Blog Post

How to Document Beyond Medicare’s Therapy Threshold

Stay compliant by learning how to correctly document beyond the Medicare therapy threshold.

Melissa Hughes
5 min read
January 8, 2021
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The Medicare program is rife with confusing legislative lingo and overly complex rulings, yet therapists must perfectly comply with each and every letter of each and every rule—or risk drawing federal ire. To make matters worse, these regulations are subject to change at least once a year when the Centers for Medicare and Medicaid Services (CMS) releases its annual final rule

The long and the short of it is that tracking all this information is a tall order—and there are some regulatory concepts that seem to give rehab therapists a really tough time. Case in point: the therapy threshold. At this point, the therapy threshold has been around, in some form, for decades. But therapists are still wondering what it is, how it works, and how to comply with it—especially when it comes to documentation. So, let’s talk about exactly what therapists need to do when documenting beyond the therapy threshold. 

What is the therapy threshold?

The therapy threshold is a certain dollar amount—set by Medicare and updated each year—representing the cost of therapy services that a Medicare beneficiary has received during a single calendar year. For instance, the 2021 therapy threshold for PT and SLP services (which are combined under a single dollar amount) is $2,110—and the threshold for OT services is $2,110. 

Contrary to popular belief, therapists can provide—and Medicare beneficiaries can receive—therapy services beyond the therapy threshold. The only requirement for providing—and billing for—services beyond the threshold is that the services are medically necessary. As such, for each service billed above the threshold, the provider must affix the KX modifier to the claim form. Because of this requirement, it is imperative that PTs, OTs, and SLPs track the total cost of services delivered to each Medicare beneficiary throughout the year—keeping in mind that the amount resets to $0 on January 1. 

So, the therapy threshold isn’t a hard cap on services?

Nope! When the therapy threshold was first established in the 1997 Balanced Budget Act, it was known as the therapy cap, and it was supposed to “serve as a hard limit on Medicare’s annual coverage allowance for outpatient therapy services.” However, Congress never enforced a true cap on therapy services. Instead, CMS created—and annually renewed—an exceptions process that “allow[ed] therapy providers to treat above the cap when their services qualif[ied] as ‘medically necessary.’” In other words, the cap often acted more like a threshold than a cap—kind of how it functions today. 

What’s the difference between the therapy threshold and the targeted medical review threshold? 

The targeted medical review threshold is similar to the therapy threshold in that it represents a certain dollar value of therapy services a Medicare beneficiary has received during a given year. The 2021 targeted review threshold for PT and SLP services combined is $3,000—and it’s $3,000 for OT services. 

If the cost of a Medicare beneficiary’s therapy services surpasses the targeted medical review threshold during a given year, then the providing therapist may be subject to a targeted medical review (a.k.a. an audit). But, don’t let this threshold deter you from treating patients, because as with the therapy threshold, CMS is 100% A-okay with therapists providing medically necessary care beyond the targeted medical review threshold. And no—providing care beyond this threshold will not automatically trigger an audit. CMS generally chooses to audit you only when “your billing practices differ significantly from your peers.”

If surpassing the therapy and targeted medical review thresholds doesn’t trigger an audit—what does?

As mentioned in the previous section, CMS (and the supplemental medical review contractors it hires) monitors provider claims for unusual billing scenarios that may result in improper payments. Specifically, the APTA says that CMS and its contractors look for the following red flags:

  • A high claims denial percentage or gaps in adherence to compliance requirements, 
  • Unusual billing practices that are “aberrant compared with peers”—like billing unlikely units on the same day,
  • Newly enrolled providers or providers who did not previously provide therapy services, 
  • Treatment targeted to specific medical conditions, and
  • Providers who belong to groups that contain other providers who meet the above criteria.

How do I document beyond the therapy threshold and the targeted medical review threshold? 

Documenting beyond the therapy and targeted medical review thresholds is a cinch. Simply document as normal! Let’s put it this way: your standard, everyday documentation should sufficiently defend all of your medical decisions and the medical necessity of all treatment you provide. In other words, your documentation should always be defensible. And that’s all CMS wants—to prevent fraudulent billing and validate that the services it pays for are necessary and effective. 

In fact, if you drastically change your style of documentation after hitting one (or both) of these thresholds, it may signal to CMS (accurately or not) that something is wrong with your treatment and/or documentation practices. 

How do I document defensibly?

Defensible documentation is the gold standard of patient charting. It contains enough clear, concise information that a non-clinician could pick it up and understand the full course of treatment. Defensible documentation should:

  • Be legible; 
  • Defend the provider’s choice of treatment;
  • Defend the provider’s choice of frequency and duration of treatment; 
  • Include a plan of care and goals; 
  • State what treatment was provided, when, and for how long; 
  • Illustrate the patient’s progress (or lack thereof); 
  • Include the provider’s name and professional designation; 
  • Include instructions for, and comments from, caregivers;
  • Include a discharge summary that compares the patient’s abilities pre- and post-treatment; and
  • Adhere to all compliance regulations. 


The Medicare program might be confusing, but hopefully now the therapy and targeted medical review thresholds are more clear to you. Do you have any remaining questions about the threshold? Drop ’em below, and our team will do its best to find you an answer.

Download your Defensible Documentation Toolkit now.

Enter your email address below, and we’ll send you a free toolkit to help you ensure your documentation is defensible enough to withstand scrutiny.


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