June 14, 2024 | Net Health

12 min read

CMS Final Rule: Physical Therapy Medicare Guidelines for 2024

Last year’s release of the 2024 Final Rule by the Centers for Medicare and Medicaid Services (CMS) introduced notable updates and adjustments to reimbursement rates, telehealth coverage, supervision rules, and value-based care initiatives that directly impact physical therapists across the United States.

Implemented as part of CMS’s annual effort to enhance patient care, streamline provider operations, and address evolving needs within the healthcare landscape, it’s crucial that outpatient physical therapy providers who see Medicare Part B patients know and understand these changes, especially how Medicare covers physical therapy. Staying abreast of updates in the 2024 Final Rule helps all outpatient therapy providers optimize practice management, ensure compliance, and optimize the quality of care provided to Medicare patients.

This post delves into the essential aspects of the CMS 2024 Final Rule, highlighting what updates and rule adjustments mean to physical therapists, physical therapist assistants, and others who provide rehab therapy services.

From increased reimbursement rates and the use of telehealth tools to treat Medicare patients to new performance thresholds under the Merit-based Incentive Payment System (MIPS), this overview will equip outpatient physical therapy providers and owners of a physical therapy practice with the knowledge they need to navigate today’s regulatory landscape more proactively, providing outpatient services, assuming those outpatient services provide physical therapy sessions to those covered by medical insurance.

First on the list: another cut to Medicare reimbursement.

CMS Cuts the Conversion Factor for Rehab Therapy

Perhaps the most notable change in the 2024 Final Rule is CMS’s announcement that it once again reduced its conversion factor for physical therapy, an adjustment that has lowered the rate at which Medicare pays physical therapists for providing physical therapy sessions to Medicare approved patients.

The new 2024 conversion factor, $32.74, was decreased by approximately 3.4% of 2023’s rate of $33.89.

The conversion factor is a critical component in calculating Medicare reimbursement rates. It’s used to convert the Relative Value Units (RVUs) assigned to medical services, including physical therapy, into a dollar amount.

According to CMS, this year’s reduction is part of the agency’s effort to balance the Medicare budget and address statutory requirements set by the Medicare Access and CHIP Reauthorization Act (MACRA). The adjustments were also influenced by changes in overall spending projections and the need to accommodate payment increases in other areas of Medicare.

The implications of this change for physical therapists are largely financial but address a number of areas beyond familiarity with those services medicare covers.

Lower Reimbursement Rates

Each physical therapist will receive lower payments for the same services compared to previous years, which may affect the financial viability of some practices, particularly smaller or rural providers and those who cover physical therapy for a greater number of Medicare Part B patients. This reduction may impact the ability of these providers to continue offering necessary services.

Increased Financial Pressure

Due to this anticipated reduction, physical therapy providers may experience increased financial pressure. This may lead to cost-cutting measures, changes in service delivery models, or increased patient volumes to offset the reduced rates.

A Focus on Efficiency

To mitigate the impact of lower reimbursement rates, physical therapy practices may consider enhancing operational efficiency, optimizing billing processes, and taking steps to ensure accurate coding so that all eligible Medicare Part B reimbursements are captured.

An Emphasis on Quality and Value-Based Care

Despite the cut, the healthcare and the physical therapy profession is experiencing an ongoing transition toward quality and value-based care. Physical therapists who meet performance measures and improve patient outcomes can find long-term financial advantages by simply creating more happy patients. They could also potentially benefit from incentives from value-based payment programs like MIPS.

physical therapy medicare guidelines 2024

CMS Increases KX Modifier Threshold for Physical Therapy Services

The Medicare therapy cap, which was effectively repealed as part of the Bipartisan Budget Act of 2018, was replaced with threshold amounts that have incrementally increased each year since the repeal. This year’s 2024 updates were no different, as the KX modifier threshold for combined physical therapy and speech-language pathology services was set at $2,330—an increase of $100 from 2023.

The KX modifier is a billing code used in Medicare to indicate that a particular service or item is medically necessary and that the usual limits on these services have been exceeded. They are appended to relevant CPT® codes for outpatient therapy services that surpass this annual threshold. Additionally, Medicare Advantage plans may have their own specific requirements and thresholds for physical therapy services.

A separate KX modifier threshold of $2,330 was set for occupational therapy (OT) services, as well.

This means that when combined physical therapy (PT)/speech-language pathologist (SLP) services or OT services for Medicare patients exceed these thresholds, KX modifiers are required in billing rules to indicate further patient services are essential and meet Medicare’s coverage criteria.

In addition to the codes, providers must also ensure documentation within the records of the Medicare patient supports why each service was medically necessary.

