The 2027 Medicare Physical Therapy Cap: What $2,540 Means for Your Practice
Medicare has no therapy cap in 2027. The KX threshold is $2,540, targeted review stays at $3,000, and PT telehealth runs through 2027. What to do now.
Medicare has no hard cap on outpatient physical therapy in 2027. CMS finalized a KX modifier threshold of $2,540 for physical therapy and speech-language pathology combined, up from $2,480 in 2026. The targeted medical review threshold stays at $3,000, and PT telehealth is extended through December 31, 2027.
The KX modifier threshold rises to $2,540
For 2027, the KX modifier threshold is $2,540 for PT and SLP services combined, according to the CY 2027 Physician Fee Schedule final rule. Occupational therapy has its own separate $2,540 threshold.
Medicare keeps paying for medically necessary care after a patient's combined PT and SLP charges reach $2,540 in a calendar year. Each claim line above the threshold needs the KX modifier. KX is your attestation that the services are still reasonable and necessary and that the medical record supports them.
What to do: set your billing workflow to track each Medicare patient's running total against $2,540 starting with January 2027 dates of service. Before anyone appends KX, the documentation should support continued care.
The targeted medical review threshold stays at $3,000
The $3,000 threshold holds for 2027. Crossing it makes a claim eligible for targeted medical review. Coverage continues, and there is no automatic audit. Only some claims above the line get selected, and medical necessity still decides coverage.
What to do: if your notes already explain why skilled therapy is still medically necessary, nothing changes for you. Practices that document well have little to fear from $3,000.
PT telehealth runs through December 31, 2027
Under the Consolidated Appropriations Act, 2026, physical therapists, occupational therapists and speech-language pathologists can keep furnishing Medicare telehealth services through December 31, 2027 (CMS Therapy Services). Patients can be seen at home, and there is no rural-area requirement.
What to do: if telehealth is part of your model, you can plan on it through the end of 2027. The services still have to meet Medicare's telehealth coverage and billing rules, so check the codes you deliver remotely.
2027 quick reference
| Item | 2026 | 2027 |
|---|---|---|
| KX modifier threshold (PT + SLP combined) | $2,480 | $2,540 |
| KX modifier threshold (OT) | $2,480 | $2,540 |
| Targeted medical review threshold | $3,000 | $3,000 |
| PT telehealth eligibility | In effect | Through Dec 31, 2027 |
Where practices lose money around the threshold
Practices lose revenue around the threshold when they stop treating, stop billing, or move patients to self-pay because someone on staff still believes Medicare has a therapy cap. Congress repealed the hard cap in 2018, and treating past $2,540 with KX on the claim is how the system is meant to work.
Frequently asked questions
Is there a Medicare cap on physical therapy in 2027?
No. The hard cap was repealed in 2018. The $2,540 figure is a KX modifier threshold. Medically necessary therapy above it is still covered when the claim carries the KX modifier and the record supports it.
Is the KX modifier still used in 2027?
Yes. Add KX to each PT or SLP claim line once the patient's combined charges for the year pass $2,540, as long as the care is still medically necessary.
Does Medicare limit the number of physical therapy visits?
No. Original Medicare sets no visit limit for outpatient therapy. Coverage depends on medical necessity and documentation.
Does crossing $3,000 mean an audit?
No. It means a claim can be selected for targeted medical review. Medical necessity, backed by your documentation, still decides coverage.
Need help with 2027 Medicare billing?
Tracking thresholds, adding KX at the right line and keeping claims clean takes real front-office time. That is the work we do for outpatient PT practices. Contact us to talk about handing off your Medicare billing for 2027.