The 2026 Bottom Line — Before You Read Anything Else

The 2026 CMS Physician Fee Schedule Final Rule (CMS-1832-F) is the most consequential update for physical therapy practices in five years. The headline — a conversion factor increase after 5 straight years of cuts — masks a more complicated story: a mandatory 2.5% efficiency adjustment, a historic split into two separate conversion factors, and a telehealth landscape reshuffled by last-minute legislation. This blog cuts through the 2,375-page rule so your practice doesn't have to.

Here is the number your billing staff needs immediately: $33.40. That is the 2026 conversion factor for non-qualifying APM participants — which describes the overwhelming majority of outpatient PT practices. It is an increase from $32.35 in 2025, but what CMS gives with one hand, it partially takes back with the other.

The good news? Three new RTM CPT codes, a higher KX modifier threshold of $2,480, and ongoing caregiver training revenue streams create real offset opportunities — if your practice knows how to capture them.

Here are the 7 changes that matter most for your revenue cycle, clinical operations, and compliance posture in 2026.

CMS 2026 PT Reimbursement at a Glance

Before diving into each change, here is the core financial picture for 2026:

CMS 2026 Conversion Factor & Key Threshold Changes for Physical Therapy

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CHANGE 01  - FINANCIAL IMPACT

The Conversion Factor Split — Are You in the Right Tier?

For the first time in Medicare's history, the 2026 CMS Physician Fee Schedule uses two separate conversion factors — one for qualifying Alternative Payment Model (APM) participants and one for everyone else. This is not a minor administrative distinction. It is the financial embodiment of CMS's decade-long push toward value-based payment.

Qualifying APM participants receive a conversion factor of $33.57 — a 3.77% increase from 2025. Non-qualifying APM participants — including most outpatient PT practices — receive $33.40, a 3.26% increase. On the surface, both represent increases after five consecutive years of cuts. In practice, the 0.37% gap compounds across every Medicare claim your practice submits.

But here is the crucial nuance APTA flagged immediately: after accounting for changes to Relative Value Units (RVUs), physical therapists will see an average net reimbursement increase of only 1.75%. RVU adjustments reduce practice expense components for some facility-based services, partially offsetting the headline conversion factor gain.

Billing Staff Action

Model your 2026 Medicare revenue projections using $33.40 (non-QP baseline). If your practice participates in an ACO or Advanced APM, confirm QP status immediately at qpp.cms.gov to determine whether you qualify for the $33.57 rate. The QP determination for 2026 payment year is based on 2024 performance data.

CHANGE 02 - BILLING ALERT

The 2.5% Efficiency Adjustment — Does It Hit Your Codes?

CMS finalized a –2.5% efficiency adjustment applied to the work RVUs of non-time-based CPT codes. The rationale: as procedures become more common and technology improves, CMS assumes clinicians can deliver them more efficiently, justifying a lower payment. The adjustment is derived from the five-year cumulative Medicare Economic Index (MEI) productivity adjustment from 2021 through 2025.

For physical therapy, the practical impact is more nuanced than the headline suggests.

Which PT Codes Are Affected?

The majority of core PT codes — 97110 (therapeutic exercise), 97140 (manual therapy), 97530 (therapeutic activities) — are time-based and are NOT subject to the efficiency adjustment. This is significant protection for most outpatient PT revenue streams.

However, the following non-time-based codes used by PT practices may see reduced reimbursement:

•        97161–97163 (PT Evaluation codes) — potential work RVU reduction

•        97010 (Hot/cold pack application) — subject to efficiency adjustment

•        97014 (Electrical stimulation, unattended) — subject to efficiency adjustment

Additionally, due to advocacy by APTQI and APTA, CMS removed several frequently used codes from the efficiency adjustment list entirely: 97032, 97033, 97034, 97035, 97036, 97113, 97124, 97140, and 97533. Notably, 97140 (manual therapy) and 97113 (aquatic therapy) went from a negative year-over-year change to a positive one in 2026.

 Billing Staff Action

Run a CPT code frequency report for your practice before December 31. Identify which non-time-based codes appear in your top 20 billed codes and model revenue impact. Ensure time-based codes are documented with precise start/stop times to preserve their exempt status from efficiency adjustments.

CHANGE 03 - COMPLIANCE

KX Modifier 2026: New Threshold Is $2,480 — Are Your Systems Updated?

Every year, CMS indexes the KX modifier threshold to the Medicare Economic Index (MEI). For 2026, the combined physical therapy and speech-language pathology threshold rises from $2,410 to $2,480. The occupational therapy threshold also moves to $2,480. The targeted medical review (MR) threshold remains unchanged at $3,000 through 2028.

