CMS Therapy Documentation Requirements for Medicare

To get Medicare to pay for outpatient physical therapy, occupational therapy, or speech-language pathology, the medical record has to carry a specific chain of documents from the first visit to the last: a therapist evaluation, a written Plan of Care certified by a physician, a dated treatment note for every session with accurate timed minutes, a progress report at least every 10 treatment days, recertification of the plan at least every 90 days, and the correct modifiers on the claim. CMS therapy documentation requirements for Medicare are strict on each of those pieces, and a gap anywhere in the chain is the most common reason therapy claims are denied on audit or clawed back after payment.

The Initial Evaluation

The evaluation has to be performed by the licensed therapist, not an assistant, and it sets the clinical baseline that every later note will be measured against. It must include the patient’s medical diagnosis, the history of the current condition, and a description of the functional limitations that brought the patient in.¹

The therapist has to quantify that baseline with objective tests and measures. “Decreased mobility” is not enough. CMS expects data from standardized assessment tools that have been normed and validated, and the assessment has to be multi-dimensional. A pain-only instrument like the Visual Analog Scale does not satisfy the requirement, because the record needs to cover functional capacity rather than pain intensity alone.²

The evaluation also has to contain a clear statement of medical necessity: why this patient’s condition requires the skills of a licensed therapist. If an untrained caregiver or the patient could safely do the same activities, the service is not skilled and Medicare will not cover it.³

The Plan of Care

Before treatment starts, the therapist or the patient’s physician must establish a written Plan of Care with three required elements: the patient’s diagnoses, measurable long-term treatment goals, and the type, amount, frequency, and duration of the planned services.¹

Type is the specific intervention, such as therapeutic exercise or manual therapy. Amount is how many times per day the service will be provided. Frequency is the number of sessions per week. Duration is the total length of the treatment episode in weeks or total visits. Auditors look for all four, and leaving any one out is a common reason for denial.

Goals must tie directly to the impairments found during the evaluation. “Improve function” is too vague. Each goal has to be measurable so a reviewer can compare baseline data to later progress reports and decide whether the patient is benefiting from skilled care.

A physician or non-physician practitioner has to certify the Plan of Care, and recertification is required at least every 90 calendar days after treatment begins. Recertification is also required whenever the plan changes significantly, such as an extension of the treatment duration or a change in the type of services.⁴ The certifying provider can approve the plan for any duration they consider clinically appropriate, up to the 90-day maximum. Treatment beyond the certified duration requires a new recertification before services continue.

Daily Treatment Notes and the 8-Minute Rule

A treatment note is required for every session. Each note must record the date of service, the specific interventions performed, the patient’s response to treatment, and the total treatment time in minutes. It must be signed by the treating professional with their credentials.⁴

Time documentation matters because most therapy CPT codes are billed in 15-minute units, and CMS uses the 8-Minute Rule to decide how many units a provider can charge. A single service under 8 minutes cannot be billed at all. The conversion from total timed minutes to billable units runs like this:⁵

1 unit: 8 through 22 minutes
2 units: 23 through 37 minutes
3 units: 38 through 52 minutes
4 units: 53 through 67 minutes
5 units: 68 through 82 minutes
6 units: 83 through 97 minutes
7 units: 98 through 112 minutes
8 units: 113 through 127 minutes

The pattern adds 15 minutes for each additional unit. When several timed services happen in the same session, add up all the timed minutes across services to determine total billable units, then allocate those units to the individual CPT codes based on the minutes each service consumed. Miscounting here is one of the fastest ways to trigger an overpayment finding.

Progress Reports

A progress report must be completed at least once every 10 treatment days. The first day of the therapy episode counts as day one whether that visit was an evaluation or a treatment session.¹ The therapist can write it earlier, but not later.

The report has to compare the patient’s current functional status to the baseline from the initial evaluation and document progress toward the long-term goals. It must include the therapist’s professional judgment on whether continued skilled services are necessary. A note that says “patient tolerated treatment well” or “continue with Plan of Care” is insufficient and will not support ongoing coverage.⁶

At the end of the episode, the final progress report serves as the discharge note. It should summarize overall progress from the initial evaluation, document which goals were met and which were not, and explain the reason for discharge.

KX Modifier and Targeted Review Thresholds

Medicare does not cap outpatient therapy spending, but once a beneficiary’s charges hit a dollar threshold, documentation scrutiny increases. For 2026, the KX modifier threshold is $2,480 for physical therapy and speech-language pathology combined, and a separate $2,480 for occupational therapy. These figures are updated annually.⁷

Above the threshold, every claim line must carry the KX modifier. Adding it is the provider’s attestation that the record supports medical necessity beyond the threshold amount. Claims over the threshold submitted without the KX modifier are automatically denied.⁷

A second, higher threshold triggers potential targeted medical review. For 2026 that threshold is $3,000 for each category. Above it, Medicare Administrative Contractors may request the full medical record and conduct a detailed review of whether the services were reasonable and necessary. The $3,000 targeted review threshold stays fixed through 2027 and will be updated by the Medicare Economic Index beginning in 2028.⁸

When a PTA or OTA Provides the Service

Physical therapist assistants and occupational therapy assistants can deliver services under the supervision of a licensed therapist, but the documentation is stricter and the payment is lower. Since January 1, 2022, Medicare pays 85 percent of the standard rate for services furnished in whole or in part by a PTA or OTA.⁹

The claim has to flag those services with the right modifier. The CQ modifier applies to physical therapy services furnished in whole or in part by a PTA, paired with the GP therapy modifier. The CO modifier applies to occupational therapy services furnished in whole or in part by an OTA, paired with the GO therapy modifier. The CQ or CO modifier is required when the assistant furnishes all the minutes for a service, or when the assistant’s portion exceeds 10 percent of the total minutes for that service. That is the de minimis standard. Claims with mismatched modifier pairs are rejected as unprocessable.⁹

The treatment note has to make clear who performed which portions of the service and for how many minutes. The supervising therapist stays responsible for the Plan of Care and must sign all documentation. Loose time tracking between therapist and assistant is where billing errors most often show up.

