Physical therapy reimbursement rates are facing another significant decrease in 2025, with the conversion factor dropping to $32.3465 from $33.29 in 2024 - a concerning 2.83% reduction that will affect the physical therapy industry, in particular our private practices.
While this decrease presents challenges for practice owners, there are some positive changes on the horizon. The therapy threshold for physical therapy services is increasing to $2,410 in 2025, up from $2,330 in 2024. In addition, new provisions are being implemented to reduce administrative burdens, particularly easing plan of care certification requirements.
We'll examine these changes in detail, breaking down the 2025 Medicare Physician Fee Schedule final rule, the conversion factor adjustments, therapy threshold updates, and modifications to the Plan of Care certification process. This information will help you prepare your practice for the upcoming changes and understand their impact on your bottom line.
Overview of 2025 Medicare Fee Schedule Final Rule
On November 1, 2024, the Centers for Medicare & Medicaid Services (CMS) released the Medicare Physician Fee Schedule final rule that will shape Physical Therapy reimbursement rates for the coming year. A 2.8% decrease in the conversion factor suggests an ongoing trend of reduced Medicare payments for physical therapists and other healthcare providers. This will the fifth consecutive year of cuts to the Physical Therapy Reimbursement Rate.
However, the final rule includes several positive changes for our profession. The supervision requirements for Physical Therapist Assistants are being updated to align with state licensure laws - a change that will especially benefit practices in rural areas where PTAs are 50% more likely to provide therapy services.
The rule also introduces new flexibility in how we handle administrative tasks. Specifically, CMS has streamlined the plan of care certification process, reducing paperwork burdens that have historically impacted our ability to focus on patient care.
Overview of 2025 Physical Therapy Reimbursement Rates Changes
Decrease to Conversion Factor
Let's examine the most significant change in the 2025 Medicare Fee Schedule that will impact reimbursement. Unfortunately, we're looking at a conversion factor of $32.35, down from $33.29 in 2024 - a concerning 2.83% reduction.
Consequently, this reduction presents real challenges for physical therapy private practices. With rising overhead costs and declining physical therapy reimbursement rates, maintaining profitable operations becomes increasingly difficult.
Notably, this marks the fifth consecutive year of payment cuts to physical therapy reimbursement rates. The decrease, though smaller than previous years, still adds pressure to our bottom lines. The budget-neutral payment system continues to impact outpatient providers significantly.
Impact on 2025 Physical Therapy Reimbursement Rates
The table below provides a comparative look at the 2025 medicare fee schedule for the top 10 CPT Codes for outpatient physical therapy.
2025 vs. 2024 Medicare Reimbursement Rates for Physical Therapy (National Payment Amount, Non-Facility)
HCPCS Code | Description | 2025 | 2024 |
97110 | Therapeutic exercises | $28.79 | $29.29 |
97112 | Neuromuscular reeducation | $32.02 | $33.62 |
97116 | Gait training therapy | $28.79 | $29.29 |
97140 | Manual therapy 1/> regions | $27.17 | $26.96 |
97530 | Therapeutic activities | $34.61 | $36.62 |
97150 | Group therapeutic procedures | $17.47 | $17.98 |
97161 | Pt eval low complex 20 min | $98.01 | $100.20 |
97162 | Pt eval mod complex 30 min | $98.01 | $100.20 |
97163 | Pt eval high complex 45 min | $98.01 | $100.20 |
97164 | Pt re-eval est plan care | $67.60 | $69.57 |
The following reimbursement data is based on the National Payment Amount (MAC: 0000000). Reimbursement rates will vary slightly depending on your MAC locality. Providers can look up fee schedule per their MAC locality here.
Reimbursement for CPT Code 97110: Therapeutic Exercises
Therapeutic exercises will be decreased from $29.29 (2024) to $28.79 (2025)
Reimbursement for CPT Code 97112: Neuromuscular Reeducation
Neuromuscular reeducation will be decreased from $33.62 (2024) to $32.02 (2025)
Reimbursement for CPT Code 97140: Manual Therapy
Manual therapy will be increased from $26.96 (2024) to $27.17 (2025)
Reimbursement for CPT Code 97530: Therapeutic Activities
Therapeutic activities will be decreased from $36.62 (2024) to $34.61 (2025)
Reimbursement for CPT Code 97116: Gait Training
Gait training will be decreased from $29.29 (2024) to $28.79 (2025)
Reimbursement for CPT Code 97150: Group Therapeutic Procedures
Group therapeutic procedures will be decreased from $17.98 (2024) to $17.47 (2025)
Reimbursement for CPT Code 97161: PT Eval Low Complexity
PT eval low complex will be decreased from $100.20 (2024) to $98.01 (2025)
Reimbursement for CPT Code 971612: PT Eval Moderate Complexity
PT eval moderate complex will be decreased from $100.20 (2024) to $98.01 (2025)
Reimbursement for CPT Code 97163: PT Eval High Complexity
PT eval high complex will be decreased from $100.20 (2024) to $98.01 (2025)
Reimbursement for CPT Code 97164: PT Re-eval Establish Plan of Care
PT Re-eval est plan care will be decreased from $69.57 (2024) to $67.60 (2025)
Reimbursement is based on your MAC locality or your geographic location. To check your regional reimbursement click here.
