2013 Medicare Changes

There are several issues affecting physical therapist payment for services in 2013. Use the resources on this page to stay informed about issues like sequestration, therapy cap, MPPR, manual medical review, functional limitation reporting, and PQRS, and find out how you can support APTA's advocacy efforts.

July 1: Medicare Part B Requires Functional Limitation Data

As of July 1, 2013, all those billing outpatient therapy services under Medicare Part B must begin or continue submitting functional limitation data (G-codes) for any beneficiary, or claims will be returned unpaid.

All practice settings that provide outpatient therapy services must include this information on the claim form. Specifically, the policy applies to physical therapy, occupational therapy, and speech-language pathology services furnished in hospitals, critical access hospitals, skilled nursing facilities, comprehensive outpatient rehabilitation facilities, rehabilitation agencies, home health agencies (when the beneficiary is not under a home health plan of care), and private offices of therapists, physicians, and nonphysician practitioners.

APTA urges physical therapists to utilize the vast resources on its Functional Limitation Reporting page, which include including PTNow's list of functional outcome measures identified for the top (highest volume conditions), FAQs, case scenarios, a free webinar, and an online discussion forum where you can ask questions and share experiences.

2013 Policy Primer - July 1 Update - 590x456

April 1: MPPR and Sequestration

Two critical changes for the physical therapy profession went into effect April 1, 2013: an increase in the multiple procedure payment reduction (MPPR) and, independent of the MPPR, the Medicare spending cuts caused by sequestration.

Use the information on this page to learn more about these issues.

Podcast: Heard on the Hill: Prepare for April 1 Medicare Payment Changes - 3/26/13 APTA.org Members Only Icon

Video: APTA President Paul Rockar Jr Outlines Key Dates Affecting Physical Therapist Payment - 2/28/13


The American Taxpayer Relief Act of 2012 (HR 8) prevented sequestration from going into effect until March 1. Congress did not act further to prevent these cuts, and they have begun to be implemented across the federal government. These cuts will affect programs important to all Americans, including physical therapy. The impact to physical therapy is expected to be seen in the areas of rehabilitation research, education and Medicare payment. APTA expects the sequester to result in a 5-7% cut for NIH funding, 5-8% cut for the Department of Education, and a 2% payment cut for all Medicare providers.

The Centers for Medicare and Medicaid Services (CMS) have indicated providers will begin receiving sequestration cuts beginning April 1. In addition, the 2% cut will only apply to the Medicare payment, not to the beneficiary copayments. The impact of this will be approximately 1.6% in cuts to provider payments. APTA's Fee Schedule Calculator is being updated to reflect these changes.

Federal agencies have some discretionary power regarding how to apply these cuts; therefore, the full impact of sequestration is not yet known. The combination of the sequester and MPPR cuts beginning April 1 could result in an 8-9% total cut for therapy providers. Continue checking APTA's website for updates on the full impact of the sequester and any efforts by Congress to retroactively address these cuts.

Therapy Cap, Fee Schedule, and MPPR

January 1, Congress passed the American Taxpayer Relief Act of 2012 (HR 8), which includes several important provisions for physical therapists.

The legislation freezes the Medicare conversion factor for 2013 at the 2012 level, averting a 26.5% cut to physical therapists and other providers under the physician fee schedule, and continues the 1.0 GPCI work value floor through 2013. The legislation also extends the current 2-tier therapy cap exceptions process ($1,900 automatic KX modifier process, $3,700 manual medical review, and application of the therapy cap to hospital outpatient department) for 1 year.

Additionally, in a provision that APTA has called "unjustified, capricious, and poor public policy," the bill applies the multiple procedure payment reduction (MPPR) to therapy services at 50%, up from 20% for office settings and 25% for facility settings, beginning April 1. APTA estimates the application of a 50% MPPR policy will reduce payments by approximately 6-7%. This reduction will be partially offset by a 4% increase that resulted from the Centers for Medicare and Medicaid Services' (CMS) use of new survey data of practice expenses conducted by APTA.

The impact of the MPPR reduction on individual practices and facilities will vary depending on the CPT codes billed and the typical duration of the therapy sessions. To determine the impact on your practice, refer to APTA's MPPR calculator, which can be used to determine payment rates for 2012 and 2013. APTA is advocating to stop the implementation of the MPPR provision (see info below).

In addition, several other policies of importance to physical therapists went into effect January 1, including functional limitation reporting and PQRS. Learn more.

2013 Fee Schedule and MPPR Calculator APTA.org Members Only Icon

FAQ: 2013 Medicare Therapy Cap - 3/26/13

FAQ: 2013 Physician Fee Schedule and MPPR - 3/25/13

Congressional Summary of Medicare Provisions and Offsets (.pdf) - 1/2/13

Statement by APTA President on Taxpayer Relief Act of 2012 - 1/1/13

Take Action on MPPR!

APTA is asking all members to contact their legislators and request that they delay implementation of MPPR until January 1, 2015. APTA members can contact their legislators using the Legislative Action Center. Nonmembers can use APTA's Patient Legislative Action Center to e-mail their legislators.


  • Ask your members of Congress to delay implementation of MPPR until January 1, 2015.
  • Tell your legislators that APTA is developing an alternative payment system, which is scheduled to begin on January 1, 2015, and will move payment away from the current multiple procedures system.
  • The impact of MPPR will result in a 6-7% payment cut for outpatient therapy providers, in addition to the 6-7% cut applied in 2011. The combination of sequestration and MPPR could result in at least a 9% cut for therapy providers under Medicare in 2013.
  • These payment cuts will be difficult for providers to absorb. Outpatient therapy settings may stop treating Medicare patients or be forced to close their doors.

For more information on APTA's advocacy efforts and to stay up-to-date on the latest MPPR news, join PTeam, APTA's grassroots network.

Guidance for Manual Medical Review Process

CMS announced as of April 1, 2013, recovery audit contractors (RACs) will conduct manual medical review (MMR) of outpatient therapy services, including physical therapy, for outpatient therapy claims that exceed $3,700.

In additional guidance on MMR, CMS said that RACS will complete 2 types of review for claims processed on or after April 1, 2013—prepayment review for states within the Recovery Audit Prepayment Review Demonstration, and immediate postpayment review for the remaining states.

APTA is gathering additional information regarding this MMR policy to further inform members. In addition, APTA will meet with CMS officials and Congress to address concerns about the challenges this process will present for both providers and patients.


In 2013, the PQRS program changes from an incentive-based program to a penalty program, informing both the 2013 bonus and the 2015 penalty. For further information, see our PRQS webpage.

CSM 2016