KX Modifier and the Medicare Therapy Threshold for PTs

The KX modifier is what you add to a Medicare Part B therapy claim once a patient's outpatient therapy costs for the year pass the KX modifier threshold, the amount that used to be the therapy cap. It confirms that the services are medically necessary and that your documentation in the medical record justifies them. Physical therapy and speech-language pathology share one threshold, and occupational therapy has its own. CMS publishes the figures each year. For CY 2026 the KX modifier threshold is "$2,480 for PT and SLP services combined, and $2,480 for OT services."

The amounts change every year, so check the CMS Therapy Services page each January rather than relying on a number you remember. This guide covers Original Medicare Part B in the United States. It sets out the published rules, quoting them where the wording matters, and its one patient example is invented. It is not billing or legal advice. Check the current CMS manuals, and ask your Medicare contractor before changing your billing.

What is the Medicare therapy threshold?

The threshold began life as a hard limit. Chapter 5 of the Medicare Claims Processing Manual traces the financial limitations on outpatient therapy back to the Balanced Budget Act of 1997, with a per-beneficiary annual limit first applied in 1999. Congress passed several moratoria over the years, and the Deficit Reduction Act of 2005 set up an exceptions process from 2006 for patients who needed more care. Under the statute, that process covered 2006 to the end of 2017.

The Bipartisan Budget Act of 2018 changed that. In the words of the CMS Therapy Services page, section 50202 of the Act "repeals application of the Medicare outpatient therapy caps and its exceptions process" but "preserves the former therapy cap amounts as thresholds above which claims must include the KX modifier as a confirmation that services are medically necessary as justified by appropriate documentation in the medical record." So there is no longer a ceiling on medically necessary therapy, only a point after which the claim has to carry the KX modifier.

A few details matter in practice:

The threshold is counted per patient, per calendar year, in incurred expenses. Chapter 5 says contractors apply it to the Medicare Physician Fee Schedule amount, or the amount charged if that is smaller.
The amount is indexed each year by the Medicare Economic Index, which is why the figure moves.
Medicare's Common Working File (CWF) tracks the threshold for each patient. The manual says the limitation "is based on therapy services the Medicare beneficiary receives, not the type of practitioner who provides the service."
Because the amount is set per patient and per year, outpatient therapy the patient had earlier in the year from another provider billing Part B counts toward the same total. Your own records only show part of it.
When the multiple procedure payment reduction cuts a payment, the reduced amount is what counts toward the total (Chapter 5, section 10.7).

Chapter 5 still carries a lot of wording from before 2018, such as "cap" and "exception". Section 10.3 says the references to the exceptions process apply only when exceptions to the caps are in effect, and that process ended with 2017. The note at the top of section 10.3.3 says the KX modifier is still used and that claims with and without it are processed in the same manner the section describes. Where this guide quotes the older text, it says so.

The CMS page says "there is one amount for PT and SLP services combined and a separate amount for OT services." For CY 2026 both amounts are the same figure, but they are tracked separately.

This has two effects. Speech therapy counts toward the same total as your physical therapy, so a patient who has seen a speech-language pathologist this year may reach the threshold sooner than your own billing suggests. Occupational therapy runs on its own total. Passing the PT and SLP threshold tells you nothing about the OT one.

Chapter 5 shows how this works on an institutional claim. If one PT line exceeds the threshold, you use the KX modifier on all the PT and SLP lines on that claim. If all the OT lines on the same claim are below the OT threshold, none of them gets the KX modifier, even though every PT line does.

Where the threshold applies

The old caps did not apply everywhere, and the settings changed over time. Chapter 5 records that the limits were extended to outpatient hospitals other than critical access hospitals and hospitals in Maryland from October 1, 2012, to critical access hospitals from January 1, 2014, and to hospitals in Maryland from January 1, 2016. From January 1, 2018, "the KX modifier threshold applies to all the therapy provider types to which the limits applied."

The manual also lists where the limits do not apply. They do not cover skilled nursing facility residents in a covered Part A stay, and they do not apply to therapy covered under the prospective payment systems for home health or for inpatient hospital stays, including inpatient stays in critical access hospitals. Where the old limits applied, the threshold applies now. The claim types Chapter 5 lists include therapists in private practice, rehab agencies, CORFs (a Medicare-certified type of outpatient rehab facility), critical access hospitals, and Part B therapy in skilled nursing facilities and home health. Hospital outpatient departments have been covered since 2012.

