therapist independently furnishes at least 8 minutes of that unit, which is more than the 7.5 minute midpoint, regardless of any assistant minutes left over in the same unit. CMS gives the worked example. The therapist provides 23 minutes and the assistant provides 20 minutes of the same service, the 43 total minutes support 3 units, one unit bills without the modifier, one bills with it, and the third bills without it because the therapist's remaining 8 minutes meet the billing threshold on their own. The revision is in the CY 2022 Physician Fee Schedule final rule.

Medicare applies a multiple procedure payment reduction to always therapy services billed on the same date of service for one beneficiary by the same practitioner or facility under the same national provider identifier. Full payment is made for the service or unit with the highest practice expense, and the practice expense component of the second and subsequent procedures, and of additional units of the same service, is reduced by 50 percent. The work and malpractice components are not reduced. It applies whether the services are one discipline or several, so physical therapy and occupational therapy delivered to the same patient on the same day under the same identifier aggregate, and it does not reach contractor-priced codes, bundled codes or add-on codes. Sequencing the codes on the claim does not change the result, because the reduction attaches to everything other than the highest practice expense line. The 50 percent figure has applied in office-based and institutional settings since April 1, 2013 under section 633 of the American Taxpayer Relief Act of 2012.

The Consolidated Appropriations Act, 2026, Public Law 119-75, extended the Medicare telehealth flexibilities that remove the geographic restrictions, expand the acceptable originating sites and expand the array of eligible practitioners, running through December 31, 2027. The CY 2027 Physician Fee Schedule proposed rule, published July 16, 2026 with comments closing September 14, 2026, carries proposed regulation text listing occupational therapists, physical therapists, speech-language pathologists and audiologists as distant site practitioners through December 31, 2027, and permitting two-way real-time audio-only technology for a telehealth service furnished to a patient in their home on or before that date. Two cautions apply. That rule is proposed and not final, and practitioner eligibility is a separate question from whether a particular code sits on the Medicare telehealth list, which is maintained through the annual fee schedule rulemaking and has to be checked code by code.

Timed codes are billed in 15-minute units and their minutes feed the 8-minute ladder: 97110 therapeutic exercise, 97112 neuromuscular re-education, 97116 gait training, 97140 manual therapy, 97530 therapeutic activities, 97535 self-care and home management training, 97542 wheelchair management and 97760 orthotic management and training. Untimed service-based codes are billed once for the date of service regardless of how long they took, and their minutes are excluded from the timed total: the evaluations 97161 low complexity, 97162 moderate complexity and 97163 high complexity, the re-evaluation 97164, and the modality codes 97010 hot and cold packs, 97012 mechanical traction and 97014 unattended electrical stimulation. Feeding untimed minutes into the ladder inflates the unit count on a correctly delivered visit, and rounding each timed code on its own instead of against the day's total loses units. Coverage of the modality codes is payer specific and several are bundled or not separately payable under particular fee schedules, so each has to be checked against the schedule that is paying.