Medicare’s outpatient therapy cap no longer exists as a hard limit on coverage. Congress eliminated it in 2018, and in its place Medicare uses annual dollar thresholds that trigger extra paperwork rather than cut off your benefits. For 2026, that threshold is $2,480 for physical therapy and speech-language pathology combined, and a separate $2,480 for occupational therapy.1CMS. Medicare Physician Fee Schedule Final Rule Summary: CY 2026 Cross that line and your provider adds a specific billing code to each claim certifying that continued therapy is medically necessary. You keep getting care; the paperwork behind the scenes changes.
From Hard Cap to Documentation Threshold
For years, Medicare Part B set a strict annual dollar limit on how much it would pay per beneficiary for outpatient physical therapy, occupational therapy, and speech-language pathology. If your charges hit the ceiling, Medicare stopped covering further sessions that year, regardless of medical need. Congress passed temporary exceptions repeatedly, and in February 2018 the Bipartisan Budget Act permanently eliminated the hard cap. The former cap amounts became what CMS now calls KX modifier thresholds: dollar markers that tell Medicare your provider has confirmed continued treatment is warranted.2CMS. Therapy Services
2026 Threshold Amounts
The thresholds adjust each year based on the Medicare Economic Index. For calendar year 2026:
- Physical therapy and speech-language pathology, combined into one running total: $2,480
- Occupational therapy, tracked in its own separate total: $2,480
Those figures represent the total Medicare-approved amount for your services, not just your out-of-pocket share.1CMS. Medicare Physician Fee Schedule Final Rule Summary: CY 2026 Charges accumulate across the full calendar year and across every outpatient provider you see, so switching therapists mid-year doesn’t reset the count. Physical therapy and speech-language pathology pool together. Occupational therapy stands alone, even when the same clinic provides all three services.
The thresholds apply to outpatient therapy under Part B wherever it’s delivered: private practices, physician offices, outpatient rehabilitation facilities, hospital outpatient departments, and home health when billed under Part B. Services for different conditions all feed the same yearly total.
What Happens When You Cross the Threshold
When your approved charges reach $2,480 in a category, nothing changes about your care. Your provider adds the KX modifier to every subsequent claim, certifying that continued therapy is reasonable, necessary, and requires the skills of a licensed therapist, with supporting documentation in your medical record.2CMS. Therapy Services A claim submitted above the threshold without the KX modifier will be denied, not because the therapy isn’t covered but because the required attestation is missing.
From your side, the process should be invisible. Your therapist handles the modifier and the notes. You might notice your provider asking you to sign updated treatment goals or discussing your progress in more detail. That’s the record Medicare expects being built.
The Higher $3,000 Review Threshold
A second, higher threshold triggers additional scrutiny. For 2026, targeted medical review kicks in at $3,000 for physical therapy and speech-language pathology combined, and $3,000 for occupational therapy.2CMS. Therapy Services The $3,000 figure stays fixed each year through 2028, then begins adjusting annually.
Crossing $3,000 doesn’t mean every claim gets audited. CMS uses targeting criteria such as unusually high billing patterns, elevated denial rates, or outlier costs within similar patient populations to select a limited number of claims for post-payment review. Most claims above $3,000 pass through without scrutiny.
What You Pay Out of Pocket
Under Original Medicare, you pay the standard Part B cost-sharing for outpatient therapy: a $283 annual deductible for 2026, then 20 percent of the Medicare-approved amount for each visit.3CMS. 2026 Medicare Parts A and B Premiums and Deductibles Medicare pays the remaining 80 percent.4Medicare.gov. Medicare Coverage of Therapy Services
A Medigap plan may cover some or all of the 20 percent coinsurance, depending on the plan. Without supplemental coverage, costs add up quickly for intensive therapy. Twenty percent of a $150 session is $30 per visit, and patients recovering from joint replacement or stroke may need two or three sessions a week for months.
The ABN: Your Protection Against a Surprise Bill
If your therapist believes Medicare will not cover upcoming sessions, because you’ve plateaued or the services no longer meet the medical-necessity standard, they must give you a written Advance Beneficiary Notice of Noncoverage (ABN) before providing those services.4Medicare.gov. Medicare Coverage of Therapy Services The ABN explains why Medicare may deny the claim and gives you three options: get the service and accept financial responsibility if denied, get the service and have Medicare decide, or skip the service.5CMS. Advance Beneficiary Notice of Noncoverage Tutorial It must include a good-faith cost estimate so you know what you’re agreeing to.
If a provider skips the ABN and Medicare later denies the claim, the provider generally cannot bill you for that service. You should never receive a surprise bill for therapy Medicare declined to cover when you weren’t warned in advance.
Appealing a Denied Therapy Claim
If Medicare denies a therapy claim, whether for insufficient documentation, a missing KX modifier, or a reviewer’s conclusion that the service wasn’t necessary, you have the right to appeal.6Medicare.gov. Filing an Appeal The first step is a redetermination by your Medicare Administrative Contractor, and most therapy denials resolve at this level or the next. You generally have 120 days from the date on your Medicare Summary Notice to file. Your therapist’s office can often help start the process, since they hold the clinical documentation Medicare needs to see. Four further levels exist above redetermination, up through federal court, with the amount in controversy for federal court set at $1,960 for 2026.
Two Situations Where the Rules Are Different
Outpatient therapy provided in a Critical Access Hospital does not count toward the threshold and is not subject to the targeted medical review process.7CMS. Requests for Exceptions to the Therapy Threshold: Manual Medical Review Process If you get therapy at one of these small, rural hospitals, those visits sit outside the calculation entirely.
Medicare Advantage plans (Part C) must cover at least the same therapy benefits as Original Medicare, but the details vary by plan: copays, prior authorization, network restrictions, and how thresholds are handled. Some plans require pre-approval before therapy begins or limit you to in-network providers. Check your Evidence of Coverage or call the plan to confirm your specific cost-sharing and any visit limits.