Medicare Physical Therapy Coverage in 2026: A Billing Guide for Practitioners

Medicare physical therapy coverage is the reimbursement Medicare provides for medically necessary physical therapy delivered by, or under the supervision of, a qualified therapist. It comes from two parts of the program: Part A for inpatient rehabilitation, and Part B for outpatient therapy. Most private practice physical therapy is billed under Part B, which covers outpatient care when the services are medically necessary and require a therapist’s skill.

For 2026, the KX modifier threshold for physical therapy and speech language pathology combined is $2,480. The Part B annual deductible is $283, after which Medicare pays 80% of the approved amount and the patient pays 20%. 

This guide covers the difference between Part A and Part B coverage, the 2026 threshold rules, how to use the KX and GA modifiers correctly, documentation standards, and the telehealth rules now extended through December 31, 2027. If you would rather hand the threshold tracking and modifier work to a specialist team, our physical therapy billing services manage the full outpatient PT revenue cycle 

Part A vs. Part B — Where PT Coverage Comes From

Inpatient Rehabilitation Under Part A (IRF)

Medicare Part A reimburses patients for physical therapy when the patient is admitted to an inpatient rehabilitation facility (IRF). IRFs are also referred to as inpatient rehabilitation hospitals or acute care rehabilitation centers. The patient typically requires a significant level of care to qualify for inpatient rehabilitation. Coordinated care among various disciplines (e.g., PT, OT, SLP), physician supervision, and participation in a structured rehab program are examples of such care.

Not every patient who requires physical therapy will be eligible for inpatient rehabilitation. The physician must certify that the patient suffers from a medical condition that necessitates intensive rehabilitation, ongoing medical oversight, and coordination of care. A patient who merely needs physical therapy 2 or 3 times weekly does not meet the criteria for inpatient rehabilitation.

Outpatient Physical Therapy Under Part B (TOB 34X)

Private Practice PTs generally bill under Part B. This provides coverage for outpatient physical therapy services rendered in private practices, physician offices, SNFs (when billing Part B services), outpatient departments of hospitals, rehabilitation agencies, and home healthcare agencies under Type of Bill Code 34X. Part B follows a standardized 80/20 ratio. The patient pays his/her annual deductible in 2026 ($283). Following payment of the deductible, Medicare pays 80% of the approved amount for services that Medicare deems payable. The patient pays the remaining 20% as copayment. Since there is no out-of-pocket limit for Original Medicare, many patients purchase Medigap policies. Such policies may pay part or all of that remaining 20%.

The 2026 Threshold for Physical Therapy and Speech Language Pathology

From Hard Cap to Soft Threshold (BBA 2018)

Prior to 2018, Medicare had a fixed cap on outpatient therapy services. Once a patient reached that cap, Medicare ceased paying for any additional therapy services. That was it. Either the therapist discharged the patient or the patient paid the entire bill himself/herself.

The Bipartisan Budget Act of 2018 eliminated this “hard cap.” Instead, Medicare established a “soft threshold.” Therefore, once a patient reaches the threshold, Medicare continues to reimburse for subsequent therapy services without interruption. The therapist must document that continuing therapy services are medically necessary by attaching the KX modifier to claims submitted for services exceeding the threshold.

2026 Threshold Figures ($2,480 / $3,000)

There are several key numbers that you will need to commit to memory for 2026. Specifically, the combined threshold for both PT and SLP services is set at $2,480. As noted above, OT also has its own threshold and will not share the $2,480 threshold with PT and/or SLP. Although OT shares the same threshold figure as PT and SLP ($2,480), it is considered a separate threshold for purposes of calculating utilization rates.

Regardless of whether a patient receives PT following knee surgery and then returns six months later for PT following shoulder surgery, all of the outpatient therapy services received during that calendar year will contribute to a cumulative total and will apply to the same threshold figure ($2,480) for the purpose of determining utilization rates.