Targeted Medical Review Threshold Holds Steady

In contrast to the KX modifier threshold, the targeted medical review threshold will remain static through the end of 2017.

Set at $3,000 for combined PT/SLP services and $3,000 for OT services, the targeted medical review threshold was established by Medicare to monitor and review the use of rehab therapy services by patients with Medicare coverage. When coverage passes this amount, claims may be targeted for review to ensure medical necessity.

While all claims that exceed the targeted medical review threshold are flagged, not all of these claims will be reviewed.

New Medicare Benefits Cover Caregiver Training

According to the National Alliance for Caregiving (NAC) and the AARP, the number of family caregivers has increased to 53 million people by 2020, and this number continues to increase as the senior population rises. Of these caregivers, only three in 10 report having had general conversations with healthcare professionals such as doctors, nurses, physical therapists, and other rehab therapists

To provide more support to family caregivers, the CMS 2024 Final Rule includes three new CPT® codes for individual and group caregiver training services for patients with mental or physical diagnoses and for caregivers of patients who need help with activities of daily living.

As long as caregiver training services fall within a patient’s plan of care and are designed to achieve specific outcomes with the help of the family caregiver, Medicare will reimburse rehab therapists for these therapy services. Medicare requires that family caregivers are “a family member, friend, or neighbor who provides unpaid assistance to a person with a chronic illness or disabling condition.” These caregiver training services are also crucial for those providing skilled nursing facility care, ensuring that caregivers are well-equipped to support patients in various settings.

The new CPT codes created for 2024 include:

  • 97550**– Functional Performance of ADLs – One or More Caregivers for Single Patient** (Initial 30 Minutes). Caregiver training in strategies and techniques to facilitate the patient’s functional performance in the home or community (e.g., activities of daily living [ADLs], instrumental ADLs, transfers, mobility, communication, swallowing, feeding, problem-solving, safety practices), face to face, without the patient present. RVU Value: 1.00
  • 97551 – Functional Performance of ADLs – One or More Caregivers for Single Patient (Each Additional 15 Minutes). Same as above, but for additional minutes of training, listed in addition to 977550. RVU Value: 0.54
  • 97752 – Functional Performance of ADLs – Multiple Sets of Caregivers for Average of Five Patients (Untimed). Group caregiver training in strategies and techniques to facilitate the patients’ functional performance in the home or community (e.g., ADLs, instrumental ADLs, transfers, mobility, communication, swallowing, feeding, problem-solving, safety practices), face to face, without the patient present. RVU Value: 0.23

These changes reflect CMS’s commitment to supporting caregivers for Medicare beneficiaries, recognizing that well-trained caregivers are essential for the effective management and rehabilitation of patients.

Physical Therapy Supervision Rules Changed in 2024

According to the American Physical Therapy Association (APTA), changes in required supervision during physical therapy sessions show important progress that impacts both in-person and virtual rehab therapy visits.

“The [2024] rule features more positive movement on [physical therapist assistant] supervision, including deeper consideration of general supervision in private practice settings, and extension of virtual supervision allowances, and relaxation of supervision associated with [remote therapeutic monitoring],” the APTA stated in its summary of Medicare changes.

During the COVID era, CMS relaxed some of the rules that required the direct supervision of physical therapist assistants (PTAs) for a time, but this year’s rule changes allow for the general supervision of private practice PTAs who use remote therapeutic monitoring (RTM) to engage with patients.

In addition, the 2024 Final Rule extends the use of virtual supervision for PTAs and OTAs through the end of 2024.

These changes in supervision requirements could help the Medicare program save money. According to a report commissioned by the APTA and other provider groups, a change to general supervision of PTAs in private practice and outpatient physical therapy settings could result in $271 million in Medicare coverage savings over 10 years. These changes are particularly relevant for both outpatient and inpatient physical therapy settings, where supervision requirements can significantly impact service delivery.

MIPS 2024 Changes and Updates

The Merit-Based Incentive Payment System (MIPS) continues to evolve in 2024, but in one key way, the program remains the same. CMS did not increase the performance threshold in its new rule, so this threshold will remain at 75 points.

The MIPS performance threshold is the minimum composite score that participating clinicians must achieve to avoid a negative payment adjustment under MIPS. It serves as a benchmark to evaluate the quality, cost, improvement activities, and interoperability of physical therapy services provided by clinicians.

Those clinicians with MIPS composite scores below this threshold when treating Medicare patients will receive negative payment adjustments, those above will receive positive payment adjustments, and those at the threshold score will have no change to their Medicare reimbursement rates.

