Medicare Part B physical therapy: what the outpatient benefit covers and what it requires

Medicare Part B pays for medically necessary outpatient physical therapy, and it has not had a hard annual dollar cap since 2018. Instead it has three conditions, and all three have to hold on every claim. The patient is under the care of a physician, and the care runs under a written plan of treatment. The service is furnished by a qualified physical therapist, or by an assistant supervised the way the regulation says. Everything on this page was read from the regulation, from medicare.gov and from cms.gov on 27 October 2026, and the date matters: the thresholds and the fee schedule are reset every year, and most of what ranks for this subject still carries last year's numbers under this year's heading.

This is the hub page, not the detail. Where a figure changes annually or a rule has its own guide on this site, the number lives there and this page links to it. A practice chasing the threshold amount needs the page that gets revised when the amount changes. A second copy here would be wrong by next January, and out of date copies are where most of the wrong numbers on this subject come from.

What does Medicare Part B cover for physical therapy?

Medicare.gov is blunt about the benefit. Part B helps pay for medically necessary outpatient physical therapy if the patient is eligible, the patient pays 20 percent of the Medicare-approved amount after the Part B deductible, and a doctor or other health care provider has to certify that the care is needed. On the question clinics get asked most, the same page says there is no limit on what Medicare pays for medically necessary outpatient therapy services in one calendar year.

That last sentence is true, and it gets misread constantly. No limit on payment does not mean no paperwork above a dollar figure, which is exactly what the KX modifier threshold is. Nor does it mean no review. Both still exist, and both are further down this page.

The Part B deductible amount is not on this page on purpose. It is reset every year, and medicare.gov publishes the current figure. Quote it to a patient from there, on the day, or do not quote it.

Medicare outpatient physical therapy: who may furnish and bill it

The conditions are in 42 CFR 410.60. Part B pays for outpatient physical therapy only when it is furnished by a qualified physical therapist, or by a physical therapist assistant under the supervision the regulation sets. The patient has to be under the care of a physician, which the regulation defines as a doctor of medicine, osteopathy or podiatric medicine. And the service has to be furnished by a provider, by a physical therapist in private practice, or incident to the services of certain other practitioners, so far as state law allows.

The private practice paragraph is the one most clinic owners are actually in. It requires state authorization, practice in a solo, partnership or group practice or as an employee of one, and billing Medicare only for services furnished in the therapist's own private practice office space or in the patient's home. Services are generally performed by the therapist or under their general supervision; an unenrolled therapist needs direct supervision. That last point catches new hires more often than anything else in the section.

Assistants carry their own rule. From 1 January 2020 a claim for a service furnished in whole or in part by a physical therapist assistant has to carry the prescribed modifier, and from 1 January 2022 those claims are paid at 85 percent of the amount that would otherwise apply. The regulation defines "in part" with a minutes test: the assistant's portion counts when it exceeds 10 percent of the total minutes of the service, with exceptions written in for certain final units. If units and minutes are where your billing goes wrong, that is the subject of the 8 minute rule guide.

What are the Medicare physical therapy documentation requirements?

The written plan of treatment is a regulatory requirement, not a habit. 42 CFR 410.61 says outpatient rehabilitation services must be furnished under a written plan of treatment, that the plan prescribes the type, amount, frequency and duration of the therapy, and that it indicates the diagnosis and the anticipated goals. Before treatment begins the plan is established by a physician, by the physical therapist furnishing the therapy, or by a nurse practitioner, clinical nurse specialist or physician assistant. Changes have to be made in writing, signed by an authorized practitioner, and are then incorporated into the plan immediately.

Certification sits on top of the plan, with its own timing rules and a delayed certification route. Those intervals, the 2025 change to how an order and a delivered plan interact, and what a progress report has to show are all set out on the physical therapy plan of care guide. Use that page for the intervals rather than this one. It is the one we keep current.

For the note itself, the structure that survives a review is the ordinary one: what the patient reported, what you measured, what you did, what you decided and why. SOAP notes covers the format and outcome measures covers what to put in the objective section so that the next progress report can show change rather than assert it.

