Medicare covers the physical therapy necessary for recovery after a total knee replacement (TKR). Rehabilitation focuses on restoring strength, range of motion, and functional mobility in the new joint. The coverage framework depends entirely on the setting where the therapy is delivered. Understanding whether your physical therapy falls under Medicare Part A or Part B is the first step in managing recovery costs. The location and intensity of the therapy determine which rules and financial responsibilities apply.
Part A Coverage: Hospital and Skilled Nursing Facility Physical Therapy
Medicare Part A covers physical therapy provided during a qualifying institutional stay, as it is primarily hospital insurance. This includes the initial, brief period of therapy received while the patient is an inpatient immediately following TKR surgery. Since the average hospital stay for a TKR is now very short, most Part A physical therapy occurs in a Skilled Nursing Facility (SNF).
Admission to an SNF for covered physical therapy requires the patient to have had a prior qualifying inpatient hospital stay of at least three consecutive days. Once this requirement is met, Medicare Part A covers up to 100 days of skilled care, including physical therapy, per benefit period. The therapy must be ordered by a physician and be considered a skilled service, meaning it can only be safely and effectively performed by a qualified professional.
For the first 20 days of the SNF stay, the patient typically pays nothing for covered services, provided the Part A deductible has been met. From day 21 through day 100, a daily coinsurance amount applies, which is a significant financial consideration. After day 100 in the same benefit period, the patient is responsible for all costs related to the SNF stay and physical therapy services.
Part B Coverage: Outpatient Clinics and Home Health Physical Therapy
Medicare Part B covers physical therapy once the patient transitions from inpatient care to an outpatient setting or home health services. This coverage is for medically necessary rehabilitation provided in various places. These include a physical therapist’s office, an outpatient clinic, or a hospital outpatient department. Part B also covers services delivered in the home setting, but only if the patient meets the criteria for being considered homebound.
For outpatient physical therapy, Medicare Part B operates on a cost-sharing model after the annual deductible is satisfied. The program generally pays 80% of the Medicare-approved amount for services, leaving the patient responsible for the remaining 20% coinsurance. This coinsurance applies to the cost of each therapy session received throughout the calendar year.
The historical “therapy cap” on outpatient physical therapy services has been removed, meaning there is no dollar limit on medically necessary treatment. However, a financial threshold remains to ensure oversight of high-cost care. When the combined cost of physical therapy and speech-language pathology services reaches a certain amount (around $2,410 in 2025), the treating therapist must confirm the services are still necessary through specific documentation.
Physical therapy provided through a certified Home Health Agency (HHA) is also covered by Part B, but the financial terms differ from outpatient clinics. If the patient is homebound and requires skilled services, Medicare covers the therapy 100%, and the patient pays nothing. A physician must establish and periodically review a plan of care to ensure the services remain appropriate for the patient’s recovery.
Patient Financial Responsibility and Coverage Prerequisites
The patient will have specific out-of-pocket costs and administrative requirements to manage, regardless of whether the therapy is covered under Part A or Part B. Under Part A, the patient is responsible for the inpatient hospital deductible, which is $1,676 per benefit period in 2025. This single deductible covers the initial hospital stay and the first 20 days of a subsequent SNF stay.
For prolonged rehabilitation in an SNF, the patient must pay a daily coinsurance of $209.50 for days 21 through 100 in 2025. This can become a significant expense for individuals requiring extended institutional care. The Part B coverage model involves a separate annual deductible of $257 in 2025, which must be paid before the program covers its share of outpatient costs.
After the Part B deductible is satisfied, the patient must pay 20% coinsurance for each outpatient physical therapy session. This 20% share is based on the Medicare-approved amount for the service, not the provider’s total bill. The most important prerequisite for all coverage is “Medical Necessity,” requiring a physician-certified plan of care that demonstrates the therapy aims to improve or maintain the patient’s function.
Supplemental insurance policies, often called Medigap plans, are frequently used to help cover these deductibles and coinsurance amounts. These private plans can significantly reduce the patient’s financial exposure, especially the daily coinsurance for longer SNF stays or the 20% share of outpatient therapy costs. The treating physician and physical therapist must consistently document the patient’s progress to justify the continuation of skilled services and ensure compliance with Medicare’s necessity rules.