Reminder: Medicare therapy caps & required modifiers

In 2018, Congress eliminated the limits on how much Medicare pays for therapy services in one calendar year (also called "therapy caps" or "therapy cap limits"). However, for Priority Health to pay for your services, the law requires therapists or therapy providers to confirm that therapy services are medically reasonable and necessary when they reach specific amounts each calendar year.

Required modifier by total service cost

Since January 2021, we’ve asked therapists and therapy providers to add the KX modifier to therapy claims if a member's therapy services reach certain amounts based on the Medicare allowed amount. The allowed amounts are updated annually. The amounts below went into effect on Jan. 1, 2023:

  • $2,230 for physical therapy (PT) and speech-language pathology (SLP) services combined
  • $2,230 for occupational therapy (OT) services

The KX modifier indicates that medical records support ongoing medical necessity for a continued skilled intervention. Consider the following when determining whether services are appropriate:

  • The patient's condition, including the diagnosis, complexities, and severity.
  • The services provided include their type, frequency, and duration.
  • The interaction of current active conditions and complexities that directly and significantly cause the treatment to exceed the therapy threshold.

Claims between $2,230 and $3,000 must include the KX modifier to be paid.

Claims received at $3,000 or more must include the KX modifier and may be selected for audit (details below).

Audits on claim totals $3,000+

We’ll conduct a targeted medical review of therapists' outpatient therapy service claims for Medicare members meeting the following conditions:

  • $3,000 or more for PT and SLP services claims combined
  • $3,000 or more for OT services claims

Factors used to select claims for review may include services:

  • Furnished to treat targeted types of medical conditions
  • Billed by providers who provide a medically unlikely high number of minutes or hours of therapy in a single day
  • Billed by providers who have a high percentage of patients that exceed the $3,000 threshold/high use of the KX modifier.
  • Provided for episodes of care ≥ 6 months.
  • Provided by providers with questionable billing practices for services

This medical review will determine whether the services met medical necessity and that adequate supporting clinical documentation is present.

A Medical Director will review any potential denial of medical necessity.

Documentation requirements

To be payable, the medical record and the information on the claim form must consistently and accurately report covered therapy services as documented in the medical record. Documentation (see the required list below) must be legible, relevant and sufficient to justify the services billed:

  • Evaluation
  • Plan of Care/Certification of the Plan of Care
  • Progress reports
  • Treatment notes
  • Discharge notes
  • Signature log

More information

For additional information on documentation requirements, see Medicare Benefit Policy Manual Chapter 15, 220.3 Documentation Requirements for Therapy Services.

For additional information about Medicare therapy cap limits and CMS' position, see CMS’ 2023 Annual Update of Per-Beneficiary Threshold Amounts.