This is not a dramatic change in dollar terms — $70 more per patient before triggering enhanced documentation requirements. But the compliance implications are exactly the same as prior years, and the consequences of getting it wrong remain severe: claims submitted above the $2,480 threshold without the KX modifier are automatically denied.

What Triggers the KX Modifier?

When cumulative charges for combined PT and SLP services in a calendar year exceed $2,480, every subsequent claim must include the KX modifier. The modifier signals to Medicare that additional services are medically necessary and that the provider's documentation supports continued treatment beyond the threshold.

•        KX modifier does NOT cap care — it flags medical necessity for review

•        Documentation must clearly justify continued treatment: functional progress, measurable goals, and clinical rationale

•        Claims above $3,000 (targeted MR threshold) may trigger a focused audit — ensure all documentation is audit-ready

 Billing Staff Action

Update your EMR billing threshold alert from $2,410 to $2,480 immediately. Configure automated KX modifier triggers in your practice management system. Train front desk and billing staff to flag patients approaching $2,200 in accumulated charges for a documentation review before the threshold is crossed.

CHANGE 04  - NEW REVENUE

Three New RTM CPT Codes — A Revenue Stream Most Practices Are Missing

The 2026 CMS Final Rule adds three new Remote Therapeutic Monitoring (RTM) CPT codes that fix the biggest operational complaint practices had with the original RTM framework: the all-or-nothing billing threshold.

Under the prior framework, practices needed a minimum of 16 days of data transmission within a 30-day period to bill RTM device codes, and a minimum of 20 minutes of provider management time per month for treatment management codes. In the real world, patients miss sync days, go on vacation, or struggle with technology — meaning significant clinical effort went uncompensated.

What the New Codes Fix

•        98985 (NEW): RTM device supply for musculoskeletal monitoring, 2–15 days in a 30-day period. Fills the billing gap for patients who transmit less than 16 days of data.

•        98979 (NEW): RTM treatment management, first 10 minutes per month with at least 1 real-time patient interaction. Previously, practices needed 20 minutes to bill management — 10 minutes of legitimate work went unpaid.

•        98984 (NEW): RTM device supply for respiratory system monitoring, 2–15 days in a 30-day period.

The existing codes 98976 and 98977 had their descriptors revised to explicitly specify the 16–30 day monitoring window, complementing the new 2–15 day companion codes. All three new codes are designated "sometimes therapy" codes, meaning therapists must bill them under a therapy plan of care with GP, GO, or GN modifiers.

2026 RTM CPT Code Reference Guide for Physical Therapy Practices

*Rates based on non-facility national averages. Actual reimbursement varies by locality. Source: CMS MLN Matters MM14250; Tenovi RTM CPT Codes 2026.

Practice Owner Action

Calculate your RTM revenue opportunity: if your practice has 30 active RTM patients per month who previously failed the 16-day threshold, billing 98985 at ~$28 per patient = $840/month or ~$10,000/year in previously unrecovered revenue. The math scales significantly for multi-provider practices.

CHANGE 05  - NEW REVENUE

Caregiver Training CPT Codes: Are You Billing What You're Already Doing?

The CMS Final Rule 2024 introduced caregiver training CPT codes — and most PT practices are still not billing them consistently in 2026. If you are treating patients who require family members or caregivers to assist with home exercise programs, functional mobility training, or activities of daily living — and you are spending time training those caregivers — you have been leaving reimbursable services on the table.

These codes allow physical therapists and occupational therapists to bill Medicare for time spent training unpaid caregivers (family members, friends, or neighbors) even when the patient is not present. Key requirements:

•        Caregiver training must be part of the patient's active plan of care

•        The training must be designed to achieve specific, measurable patient outcomes

•        The caregiver must be unpaid — paid professional caregivers do not qualify

•        Documentation must describe the caregiver's relationship, the skills trained, and the anticipated patient benefit

Clinical Director Action

Audit your current caseload for patients with high caregiver dependency: post-stroke, post-surgical hip/knee, pediatric rehabilitation, and neurological conditions. For each qualifying patient, integrate a structured caregiver training session into the plan of care and document it separately. Based on typical training session requirements, practices can generate $200–400 in additional monthly revenue per qualifying patient.

CHANGE 06 - POLICY UPDATE

Telehealth for PTs: Extended Through December 31, 2027 — With New Location Rules

The telehealth story for physical therapists in 2026 had all the drama of a last-minute legislative thriller. PT telehealth privileges were set to expire January 31, 2026, having been extended repeatedly since the COVID-19 public health emergency. When the government shutdown consumed the early weeks of the year, the extension appeared in jeopardy.

