The #spookyszn has come and gone, but for many physical therapists, the threat of a Medicare audit is far more frightening than any ghoul or goblin—no matter what time of year it is. As such, some PTs may try to subvert the ever-watchful eye of CMS by remaining cautious as their patients creep closer to the Medicare physical therapy threshold (formerly known as the “Medicare physical therapy cap”). However, exceeding the threshold isn’t an automatic red flag. In fact, it’s quite common, and there are plenty of circumstances in which you should, in fact, allow the patient to go over the threshold. With that in mind, here are a few common scenarios when exceeding the therapy threshold is totally acceptable:

1. Continued therapy treatment is medically necessary.

If you see Medicare patients on the regular, you’ve surely been in a situation like this before: you’re treating a patient who is recovering after a major injury and all of a sudden, you receive a denial that states your claim was missing a modifier. And if you’ve exceeded the $2,040 threshold (or $2,090 as of January 1, 2020), the missing modifier in question is likely the KX modifier. Of course, assuming you have yet to finish your treatment plan—and continued care is necessary in order to help the patient meet his or her functional goals—then continuing treatment is A-okay.

What the Therapist Needs to Do

If your clinical assessment and documentation demonstrate beyond a reasonable doubt that additional therapy is, in fact, medically necessary, all you have to do is attach the KX modifier to the claim and continue treating the patient beyond the cap. There’s no need to submit additional documentation in order to use the KX modifier during a patient’s current benefit period. But as we explain here, by attaching the KX modifier to a claim, you attest to Medicare—and your patient—that the services billed:

  • “qualify for the cap exception;
  • are reasonable and necessary;
  • require the skills of a therapist; and
  • are justified by supporting documentation in the patient’s medical record.”

You can treat patients beyond the threshold until they reach the $3,000 secondary threshold for the current benefit period. If you have a claim that exceeds that amount—and again, you determine that continued care is medically necessary—you should continue affixing the KX modifier, which means Medicare should continue paying you. Keep in mind that these claims are subject to a targeted medical review; however, selection for review is largely based on whether your billing practices differ significantly from your peers’.

2. Continued maintenance therapy is necessary to prevent functional decline.

Now, let’s say you have a patient with a degenerative or neurological disorder who would highly benefit from continued care to maintain his or her level of function or slow the effects of the illness—despite a lack of improvement potential. Fortunately, improvement potential is not a requirement for Medicare Part B to reimburse for physical therapy services.

Per CMS, “coverage of skilled nursing and skilled therapy services in the Skilled Nursing Facility, Home Health, and Outpatient Therapy settings does not turn on the presence or absence of a beneficiary’s potential for improvement, but rather on the beneficiary’s need for skilled care.” So, as long as the services (1) meet the medical needs of the patient, (2) require a therapist’s skills, (3) have appropriate duration and frequency, and (4) are safe and effective, it is permissible to bill Medicare for maintenance therapy—even beyond the $2,040 and $3,000 thresholds.

What the Therapist Needs to Do

In this scenario, the therapist should follow the same protocol as denoted for the first scenario (i.e., make sure his or her documentation demonstrates that the services are medically necessary and use the KX modifier accordingly). However, as I explained in this WebPT Blog post, “proving medical necessity could become an even larger issue for rehab therapists as charts come under increased scrutiny. This is partly because therapy-specific EMRs have made it pretty easy for providers to meet the formatting, reporting, and technical requirements of documentation, which means auditors are actually reading your documentation.” So, if auditors pay closer attention to documentation, it’s doubly important that your documents support the medical necessity of any maintenance services you provide.

3. Continued therapy treatment is not medically necessary, but the patient agrees to sign an Advance Beneficiary Notice of Noncoverage (ABN).

Now, let’s say a patient has received physical therapy two times per week for eight weeks and has reached all of his or her therapy goals. Even if the original plan of care called for ten weeks of therapy, Medicare will no longer cover those services if the entity perceives that they are not medically necessary. However, the patient may choose to continue therapy for another two weeks—or longer—as long as he or she agrees to pay for services out of pocket.

What the Therapist Needs to Do

If you find yourself in the above situation (i.e., you decide that certain services would not meet Medicare’s definition of medical necessity) you should:

Once you’ve submitted the claims, the GA modifier will prompt Medicare to reject them. Only once you’ve received a denial can you collect the patient’s out-of-pocket payment.

Note: If you use the GA modifier, you must discontinue use of the KX modifier. Also, make sure you’re not issuing an ABN to every beneficiary who exceeds the therapy threshold; only issue an ABN to those patients for whom the services do not fall under Medicare’s definition of “reasonable or necessary.”

4. Continued therapy treatment is not medically necessary, but the patient would like to receive non-covered services on a cash basis.

Let’s say a different patient has met all of his or her functional goals and therapy services no longer meet Medicare’s definition of medical necessity. The patient then expresses interest in the dry needling services your practice offers. Because dry needling is not covered by Medicare (as of the 2020 final rule, anyway), the patient would need to pay for these services out of pocket. The same would go for any other health or wellness service not covered by Medicare.

What the Therapist Needs to Do

Technically, the therapist is not required to issue an ABN before providing a service Medicare never covers. However, some therapists issue ABNs on a voluntary basis as a courtesy to the patient. As WebPT’s Chief Compliance Officer Veda Collmer, OTR, JD, explained in this Medicare compliance webinar, you should affix the GX modifier—not the GA—to the claim whenever you perform a non-covered service, which will prompt an automatic rejection from Medicare.


While you should never attempt to bill Medicare for unnecessary services, discharging the patient to never return should be the option of last resort. And as long as you proceed with caution, Medicare audits are nothing to fear. Have questions about exceeding the Medicare physical therapy threshold? Let us know in the comment section below!