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Medicare and Medicaid billing can be challenging for physical therapists due to the many rules and regulations they must follow. Even small mistakes, like using invalid codes, entering incorrect patient information, or failing to document medical necessity, can result in claim denials and revenue loss.
While billing is an essential part of running a physical therapy practice, it doesn’t have to be overwhelming. If a significant portion of your clients have Medicare insurance, it’s important to understand Medicare billing guidelines for physical therapy to maximize claim approval and timely reimbursement.
In this article, we’ll cover Medicare billing codes, Medicare Part B for outpatient physical therapy, documentation requirements, and more.
Medicare Part B is the primary component relevant to physical therapy practices. It covers outpatient services provided by healthcare professionals, home health care, preventive services like wellness visits and vaccinations, and medical equipment such as hospital beds and wheelchairs.
For outpatient physical therapists, the majority of Medicare reimbursements are processed through Part B.
Credentialing with Medicare significantly impacts the billing process for physical therapists, how? Let’s take a look.
To treat patients who are Medicare beneficiaries, you need to be certified or credentialed through CMS (Centers for Medicare & Medicaid Services) as a licensed OT, PT, or SLP rehab provider. Without proper credentialing, claims cannot be submitted, leading to lost revenue opportunities. The following are the requirements:
Step 1: Meet Credentialing Requirements
Hold a valid state license for your profession.
Maintain malpractice insurance.
Secure a National Provider Identifier (NPI) through the National Plan & Provider Enumeration System (NPPES) if you don’t already have one.
Step 2: Complete the Medicare Enrollment Application
Fill out and submit the online Medicare Enrollment Application.
Work with a Medicare Administrative Contractor (MAC) assigned to you, who may request additional information.
Step 3: Coordinate with CMS & keep them updated
A CMS coordinator, knowledgeable about state-specific regulations, will guide you through the remaining steps. Notify CMS at least 30 days in advance if your practice relocates, ownership changes, or if you encounter legal sanctions.
Medicare assigns a specific code to every therapy and medical treatment that a patient receives from a healthcare provider. This coding system establishes a standardized billing framework across the U.S. healthcare system, which is mandated by federal HIPAA regulations.
To bill Medicare for your services, it's essential to accurately diagnose your patient’s conditions to prove the medical necessity of the treatments provided. This is done by using the most recent version of the ICD-10 codes. Here are some of the Common Physical Therapy ICD-10 Diagnosis Codes for reimbursement.
AMA’s five-digit CPT codes represent treatments and therapies by a licensed healthcare provider. Correctly applying CPT-4 codes allows you to accurately bill for the services and ensure all aspects of patient care are captured and reimbursed.
97161: PT evaluation – low complexity
97162: PT evaluation – moderate complexity
97163: PT evaluation – high complexity
97164: PT reevaluations
97010–97028: Untimed modalities (supervised)
97032–97039: One-on-one modalities (constant attendance billed in 15-minute increments)
97110–97546: One-on-one procedures (therapeutic)
97597–97606: Wound care management
97750–97755: Tests and measurements
97760–97762: Orthotic and prosthetic management
Suggested Read: Physical Therapy CPT Codes Reference Sheet
"One-on-one" billing applies when a therapist provides individual, direct treatment to a single patient. In contrast, "Group Therapy" billing is used when a therapist treats multiple patients simultaneously with similar activities, sharing their attention. Each patient is billed for their therapy time but at a lower rate than one-on-one sessions.
Adherence to rules is important for accurate and time-based billing. Therapy Caps set annual service limits, and an ABN (Advance Beneficiary Notice of Noncoverage) ensures clients are informed about non-covered services. Here's a look at the details
The 8-Minute Rule is a crucial guideline for billing Medicare, particularly for physical therapists and other rehabilitation providers. This rule dictates that healthcare providers must deliver a minimum of 8 minutes of direct, face-to-face patient care to bill for one unit of a time-based service.