Maintenance Therapy After Jimmo

After the Jimmo v. Sebelius settlement, CMS clarified that Medicare coverage does not depend on whether the patient is expected to improve. Therapy aimed at maintaining current function or slowing decline is covered as long as the patient needs a skilled therapist to perform or supervise the program safely and effectively.¹⁰

The documentation bar for maintenance therapy is higher than for restorative care, because you cannot lean on objective improvement data to justify continued treatment. The notes must lay out a detailed rationale explaining why skilled care is necessary given the patient’s overall medical condition, the complexity of the service, and any characteristics of the patient or their living situation that make unskilled alternatives unsafe. “Patient remains stable” will not clear that bar. The record has to explain what would happen if the skilled therapist stopped: whether the condition would deteriorate, whether the exercises would become unsafe without professional supervision. That clinical reasoning belongs in the record every session.⁶

Telehealth Therapy

Medicare covers certain therapy services delivered by telehealth, but the documentation goes beyond what an in-person visit requires. When services are billed by hospital-employed therapists via telehealth, the claim must include modifier 95. The Place of Service code has to reflect whether the patient was at home (POS 10) or at another location (POS 02).¹¹

Patient consent for telehealth must be documented. For home health therapy delivered via real-time video or audio-only technology, the record has to explain how the telehealth format helps achieve the goals in the Plan of Care. Telehealth policies for therapy have been changing quickly since the pandemic-era flexibilities, so verify current coverage rules at the start of each calendar year.¹¹

Remote Therapeutic Monitoring is a related but separate service that captures treatment-related data between visits, such as musculoskeletal or respiratory measurements. For RTM billing, the record has to document the specific dates of data transmission, the total number of monitoring days in the reporting period, and the clinician time spent reviewing data and making care decisions.

Signatures, Corrections, and Retention

All documentation must be legible and available for review on request. Every entry needs the author’s dated signature and credentials. In an electronic health record, the system has to be protected against unauthorized modification, and the person whose name appears on the electronic signature bears full responsibility for that entry. If a signature is illegible during review, the contractor may request a signature log or attestation to resolve the issue.¹²

When you correct an error, the original entry must stay visible. On paper, draw a single line through the incorrect text. In an EHR, the system should preserve the original and append the correction. Either way, the correction has to include the date, the identity of the person making it, and the reason for the change. Deleting or overwriting the original is a compliance violation that can raise fraud concerns during an audit.

Medicare Fee-For-Service providers must keep therapy records for at least six years from the date the document was created or last in effect, whichever is later. Medicare managed care providers face a 10-year retention requirement. Providers who submit cost reports must retain patient records for at least five years after the cost report closes.¹³ State law may require longer retention in some jurisdictions, so follow whichever rule gives the longest period.

What Happens When Documentation Falls Short

Incomplete documentation is not just an administrative problem. When a Medicare contractor requests records and the documentation is missing, incomplete, or does not support medical necessity, the claim is denied. If it was already paid, the provider gets a demand letter for the overpayment and has to return the funds.¹⁴

Providers whose claims show patterns of errors face escalating corrective actions. Education and feedback is the first step, with the contractor notifying the provider of proper billing procedures. Prepayment review comes next: a selection of future claims must be reviewed and approved before Medicare authorizes payment, continuing until the provider demonstrates correct billing. The heaviest step is postpayment review with statistical sampling, where the contractor reviews a sample of paid claims and uses statistical methods to estimate the total overpayment across all claims in the relevant period.

That last category is where the real financial exposure sits. A statistical extrapolation from a small sample of deficient records can produce an overpayment demand covering hundreds of claims the provider thought were properly documented. By the time the letter arrives, the record cannot be retroactively fixed. It either supports the services billed or it does not.¹⁴

1
Centers for Medicare & Medicaid Services. Medicare Benefit Policy Manual, Chapter 15
2
QPP – CMS. Quality ID #182: Functional Outcome Assessment
3
Centers for Medicare & Medicaid Services (CMS). Therapy Requirements Fact Sheet
4
Centers for Medicare & Medicaid Services. Complying Outpatient Rehabilitation Therapy Documentation Requirements
5
Centers for Medicare & Medicaid Services. CMS Manual System – Pub 100-04 Medicare Claims Processing
6
CMS. Jimmo v. Sebelius Settlement Agreement Program Manual Clarifications Fact Sheet
7
Centers for Medicare & Medicaid Services. Therapy Services
8
Centers for Medicare & Medicaid Services (CMS). 2026 Annual Update of Per-Beneficiary Threshold Amounts
9
Centers for Medicare & Medicaid Services. Billing Examples Using CQ/CO Modifiers for Services Furnished in Whole or in Part by PTAs and OTAs
10
Centers for Medicare & Medicaid Services. Pub 100-02 Medicare Benefit Policy – CMS Manual System
11
Centers for Medicare & Medicaid Services. Telehealth and Remote Monitoring
12
Centers for Medicare & Medicaid Services (CMS). Medical Review Policies for Signature Requirements
13
Centers for Medicare & Medicaid Services. Medical Record Retention and Media Format for Medical
14
Centers for Medicare & Medicaid Services. Medicare Claim Review Programs