Outpatient rehab billing comes down to five things: the right evaluation code for each discipline, correctly counted timed and untimed units, the GP, GO or GN therapy modifier on every line, CQ or CO when an assistant furnishes part of a service, and a certified plan of care with KX documentation once Medicare spending passes $2,480 in 2026.
Physical therapy (PT), occupational therapy (OT) and speech-language pathology (SLP) share one Medicare benefit, but each discipline has its own evaluation codes, modifier and documentation habits. Most rehab denials are not about the care. They come from a missing modifier, an evaluation billed at the wrong complexity, units that do not match the minutes in the note, or a plan of care that was never certified.
This guide covers outpatient Part B therapy billing in private practice, hospital outpatient and other outpatient settings. Inpatient rehabilitation facility (IRF) stays are paid under a completely different prospective payment system; see our guide to CPT codes for inpatient rehabilitation and IRF billing for that setting.
Key Takeaways
- Every Medicare therapy line needs a discipline modifier: GP (physical therapy), GO (occupational therapy) or GN (speech-language pathology).
- CQ means the PT service was furnished in whole or in part by a physical therapist assistant; CO means the OT service was furnished in whole or in part by an occupational therapy assistant. Medicare pays those services at 85% of the fee schedule amount.
- PT evaluations are 97161 to 97163 and OT evaluations are 97165 to 97167, chosen by complexity; re-evaluations are 97164 (PT) and 97168 (OT).
- For 2026, the KX modifier threshold is $2,480 for PT and SLP combined and a separate $2,480 for OT; targeted medical review applies above $3,000.
- The plan of care must be certified by a physician or qualified NPP and recertified at least every 90 days, with a new exception for signed referrals since 2025.
How Outpatient Rehab Claims Are Built
A clean outpatient therapy claim links four elements on each line: a CPT code that describes what was done, the number of units supported by the minutes in the note, the discipline modifier (plus CQ, CO, KX or 59/X modifiers when they apply) and an ICD-10-CM diagnosis that explains why skilled therapy is needed. Professional claims go on the 837P (CMS-1500), while hospital outpatient departments and other institutional providers bill on the 837I (UB-04) with therapy revenue codes.
The codes fall into two groups. Evaluations and some treatment codes are untimed, so they are billed as one unit per session no matter how long they take. Most PT and OT interventions, such as therapeutic exercise or manual therapy, are timed codes billed in 15-minute units. How Medicare converts total minutes into units is covered step by step in our 8-minute rule guide with a Medicare unit chart, so this guide focuses on the codes and rules around it.
Evaluation Codes by Discipline and Complexity
Since 2017, PT and OT evaluations are reported by complexity rather than with a single code. The complexity level is driven by documented components, not by the time spent, although CPT lists a typical face-to-face time for each level.
| Code | Description | Key components (all must be met) | Typical time |
|---|---|---|---|
| 97161 | PT evaluation, low complexity | No personal factors or comorbidities affecting the plan of care; 1 to 2 body system elements examined; stable presentation; low-complexity decision making | 20 min |
| 97162 | PT evaluation, moderate complexity | 1 to 2 personal factors or comorbidities; 3 or more elements; evolving presentation; moderate-complexity decision making | 30 min |
| 97163 | PT evaluation, high complexity | 3 or more personal factors or comorbidities; 4 or more elements; unstable, unpredictable presentation; high-complexity decision making | 45 min |
| 97164 | PT re-evaluation | Review of history, standardized tests and measures, revised plan of care | Not time based |
| 97165 | OT evaluation, low complexity | Occupational profile with brief history; 1 to 3 performance deficits; low analytic complexity; no task modification needed | 30 min |
| 97166 | OT evaluation, moderate complexity | Expanded history review; 3 to 5 performance deficits; moderate analytic complexity; minimal to moderate task modification | 45 min |
| 97167 | OT evaluation, high complexity | Extensive history review; 5 or more performance deficits; high analytic complexity; significant task modification or assistance | 60 min |
| 97168 | OT re-evaluation | Change in status, updated occupational profile, revised plan of care | Not time based |
SLP does not use the complexity codes. Speech-language pathologists choose the evaluation that matches the domain assessed: 92521 (speech fluency), 92522 (speech sound production), 92523 (speech sound production with language comprehension and expression), 92524 (behavioral and qualitative analysis of voice and resonance) and 92610 for a clinical swallowing evaluation. SLP treatment is usually 92507, an untimed per-session code.
A re-evaluation is separately payable only when there is new clinical information, a significant change in the patient’s condition or function that the plan of care did not anticipate, or a need to revise the plan. Routine progress reports and recertification of the plan of care are not billable re-evaluations, and Medicare contractors such as Noridian state that recertification itself requires no patient encounter.