On February 3, 2026, President Trump signed the Consolidated Appropriations Act, 2026 (HR 7148), which extended all major Medicare telehealth flexibilities through December 31, 2027. Physical therapists, occupational therapists, and speech-language pathologists are explicitly included in the expanded practitioner eligibility list. Key provisions:

•        Patients may receive telehealth services from any location, including home — no geographic restrictions through December 31, 2027

•        Audio-only telehealth remains permitted when clinically appropriate and documented

•        PTs, OTs, and SLPs remain eligible as distant-site telehealth providers through December 31, 2027

•        Behavioral health telehealth in-person requirements deferred until January 1, 2028

However, there is a critical administrative change that catches many practices off guard: providers can no longer bill telehealth services from their home address without formally enrolling that address with Medicare. Any location from which a PT provides telehealth services must be enrolled as a practice location in PECOS (Provider Enrollment, Chain, and Ownership System).

 Practice Owner Action

Stop referring to your telehealth program as 'temporary' or 'COVID-era' in patient communications — it is now extended through December 31, 2027. Immediately verify that all telehealth service locations (including home offices) are enrolled in PECOS. Failure to do so results in denied claims regardless of clinical appropriateness.

CHANGE 07  - QPP / MIPS

MIPS 2026: Stability in the Program — But the MVP Transition Clock Is Ticking

CMS characterized its 2026 Quality Payment Program (QPP) policy as one of "stability" — and by Washington standards, that is largely accurate. The 75-point MIPS performance threshold is maintained through the 2028 performance year. The four performance categories remain intact. And the Musculoskeletal MVP introduced in 2024 continues as the primary voluntary pathway for PT practices interested in value-based payment.

But stable does not mean static. Key 2026 MIPS changes physical therapy practices must track:

Quality Measure Updates

•        5 new quality measures added to the 2026 MIPS inventory

•        Substantive changes to 30 existing quality measures

•        10 quality measures removed from the inventory

•        "Health equity" removed from the definition of high-priority measures — narrowed to clinical outcomes, safety, and care coordination

MVP Changes

•        6 new MVPs finalized for 2026 (diagnostic radiology, interventional radiology, neuropsychology, pathology, podiatry, vascular surgery) — PT-relevant MVP remains the Musculoskeletal MVP

•        All 21 existing MVPs modified to align with updated quality and improvement activity inventories

•        Multispecialty groups can no longer register as a group for MVP reporting — must register at subgroup, individual, or APM Entity level (exception: small practices of 15 or fewer clinicians)

What Does This Mean for PT Practices?

CMS has been explicit: MIPS Value Pathways are the future of the program. Traditional MIPS will be phased out after the 2027 performance year. Starting in 2028, MVPs (or APMs) will be the only options. If your practice has not yet piloted the Musculoskeletal MVP, the 2026 performance year is the last low-stakes opportunity to do so before it becomes effectively mandatory.

Practice Owner Action

Check your MIPS participation status immediately at qpp.cms.gov. Confirm whether you meet the low-volume threshold exemption (billing ≤$90,000 to Medicare, OR treating ≤200 Medicare beneficiaries, OR furnishing ≤200 covered professional services). If required to participate, assess Musculoskeletal MVP registration for 2026 and begin tracking MSK quality measures (MSK6–MSK9) now.

Your 2026 CMS Compliance Action Table

All 7 changes. All stakeholders. One table. Print this and post it in your billing office.

2026 CMS Final Rule — Compliance Action Table for PT Practices

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Navigating CMS 2026 Changes Manually Is a Revenue Risk.

SPRY's AI-powered EMR automatically flags KX modifier thresholds, supports the new RTM CPT codes, tracks MIPS performance in real time, and keeps your billing compliant with every CMS update — so your team focuses on patients, not paperwork.

👉  Read Our 2026 MIPS Guide for PT Practices   |   👉  Schedule a Free SPRY Demo

Conclusion: CMS 2026 Is a Net Positive — If You Know Where to Look

The 2026 CMS Final Rule is, on balance, better news than most PT practice owners anticipated going into the year. The conversion factor increase ends five consecutive years of cuts. The new RTM codes expand billing flexibility. The KX modifier threshold moved up. And telehealth is locked in through 2027.

But the rule is not a gift — it is a test of how well your billing infrastructure, documentation protocols, and technology platforms are aligned with CMS's direction of travel. The 2.5% efficiency adjustment penalizes practices leaning on non-time-based codes without compensating volume. The dual conversion factor rewards APM participation. And the MIPS-to-MVP transition is accelerating whether practices are ready or not.

