How to Bill Occupational Therapy Under Medicare Part B (2024)

• Last Updated: May 29, 2023
• Originally published:June 22, 2021

Medicare Part B is utilized in acute care, long-term care, outpatient, SNF, private practice, and Med B home health services. Billing occupational therapy under Medicare Part B can be complex as the responsibility to document and bill correctly falls on you, the clinician.

For those working under their own National Provider Identifier (NPI), accurate coding is even more important. If practitioners do not have a thorough understanding of how to bill Medicare, it could mean losing your license or billing inappropriately for your services.

Medicare Part B is billed through CPT codes in a fee-for-service model. Practitioners cannot bill cash for covered services for Medicare beneficiaries! This is written pretty clearly in the law and Medicare manuals. Under Medicare Part B plans, beneficiaries have a deductible for the year and have a 20% copay for each service provided under Part B.

When looking for accurate information on billing and coverage, going directly to the source is important – so it’s a good thing we are always referencing the source here!

The Medicare Benefit Policy Manual for Part B Services provides details on the type of services covered under Medicare Part B for Occupational Therapy. Chapter 15

Coding and Billing for Occupational Therapy Under Medicare Part B

AOTA’s Coding and Billing Page has numerous resources for members and non-members. The videos on billing are beneficial and easy to understand. We also cover this information in more detail in our courses included in the Amplify OT Membership.

Evaluation Codes

Eval codes are used during the first visit. They are coded as low, medium, or high complexity based on patient factors. Although there are times associated with the description of each code, these are just guidelines and do not have to reflect the actual time spent on the evaluation.

Evaluation codes are untimed codes, so you receive the same amount of reimbursem*nt regardless of if you bill eight minutes in the eval or 30. That said, legally, your billed time must accurately represent the time spent on the evaluation and subjective interviewing of the patient.

Evaluation typically consists of manual muscle testing, range of motion measurements, assessments, subjective interviewing, etc. Once you transition to education or prescribing exercises/activities, that is treatment vs evaluation. Knowing exactly when this transition occurs relies on the clinician’s clinical judgment.

During evaluations, you can, and should, bill treatment codes with the evaluation. Consider, how would you feel if you went to the doctor and all they did was evaluate you but not prescribe any treatment or provide education about the diagnosis? It should be a rare occasion where you only charge an evaluation code during your first visit.

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Timed Codes

The 8-Minute Rule is used for timed CPT codes. Billable time must be spent 1:1 and face-to-face with the patient providing a covered service. You must provide a skilled, reimbursable service that fits within the CPT code description.

Time spent before or after the session, such as chart reviews, interdisciplinary collaboration, or documentation, cannot be billed.

To charge a timed code, a minimum of 8 minutes of one-on-one, face-to-face care must be provided. There is then a 15-minute window between each unit of service, as demonstrated in the table below.

• How to Apply the Medicare 8-Minute Rule in OT Billing
• New Cognitive Intervention Codes

OTA Modifier and Payment Differential

As of January 2020, CMS required a modifier to indicate an occupational therapy assistant provided the services. This change was required as part of the Balanced Budget Act (BBA) of 2018 (the same bill that repealed the Therapy Cap). As of January 1, 2022, the modifier now carries a 15% reduction for Medicare’s reimbursem*nt for services provided by OTAs (this effectively means there is a overall 12% reduction in total reimbursem*nt). AOTA is actively lobbying Congress to change the reduction and add exemptions for rural and medically underserved areas through the SMART Act. To learn more about the OTA modifier and payment differential check out this article.

Occupational Therapy Assistant Supervision

Medicare Part B is the only setting that requires direct supervision for occupational therapy assistants and physical therapy assistants vs distant supervision. This means that an OT/PT must be on-site in person for an OTA/PTA to provide outpatient Part B services. This supervision cannot be provided through virtual means such as telephone or telehealth. There are temporary flexibilities allowed under the public health emergency, but there is no indication that these flexibilities will become permanent. Currently, these supervision flexibilities expire on January 1, 2024. AOTA and APTA are working to re-introduced the SMART Act in the 118th Congress to address these supervision issues as well as the payment differential.

This is the language from CMS Policy Manual on OTA supervision:

“An occupational therapist must supervise OTAs. The level and frequency of supervision differs by setting (and by state or local law). General supervision is required for OTAs in all settings except private practice (which requires direct supervision) unless state practice requirements are more stringent, in which case state or local requirements must be followed. See specific settings for details. For example, in clinics, rehabilitation agencies, and public health agencies, 42CFR485.713 indicates that when an OTA provides services, either on or off the organization’s premises, those services are supervised by a qualified occupational therapist who makes an onsite supervisory visit at least once every 30 days or more frequently if required by state or local laws or regulation.”

Chapter 15: Medicare Benefit Policy Manual for Part B Services

Is there still a therapy cap?

