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Physical Therapists’ Guide to Functional Limitation Reporting

As of January 1, 2019, functional limitation reporting (FLR) for Medicare Part B patients is no longer required for physical, occupational, and speech therapists.

Learn how our fully integrated functional limitation reporting feature makes it easy for WebPT Members to stay compliant and thus get paid.

Heidi Jannenga
5 min read
February 8, 2023
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The Centers for Medicare and Medicaid Services (CMS) announced the official discontinuation of FLR in the 2019 final rule, citing undue administrative burden and negligible effect to quality of care as reasons for the cut. CMS allowed providers one year to phase out all FLR billing procedures and policies. So while rehab therapists could report functional limitations to Medicare during 2019, they were absolutely not required to do so.

What was FLR?

FLR was a program that required eligible professionals to document each Medicare patient’s primary functional limitation—and the severity of the limitation—along with the patient’s goal for therapy. Providers submitted this data using G-codes, corresponding severity modifiers, and therapy modifiers. They were required to report functional limitations at a patient’s initial evaluation or re-evaluation (if applicable), at a minimum of every ten visits (in the form of a progress note), and at discharge. Those who failed to complete FLR did not receive any reimbursement for their services.

Please note that FLR was completely separate from PQRS—another defunct Medicare reporting initiative—even though both involved submitting quality data codes.

What was the purpose of FLR?

CMS created FLR as a mechanism to objectively demonstrate the connection between rehab therapy and patient progress. Initially, CMS hoped to use FLR data to better understand the Medicare population, analyze the effectiveness of the therapy treatment those patients received, and develop future payment structures for therapy services. But over time, CMS realized that FLR’s data wasn’t suited for any of those purposes—which is part of why it discontinued the program.

Who had to complete FLR?

Originally, all outpatient therapy providers billing under Medicare Part B were required to complete FLR in order to receive reimbursement for their services. That included physical therapists, occupational therapists, and speech-language pathologists who furnished services in:

  • Hospitals;
  • Critical access hospitals;
  • Skilled nursing facilities;
  • Comprehensive outpatient rehabilitation facilities;
  • Rehabilitation agencies;
  • Home health agencies (when the beneficiary wasn’t under a home health plan of care); and
  • Private offices of therapists, physicians, and nonphysician practitioners.

As of 2019, the program has officially been sunset and FLR participation is no longer mandatory.

To which patients did FLR apply?

Functional limitation reporting applied to all patients who had Medicare proper as either their primary or secondary insurance. However, it did not apply to patients with Medicare replacement or advantage plans.

How did eligible providers report FLR?

To successfully complete functional limitation reporting, providers designated a patient’s primary functional limitation—in other words, the main reason the patient was seeking therapy—and documented it along with the severity of the limitation (current status and projected goal status) at the patient’s initial examination and—at minimum—every tenth visit or progress note. Then, when providers discharged the patient, they reported the discharge status and projected goal status.

Therapists reported this information using G-codes (quality data codes that described functional limitations) and corresponding severity modifiers (codes that indicated the degree of severity for the limitation). To determine the appropriate severity modifier, therapists considered the score of an outcome measurement tool in conjunction with their skilled clinical knowledge. Finally, therapists submitted a therapy modifier (GO, GP, or GN) to designate whether they provided services under an OT, PT, or SLP plan of care, respectively.

On the HCFA 1500 claim form, these G-codes and their modifiers went in section D (Procedures, Services, or Supplies). Per CMS, all functional limitation data was reported with a nominal charge (e.g., a penny).

What was the penalty for noncompliance?

CMS automatically denied claims that lacked FLR data. So, providers who qualified for FLR (but failed to successfully report on eligible patients) weren’t paid for the services provided to that patient.

What were some common FLR pitfalls?


Many therapists wanted an easy solution for selecting severity modifiers based solely on outcome measurement tool (OMT) scores (e.g., a crosswalking tool). But when providers selected a percentage of impairment, it was supposed to reflect both the results of the OMT and their clinical judgment. So reporting through crosswalking tools didn’t fully satisfy the requirements of FLR because it didn’t account for the context surrounding specific scenarios—ultimately creating an incomplete picture of the patient.

Misrepresenting Patient Progress

The primary goal of FLR was to collect realistic data, and at the end of the day, providers needed to report information as accurately as possible. So, there was no reason to stretch the truth about a patient’s progress toward his or her goal. In fact, those who provided false or inflated information distorted Medicare’s idea of realistic outcomes—which ran the risk of negatively impacting payment structures down the road.

What was the best way to ensure FLR compliance?

To easily maintain FLR compliance, many therapists implemented an EMR with a fully integrated functional limitation reporting feature—like WebPT’s. That way, providers never forgot to submit a required piece of FLR information, because our EMR remembered for them.

Take the pain out of Medicare compliance.

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