Outpatient Therapy: Implications of the 9% Cuts and What’s in Store for 2021

As of December 21, 2020, the cuts will be reduced from an average of 9% to an average of 3.6% for 2021 using $5B in relief funds.


Information below is accurate as of publishing on December 17, 2020. Information presented may be subject to change pending further regulatory changes at a later date.


Outpatient physical and occupational therapists along with speech-language pathologists are really hoping for a present from Santa this year (translation: some financial relief from Congress). Why?

Because payment is being reduced in 2021 for most therapy codes.

The 2021 Medicare Physician Fee Schedule Final Rule (CMS-1734-F) was placed on view at the Federal Register on Wednesday, December 2, 2020. Substantial grassroots efforts by the entire therapy industry were not enough to convince CMS to alter plans for the projected average of 9 percent cuts to therapy codes. CMS, making its decision based on “budget neutrality,” claimed it was not authorized to do so. In a nutshell, CMS rebalanced a number of Evaluation and Management Codes (E&M) to give “raises” to primary specialties that came at the expense of reducing the amount paid to thirty-plus specialties, including physical therapy, occupational therapy, and speech-language pathology. CMS is achieving “balanced” budget neutrality by lowering the conversion factor from $36.0986 to $32.4085.  

There is a small ray of sunshinethe fee schedule for 2021 for therapy evaluation and reevaluation codes received small updates in value, but not enough to offset the reduction in the therapy codes. Of note, there are some issues with CMS revaluing the OT evaluation codes that AOTA is currently reviewing.

As this news sinks in, keep in mind that the MPPR (multiple procedure payment reduction) will be applied in claims payment, and the 2 percent sequestration that was temporarily suspended this year will return in January 2021. Providers subject to MIPS adjustments will also have to factor that into budget planning for 2021.

Additional Implications for 2021

Therapy Threshold

For 2021, the therapy threshold, also known as the therapy cap, will be $2,110 for physical therapy and speech-language pathology combined and $2,110 for occupational therapy. This was announced by CMS in Transmittal 10464 to the Claims Processing Manual. The effective date is January 1, 2021, with an implementation date of January 4, 2021. The medical review threshold, also known as manual medical review, remains at $3,000 until 2028.

Maintenance Therapy

Maintenance therapy will now be able to be delegated to physical therapist assistants (PTA) and occupational therapy assistants (COTA). Maintenance therapy delegated to PTA/COTA for Part B services was implemented during the COVID-19 PHE and is now finalized by CMS.


In a bit of a non-sequitur, the Final Rule clarified that physicians and NPPs, including therapists, can review and verify documentation entered into the medical record by members of the medical team for their own services that are paid under the PFS. 

Therapy students and students of other disciplines, working under a physician or practitioner who furnishes and bills directly for their professional services to the Medicare program, may document in the record so long as the documentation is reviewed and verified (signed and dated) by the billing physician, practitioner, or therapist.


The news on telehealth and communication technology-based services (CTBS) is mixed for outpatient physical therapy, occupational therapy, and speech-language pathology. PT, OT, and SLP were not added to the list of eligible distant health practitioners; however, a number of therapy codes were added to the list of telehealth codes on a Category 3 basis. These are able to be provided by PT, OT, and SLP until the end of the PHE.

Following the end of the PHE, these selected therapy codes will be able to be provided by PT, OT, and SLP incident to the services of a physician until the end of the year in which the PHE ends. Nuances related to the delivery of telehealth and CTBS exist for private practice therapists (Part B suppliers) and to therapists in institutional settings (Part A providers) including hospitals, SNFs, rehab agencies, CORFs, and home health. 

What Can Still Be Done: ‘Help Stop the Therapy Cuts’ Last Stand

The Holding Providers Harmless from Medicare Cuts During COVID-19 Act of 2020 (HR 8702) was introduced in the House on October 30, 2020. This bill directs CMS to reset payment to 2020 (current year) for all specialties (including PT, OT, and SLP) impacted in the Final Rule and keeps Medicare payment stable for the next two years.

Additionally, on December 10, 2020, the Senate introduced S.5007, a counterpart to HR 8702, “A bill to amend title XVIII of the Social Security Act to provide for an increase in payment under Part B of the Medicare program for certain services in response to COVID-19.” This would provide critical relief to rehab therapists set to receive Medicare payment cuts as a result of the changes made by CMS.

Visit the APTA, AOTA, APTQI, or ASHA websites or head to the NARA Advocacy Center to file a letter to your congressional delegation in support of legislation that is critical to the financial health of our therapy industry.

The end-of-the-year news from CMS brings more challenges than victories, but hope still remains with HR 8702 and SR 5007. Make sure your voice is heard.