CMS provides a chart illustrating how many minutes correspond to each billable unit:
Example: If you provide at least 8 minutes of service, you can bill for one unit. Services lasting between 8 and 22 minutes count as 1 billable unit, while additional time is billed in 15-minute increments thereafter. For example, a session lasting 25 minutes would allow billing for 2 units.
Also Read: Guide to the Medicare's 8-Minute Rule
Under Medicare Part B (for outpatient therapy), patients are responsible for a 20% copayment based on the Medicare-approved amount. This is the fee you agree to accept for your services. Avoid waiving copays or deductibles, but you can provide financial assistance if needed.
Therapy caps are financial limits placed on the amount Medicare will cover for outpatient therapy services within a calendar year. This cap does not reset for each diagnosis, making it important for therapists to monitor their clients' therapy usage throughout the year. If a client requires medically necessary care that exceeds this cap, therapists can apply for an exemption to continue providing necessary services.
When providing services to Medicare clients that may not be covered or are deemed not medically necessary, such as those exceeding the therapy cap, it's important to have your clients sign an Advance Beneficiary Notice of Noncoverage (ABN).
“This ABN signed declaration form serves as a formal acknowledgement that the client understands they will be financially responsible if Medicare denies coverage for those services.”
Monitoring Medicare aspects like co-payments, therapy caps, and signed ABNs is crucial, but it’s only part of the equation. To truly streamline your practice, you need a reliable partner like Spry PT, offering intuitive practice management software that takes the stress out of billing and keeps your operations running smoothly.
Let us now take a look at the modifiers that are important to ensure correct billing practices and avoid claim denials by clearly identifying who provided the therapy services and if they exceeded Medicare limitations.
Below are some of the most common modifiers you’ll encounter as a physical therapist:
The KX modifier is a billing code used in Medicare Part B when therapy services exceed the established annual therapy thresholds. It indicates to Medicare that additional care is medically necessary for the patient.
When a patient’s PT/SLP or OT services go beyond these thresholds, you must include the KX modifier with the relevant CPT codes to confirm that continued services meet Medicare’s coverage criteria.
Read this to know when to use the KX modifier: The Medicare Therapy Threshold and KX Modifier.
The CQ Modifier is a key billing code required when Physical Therapist Assistants (PTAs) deliver care to patients. Introduced by the CMS, this modifier ensures accurate reimbursement by indicating that a PTA was involved in providing the service.
Additionally, when a therapy session extends to 45 minutes, the CQ Modifier is used to specify that the service was delivered over this timeframe—a key detail for accurate billing. Using the CQ Modifier correctly helps PTAs and clinics comply with Medicare rules and secure proper payment.
The CO Modifier is required when an Occupational Therapy Assistant (OTA) independently performs over 10% of service for payers that apply the OTA payment differential policy, such as Medicare Part B.
Here are common situations where the CO Modifier is needed:
When the OTA delivers the entire service or a full unit of service.
When the OTA completes more than 10% of a timed service independently, which equates to over 1.5 minutes of a 15-minute unit.
When the OTA handles more than 10% of an untimed service independently, requiring precise documentation of time spent.
Here are a few more billing modifiers that a physical therapist needs to know: Billing Modifiers 101: A Guide for Physical Therapists
To ensure a successful billing process, you have to pay close attention to every detail, as Medicare enforces strict reimbursement guidelines. Missing important details or failing to follow these requirements can lead to claim denials due to unmet payment criteria.
Necessity of Accurate Documentation for Billing Support: Proper documentation serves as the foundation for billing claims, ensuring that all services provided are clearly recorded. This includes detailing the reason for each visit, the specific services rendered, and any medical decision-making involved.
Legal Protection and Audit Readiness Through Documented Notes: Comprehensive documentation not only supports billing but also provides legal protection in case of audits. All medical records must be complete and legible, containing details such as the patient's history, findings, test results, and a clear plan of care. This level of detail helps verify that services were "reasonable and necessary," which is a requirement for reimbursement.