Required Therapy Modifiers for PT Claims

Medicare physical therapy claims depend on a small set of modifiers that must line up correctly on every claim line. The GP modifier identifies the discipline, the KX modifier unlocks payment above the annual threshold, the CQ modifier flags assistant-furnished services, and the GA modifier signals an Advance Beneficiary Notice is on file. Combined with the 8-minute rule for timed codes, these are the mechanics that determine whether a therapy claim pays in full, pays reduced, or denies.

The GP Discipline Modifier

Before you worry about thresholds, every outpatient physical therapy claim line needs the GP modifier. GP tells Medicare the service was delivered under an outpatient physical therapy plan of care. It is required on all “always therapy” codes regardless of who performs the service, and leaving it off is one of the most common reasons therapy claims reject, and one of the easiest to avoid.

The discipline modifier is specialty-specific: GP for physical therapy, GO for occupational therapy, and GN for speech-language pathology. If your practice bills more than one discipline, the correct modifier must follow the correct plan of care, or the claim can be denied or misrouted.

The KX Modifier: Billing for Services Exceeding the Threshold

What Does Attaching KX Mean?

Attaching KX to a claim represents an affirmative statement made to Medicare that four items are true. 

1. First, the services qualify for a threshold exception. 
2. Second, the services are reasonable and necessary. 
3. Third, the services require the expertise of a qualified therapist. 
4. Fourth, sufficient documentation exists in the patient’s chart to support continued therapy.

If you fail to attach KX to any claim lines submitted after crossing the $2,480 threshold and Medicare determines that you failed to do so, Medicare will automatically deny payment. No warning. No appeals process for failure to attach a modifier. Only an automatic denial.

Codes Subject to KX Modifier

CMS lists virtually all of what you bill regularly as being subject to inclusion in KX modifier usage. 97012 mechanical traction. 97035 ultrasound. 97110 therapeutic exercise. 97112 neuromuscular reeducation. 97116 gait training. 97140 manual therapy. 97530 therapeutic activities. And PT evaluation codes 97161 through 97164.

The rule is straightforward. Any claim lines billed utilizing a therapy code that contributes to counting against the threshold include KX to demonstrate that you recognize that your patient has exceeded the threshold.

Billing Over $3,000

After a patient reaches $3,000 in therapy charges in a benefit period, claims become subject to Targeted Medical Review (TMR). Not every claim is reviewed. CMS selects claims using defined risk criteria. These include providers with high denial rates, unusual billing patterns, new enrollees without claim history, conditions flagged for abuse, or membership in a group where another member was previously flagged. If a claim is selected, you receive an Additional Documentation Request (ADR) and must produce records from the patient’s chart that support why you provided the services. 

The 8-Minute Rule for Timed Codes

Many physical therapy codes are time-based (one-on-one, constant-attendance services billed in 15-minute units), and Medicare uses the 8-minute rule to decide how many units you may bill. You must furnish at least 8 minutes of a timed service to bill a single unit. Total billable units are based on the total timed minutes in the visit:

Each additional unit follows the same pattern (+15 minutes, with the 8-minute floor). Service based codes, the untimed ones such as a PT evaluation or unattended modalities, are billed as one unit regardless of duration and are not part of the 8 minute calculation. Miscounting timed units is a frequent source of overpayments, recoupments, and audit exposure.

PTA Services and the CQ Modifier (85%)

When a physical therapist assistant (PTA) furnishes all or part of a service, the claim line must carry the CQ modifier (the equivalent for occupational therapy assistants is CO). CQ applies whenever the PTA provides more than 10% of a given service, which is the de minimis standard. Lines billed with CQ are reimbursed at 85% of the fee schedule amount, not 100%.

Tracking PT versus PTA minutes per service and applying CQ correctly protects you on two fronts. It keeps you compliant with Medicare’s supervision and billing rules, and it keeps your reimbursement projections honest by reflecting the 15% reduction instead of overstating expected revenue.

GA Modifier and Advance Beneficiary Notice (ABN)

When to Use GA Instead of KX

You would use KX when providing services you believe are medically necessary for your patient. However, you may determine that providing additional services beyond those deemed medically necessary would still continue to be beneficial to your patient. When you reach this determination point, instead of using KX, you issue an Advance Beneficiary Notice of Noncoverage (ABN) prior to providing any additional services.