Timed and Untimed Codes Used Most in Rehab
| Code | Service | Billing basis | Documentation focus |
|---|---|---|---|
| 97110 | Therapeutic exercise | Timed, 15-minute units | Strength, range of motion, endurance or flexibility goals; exercises and parameters; minutes |
| 97112 | Neuromuscular re-education | Timed | Balance, coordination, kinesthetic sense, posture or proprioception deficits addressed |
| 97116 | Gait training | Timed | Gait deviations, devices, distance and level of assistance |
| 97140 | Manual therapy | Timed | Technique, body region and response |
| 97530 | Therapeutic activities | Timed | Dynamic functional activities and the functional goal they serve |
| 97535 | Self-care and home management training | Timed | ADL or home management task taught and patient or caregiver response |
| 97150 | Group therapeutic procedure | Untimed, per session | Two or more patients, skilled service to each, group size |
| 97010 | Hot or cold packs | Untimed, supervised modality | Bundled by Medicare; not separately payable |
| 92507 | Speech, language, voice or communication treatment | Untimed, per session | Targets, cueing level and progress toward SLP goals |
Medicare also applies a multiple procedure payment reduction (MPPR) to therapy: CMS reduces the practice expense portion of the second and subsequent always-therapy services furnished to the same patient on the same day by 50%. This is a payment calculation, not a denial, but it explains why the second and third lines on a remittance pay less than the fee schedule shows. Posting staff should not appeal it as an underpayment.
Therapy Modifiers: GP, GO, GN, CQ, CO and KX
The modifier section of the previous version of this guide was wrong, and the same mistakes circulate widely online. CQ is not a telehealth modifier and does not mean assistive technology, and CO as a therapy modifier has nothing to do with contractual obligation or out-of-network status. The correct definitions are below.
| Modifier | Meaning | When to use it |
|---|---|---|
| GP | Services delivered under an outpatient physical therapy plan of care | Every PT line, including evaluations and services by a PTA |
| GO | Services delivered under an outpatient occupational therapy plan of care | Every OT line, including services by an OTA |
| GN | Services delivered under an outpatient speech-language pathology plan of care | Every SLP line |
| CQ | Outpatient PT services furnished in whole or in part by a physical therapist assistant | With GP when the PTA furnished more than 10% of the service (de minimis standard); paid at 85% |
| CO | Outpatient OT services furnished in whole or in part by an occupational therapy assistant | With GO when the OTA furnished more than 10% of the service; paid at 85% |
| KX | Requirements specified in the medical policy have been met | Once the patient’s incurred therapy expenses pass the annual threshold, attesting that services remain medically necessary |
| 59 / XS, XU | Distinct procedural service | Only to bypass an NCCI edit when documentation shows separate, distinct services |
The confusion around CO usually comes from remittance advices, where CO is also a claim adjustment group code meaning contractual obligation (for example CO-45 or CO-97). That group code appears on the payer’s response, never as a modifier you put on the claim. If you need to interpret those remittance codes, see our guides to CO-97 bundling denials and CO-50 medical necessity denials.
The CQ and CO de minimis standard
CMS applies the assistant modifier only when the PTA or OTA furnishes more than 10% of a service independently of the therapist. CMS also gives two unit-level exceptions for timed codes. When one final 15-minute unit remains and the therapist furnished 8 or more minutes of it, that unit is billed without CQ or CO. When two units remain and the therapist and the assistant each furnished 9 to 14 minutes, with 23 to 28 combined minutes, one unit is billed with the assistant modifier and one without.
Do not drop the CQ or CO modifier to avoid the 85% payment. Billing assistant-furnished services as if the therapist performed them is a common audit finding and creates an overpayment that must be refunded.
Plan of Care, Certification and the 2026 KX Threshold
Medicare covers outpatient therapy only when the patient is under the care of a physician or nonphysician practitioner (NPP), a plan of care has been established, and that plan is certified. The plan of care must state the diagnoses, long-term goals, and the type, amount, frequency and duration of therapy. Certification means a physician or NPP has signed and dated the plan; recertification is required whenever the plan is significantly modified and at least every 90 days, according to Noridian’s guidance.
From 1 January 2025, CMS added an exception. If the patient was referred, a signed and dated order or referral in the record satisfies the initial certification requirement as long as there is evidence the therapist sent the plan of care to the referring practitioner within 30 days of the initial evaluation. CMS also clarified that Medicare does not require an order or referral for outpatient therapy itself; the referral matters because it powers this certification exception.
For calendar year 2026, CMS set the KX modifier threshold at $2,480 for PT and SLP services combined and $2,480 for OT services. Claims above the threshold without KX are denied. Adding KX attests that the services are medically necessary and that the record supports them. CMS also keeps a targeted medical review threshold of $3,000 for each category; not every claim above it is reviewed, but reviews are more likely.
- Track each patient’s incurred PT/SLP and OT amounts separately, including services from other providers this year (eligibility responses show the year-to-date amount).
- Add KX only when the note documents why continued skilled therapy is needed.
- Keep certification and recertification dates visible on the scheduling screen so no visit falls outside a certified period.
- Confirm that PTs, OTs and SLPs remain eligible to furnish Medicare telehealth: CMS states this flexibility runs through 31 December 2027 under the Consolidated Appropriations Act, 2026.