Justifying Medical Necessity and Billed Services: To receive payment from Medicare, providers must justify the medical necessity of the services billed. This involves using appropriate ICD-10 codes to explain the diagnosis and correlating them with CPT codes that describe the services performed.
NCCI Code Edits: Ensuring Compliance with Billing Rules
Medicare uses the National Correct Coding Initiative (NCCI) to prevent improper billing. This includes:
NCCI updates these edits annually, so staying informed is essential to avoid claim issues.
Source: ContempoCoding
MPPR: Reduced Reimbursement for Multiple Services
The Multiple Procedure Payment Reduction (MPPR) rule lowers reimbursement for additional therapy services provided on the same day.
After the first billed service, the reimbursement for practice expenses drops by 50% for each additional service, even if different therapy disciplines are involved.
Understanding MPPR can help clinics implement strategies to reduce their financial impact and maintain revenue flow.
As of January 1, 2025, significant changes are set to impact telehealth services under Medicare Part B, reflecting both the lessons learned during the COVID-19 pandemic and ongoing efforts to enhance healthcare accessibility.
Here are the key developments and outlook for telehealth services:
Return to Pre-Pandemic Limitations: Telehealth services will again be limited to specific settings, primarily affecting where patients can receive these services.
Expanded Telehealth Services: The Centers for Medicare & Medicaid Services (CMS) has finalized the addition of several new services to the Medicare Telehealth Services List for 2025. This includes caregiver training and PrEP counseling available through telehealth.
Audio-Only Communication: CMS will allow two-way, real-time audio-only communication technology to qualify as a telehealth service when video technology is not feasible or consented to by the patient. This flexibility will benefit patients lacking access to video-capable devices.
Telesupervision: Telesupervision will continue to be permitted for physical therapy, occupational therapy, and speech-language pathology services through 2025, facilitating remote oversight of therapy practices.
Billing Modifications: Providers must report specific modifiers on claims when using audio-only services to ensure proper billing and reimbursement. This includes a requirement to document the use of audio-only technology when applicable.
Impact on Mental Health Services: The in-person visit requirement for mental health services via telehealth will remain waived through March 31, 2025, allowing patients continued access to necessary care without the burden of prior in-person consultations.
Legislative Support: Recent legislative actions have extended many telehealth flexibilities until March 31, 2025, including waiving geographic restrictions and allowing home as an originating site for all telehealth services.
Medicare Part B billing requires careful attention to key guidelines, from understanding Medicare billing codes to modifiers like KX and CQ and adhering to policies like NCCI edits and MPPR. Staying updated on these regulations is essential to ensure compliance, avoid claim denials, and maintain a steady revenue stream.
That’s where Spry PT makes a difference. With its intuitive, all-in-one platform, you can streamline billing, stay compliant with Medicare requirements, and focus more on providing exceptional care.
Medicare may be complicated, but your clinic’s systems don’t have to be. Take the first step toward smarter practice management with Spry PT by booking a free demo—because your time and energy belong to your patients, not paperwork.
1 When and how should I use modifiers?
Modifiers should be used whenever additional information is needed to clarify the type of service provided, the diagnosis treated, or the provider involved. They are attached to CPT codes to ensure accurate billing and reimbursement.
2 What is billable time?
This refers to the actual time spent providing direct treatment to a client. You cannot bill for unskilled tasks like preparation time, time spent by multiple therapists on the same timed units, breaks, supervision, or documentation. Additionally, rounding up treatment time is not allowed.
3 Can you bill for co-treatments?
No, under Medicare Part B, if two therapists treat a patient simultaneously, whether providing the same or different services - neither therapist can bill separately for the entire session. Billing must reflect only the time each therapist individually provided skilled care.
4 When can you bill for a re-evaluation?
You can bill for a reevaluation under the following scenario:
5 What Are CCI Edits?
CCI Edits are an important tool for anyone billing physical therapy treatment codes. They consist of a list of CPT codes commonly used in physical therapy that specifies which codes cannot be billed together on the same date of service unless a modifier is applied.
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