In the first article of this series on Medicare and Cash-Pay PT Services, we defined the three relationships a PT can have with Medicare and explained how each one influences the types of services (i.e., “covered” and “non-covered”) we can provide to beneficiaries on a self-pay basis.

So, now we need to define which services are covered and which are not covered, as well as pinpoint the scenarios in which covered services may become non-covered.

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3 Scenarios in Which Medicare Will Not Cover Physical Therapy Services

1. The Statutory Scenario

The first is called a “Statutory” reason. The most important example of this is when a service would be considered “prevention,”  “wellness,” or “fitness.”

Note: You may have heard that since the implementation of the Affordable Care Act, some “wellness” and “prevention” services are now covered by Medicare. According to documents like this one produced by CMS, these covered services are simply once-annual visits to a patient’s physician (or visits that are at least overseen and coordinated by a physician). Diving further into this topic, the CMS-provided answer to the question, “Who can perform the annual wellness visit?” includes “other licensed practitioner”—which I imagine could include a physical therapist. However, this “other licensed practitioner” must be “working under the direct supervision of a physician.” So unless you’re working as a member of a physician’s established wellness program, it’s unlikely that you’re providing “wellness” services that are actually covered by Medicare.

2. The Technicality Scenario

There are instances in which Medicare will not cover a service due to a “technicality”—for example, the plan of care is missing a physician signature. (It probably goes without saying, but if the POC for a Medicare beneficiary is missing a physician signature, that does not make it okay for the therapist to collect self-payments from the patient).

3. The Medical Necessity Scenario

The third reason Medicare would not cover a particular service is that the service is not considered “reasonable and (medically) necessary.” Section 220.2 of the Medicare Benefit Policy Manual (starting here at page 82) gives clear criteria that must be met for a therapy service to be considered reasonable and necessary. 

Examples of Services Not Considered Reasonable and Necessary

The service could be performed by the patient or by unskilled personnel without the supervision of a therapist.

To expand and define this further, here are two excerpts from the above-linked section 220.2 of the Medicare Benefit Policy Manual:

  1. To be covered, services must be skilled therapy services as described in this chapter and be rendered under the conditions specified. Services provided by professionals or personnel who do not meet the qualification standards, and services by qualified people that are not appropriate to the setting or conditions are unskilled services. A service is not considered a skilled therapy service merely because it is furnished by a therapist or by a therapist/therapy assistant under the direct or general supervision, as applicable, of a therapist. If a service can be self-administered or safely and effectively furnished by an unskilled person, without the direct or general supervision, as applicable, of a therapist, the service cannot be regarded as a skilled therapy service even though a therapist actually furnishes the service. Similarly, the unavailability of a competent person to provide a non-skilled service, notwithstanding the importance of the service to the patient, does not make it a skilled service when a therapist furnishes the service. 
  2. The services shall be of such a level of complexity and sophistication or the condition of the patient shall be such that the services required can be safely and effectively performed only by a therapist, or in the case of physical therapy and occupational therapy by or under the supervision of a therapist. Services that do not require the performance or supervision of a therapist are not skilled and are not considered reasonable or necessary therapy services, even if they are performed or supervised by a qualified professional.

(Please note: In the cases where a service can be self-administered or furnished by an unskilled person, the training of the patient or unskilled personnel may be a covered service, depending on the situation. You’ll need to contact your area’s Medicare contractor to inquire about these specific scenarios and determine which services will or will not be considered reasonable and necessary.)

The specific service has been deemed not reasonable/medically necessary. Occasionally, Medicare contractors do not consider certain commonly used treatments/modalities (like iontophoresis) to be reasonable and medically necessary; therefore, these services are not covered.

Therapy Cap and Medical Necessity

As of 2013, Medicare’s therapy cap coverage denial was moved into this “medical necessity” category. At the time of this writing, if you are a participating or non-participating provider treating a beneficiary who has met the therapy cap, but you believe the PT services are still medically necessary, you cannot begin taking self-payment from the beneficiary once that beneficiary hits the initial cap. Instead, you must begin submitting claims with a KX modifier (if the total annual billing is between $1,900 and $3,700) and make sure your documentation supports the medical necessity of continued treatment. At $3,700, there is a manual medical review process. You are only supposed to accept self-payment if you get to a point at which you believe (or CMS decides) that the services are not medically necessary.

Note: Before you provide these no-longer-covered services on a self-pay basis, you must issue an Advance Beneficiary Notice (ABN) to the patient. Visit this CMS page to learn more about the use of ABNs with respect to the therapy cap. 

All this talk about medical necessity may have you wondering about “maintenance care” and how it fits into the cash-pay model. Well, stay tuned, as I’ll detail when physical therapists can and cannot provide maintenance care on a cash-pay basis in the next article.

Want more details about Medicare and Cash-Based PT? Click here to check out our industry’s leading resource on how to legally capitalize on cash-pay opportunities for Medicare beneficiaries.

About the Author

Jarod Carter PT, DPT, MTC is the owner of Carter Physiotherapy in Austin, Texas—a successful 100% cash-based private practice. He also is an author and helpful guide on the cash-based practice model. You can find his most recent book, Medicare and Cash-Pay Physical Therapy, at

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