Occupational therapy billing requires precision: the correct code, the appropriate modifier, and documentation that clearly supports medical necessity. With the upcoming implementation of changes to the Medicare Physician Fee Schedule for 2026, occupational therapy practices must update their knowledge regarding frequently used codes, current reimbursement rates, and modifications compared to previous years. This guide examines the primary CPT code categories used in occupational therapy billing, estimated Medicare reimbursement figures for 2026, and regulatory changes that practices should monitor closely.

The reimbursement figures listed below are approximate national averages compiled from 2026 billing references and are subject to locality-based adjustments applied by the Medicare Administrative Contractor (MAC). Practices are advised to verify the exact rates for their specific locality using the CMS Physician Fee Schedule Look-Up Tool before relying on these figures for financial planning.

Key 2026 Medicare Billing Changes Affecting OT Practices

1. Conversion factor: The Medicare conversion factor for calendar year 2026 is approximately $33.29 for standard PFS participants ($33.46 for participants in Advanced Alternative Payment Models).
2. Evaluation code efficiency adjustment: CMS finalized a 2.5% reduction in work relative value units (RVUs) based on efficiency, applied to codes without time limits including occupational therapy evaluation and re-evaluation codes. Time-based treatment codes are exempt from this reduction.
3. Therapy threshold increase: The threshold for using the KX modifier in 2026 is $2,480 for occupational therapy services (a separate $2,480 threshold applies to combined physical therapy and speech-language pathology services). Once a patient's services exceed this amount, the KX modifier must be added to document medical necessity.
4. Targeted medical review threshold: It remains at $3,000 until 2027.
5. Telehealth extension: Telehealth billing flexibilities for occupational therapy services have been extended through December 31, 2027.
6. New Remote Therapeutic Monitoring (RTM) codes: Additional RTM codes have been introduced, creating new billing opportunities for practices that monitor patient progress remotely.

OT Evaluation and Re-Evaluation Codes

Evaluation codes are not subject to time limits and are billed once per evaluation episode; under Medicare Part B, the use of modifier GO is required.

The approximate Medicare reimbursement for 2026 in non-facility settings for occupational therapy (OT) evaluation codes typically falls within the $85 to $100 range per code; these figures vary based on complexity level and location, following the application of the 2.5% efficiency adjustment to untimed codes this year. Since the selection of evaluation codes is a common cause of undercoding, facilities must ensure that documentation clearly supports both the number of performance deficits and the complexity of the clinical decision-making being billed.

OT Therapeutic Procedure Codes (Timed, 15-Minute Units)

These codes are billed by applying the CMS "8-minute rule" which requires a minimum of 8 minutes of direct, one-on-one treatment per billable unit and require the GO modifier under the Medicare program.

Because these are timed codes, they were not subject to the 2.5% efficiency reduction applied to evaluation codes, and their values have generally held steadier year over year compared to evaluation-code reimbursement.

Cognitive Intervention and Specialty Codes

Coding Distinctions That Matter

1. 97110 vs. 97530: If the exercise focuses on a single physical parameter (such as strength) in isolation, use code 97110. If it simulates a real-world functional task, use code 97530.
2. 97530 vs. 97535: Code 97530 covers training in broader functional tasks; 97535 is specific to instruction in self-care and home management (dressing, meal preparation, use of adaptive equipment).
3. Overlapping time blocks: CMS's NCCI policy prohibits billing for more than one rehabilitation therapy service during the same 15-minute interval; documentation showing overlapping times is a frequent trigger for audits.

Modifiers That Affect Reimbursement

1. GO modifier: Required across all Medicare occupational therapy (OT) service lines to identify services provided in accordance with an occupational therapy plan of care.
2. KX modifier: It is attached once the patient's therapy costs exceed the $2,480 threshold, documenting the medical necessity for continued care.
3. CQ/CO modifiers: They are required when an occupational therapy assistant (OTA) provides more than 10% of the total timed minutes of a service. These modifiers trigger a 15% payment reduction under current Medicare rules.

Documentation Habits That Support Clean Claims

1. Clearly document the functional relationship between the activity and the billed CPT code; vague notes such as "the patient practiced dressing" do not support code 97535 as effectively as documentation describing the specific deficit addressed and the clinical reasoning behind the intervention.
2. Separately record the start and end times for each time-based service when billing multiple codes during a single visit.
3. Ensure a certified plan of care is on file before billing for any therapy service.
4. Accurately track the minutes of care provided by assistants to correctly apply the CQ/CO modifiers.

Final Thoughts

Reimbursement for occupational therapy services in 2026 will reward precision: accurate code selection, correct use of modifiers, and documentation that clearly links each billed service to a specific functional goal. With evaluation codes now subject to a permanent efficiency adjustment and therapy thresholds having increased, practices that stay current with these changes are better positioned to protect their revenue and avoid preventable claim denials.

At MedMaxBill, Inc., we help occupational therapy practices across New York manage CPT coding, modifier requirements, and constantly evolving CMS billing regulations, ensuring claims are submitted correctly the first time. If your practice needs assistance optimizing occupational therapy billing for 2026, our team is ready to partner with you.