NCCI Edits That Affect Therapy Claims
National Correct Coding Initiative procedure-to-procedure (PTP) edits stop certain code pairs from being paid together on the same day. Each pair carries a modifier indicator: 0 means the codes can never be paid together, and 1 means they can be paid together with 59 or an X modifier when the documentation shows distinct services. CMS removed many therapy edits in 2020 and 2021 after APTA advocacy, so older cheat sheets are often wrong.
| Code pair | Edit status (check current quarter) | What it means |
|---|---|---|
| 97161 + 97164 | Modifier indicator 0 | An evaluation and a re-evaluation cannot both be paid on the same day |
| 97150 + 97110, 97112, 97140, 97530 and others | Modifier indicator 1 | Group therapy plus an individual code needs separate time periods documented and 59/X modifier; APTA asked CMS in 2026 to delete these edits |
| 97010 + any therapy code | Bundled under the fee schedule (status B) | Hot or cold packs are not separately payable under Medicare |
| Evaluation + same-day timed codes | Many pairs were deleted in 2020 to 2021 | Check the current PTP file before adding 59 by habit |
Commercial payers do not always follow CMS edit changes, so keep a short payer-specific list. Our physical therapy billing audit checklist shows how to test a monthly sample of claims for modifier and edit errors, and our PT billing compliance guide covers documentation defense in an audit.
Worked Example: A Medicare PT Visit With a PTA
A Medicare patient in week three of a certified PT plan receives 24 minutes of therapeutic exercise (97110) from the physical therapist and 14 minutes of neuromuscular re-education (97112) furnished entirely by the PTA. Total timed minutes are 38.
- Count total timed units. 38 minutes falls in the 38 to 52 minute range, so 3 units are billable in total.
- Assign full units first. 97110 has one full 15-minute unit, leaving 9 minutes; 97112 has 14 minutes and no full unit.
- Assign remaining units. The two remaining units go to the largest remainders: one to 97112 (14 minutes) and one to 97110 (9 minutes). Result: 97110 x 2 and 97112 x 1.
- Apply modifiers. All lines get GP. The PTA furnished all of 97112, well over 10%, so that line also gets CQ and pays at 85%. The 97110 units were furnished by the PT and carry GP only.
- Check the threshold. If the patient’s year-to-date PT/SLP spending has passed $2,480 and the note supports ongoing need, add KX to every line.
Claim result. 97110-GP x 2, 97112-GP-CQ x 1 (plus KX on each line if over the threshold), each linked to the treating diagnosis.
Payer Rules Beyond Medicare
Medicaid programs and commercial plans often require prior authorization or visit limits that Medicare does not. Many plans authorize a set number of visits for a date range, and visits beyond it deny even when they are medically necessary. Verifying therapy benefits, remaining visits and authorization at intake prevents most of these denials; our eligibility verification service handles this for rehab clinics.
Timely filing also differs. Medicare allows 12 months from the date of service, while commercial contracts frequently set much shorter windows, so check each contract instead of assuming the Medicare limit. Motor vehicle and workers’ compensation cases follow their own state rules and fee schedules.
Common Rehab Billing Errors and How to Prevent Them
- Evaluation complexity not supported. Document each component (history and comorbidities, elements examined, presentation, decision making) so the level is defensible.
- Units that do not match minutes. Record timed minutes per code and total treatment time in every note.
- Missing GP, GO or GN. Medicare returns therapy lines without the discipline modifier.
- CQ or CO omitted or misapplied. Track who furnished each minute when assistants treat.
- Expired certification. Calendar recertification dates at least every 90 days.
- KX missing above $2,480. Monitor year-to-date spending, including other providers.
- Billing a re-evaluation for a routine progress note. Bill 97164 or 97168 only when the clinical criteria are met.
Want PT, OT and SLP claims that go out with the right codes, modifiers and units the first time? Our rehab medical billing services handle coding, KX tracking, authorizations and denial follow-up for outpatient therapy practices.
Frequently Asked Questions
What does the CQ modifier mean in therapy billing?
CQ means an outpatient physical therapy service was furnished in whole or in part by a physical therapist assistant. It is reported with GP when the PTA furnished more than 10% of the service, and Medicare pays those services at 85% of the fee schedule amount. It is not a telehealth modifier.
What is the difference between the CO modifier and the CO group code?
The CO modifier is placed on the claim with GO to show an occupational therapy assistant furnished more than 10% of an OT service. The CO group code appears on remittance advices and means contractual obligation. They are unrelated.
What is the 2026 KX modifier threshold for therapy?
For 2026 CMS set the KX threshold at $2,480 for physical therapy and speech-language pathology combined and a separate $2,480 for occupational therapy. Claims above the threshold need KX and documentation of medical necessity, and a targeted medical review threshold of $3,000 applies.
How do I choose between 97161, 97162 and 97163?
Choose the level whose components are all documented: personal factors and comorbidities, number of body system elements examined, stability of the clinical presentation and complexity of decision making. Typical times of 20, 30 and 45 minutes are guides, not the deciding factor.
How often must a therapy plan of care be recertified for Medicare?
A physician or qualified nonphysician practitioner must recertify the plan whenever it is significantly modified and at least every 90 days. Since 2025, a signed and dated referral plus evidence the plan was sent to the referring practitioner within 30 days can satisfy initial certification.