What the KX modifier attests to

Section 10.3.3 of Chapter 5 sets out the attestation. "By appending the KX modifier, the provider is attesting that the services billed:"

"Are reasonable and necessary services that require the skills of a therapist" (the manual refers you to section 220.2 of Chapter 15 in the Benefit Policy Manual)
"Are justified by appropriate documentation in the medical record" (pointing to Chapter 15, section 220.3)
"Qualify for an exception using the automatic process exception"

That third item is left over from the exceptions era. The note CMS added at the top of the same section explains the change: from January 1, 2018, the KX modifier "no longer represents an exception request but serves as a confirmation that services are medically necessary after the beneficiary has exceeded the KX modifier threshold of incurred expenses." The statute uses almost the same words. Section 1833(g)(7) of the Social Security Act requires a modifier "indicating that such services are medically necessary as justified by appropriate documentation in the medical record involved."

No special documentation goes with the claim. APTA says you do not need to submit special documentation with the KX modifier, and that your submission is not binding on the Medicare contractor, who makes the final decision on whether the claim is payable. The record still has to be there and back the claim up. CMS spells out what happens if it does not: "If this attestation is determined to be inaccurate, the provider/supplier is subject to sanctions resulting from providing inaccurate information on a claim." The KX modifier goes on alongside the discipline modifier (GP for physical therapy), not instead of it.

The targeted medical review threshold

There is a second, higher line. The CMS Therapy Services page says the BBA of 2018 "retains the targeted medical review (MR) process (first established through Section 202 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)), but at a lower threshold amount of $3,000." It goes on: "For CY 2021 (and each calendar year until 2028 at which time it is indexed annually by the MEI), the MR threshold is $3,000 for PT and SLP services and $3,000 for OT services."

The statute sets that review threshold at $3,000 for each year before 2028 and raises it by the MEI from 2028 on.

Not every claim above that line gets reviewed. CMS notes that "not all claims exceeding the MR threshold amount are subject to review as they once were." The factors for choosing what to review are written into the statute, at section 1833(g)(5)(E) of the Social Security Act. They include a provider with a high denial rate for therapy claims, a billing pattern that is aberrant compared with peers (the law gives "billing medically unlikely units of services in a day" as an example), a provider who is newly enrolled or has not billed therapy before, services for a particular type of medical condition, and a provider in a group that includes another provider flagged by these factors.

If one of your claims is selected, you send the records that justify the services. Section 10.3.2 of Chapter 5, written for the exceptions process, says "Documentation justifying the services shall be submitted in response to any Additional Documentation Request (ADR) for claims that are selected for medical review," and points to Chapter 15, section 220.3 of the Benefit Policy Manual for what the records must contain. APTA quotes the same line on its page about targeted review. Passing the review threshold does not change what goes on the claim. CMS's 2018 questions and answers on ABNs say that once a patient is past the review threshold, you continue to apply the KX modifier to reaffirm that the services are medically reasonable and necessary.

What happens if you leave the KX modifier off

The claim lines above the threshold are denied. The CMS Therapy Services page says: "Claims for services over the KX modifier threshold amounts without the KX modifier are denied." Chapter 5 adds a route back. "In cases where appending the KX modifier would have been appropriate, contractors may reopen and/or adjust the claim, if it is brought to their attention."

The cost of that denial falls on you, not the patient. CMS's August 2018 document on ABNs explains that under section 1833(g)(8) of the Social Security Act, the therapist or therapy provider is financially liable for services above the threshold when Medicare denies payment because the KX modifier was missing. To transfer that liability to the patient, you must have issued a valid Advance Beneficiary Notice of Noncoverage (ABN), Form CMS-R-131.

An ABN is not a way around the threshold, though. The same CMS document is clear that for services above the threshold that are medically reasonable and necessary, you cannot transfer liability to the patient, and the same goes past the review threshold. Medicare covers those services, and the patient pays the usual coinsurance and deductible.