On the ABN you inform the patient that Medicare likely will not pay for the requested service(s). The patient signs the form agreeing to personally bear financial responsibility for payment or utilize secondary insurance if applicable.

On the claim submitted after providing the service(s), you include the GA modifier instead of KX modifier. Medicare will subsequently deny payment on the claim and allow you to collect payment from the patient.

It is essential to note that an ABN should only be issued when you truly believe that the additional services requested are not medically reasonable and necessary for treatment of your patient’s medical condition.

One Rule You May Never Be Able to Follow

Never attempt to issue an ABN following receipt of an adverse decision from Medicare on your claim related to services you provided. The ABN must be completed by your patient prior to receiving any service(s).

A retroactively issued ABN carries absolutely no weight as evidence in court that you informed your patient that he/she might incur liability for payment.

Documentation Requirements

Medicare pays for physical therapy only when the patient record supports the care. Your documentation has to show that the services were skilled, that they were medically necessary, and that they followed a valid plan of care. 

Supporting Documentation Required by CMS

Medicare reimbursement for physical therapy services occurs only when your documentation supports that:

• the services require professional therapy skills;
• the services are medically reasonable and necessary for treatment of your patient’s medical condition or injury
• Your documentation demonstrates why your patient needs skilled therapy services as opposed to routine care (i.e., self-care) that can be performed by your patient independently at home;
• Coverage is based on necessity and skill of care needed by your patient rather than ability to improve or recover.

Documentation requirements vary depending on the type of setting providing services. However, documentation standards are relatively consistent across settings.

For example, for outpatient physical therapy services your initial certification must include three elements:

• The patient needs physical therapy services;
• The physical therapy services were provided while under physician or allowed practitioner direction;
• The physical therapy services were provided according to a plan developed under applicable law and regulation.

Recertification is required at least every ninety (90) days. Your documentation must clearly establish the continued need for therapy services.

Establishing the Treatment Plan Without Physician Signoff

PTs enjoy flexibility in establishing a treatment plan independent of physician signoff due to one section in federal regulations.

Specifically, if a PT develops a plan of treatment and there is written orders/referral from a patient’s physician/NP/PA/CNS included in the patient’s chart; and if the PT documents delivery of said plan within thirty (30) days of completion of the initial evaluation; then neither initial nor subsequent certifications are required to carry physician/NP/PAs/CNS signatures.

However, if no written order/referral exist in the chart; then PT must secure a physician/NP/PA/CNS signature on said plan of treatment.

Note that this rule allows alternative pathways when written orders/referrals exist; but it does not require written orders/referrals for outpatient physical therapy services.

Maintenance Therapy and the Jimmo Standard

Medicare does not require a patient to be improving for skilled physical therapy to stay covered. The Jimmo v. Sebelius settlement made this clear. Skilled therapy is covered when a qualified therapist’s skill is needed to maintain a patient’s function, or to slow or prevent decline, even when the patient is not expected to get better. What matters is whether the care takes a therapist’s skill, not whether the patient is recovering.

To get maintenance care paid, your notes have to show why skilled therapy is needed to hold function or keep the patient from getting worse, what makes the service skilled, and your clinical reason for continuing care. If the record reads like routine exercises an aide or a family member could run, Medicare can deny it. If it shows real assessment, judgment, and hands on skill, it supports coverage.

Strong documentation is what turns covered care into paid claims, and it is the first thing an auditor asks for. At UControl Billing, we review therapy documentation against current Medicare standards before claims go out, so your certifications, recertifications, and maintenance notes hold up under review.

Home Health PT: A Different Set of Rules

Physical therapy provided in the patient’s home under the Medicare home health benefit follows different rules than outpatient PT.

For Medicare to pay for home health services including PT, a physician or allowed practitioner must certify the patient’s eligibility. The certification must state that the patient needs or needs intermittent skilled nursing care, or physical therapy or speech-language pathology services. The patient must be confined to the home. A plan of care must be established and reviewed periodically by a physician. The services must be furnished while the patient is under the care of a physician. And a face-to-face encounter must have occurred no more than 90 days before, or within 30 days after, the home health start of care date.

