Occupational Therapy Billing Services / 2026

The COTA Modifier Cut: OT Assistant Billing and Threshold Tracking in 2026

Two rules quietly reshape every OT claim: the CO assistant modifier's payment reduction, and the KX therapy threshold. Here is exactly where each one bites, across one patient's episode.

Short answer. When an occupational therapy assistant (OTA, the COTA) furnishes more than 10% of a therapeutic service, you append the CO modifier and Medicare pays that service at 85% of the fee schedule amount, a 15% cut. Separately, once a patient's cumulative allowed OT charges pass the annual KX threshold, every further line needs the KX modifier to attest medical necessity. Both clocks run at the same time on the same episode, and missing either one turns clean therapy work into denials and takebacks.

85%

of the MPFS amount paid on OTA-furnished services

CO modifier

10%

de minimis: more than 10% by the OTA triggers CO

CY2022 standard

$2,410

CY2025 KX threshold for OT (CY2026 set by the PFS final rule)

KX threshold

$3,000

targeted medical-review threshold, fixed through CY2027

Targeted MR

The episode

One OT episode, two clocks running

Follow an archetype patient, an adult recovering from a distal radius fracture in outpatient hand therapy. Nothing about the care is unusual. What changes is the money, at two specific points on the calendar.

Day 1 / Evaluation

Therapist evaluates and opens the plan of care

The occupational therapist performs the initial evaluation (CPT 97165 to 97167) and establishes a written plan of care with goals and frequency. Evaluations are furnished by the therapist, so no CO modifier applies here.

97165 to 97167 Full MPFS rate

Within 30 days / Certification

Plan of care certified by the physician or NPP

The plan must be certified by a physician or non-physician practitioner within 30 days of the initial treatment. Recent PFS rules eased how that certification can be documented, but the 30-day window and the requirement itself remain. No signed order is required to start covered treatment when the record supports it.

Benefit Policy Manual Ch.15 sec 220.1.3

Weeks 2 to 6 / Treatment ramps up

The COTA delivers care, and the CO modifier arrives

The OTA runs therapeutic exercise (97110) and manual therapy (97140) under supervision. On any timed service where the OTA personally furnishes more than 10% of the minutes, the line carries the CO modifier and pays at 85%. Split a unit between therapist and assistant and the 10% math decides whether CO applies.

97110 / 97140 CO = 85% pay Track minutes per provider

Running total / Every claim

Cumulative allowed OT charges climb toward the threshold

Medicare counts allowed charges for OT against a single annual threshold, separate from the combined PT and SLP pool. Nobody warns you at the crossing point. You have to watch it.

OT allowed, year to dateapproaching KX line

$0KX at $2,410 (CY2025)

The crossing / KX bites

Cumulative charges pass the KX threshold

Once year-to-date allowed OT charges exceed the threshold ($2,410 in CY2025, updated for CY2026 in the PFS final rule), every further covered line needs the KX modifier to attest the services are medically necessary and supported in the record. Forget it and the claim rejects.

Append KX to every OT line Documentation must back it

Day 90 / Recertification

Plan of care recertified

The plan of care is reviewed and recertified at least every 90 days by the physician or NPP. A lapsed recert is one of the quietest denial causes in outpatient OT, because the visits keep happening while the paperwork does not.

90-day recert cycle

If care continues / $3,000

Approaching the targeted medical-review threshold

A second, higher line sits at $3,000 in cumulative allowed OT charges, held there through CY2027 by statute. Crossing it does not stop payment, but it flags the patient for possible targeted medical review. Your documentation is now the whole ballgame.

Targeted MR at $3,000

Discharge

Close the episode clean

Final progress note, goals met or reason for discharge, and a claim history where every OTA-furnished line carried CO and every post-threshold line carried KX. That is the difference between a paid episode and a six-month appeal.

Clean claim history

The cut, in numbers

What the CO modifier actually does to a line

Same CPT code, same 15 minutes. The only variable is who furnished more than 10% of it. Figures below are illustrative to show the mechanism, not a fee-schedule quote.

Therapist-furnished

100%

Paid at the full Medicare Physician Fee Schedule amount for the code. No assistant modifier.

OTA-furnished (CO)

85%

The 15% reduction directed by Section 53107 of the Bipartisan Budget Act of 2018, in effect since Jan 1, 2022. The cut applies to the fee-schedule amount for that service.

Two lines, not one

KX threshold vs targeted medical review

These get confused constantly. They are different numbers doing different jobs.

KX modifier threshold

$2,410

CY2025 amount for OT, indexed annually and updated for CY2026 in the CMS PFS final rule. Cross it and you keep billing, but every OT line needs KX. It is an attestation, not a hard cap.

Targeted medical-review threshold

$3,000

Held at $3,000 through CY2027 by statute. Above it, a portion of claims may be selected for review. Payment is not automatic, and your notes carry the medical-necessity case.

Guidelines referenced (by name):

CMS Medicare Physician Fee Schedule (PFS) CY2026 final rule, therapy provisions and annual threshold update.
KX modifier therapy threshold and $3,000 targeted medical-review threshold (Social Security Act sec 1833(g); MLN Matters guidance).
CO assistant modifier and the more-than-10% de minisis standard (Bipartisan Budget Act of 2018, Section 53107; CY2020 and CY2022 PFS final rules).
Therapy plan-of-care certification and recertification rules, Medicare Benefit Policy Manual Chapter 15, section 220.

Do not lose these

The plan-of-care rules that quietly sink OT claims

30d

Certify within 30 days

Physician or NPP certifies the initial plan of care within 30 days of the first treatment.

90d

Recertify every 90 days

The plan is reviewed and recertified at least every 90 days for continued care.

Supervision on record

OTA services follow the applicable supervision level for the setting. Document who furnished each portion so CO is defensible.

Stop losing 15% you never had to lose

ASP-RCM builds the minute-tracking, CO logic, and KX threshold monitoring into your occupational therapy billing services, so the cut is intentional and the threshold never surprises you. We test on complete claims, not line extracts, and we watch both clocks per patient.

Talk to an OT billing specialist → or request a claims review