No! The Therapy Cap was permanently repealed under the Balanced Budget Act of 2018. Medicare now has a therapy threshold and a targeted review. So there is no longer a point where Medicare cuts off therapy at a certain spending level. However, CMS does monitor for trends where clinicians or practices routinely bill over the thresholds. If a clinic or therapist routinely bills over the threshold, this indicates to CMS that the therapist/clinic may be involved in fraud by over-providing therapy that isn’t reasonably/necessary or skilled.

Therapy Threshold/ KX Modifier

The KX Modifier is utilized to indicate medical necessity, specifically for services over the therapy threshold. The threshold is typically updated annually so be sure to check Medicare guidelines each year. For 2023, the therapy threshold is $2230 for occupational therapy and $2230 for physical and speech therapy services combined.

Of note, it is important to document medical necessity for therapy services in each note, not only when utilizing the KX modifier. Any claim may be denied for various reasons. Not just those above the threshold. For more information on the KX Modifier, check out this Medicare Part B page which includes the most up to date thresholds.

Targeted Medical Review

Services provided over $3000 for the calendar year may be subject to a targeted medical review. As with the KX modifier, OT has the threshold of $3000 and PT and SLP share a $3000 thresholds.

A targeted medical review means that not all claims will be reviewed. However, if you consistently bill over the threshold, your chances of being reviewed may increase. The purpose of the targeted review is to prevent bad actors from billing for unnecessary services. There is not a hard cap on therapy services. CMS does understand that some clients require extensive therapy and if your clinic routinely serves complex patients, CMS should be able to identify that in your submitted documentation.

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Diagnostic Coding

THERE IS NO SUCH THING AS THERAPY-ONLY DIAGNOSTIC CODES. OTS CAN USE ALL ICD-10 CODES. EVEN THOSE NOT USED BY THE DOCTOR. That said, OTs cannot diagnose any NEW conditions and not all ICD-10 codes are reimbursed. So make sure to check with the insurance plan as to what is covered.

For example, if the patient’s diagnostic code is for a CVA, but does not include a code for left upper extremity hemiplegia, you can still use this code. The diagnostic code should reflect the patient’s diagnosis and the plan of care.

Bill the most relevant diagnosis. As always, when billing for therapy services, the diagnosis code that best relates to the reason for the treatment shall be on the claim, unless there is a compelling reason to report another diagnosis code. For example, when a patient with diabetes is being treated with therapy for gait training due to amputation, the preferred diagnosis is abnormality of gait (which characterizes the treatment). Where it is possible in accordance with State and local laws and the contractors’ local coverage determinations, avoid using vague or general diagnoses. When a claim includes several types of services, or where the physician/NPP must supply the diagnosis, it may not be possible to use the most relevant therapy diagnosis code in the primary position. In that case, the relevant diagnosis code should, if possible, be on the claim in another position. Codes representing the medical condition that caused the treatment are used when there is no code representing the treatment. Complicating conditions are preferably used in nonprimary positions on the claim and are billed in the primary position only in the rare circ*mstance that there is no more relevant code.

CMS Medicare Claims Processing Manual – Chapter 5 (bold added for emphasis)

So, if you use generalized weakness as your therapy code, CMS would expect that your plan of care will address weakness.

Therapy Diagnostic Coding – ICD-10 Coding Resources

Merit-Based Incentive Payment System (MIPS)

MIPS is the value-based payment model for Medicare Part B. Occupational therapists and occupational therapy clinics may be subjected to MIPS depending on your patient caseload. You may also be able to opt in to MIPS. The general premise is that there are certain outcomes that are tracked for your patients, which provides a quality rating.

Check out the information in the link below to see if you or your clinic needs to be reporting to MIPS. OTs are eligible to opt-in even if not required to report to MIPS. –> AOTA Resources

Questions about Billing Medicare Part B?

There is a lot of misinformation out there on billing especially when it comes to Medicare. That is why it is so important to insure you get information from reputable sources. Don’t bet your license on your coworker’s opinion or a social media post.

To save you time searching for reliable resources, I put together a list of my favorite resources which you can find in my shop – basically I did the Googling for you. If you’re looking to really learn the ins and outs of our healthcare system and understanding Medicare, I go over this in detail in my Mastering OT Policy and Medicare Course high is part of the Amplify OT Membership in addition to all of our other amazing resources like our 2023 Medicare Updates course and our 2022 Medicare Updates course.

Remember, always go to the source!

Other Resources

• Amplify OT – How to Apply the Medicare 8-Minute Rule in OT Billing
• Amplify OT – How Health Insurance Impacts Occupational Therapy
• Amplify OT – Applying the OTA and PTA Modifier (CO/CQ) for Outpatient Therapy
  Documentation – AOTA Documentation and Reimbursem*nt Resources
• AOTA Evaluation Codes
• CMS – Chapter 15 Medicare Manual of
• CMS Medicare Claims Process Manual – Chapter 5
• Amplify OT – Medicare Part B in the Home Resources