The threshold, the KX modifier and the one figure vendors keep getting wrong

The history is in the regulation, and reading it clears up most of the confusion. 42 CFR 410.60 records that a dollar limit on incurred expenses applied from 1999 to 2001, that it rose with the Medicare Economic Index from 2002, and that it was not applied between 8 December 2003 and 31 December 2005. Beginning in 2018 it stopped being a limit on what Medicare pays. It became a threshold above which a claim must carry the KX modifier, and a claim above the threshold without the modifier is denied.

A separate and higher figure governs targeted medical review. The regulation sets that review threshold at 3,000 US dollars from 2018 through 2027, with annual indexing from 2028. CMS states the same amounts on its CY 2026 Therapy Services page: one 3,000 dollar medical review threshold for physical therapy and speech-language pathology combined, and another for occupational therapy, holding until CY 2028.

Here is the trap, and it is sitting in vendor guides right now. 3,000 dollars is the targeted medical review threshold. It is not the KX modifier threshold, which is a different and lower amount, set separately and indexed every year, and physical therapy shares it with speech-language pathology while occupational therapy has its own. The current KX amount, what the modifier attests to and what happens when it is left off are on the KX modifier and Medicare therapy threshold guide. Any page that tells you the KX threshold is 3,000 dollars has confused the two.

What does Medicare pay, and where is that set?

Payment for outpatient therapy under Part B runs through the Medicare Physician Fee Schedule. CMS describes the fee schedule family as lists of maximum fees used to pay on a fee-for-service basis, and lists four of them: ambulance, clinical laboratory, durable medical equipment, prosthetics, orthotics and supplies, and the Physician Fee Schedule. The Physician Fee Schedule is the one therapy sits in, and CMS calls it the primary method of payment for enrolled health care providers.

We are not printing a conversion factor on this page, and the reason is worth saying out loud. When we read the CMS Physician Fee Schedule page on 27 October 2026, the conversion factor figures shown on it were the 2024 ones, including the mid-year change that took effect on 9 March 2024. A current-year amount read from a page carrying older amounts is exactly how a wrong number spreads. Take the current conversion factor and the current therapy code values from the relative value files and the PFS Look-up Tool in that same part of cms.gov. For the annual policy changes, read the CY 2026 Physician Fee Schedule final rule, published at 90 FR 49266 on 5 November 2025 and effective 1 January 2026, together with its correction at 90 FR 54589.

Two CY 2026 therapy changes are worth a clinic's attention, both from the CMS therapy services page. Three remote therapeutic monitoring codes, 98979, 98984 and 98985, were added to the list of codes that sometimes or always describe therapy services. And the telehealth authority for therapists was extended through 31 December 2027. If either applies to you, remote therapeutic monitoring, the RTM CPT codes guide and the telehealth guide go into the coding and consent side.

Does Medicare cover physical therapy at home, or without a referral?

Patients ask both, and the two answers do not work the same way. On a referral, the regulation does not require one in the way most people mean: what 42 CFR 410.60 requires is that the patient is under the care of a physician and that a plan of treatment exists, which is not the same thing as a physician's order sending them to you. State practice acts are the other half of the answer, and they differ. The state-by-state position, and how it interacts with Medicare, is on the direct access guide.

On care at home, note which benefit you are in. A physical therapist in private practice may bill Part B for services furnished in the patient's own home under 410.60(c), and that is a different thing from the home health benefit, which has its own rules and its own certification. Part B also covers outpatient therapy for a hospital, critical access hospital or skilled nursing facility inpatient who needs it but has exhausted or is not eligible for Part A benefit days.

The patient's own share, when they ask, is the 20 percent coinsurance after the deductible that medicare.gov states. If they are weighing a cash arrangement instead, out-of-network physical therapy and cash-based physical therapy set out what you may and may not do with a Medicare beneficiary, which is the question behind the question.

Where the rules are actually written

Four documents between them answer almost everything, and none of them sits behind a paywall.