An ABN is for care that is not medically necessary, for example when goals are met and the patient wants to keep coming. If you intend to collect from the patient, CMS says the ABN must be issued before that care, "regardless of the amount of incurred expenses." On the claim, those lines carry the GA modifier. CMS says the KX and GA modifiers cannot go on the same claim line because they convey opposing payer policy.

Documentation that supports medical necessity

The KX modifier is only as good as the note behind it. Chapter 5, section 10.3.2, gives a practical checklist, even though it was written for the exceptions process, and APTA uses the same list for today's KX decisions. It asks whether services are appropriate to:

"The patient's condition, including the diagnosis, complexities, and severity"
"The services provided, including their type, frequency, and duration"
"The interaction of current active conditions and complexities that directly and significantly influence the treatment such that it causes services to exceed caps"

The manual adds that documentation "should indicate how the complexity (or combination of complexities) directly and significantly affects treatment for a therapy condition," and that factors like the availability of a caregiver at home count too. It also warns that "most conditions would not ordinarily result in services exceeding the cap." In a record, that means the reason this patient needs more care than usual should be written down, not left for a reviewer to guess.

Chapter 15 of the Benefit Policy Manual sets the documentation rules. Section 220.1.2 says goals "should be measurable and pertain to identified functional impairments." Section 220.3 says a therapist's skill can be shown by "the clinician's descriptions of their skilled treatment" and by the changes made to treatment after assessing the patient, and it allows a separate justification statement when care is more extensive than is typical for the condition. A separate statement is not required if the record already justifies the care.

In practice, that means an assessment that explains your clinical reasoning, because a list of exercises on its own shows no skill. When a complication slows recovery, write it down and say how it changes the plan. Our guide to writing SOAP notes shows where each of these goes, and the 8-minute rule guide covers the timed minutes and total treatment time that every Medicare treatment note needs.

Do not assume that a patient who has stopped improving has stopped qualifying. CMS's Jimmo settlement page says coverage of outpatient therapy "does not turn on the presence or absence of a beneficiary's potential for improvement, but rather on the beneficiary's need for skilled care." The same page says skilled therapy services are covered "when an individualized assessment of the patient's clinical condition demonstrates that the specialized judgment, knowledge, and skills of a qualified therapist" are needed "for the performance of a safe and effective maintenance program." Chapter 15, section 220.2 sets out the same standard. It also says that when a maintenance program can be carried out by the patient alone, or with help from a family member, caregiver or unskilled personnel, coverage is not provided, so the record has to show why this program needs a therapist's skills.

The home program belongs in the record too. Write down what you prescribed and at what dose, and change it as the patient changes. How to write a home exercise program and exercise progression cover the clinical side.

In PocketPhysio every exercise in a program carries the dose you chose (sets, reps, hold) and a cue in your words. At the next visit, last time's program is there to build on. Patients open it from a link, SMS or email, or in the patient app (Pocket Physio Care), and WhatsApp is one more route.

A worked example

The patient and the details below are invented to show the sequence. They do not use real dollar figures, and they say nothing about how much therapy a real patient needs.

Mr. T is 74 and starts physical therapy at your clinic in September for knee osteoarthritis. At intake he mentions a course of physical therapy for his shoulder at another clinic in the spring. If that was outpatient therapy billed to Original Medicare Part B, it already counts toward his PT and SLP total for the year, so he is closer to the threshold than your own records show. If you are unsure where a patient stands, CMS's advice for Medicare questions is to contact your Medicare contractor first.

Your plan of care sets functional goals: rising from a chair without using his hands, and managing the stairs at home. Each treatment note records what you did and the minutes, and the progress reports show his response and why his care still needs a therapist. Partway through the episode, his incurred expenses pass the threshold. From then on, the claim lines for his care carry GP and KX, because the services are still medically necessary and the record shows why.

Weeks later he meets his goals, including sit to stand without his hands, and you discharge him with a home program. He asks to keep coming weekly. That care is no longer medically necessary, so before any further visit you give him an ABN. If he chooses to go ahead and asks for the claim to be sent to Medicare, those lines carry GA, not KX.

