What the Latest Medicare Changes Mean for Your Therapy Practice as We Move into 2026

As we transition into 2026, therapy providers nationwide are navigating pivotal changes in Medicare regulation and reimbursement. The most recent CY 2025 Medicare Physician Fee Schedule (MPFS) Final Rule lays the groundwork for changes that will shape therapy practice this year, and beyond. These developments carry immediate implications for physical therapists (PTs), occupational therapists (OTs), speech-language pathologists (SLPs), and therapy assistants.

From reimbursement reductions and tracer thresholds to supervision reforms and telehealth rollbacks, staying ahead of these updates is essential for compliance, financial stability, and high-quality patient care. Today, we’ll break down the most impactful changes and what they mean for your therapy practice as you prepare for 2026.

1. Reimbursement Rate Reductions: What You Need to Know

One of the most immediate financial pressures for 2025 (and into 2026) is the reduction in payment rates under the MPFS. CMS finalized the conversion factor (CF) at approximately $32.35 for calendar year (CY) 2025, a drop of about 2.83% compared to the CY 2024 CF of $33.29.

Why This Matters

• The CF converts Relative Value Units (RVUs) for each CPT code into dollar payment amounts.
• Virtually all codes are impacted unless specifically revalued upward to offset the cut.
• For therapy practices heavily reliant on Medicare Part B patients, this reduction tightens margins.

Example Calculation

• CPT code with 2.0 RVUs × CF $32.35 = $64.70
• Compared to 2024: 2.0 × $33.29 = $66.58

Action Steps for Your Practice

• Review your top-volume CPT codes and forecast the impact of payment reduction.
• Adjust budgets, staffing, or service mix accordingly.
• Monitor any Congressional intervention that could alter the CF for 2026.

2. KX Modifier Threshold Increase

The KX modifier remains a vital tool for therapy billing. It signals to CMS that services provided beyond the threshold are medically necessary.

For CY 2025:

• PT + SLP combined threshold: $2,410
• OT threshold: $2,410

Usage & Documentation Essentials

• Attaching the KX modifier is not sufficient by itself.
• You must document:
  • Reason for continuation of services
  • Objective clinical findings (e.g., ROM, functional limitations)
  • Treatment plan signed by therapist with goals and expected outcomes

Good Documentation Example

“After 12 sessions, the patient improved right knee flexion by 10°. However, they still demonstrate difficulty with upstairs transfers and a Timed Up & Go (TUG) of 18s. Continued therapy is medically necessary to restore safe mobility and prevent fall risk.”

3. Manual Medical Review (MR) Threshold Holds Steady

CMS retains the $3,000 threshold for outpatient therapy services, above which claims may be subject to manual review.

What You Must Know

• If a patient’s therapy costs exceed $3,000, CMS may trigger a Targeted Probe & Educate (TPE) audit.
• Documentation must include:
  • Progress notes
  • Clearly defined treatment plans
  • Clinical justification for ongoing care

Action Item

• Build audit-ready documentation protocols now.
• Educate clinicians and billing staff on red-flags (e.g., high cost/billing patterns, frequent KX usage).

4. Supervision Requirements for Therapy Assistants — A Major Win

One of the few major positive changes in the 2025 MPFS final rule: CMS is switching from direct supervision to general supervision for PTAs and OTAs in outpatient private-practice settings.

What This Means

• The supervising PT/OT must be immediately available (via phone, video, or physically) but does not need to be in the same room.
• This aligns outpatient private-practice supervision with other settings and eases administrative burden—especially beneficial in rural or underserved regions.

Operational Implications

• Practices may adjust staffing models (e.g., increased use of PTAs) to manage costs while maintaining therapy access.
• Review internal supervision policies and train staff accordingly.

5. Plan of Care (POC) Certification Reforms

CMS has updated the signature requirement for initial therapy plans of care in outpatient settings.

Key Changes

• A signed physician order or referral now satisfies the POC signature requirement if the therapist transmits the plan within 30 days of the evaluation.
• This exemption does not apply to recertification or direct-access cases.

Practice Impacts

• Reduces delays in starting therapy when physician signatures are slow to arrive.
• Update front-desk and clinical workflows to reflect new POC process.

6. Telehealth Policy Updates — Important Nuances

Telehealth rules for therapy services remain in flux. Many pandemic era waivers are winding down, but some flexibilities persist for now.

What to Know

• Traditional Medicare telehealth eligibility rules started largely reverting at the beginning of the year, so many therapy services may not be reimbursed under standard Part B telehealth rules unless specific legislation intervenes.
• However, some telehealth flexibilities (especially audio-only) remained through September 30, 2025, particularly for non-behavioral/mental health services. After September 30, 2025, physical therapists, occupational therapists, speech-language pathologists, and audiologists can no longer furnish Medicare Telehealth services.
• Movement to broaden therapy telehealth permanently is under legislative review but not finalized.

Action Steps

• Review and update service models, scheduling, and patient communication for telehealth and in-person services.
• Confirm telehealth eligibility with your Medicare Administrative Contractor (MAC) and monitor upcoming legislation.

7. Impacts on Your Therapy Practice — Strategy & Compliance

These updates will affect your practice across finances, operations, and compliance systems.

Financial Planning

• Lower CF = tighter margins; evaluate mix of Medicare vs. commercial or cash pay.
• Consider adding wellness, maintenance programs, or alternative revenue streams.

Compliance & Documentation

• Robust documentation is now more critical.
• Train clinical and administrative staff on new thresholds (KX, MR) and supervision changes.
• Review auditing risk and create standard documentation templates.

Strategic Adaptation

• Diversify payer base to reduce Medicare dependency.
• Explore group therapy, wellness services, or telehealth (where valid).
• Leverage NARA membership for resources, benchmarking, and advocacy.

8. Advocacy & Legislative Outlook

The therapy provider community remains actively engaged in advocacy. Organizations like the American Physical Therapy Association (APTA) and the National Association of Rehabilitation Providers & Agencies (NARA) continue to push for:

• Reversals or mitigation of the ~2.8% payment cut
• Expanded telehealth access for therapy practitioners
• Simplified documentation and billing requirements
• Stable supervision and certification policy changes

Key legislative initiatives to watch include the EMPOWER Act and other bipartisan bills aiming to strengthen therapy provider access and fairness in Medicare.

Action for Providers

• Stay informed via NARA’s advocacy updates
• Reach out to your lawmakers about therapy-related policies
• Engage your team in advocacy so your practice’s voice is heard

Preparing Your Practice for 2026 and Beyond

The Medicare changes for 2025, and what’s projected for 2026, present both challenges and opportunities for therapy providers. While reimbursement cuts and telehealth uncertainties pose risks, supervision reforms and certification process improvements deliver long-awaited relief.

Your checklist:

• Audit and adjust billing and documentation workflows
• Train staff on new compliance thresholds and supervision rules
• Monitor upcoming rulemaking and legislative developments
• Partner with NARA for support, advocacy, and professional resources

With proactive adaptation, your therapy practice can navigate the regulatory shift and continue delivering high-value care to Medicare beneficiaries while sustaining your business.