Other Updates
Beyond the conversion factor changes, several other updates in the 2025 Medicare Fee Schedule will affect our practices. Let's examine these important modifications that could impact our operations.
Change to Therapy Threshold
The final rule has established the threshold for therapy services at $2,410 for the combined physical therapy and speech-language pathology services, and $2,410 for occupational therapy services. This is an increase from the previous threshold of $2,330 in 2024. Additionally, the threshold for targeted medical review is set at $3,000 for the combined physical therapy and speech-language pathology services, and $3,000 for occupational therapy services until CY 2027.
KX Modifier
The $2,410 amount serves as a threshold, not a "cap" or upper limit. Should medically necessary services exceed this value, providers can continue billing by attaching the KX modifier to each charge and document the medical necessity for the service.
Changes to Plan of Care Certification Process
The certification process for therapy plans of care is becoming more streamlined.
The Centers for Medicare & Medicaid Services (CMS) has approved a new policy regarding physician signatures on therapy plans of care (POC). Under this policy:
A signed and dated physician order or referral can now fulfill the requirement for a physician signature on a POC.
For this to be valid, the therapist must document that they have sent the POC to the physician within 30 days of completing the initial evaluation.
Under the new exemption, the requirement for the physical therapist to obtain the physician's signature for the initial evaluation will be considered fulfilled if the physical therapist submits the plan of care to the patient's referring physician within 30 days of the evaluation. PTs no longer need to obtain the physician’s signature (for the initial evaluation).
While this does not replace the need to send a plan of care, it does alleviate chasing down signatures.
PTA Supervision
The supervision requirement for physical therapist assistants under Medicare Part B will change from the current direct supervision requirement to general supervision. This change will align outpatient settings with the general supervision policies in place in all other Medicare settings. Additionally, 49 states already permit general supervision of PTAs under state licensure laws, making Medicare's direct supervision requirement in the outpatient setting more burdensome than most state licensure requirements.
This change will provide more flexibility for the therapy workforce and ensure access to therapy services for millions of Medicare beneficiaries, particularly in rural or underserved areas where beneficiaries are 50% more likely to receive therapy from a PTA.
Possible Reimbursement Increase Coming
Some positive news has emerged for our profession amid the concerning reimbursement changes. A bipartisan group in Congress has introduced the Medicare Patient Access and Practice Stabilization Act, offering hope for better compensation in 2025.
Medicare Patient Access and Practice Stabilization Act
This vital legislation proposes a 4.73% increase in the Medicare Physician Fee Schedule conversion factor. Essentially, this would:
Eliminate the planned 2.8% reduction for 2025
Add a 1.9% adjustment for inflation
Create a more sustainable Medicare payment model
Indeed, this bill addresses a critical issue in our field. Since 2001, Medicare physician payments have dropped by 29% when adjusted for inflation. Notably, independent medical practices are struggling with rising operating costs, widespread burnout, and heavy administrative burdens.
The legislation has gained substantial support from numerous healthcare organizations. Primarily, this reflects our profession's unified stance on the need for fair, inflation-adjusted Medicare payments. For our private practices, this bill could offer much-needed financial stability, particularly as we face increasing operational costs and staffing challenges.
Conclusion
Medicare reimbursement changes for 2025 present both challenges and opportunities for our physical therapy practices. Though we face a 2.83% decrease in the conversion factor, several positive developments could help offset this reduction.
Certainly, the streamlined Plan of Care certification process will make our daily operations more efficient. These improvements, paired with updated PTA supervision requirements, should help us deliver better care while reducing administrative work.
Meanwhile, the proposed Medicare Patient Access and Practice Stabilization Act offers hope for improved reimbursement rates. This bipartisan effort could eliminate the planned reduction and provide much-needed financial stability for our practices.