MIPS composite scores are weighted scores in the four categories of quality, cost, improvement activities, and promoting interoperability. However, as physical therapy and occupational therapy providers are not required to report on the cost category, their 2024 scores will be weighted thusly:

  • Improvement Activities: 15%
  • Promoting Interoperability: 30%
  • Quality: 55%

By understanding and strategically managing performance across these weighted categories, rehab therapists can optimize their MIPS scores and potentially enhance their Medicare reimbursement under the program.

CMS changes 2024 physical therapists

New MIPS Value Pathway (MVP) Focuses on Musculoskeletal Care

This year, CMS approved five new MIPS Value Pathways (MVPs) including the first-ever MVP created specifically for rehab therapists. Titled “Rehabilitative Support for Musculoskeletal Care,” the MVP includes a subset of 10 quality measures (including seven Focus On Therapeutic Outcomes, or FOTO Analytics) and 17 improvement activities that are meaningful for physical therapists and occupational therapists.

Those who opt to report through this MVP will be required to report data on just four of the 10 quality measures. This is a lower mark when compared with the six quality measures required when reporting through the wider MIPS program. 

Also, less reporting for improvement activities is required when opting to take the MVP route. MVPs include a “population health measure,” however, that isn’t part of the general MIPS program. Those reporting via an MVP will be required to choose one of two population health measures on which to report.

Just like traditional MIPS, MVPs offer participating clinicians the incentive of positive payment adjustments in return for high-quality care. However, clinicians who wish to participate in an MVP must register during the first half of the performance year, which ends on June 30.

What are MIPS Value Pathways?

Soon after MIPS was implemented, provider feedback indicated the program was confusing and overly complex. There were (and still are) just too many quality measures and improvement activities to choose from, which made participation in MIPS overwhelming. To help ease this complexity, CMS developed MIPS Value Pathways. 

MVPs are subsets of measures and activities tied to a specific specialty, clinical condition, or episode of care. In 2023, for example—CMS’s first year of creating and releasing new MVPs—these included categories for cancer care, care of heart disease, kidney health, joint repair, and chronic disease management, just to name a few. 

By cutting back on the overwhelming reporting options offered through traditional MIPs while focusing on measures that are more meaningful to certain types of health care providers, MVPs make it easier for clinicians to assess, report, and compare data within their own pathway(s). 

In the end, MVPs package MIPS up to give each Medicare provider an easier way to report on the quality, cost, improvement activities, and interoperability they offer Medicare patients. 

Telehealth Physical Therapy Services Covered Through 2024

While overall physical therapy coverage for telehealth is not part of the 2024 Final Rule, it’s worth noting that Medicare coverage will continue to include telehealth visits for outpatient physical therapy services through the end of this year. This is thanks to 2022 legislation passed in the U.S. Congress that extended telehealth flexibilities for two more years following the Public Health Emergency (PHE).

However, this law sunsets at the end of the year, and CMS does not have the statutory authority to permanently add PT, OT, and SLP as reimbursable telehealth services under Medicare. So, new legislation is needed.

However, CMS did follow through on correcting a mistake that excluded physical therapists in institutional settings from participating in the telehealth extension passed in 2022. As part of its final rule, these physical therapists can now offer and bill for telehealth services in the same way as outpatient physical therapy providers in private practice. This extension is particularly beneficial for physical therapists working in skilled nursing facilities, who can now offer telehealth services to their patients.

2024 Final Rule Strives to Set the Stage for Improved Care Delivery

The annual release of the CMS Final Rule reflects the agency’s ongoing commitment to enhancing patient care, streamlining provider operations, and addressing the evolving needs of the physical therapy medicare healthcare system.

For physical therapists, the 2024 updates are particularly significant, encompassing changes that impact reimbursement, telehealth services, supervision rules, and value-based care initiatives. These adjustments aim to ensure that physical therapy Medicare beneficiaries continue to receive high-quality and efficient care while supporting providers in adapting to new regulatory requirements.

These updates are designed to enhance physical therapy care delivery not only in hospital outpatient physical therapy and private practice physical therapy settings, but also in post-acute settings such as a skilled nursing facility providing physical therapy services, ensuring comprehensive support for Medicare beneficiaries. Inpatient physical therapy in skilled nursing facilities that offer physical therapy will often have patients needing to ensure medicare pays and will cover physical therapy sessions.

By staying informed and proactive, physical therapists can navigate these changes effectively, optimizing their practice management and ultimately improving patient outcomes. The CMS Final Rule not only sets the stage for better care delivery but also underscores the importance of continuous improvement and adaptation in the ever-evolving healthcare landscape.

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