The practices that thrive in 2026 will be the ones that modeled their revenue projections accurately, updated their billing systems before January 1, and captured the new RTM and caregiver training revenue that legacy workflows simply miss.

Frequently Asked Questions

What is the conversion factor 2026 for PT practices?

There are now two conversion factors. Physical therapists who qualify as APM participants receive $33.57 per RVU (a 3.77% increase from 2025). Non-qualifying APM participants — the majority of outpatient PT practices — receive $33.40 (a 3.26% increase). However, due to RVU changes, APTA estimates most PTs will see an average net reimbursement increase of approximately 1.75%.

What is the KX modifier threshold for 2026?

The KX modifier threshold for combined physical therapy and speech-language pathology services in 2026 is $2,480 — an increase of $70 from the 2025 threshold of $2,410. The occupational therapy threshold is also $2,480. The targeted medical review threshold remains at $3,000.

What are the new caregiver training CPT codes for physical therapy?

Caregiver training CPT codes were introduced in the CMS 2024 Final Rule and carry forward in 2026. These codes allow PTs to bill Medicare for time spent training unpaid caregivers (family members, friends, or neighbors) when the training is part of the patient's active plan of care and is designed to achieve specific patient outcomes. The patient does not need to be present during the training session.

Is PT telehealth covered by Medicare in 2026?

Yes. The Consolidated Appropriations Act, 2026 (signed February 3, 2026) extended Medicare telehealth flexibilities — including PT, OT, and SLP eligibility — through December 31, 2027. Patients may receive services from home with no geographic restrictions. However, providers must enroll all service locations (including home offices) in PECOS to bill telehealth services.

What are the new RTM CPT codes for 2026?

Three new RTM codes were finalized effective January 1, 2026: 98985 (musculoskeletal device supply, 2–15 days), 98979 (RTM treatment management, first 10 minutes with 1 live interaction), and 98984 (respiratory device supply, 2–15 days). These complement existing codes and reduce the minimum data transmission threshold, making more patients eligible for RTM billing.

How does the efficiency adjustment affect PT billing in 2026?

CMS finalized a –2.5% efficiency adjustment to work RVUs for non-time-based CPT codes. Most core PT codes — 97110, 97140, 97530 — are time-based and exempt. Evaluation codes (97161–97163) and some modality codes (97010, 97014) may see reduced work RVUs. APTQI advocacy resulted in 9 frequently used PT codes being removed from the efficiency adjustment list entirely.

What is the MIPS performance threshold for 2026?

The MIPS performance threshold remains at 75 points through the 2028 performance year (for 2030 payment adjustments). Practices below 75 points face negative payment adjustments; those above may earn positive adjustments. The Musculoskeletal MIPS Value Pathway (MVP) remains voluntary but is the recommended pathway for PT practices preparing for the post-2027 mandatory MVP era.

References

1. Centers for Medicare & Medicaid Services. Calendar Year (CY) 2026 Medicare Physician Fee Schedule Final Rule (CMS-1832-F). Federal Register, October 31, 2025. https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2026-medicare-physician-fee-schedule-final-rule-cms-1832-f

2. CMS. Medicare Physician Fee Schedule Final Rule Summary: CY 2026. MLN Matters Article MM14315. https://www.cms.gov/files/document/mm14315-medicare-physician-fee-schedule-final-rule-summary-cy-2026.pdf

3. CMS. Therapy Code List: 2026 Annual Update. MLN Matters Article MM14250. https://www.cms.gov/files/document/mm14250-therapy-code-list-2026-annual-update.pdf

4. CMS. Therapy Services — KX Modifier Threshold Amounts CY 2026. Updated February 2026. https://www.cms.gov/medicare/coding-billing/therapy-services

5. American Physical Therapy Association (APTA). CMS Finalizes Fee Schedule Pay Bump for the First Time in 5 Years. November 18, 2025. https://www.apta.org/article/2025/11/18/cms-finalizes-fee-schedule-pay-bump-for-the-first-time-in-5-years

6. APTA. Takeaways from the Proposed 2026 Medicare Physician Fee Schedule, Part 1. July 25, 2025. https://www.apta.org

7. Alliance for Physical Therapy Quality and Innovation (APTQI). CMS Releases Medicare Physician Fee Schedule Final Rule for CY 2026. November 21, 2025. https://www.aptqi.com

8. Medbridge. The 2026 Medicare Physician Fee Schedule Final Rule Is Here: Summary & Actionable Takeaways. November 5, 2025. https://www.medbridge.com

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