Document	What it settles
42 CFR 410.59, 410.60 and 410.61	Who may furnish, supervision, the assistant modifier and payment reduction, the plan of treatment, the thresholds
CMS Medicare Benefit Policy Manual, Pub. 100-02, chapter 15	The coverage detail behind the regulation, including certification and maintenance therapy
CMS Medicare Claims Processing Manual, Pub. 100-04, chapter 5	Therapy billing, modifiers and threshold mechanics
Your own Medicare Administrative Contractor's local coverage determination	What your contractor expects in a reviewed record

One honest limitation. We could not read chapter 15 of the Benefit Policy Manual on 27 October 2026. CMS publishes it only as a PDF, at cms.gov/regulations-and-guidance/guidance/manuals/downloads/bp102c15.pdf, and our tooling returned the compressed file rather than its text. It is the authority for the coverage detail that the regulation leaves to it, and sections 220 and 230 are the ones that matter to outpatient therapy. Open it yourself rather than taking a summary of it from anyone, including us.

The contractor row in that table is the one clinics skip. Review is not uniform across the country, because the local coverage determinations and the review focus belong to the Medicare Administrative Contractor for your area. Find yours and read its therapy policy once a year, at the same time you check the new thresholds.

The short version

Part B pays for medically necessary outpatient physical therapy with no annual cap on payment, the patient pays 20 percent of the approved amount after the Part B deductible, and a doctor or other provider certifies the need. The conditions are in 42 CFR 410.60: under the care of a physician, a written plan of treatment under 410.61, and a qualified therapist or properly supervised assistant. Assistant claims carry a modifier and are paid at 85 percent, and the 10 percent minutes test decides when the modifier applies.

Above the KX threshold a claim needs the modifier or it is denied, and the separate targeted medical review threshold is 3,000 dollars through CY 2027. Those two figures are not the same figure, whatever a vendor guide tells you. Payment runs through the Physician Fee Schedule, the current-year amounts come from CMS files rather than from any page quoting last year, and the annual policy changes are in the CY 2026 final rule at 90 FR 49266. Read your own contractor's local coverage determination, and read chapter 15 at source.

References

1. US Government Publishing Office, Electronic Code of Federal Regulations. 42 CFR 410.60, Outpatient physical therapy services: conditions. Read through the eCFR renderer API on 27 October 2026. https://www.ecfr.gov/api/renderer/v1/content/enhanced/current/title-42?part=410&section=410.60
2. US Government Publishing Office, Electronic Code of Federal Regulations. 42 CFR 410.61, Plan of treatment requirements for outpatient rehabilitation services. Read through the eCFR renderer API on 27 October 2026. https://www.ecfr.gov/api/renderer/v1/content/enhanced/current/title-42?part=410&section=410.61
3. US Government Publishing Office, Electronic Code of Federal Regulations. 42 CFR 410.59, Outpatient occupational therapy services: conditions. Read through the eCFR renderer API on 27 October 2026. https://www.ecfr.gov/api/renderer/v1/content/enhanced/current/title-42?part=410&section=410.59
4. Centers for Medicare and Medicaid Services. Physical therapy services (Medicare coverage). Read 27 October 2026. https://www.medicare.gov/coverage/physical-therapy-services
5. Centers for Medicare and Medicaid Services. CY 2026 Therapy Services Updates. Page last modified 10 March 2026. Read 27 October 2026. https://www.cms.gov/medicare/coding-billing/therapy-services
6. Centers for Medicare and Medicaid Services. Fee schedules. Page last modified 8 July 2026. Read 27 October 2026. https://www.cms.gov/medicare/payment/fee-schedules
7. Centers for Medicare and Medicaid Services. Physician Fee Schedule. Page last modified 30 September 2026. Read 27 October 2026. https://www.cms.gov/medicare/payment/fee-schedules/physician
8. Department of Health and Human Services, Centers for Medicare and Medicaid Services. Medicare and Medicaid Programs; CY 2026 Payment Policies under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies. Final rule, 90 FR 49266, published 5 November 2025, effective 1 January 2026. Read 27 October 2026. https://www.federalregister.gov/documents/2025/11/05/2025-19787/medicare-and-medicaid-programs-cy-2026-payment-policies-under-the-physician-fee-schedule-and-other
9. Department of Health and Human Services, Centers for Medicare and Medicaid Services. Correction to the CY 2026 Physician Fee Schedule final rule, 90 FR 54589, published 28 November 2025. Read 27 October 2026. https://www.federalregister.gov/documents/2025/11/28/2025-21458/medicare-and-medicaid-programs-cy-2026-payment-policies-under-the-physician-fee-schedule-and-other

Written and checked by the PocketPhysio editorial team. Last updated 2026-10-27.