Recertification is required at least every 60 days when there is a continuing need for home health care.

Physical Therapy and Telehealth in 2026

Here is the update that matters most for 2026, because the rule was reversed at the last minute: physical therapists can continue to furnish and bill Medicare telehealth services through December 31, 2027.

Therapist telehealth eligibility had been set to expire on January 30, 2026, and during the early-2026 funding negotiations it briefly appeared the flexibility would lapse. On February 3, 2026, the Consolidated Appropriations Act, 2026 was signed into law and extended the major Medicare telehealth flexibilities  including physical therapist, occupational therapist, and speech-language pathologist eligibility — through December 31, 2027.

For 2026, that means:

• Beneficiaries may receive telehealth from any location, including their home, with no rural or originating site restriction through December 31, 2027.
• Audio only telehealth remains payable when clinically appropriate and documented.
• Therapists may bill the telephone assessment and management codes 98966–98968.

One administrative change catches practices off guard. A provider can no longer bill telehealth from a home address unless that address is enrolled as a practice location in PECOS (Provider Enrollment, Chain, and Ownership System). Any location a PT delivers telehealth from must be on file, or the claim is denied, no matter how appropriate the visit was.

Common Billing Errors to Avoid

Missing the KX Modifier Above Threshold

The most common error is forgetting to add KX once the patient crosses $2,480. Medicare will deny every claim above the threshold that lacks the modifier. 

Track each patient’s running total. Set alerts in your billing system when a patient approaches the threshold.

Not Tracking Combined PT and Speech

PT and speech therapy share one $2,480 threshold. If a patient receives both services, the combined total counts toward the same limit. 

You need to coordinate with speech therapists to know where the patient stands.

Incomplete Documentation

The KX modifier is an attestation that your documentation justifies continued care. If an auditor reviews your records and finds insufficient justification, Medicare can recoup payments even with the KX modifier on the claim.

Conclusion

Medicare outpatient PT coverage in 2026 comes down to tracking your patients’ cumulative charges, keeping documentation that justifies every service, and knowing exactly when to add the KX modifier. The threshold is $2,480 for PT and speech therapy combined. Above that amount, attach KX. Above $3,000, prepare for possible medical review. Use GA only when you have issued a valid ABN for services you believe are not medically necessary. Physical therapists can continue billing Medicare for telehealth through December 31, 2027 provided every telehealth service location, including a home office, is enrolled in PECOS. Track the numbers. Document the care. Use the right modifiers. Your claims will pay, and your audits will pass.

Frequently Asked Questions

What is the 2026 Medicare KX modifier threshold for physical therapy?

For 2026, the threshold is $2,480 for physical therapy and speech language pathology combined. Once a patient’s cumulative charges pass that amount, every additional claim line has to carry the KX modifier to attest that the care is still medically necessary.

Can physical therapists bill Medicare for telehealth in 2026?

Yes. The Consolidated Appropriations Act, 2026 extended Medicare telehealth eligibility for physical therapists, occupational therapists, and speech language pathologists through December 31, 2027, including the patient’s home as an originating site. Every telehealth service location, including a home office, has to be enrolled in PECOS or the claim is denied.

What happens when a patient goes over the $3,000 therapy threshold?

After $3,000 in therapy charges in a benefit period, claims become subject to Targeted Medical Review. Not every claim is reviewed. CMS selects them using set risk criteria and may send an Additional Documentation Request asking you to support the services.

What is the difference between the KX and GA modifiers?

KX says the services above the threshold are medically necessary and documented. GA says you have an Advance Beneficiary Notice on file because you expect Medicare to deny the service, which lets you bill the patient directly.

Does Medicare still cover maintenance physical therapy?

Yes. Under the Jimmo v. Sebelius standard, coverage depends on whether a therapist’s skill is needed to maintain function or slow decline, not on whether the patient is expected to improve.