Common mistakes with the KX modifier

Adding KX from the first visit for every patient. For professional claims, Chapter 5 says "Use of the KX modifier when there is no indication that the cap is likely to be exceeded is abusive," and section 10.3.1, written for the exceptions process, gives using it for all of a provider's patients as an example of atypical use that "may invite contractor scrutiny."
Forgetting KX once a patient passes the threshold. The lines are denied, and you carry the cost.
Counting only your own clinic's billing. The total follows the patient, and speech therapy counts toward the same amount as physical therapy.
Treating KX as a box to tick. It is an attestation that the record justifies the care, and an inaccurate one can lead to sanctions.
Using an ABN to charge a patient for medically necessary care above the threshold or above the review threshold. CMS says you cannot transfer liability for those services.
Putting KX and GA on the same claim line.
Dropping the GP modifier when you add KX. Both go on the line.
Discharging a patient only because progress has plateaued, when an individual assessment shows they still need skilled maintenance care.
Stopping KX once the patient passes the targeted review threshold. CMS says to keep applying it.
Quoting last year's threshold. Check the CMS page each year.

The short version

The KX modifier tells Medicare that therapy above the annual threshold is medically necessary and that your record shows why. PT and SLP share one threshold, OT has its own, and CMS states the CY 2026 amount as "$2,480 for PT and SLP services combined, and $2,480 for OT services." Above a second threshold, $3,000 for each year before 2028, some claims are picked for targeted medical review, and you keep using KX. Leave KX off and the lines above the threshold are denied at your cost, and an ABN only covers care that is not medically necessary. Your protection is the note. It should explain why this patient needs more care than usual and show either measurable progress or a documented need for skilled maintenance.

References

Centers for Medicare and Medicaid Services. Therapy Services, section Implementation of the Bipartisan Budget Act of 2018 (revised February 2026 for the CY 2026 KX modifier thresholds; page last modified March 10, 2026). Accessed September 28, 2026. https://www.cms.gov/medicare/coding-billing/therapy-services
Centers for Medicare and Medicaid Services. Medicare Claims Processing Manual (Publication 100-04), Chapter 5: Part B Outpatient Rehabilitation and CORF/OPT Services. Sections 10.2 The Financial Limitation Legislation, 10.3 Application of Financial Limitations, 10.3.3 Use of the KX Modifier and 10.3.4 Therapy Cap Manual Review Threshold to Ensure Appropriate Therapy (Revision 4214, effective January 1, 2019); section 10.3.1 Exceptions to Therapy Caps, General (Revision 3367, effective January 1, 2016); section 10.3.2 Exceptions Process (Revision 3670, effective January 1, 2017); section 10.4 Claims Processing Requirements for Financial Limitations (Revision 3995, effective June 11, 2018); section 10.7 Multiple Procedure Payment Reductions for Outpatient Rehabilitation Services (Revision 3475, effective June 6, 2016). Accessed September 28, 2026. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/clm104c05.pdf
Centers for Medicare and Medicaid Services. Medicare Benefit Policy Manual (Publication 100-02), Chapter 15: Covered Medical and Other Health Services. Section 220.1.2 Plans of Care, section 220.2 Reasonable and Necessary Outpatient Rehabilitation Therapy Services and section 220.3 Documentation Requirements for Therapy Services (Revision 255, effective January 1, 2019). Accessed September 28, 2026. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/bp102c15.pdf
Centers for Medicare and Medicaid Services. Outpatient Therapy Services and Advance Beneficiary Notice of Noncoverage (ABN), Form CMS-R-131. August 2018. Accessed September 28, 2026. https://www.cms.gov/medicare/billing/therapyservices/downloads/2018-08-abn-faq.pdf
Centers for Medicare and Medicaid Services. Jimmo Settlement. Accessed September 28, 2026. https://www.cms.gov/medicare/settlements/jimmo
Social Security Act section 1833(g), 42 U.S.C. 1395l(g), paragraphs (g)(1)(B), (g)(5)(A), (g)(5)(E), (g)(7) and (g)(8). Legal Information Institute, Cornell Law School. Accessed September 28, 2026. https://www.law.cornell.edu/uscode/text/42/1395l
American Physical Therapy Association. Medicare Payment Thresholds for Outpatient Therapy Services. Accessed September 28, 2026. https://www.apta.org/your-practice/payment/medicare-payment/coding-billing/therapy-cap

Written and checked by the PocketPhysio editorial team. Last updated 2026-09-28.

The KX modifier and the Medicare therapy threshold