Medicaid is a joint federal and state program designed to provide health coverage to millions of low-income Americans, including eligible adults, children, pregnant women, elderly adults, and people with disabilities. Whether Medicaid covers physical therapy (PT) is complex, depending on the patient’s location, age, and medical need. The federal government sets broad rules, but states administer the program, creating significant variation in the type, amount, and duration of services covered.
Understanding Medicaid’s State-Level Variation
The federal government requires all state Medicaid programs to cover a set of mandatory benefits, such as inpatient and outpatient hospital services, physician services, and home health services. Physical therapy, however, is categorized as an optional benefit for adults under federal guidelines. This distinction means that each state decides whether to cover physical therapy for its adult Medicaid enrollees, and if so, to what extent.
States use documents known as State Plan Amendments (SPAs) to define the scope of their optional benefits, including physical therapy. For instance, one state may cover extensive outpatient physical therapy sessions for adults with a qualifying condition. Another state might only cover PT following a specific surgical procedure or limit it to rehabilitation services, excluding maintenance or long-term care.
This state-level discretion is the primary reason coverage can feel inconsistent to beneficiaries. An adult with a chronic musculoskeletal condition in one state might have coverage for dozens of visits annually, while a beneficiary in a neighboring state might be severely limited or have no coverage at all. This variability reflects individual state priorities and budgetary decisions within the federal framework.
Mandatory Coverage for Children (EPSDT)
The rules change significantly for younger beneficiaries due to a federal mandate known as Early and Periodic Screening, Diagnostic, and Treatment (EPSDT). EPSDT is a comprehensive benefit that states must provide for all Medicaid-enrolled children and adolescents under the age of 21. This mandate ensures that children receive all medically necessary health care services to treat or ameliorate physical or mental illnesses and conditions.
Under EPSDT, physical therapy is covered if it is deemed medically necessary to correct or improve a child’s condition, even if that service is not explicitly included in the state’s standard Medicaid plan for adults. The standard for coverage is broad, encompassing services that maintain or improve a child’s current health status, or prevent a condition from worsening. This includes habilitative services, which help a child acquire new skills, in addition to rehabilitative services.
States cannot impose arbitrary limits or caps on medically necessary services for EPSDT-eligible children, though they can use utilization controls like prior authorization to manage the care. This mandate guarantees comprehensive physical therapy access for all Medicaid-enrolled children, regardless of whether the state considers PT an optional benefit for adults.
Prior Authorization and Session Limits
Regardless of a patient’s age, coverage for physical therapy is almost always dependent on demonstrating “medical necessity.” This means a physician or licensed therapist must provide documentation establishing that the treatment is required to restore function, prevent disability, or alleviate pain. Providers must clearly outline the patient’s current functional status, the specific goals of the therapy, and the expected duration of the treatment plan.
A common administrative hurdle is the requirement for prior authorization (PA), or pre-approval, before treatment begins or continues. This process involves the state Medicaid agency or managed care organization reviewing the medical necessity documentation to approve coverage for a set number of visits or a specific time period. PA is a standard utilization control intended to ensure appropriate use of services.
Many states also impose session caps, which are hard limits on the number of therapy visits allowed within a given time frame, such as 20 or 30 visits per calendar year. Once this limit is reached, the provider must submit a new request for prior authorization to justify the need for additional sessions. This process often involves submitting updated progress notes and a revised plan of care to demonstrate continued patient improvement toward established goals.
Covered Settings for Physical Therapy
Medicaid coverage is available across various settings, provided the services are medically necessary and authorized. The most common setting is the outpatient clinic, where beneficiaries receive services on a fee-for-service basis or through a managed care network. Services are typically rendered by a licensed physical therapist or an assistant under supervision.
In some cases, physical therapy can be delivered through home health care services, which are typically covered for patients who are confined to their home and require skilled services. Skilled nursing facilities (SNFs) also provide physical therapy, often integrated into a per-diem payment for residents requiring rehabilitation. Furthermore, children covered by EPSDT may receive services through school-based programs, which are reimbursed by Medicaid when the services align with the child’s individualized education or service plan.