Therapist with patient

Hot Topics: Understanding the Medicare Therapy Threshold & Therapy Cap Repeal


What is the Medicare therapy cap and was it rescinded?

Medicare Part B helps pay for medically-necessary outpatient physical therapy, occupational therapy, and speech language pathology services. Until 2018 there were annual limits on Medicare-allowed payment for beneficiaries receiving therapy services known as the "Therapy Cap." In 2018, the cap was rescinded through the passing of the Bipartisan Budget Act of 2018 (BBA of 2018). Now, therapy services are subject to a therapy threshold.

What are the Medicare therapy threshold limits for 2021?

Although the Therapy Cap was rescinded in 2018, CMS left regulations in place requiring therapists to apply a special "KX modifier" on all claims when the Medicare allowed charges reach certain arbitrary limits known as therapy thresholds. Any amount exceeding the thresholds must also include a KX modifier to notify Medicare the services provided beyond the threshold are medically necessary for the beneficiary.

In 2021 the KX modifier threshold limits are:

  • $2,110 for physical therapy (PT) and speech-language pathology (SLP) services combined
  • $2,110 for occupational therapy (OT) services

In addition, services exceeding $3,000 annually for PT and SLP services combined or OT services may be subject to a targeted medical review process

therapist and practice owner looking at report
Learn three Medicare changes from the 2021 Final Rule.

Is there an exception process for 2021?

Since the therapy caps and associated exception processes were overturned, CMS relies on the KX modifier and targeted medical reviews as control measures for covered therapy services. While there is no official exception process anymore, any services provided to a beneficiary that exceed the threshold must also include a KX modifier to notate medically necessary services. Any services provided to a beneficiary that exceed the cap and don’t include a KX modifier will be denied coverage.

Without a therapy cap exception process, what does this mean?

This means that CMS will deny payment of any claims that exceed the $2,110 therapy threshold that doesn’t include the KX modifier to prove medical necessity. Instead, the Medicare beneficiaries will be responsible for payment of any claims that exceed the therapy threshold and are not medically necessary.

Is there a manual medical review process in 2021?

No. There is now a targeted review process instead for any services that exceed $3,000 annually for therapy services.

Does the therapy threshold apply to all outpatient settings?

Yes. The therapy threshold applies to the following settings:

  • Private practice
  • Critical access hospitals
  • Hospital outpatient departments
  • Home health agencies (provided on an outpatient basis)
  • Outpatient rehabilitation facilities or rehabilitation agencies
  • Part B skilled nursing facilities
  • Physician offices and certain non-physician practitioners

How does Clinicient help therapists manage Medicare compliance and the therapy threshold?

Clinicient's EMR and Medicare physical therapy billing system can help ease compliance to Medicare regulations and track the therapy threshold automatically for applicable patients. Among the many features that support Medicare compliance, Clinicient’s Insight offers:

  • Single system for EMR and billing
  • Therapy-specific chart templates
  • Workflow prompts, alerts, and notifications
  • Goal tracking and process reporting
  • Pre-audit at visit sign-off


Note: The information provided herein is intended to be general in nature. It is not offered as legal or insurance related advice, and is not a complete description, or meant, or intended, to replace or be interpreted as specific, of Medicare requirements. Although every effort has been made to ensure the content herein is correct, we assume no responsibility for its accuracy. Contact Department of Health & Human Services (DHHS) Centers for Medicare and Medicaid Services (CMS) for more information.