Medicare Guidelines for Physical Therapy Coverage

Medicare guidelines for physical therapy coverage are imperative to understand. Learn the ins-and-outs of Medicare guidelines with Healthie.

As of 2019, over 62 million Americans were Medicare Beneficiaries. With the aging population and activity levels of older adults more and more Medicare patients are seeking physical therapy services. With CMS leading the insurance industry with documentation and billing standards it is important that physical therapists understand the ins-and-outs of Medicare physical therapy guidelines in order to receive reimbursement for their services. 

Below we highlight key points of the Medicare guidelines for physical therapy that all therapists should know in order to decrease billing errors and increase overall financial success of your clinic.  

Medicare and Outpatient Physical Therapy 

CMS does cover outpatient physical therapy services if “a physician or non-physician practitioner (NPP) clinically certifies the treatment plan/plan of care (POC).” CMS wants to ensure that what the services they are willing to cover are medically necessary to the patient. 

Plan of Care

The plan of care for a medicare physical therapy patient created by a physical therapist for a Medicare patient should include but is not limited to: 

-Diagnoses

-Long term goals

-Type of services provides

-The amount of treatment sessions in a day

-The amount of treatment session per week

-The total duration of physical therapy (in weeks or number of treatment sessions)

The plan of care must be created prior to the beginning of treatments. A progress note is required for medicare patients on their 10th visit or within 30 days whichever comes first. Recertification of the POC has to occur within 90 days of being created if there is a major change that will affect/change the long term goals of the patient. 

Physical Therapy Billing Guidelines

Billing for physical therapy is generally based on the guidelines and reimbursement rates set by third-party payers. However, physical therapy billing guidelines for medicare patients are  based around the 8-minute rule. Physical therapists must provide a minimum of 8 minutes of a time-based physical therapy service in order to be able to bill for it. 

Billing errors and mistakes can be costly and time consuming for physical therapy practices and it is important that you understand what the 8 minute rule is and how it relates to the physical therapy services that you provide. 

In order to bill one unit of time for a code, the provider must spend at least 8 minutes performing the service. To calculate the number of units to bill for timed codes, add up the total minutes spent and divide by 15. This will give you the number of units you can bill.

So how do we calculate how many units to bill for while complying with medicare physical therapy billing guidelines?

Below is an easy to use 8-Minute Rule table that separates time spent on a physical therapy service and the associated number of units that could be billed:

8-22 mins: 1 unit

23-37 mins: 2 units

38-52 mins: 3 units

53-67 mins: 4 units

So for example, if you spent 15 minutes on therapeutic exercise and 15 minutes on gait training that would be a total  of 30mins or 2 units (1 unit of therapeutic exercise and 1 unit of gait training).

Modifiers

When it comes to medicare and physical therapy, there are a variety of modifier codes that PTs can include on their insurance claim. Below we have listed the top modifiers we think all physical therapists should know in order to reduce documentation errors and increase reimbursement. 

GP Modifier is used for all “services provided under an outpatient physical therapy plan of care.” It is important that this code is utilized to ensure reimbursement. 

CQ Modifier is used for all “outpatient physical therapy services furnished in whole or in part by a physical therapy assistant.”

KX Modifier can be used when a patient has reached their physical therapy maximum for the year. As of 2021, the medicare guidelines for physical therapy state that the Medicare cap has increased to $2,110 for PT services. Once the cap has been reached the KX modifier is used. On any claims with Modifier KX, the PT must document medical necessity for the continuation of care. Medicare can then request a review for any visits after the cap; the payment will be denied if medical necessity cannot be proven. 

Modifier 59  As defined by CMS: “Under certain circumstances, the physician may need to indicate that a procedure or service was distinct or independent from other services performed on the same day.” Providers can use Modifier 59 to identify any procedures or services that are not usually performed together, but were appropriate under the given circumstances. Modifier 59 is to be only used when there is no other appropriate modifier available, as a “last resort.”

However, the National Correct Coding Initiative has identified certain services that PTs commonly perform together; these are known as “edit pairs.” If you bill CPT codes that are part of one of these pairs, you’ll receive payment for just one of those codes. You must determine if you’re providing linked services or wholly separate services before using Modifier 59. 

Modifier XE, XP, XS, and XU are modifier codes that can be used to bypass an edit pair, by claiming a distinct encounter, anatomical structure, or practitioner, or simply an unusual service. 

It is important to understand CMS’s policy toward modifiers and how they should be incorporated into the billing process with physical therapy billing guidelines for medicare in mind. For questions or concerns about CMS guidelines with PT modifiers it is important that physical therapists contact CMS directly. 

Merit-Based Incentive Program System:MIPS

For medicare coverage for physical therapy, CMS has defined MIPS as a system that allows providers to earn performance-based payment adjustments for the professional services they provide to their patients who are covered by Medicare Part B

Providers that are eligible for MIPS will submit their data and be measured across multiple categories. The four performance categories that are measured through MIPS are: quality, improvement activities, promoting interoperability and cost.  Participants are scored on a scale from 0-100, and payment adjustments (negative, neutral or positive) are based off of the score received.  

After CMS compares your performance across a broad span of performances, and you receive your score, adjustments to your payment are then made based on the quality of care you provide. Ultimately, the higher the quality of care you provide the greater the reimbursement. MIPS was established as part of the QPP to improve the quality of care and incentivize those who provide that quality care to their patients. 

To learn more about MIPS physical therapy billing, check out our blog here.

CMS and The Final Rule

The purpose of the Final Rule for the Price Transparency policy within the medicare guidelines for physical therapy, is to increase the transparency of healthcare spending and improve patients' knowledge on what and how much they pay for services provided to them from hospitals. The Final Rule for the Price Transparency went into effect on January 1st, 2021. 

The CMS Price Transparency Final Rule states that:

Each hospital operating in the United States will be required to provide clear, accessible pricing information online about the items and services they provide. 

With this medical price transparency policy, hospitals are now required to provide a comprehensive machine-readable file with all items and services. They must also have a consumer-friendly format of the shoppable services they provide.  

In order to comply with medicare guidelines for physical therapy, updates must be made to the hospitals list of items and services that they provide and the standard charges associated with each item and service must occur annually.

Items and services provided by a hospital inpatient or outpatient can be separated into different categories, one of them being shoppable services. A shoppable service is a service that can be scheduled in advance to the consumer receiving it.  Physical therapy is considered a shoppable service, due to  patients being able to make appointments to attend physical therapy prior to the day they require it. 

Physical therapy can also be considered an ancillary service. An ancillary item and service is defined by CMS as an item or service that a hospital customarily provides as part of or in conjunction with a shoppable primary service. For example, if a patient has a total knee arthroplasty surgery, physical therapy would be an ancillary service because they would automatically receive physical therapy post surgery.

Healthie for Physical Therapy

When creating insurance claims, it’s important to have client chart notes easily accessible so that you can bill the proper diagnostic and procedural codes; selecting an EHR that integrates with a billing tool is key to streamlining your billing and insurance workflows within your physical therapy practice. This integration can reduce any errors leading to claims denials, speed up your overall insurance billing process, and ensure that you get properly reimbursed for the services you provide. 


Healthie’s insurance billing features allow you to easily generate CMS-1500s within the platform, submit claims, and track claim status and reimbursement. With Healthie’s integrated EHR and billing features, you can:

  • Easily add modifiers to CMS-1500 forms
  • Save CPT and ICD-10 codes as favorites to streamline the claim generation process
  • Pre-fill information from charting notes and client information directly into insurance claims
  • Integrate with Office Ally for simple claims submission and tracking
  • Use Anatomical Charting to accurately track patient progress

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