Physical therapy (PT) is a healthcare service designed to help individuals recover function, reduce pain, and increase mobility following an injury, illness, or surgery. The goal is often to restore a patient’s capacity to perform daily tasks or slow the deterioration of a progressive condition. Medicare, the federal health insurance program, covers these services, but the specific coverage depends on the setting where the therapy is received. Understanding Medicare’s structure, which is divided into different “Parts,” determines which component covers the physical therapy services.
Outpatient Physical Therapy Coverage Under Part B
The majority of physical therapy services are covered under Medicare Part B, which handles outpatient medical care. This coverage applies to therapy provided in a variety of non-inpatient settings, including a physical therapist’s private office, an outpatient hospital department, or a physician’s clinic. For services to be covered, they must be deemed medically necessary, meaning they are required to reasonably diagnose or treat the patient’s condition.
The therapy must involve skilled services requiring the expertise of a qualified professional, such as a licensed physical therapist. Services cannot be maintenance exercises or general fitness routines that the patient could safely and effectively perform independently. While a physician’s referral is often sought, current regulations allow a therapist to perform an initial evaluation to determine the necessity of care under direct access rules.
Medicare Part B also covers physical therapy services provided in the home, but only if the patient is considered homebound and the care is part of a certified home health plan. The services must be reasonable and necessary, with documentation supporting the complexity of the care provided. This ensures Medicare pays for skilled intervention, whether the goal is to improve the patient’s condition or safely maintain their current level of function.
Medicare no longer imposes an absolute annual spending limit, or “cap,” on how much it will pay for medically necessary outpatient therapy. However, a financial threshold is established annually. Once the combined cost of physical therapy and speech-language pathology services exceeds this amount (e.g., $2,330 in 2024), the therapist must attach the KX modifier to the claim. This modifier assures Medicare that the services above the threshold remain medically necessary and require a therapist’s skills.
Physical Therapy Coverage in Facility Settings (Part A)
Physical therapy is covered under Medicare Part A when a patient is admitted to an inpatient facility. Part A covers inpatient hospital stays and care received in a Skilled Nursing Facility (SNF). If a patient is hospitalized following an illness, injury, or surgery, physical therapy is included as part of the overall inpatient treatment plan to help regain strength and mobility.
Part A also manages coverage for physical therapy in a Skilled Nursing Facility, but specific criteria must be met. The primary requirement is a qualifying hospital stay of at least three consecutive inpatient days immediately preceding the SNF admission. The patient must also require daily skilled care, which can include physical therapy, skilled nursing, or other therapeutic services.
If these conditions are met, Part A covers the entire cost for the first 20 days of the SNF stay, including physical therapy, meals, and the semi-private room. For days 21 through 100, the patient is responsible for a daily coinsurance amount. After 100 days of covered care within a benefit period, Part A coverage for the SNF stay ceases.
Understanding Financial Responsibility and Medicare Advantage
Financial Responsibility Under Original Medicare (Part B)
Patients receiving outpatient physical therapy through Part B have specific financial responsibilities. First, the patient must meet the annual Part B deductible (e.g., $240 in 2024). After the deductible is satisfied, the patient is responsible for 20% of the Medicare-approved amount for each subsequent service, while Medicare pays the remaining 80%.
The therapist must accept Medicare assignment, limiting the charge to the Medicare-approved rate. If therapy costs significantly exceed the annual threshold, claims may be flagged for targeted medical review. This review ensures appropriate billing and confirms the services remain medically necessary, focusing on documentation rather than denying necessary care.
Coverage Under Medicare Advantage (Part C)
For beneficiaries enrolled in a Medicare Advantage Plan (Part C), the rules for physical therapy coverage are different. Part C plans are required by law to cover at least the same services as Original Medicare (Parts A and B), including medically necessary physical therapy. However, the cost-sharing structure is typically altered compared to Part B.
Instead of the standard 20% coinsurance, Advantage plans often use fixed copayments for each therapy visit. These private plans frequently require patients to receive care from providers within a specific network and may require prior authorization before therapy can begin. Patients enrolled in a Part C plan should review their specific plan documents to understand their financial obligations and network requirements.