Understanding the 2025 Medicare Physician Fee Schedule Changes

Every year, CMS releases updates to the Medicare Physician Fee Schedule (PFS), and each year, those updates can have a major impact on physical therapy practices across the country.

The proposed 2025 changes are no different—and they include reimbursement cuts, policy updates, and opportunities for smarter billing. If you're a physical therapist, clinic owner, or practice manager, understanding these changes is key to protecting your bottom line.

As a billing partner committed to helping physical therapy practices succeed, we’re breaking down the most relevant updates from the 2025 PFS and what they mean for you.

📉 The Conversion Factor Is Decreasing—Again

One of the headline changes is the proposed reduction in the Medicare conversion factor, which impacts how much you're paid for each CPT code.

• 2024 Conversion Factor: $33.29

• Proposed 2025 Conversion Factor: $32.36

That’s a 2.8% decrease, which can add up fast when you're billing dozens—or hundreds—of services each week.

💡 Example: If you bill CPT 97110 (therapeutic exercise) multiple times per day, that 2.8% reduction applies to each and every instance. It may not seem like much per code, but across your caseload, it could translate to thousands in lost revenue.

⚠️ Why Is This Happening?

This reduction is tied to CMS’s ongoing efforts to maintain budget neutrality, especially as new codes are added or revalued. It’s also the result of statutory payment adjustments required by law.

Unfortunately, without Congressional intervention, these reductions tend to become a yearly tradition—and practices that don’t adjust often feel the squeeze.

🧠 What This Means for Your PT Practice

Whether you're a solo provider or managing a multi-location practice, this change affects your cash flow. It’s more important than ever to ensure that:

• You’re capturing all billable units accurately

• Documentation supports maximum reimbursement

• Claims are submitted cleanly and quickly

• Denials are resolved promptly

Even small improvements in billing efficiency can help offset the cut in reimbursement rates.

📝 Key Updates Beyond the Conversion Factor

Here are a few more important 2025 updates that impact physical therapy:

1. KX Modifier Threshold Increase

As of 2025, the combined PT/SLP KX threshold has increased to $2,410.
Services above this amount require the KX modifier to continue reimbursement. Proper use and documentation are essential.

2. Continued Use of Telehealth for Therapists

Therapists in private practice may continue providing and billing for telehealth services through at least September 30, 2025.
Make sure your billing team is using the correct modifiers (e.g., 95) and POS codes (02) for telehealth visits.

3. Payment Reductions Still Apply for PTA/OTA Services

The 15% payment reduction for services performed in whole or in part by therapy assistants remains in effect.
Use CO (OTA) or CQ (PTA) modifiers where appropriate, and ensure assistants are clearly documented in your notes.

📋 Action Steps to Stay Ahead

Here’s how you can prepare for the 2025 changes and minimize revenue disruption:

✅ 1. Perform a Fee Schedule Impact Analysis

Run a report on your most commonly billed CPT codes and compare 2024 vs. 2025 rates. This helps you forecast revenue changes and identify where you might need to adjust volume or services.

✅ 2. Update Documentation & Modifier Training

Ensure all therapists and assistants are trained on documentation standards that support medical necessity and correct modifier use.

✅ 3. Optimize Scheduling for Revenue and Outcomes

Use data to refine your scheduling so you're maximizing billable time without sacrificing patient care. Smarter scheduling = more efficient revenue capture.

✅ 4. Work with a Billing Expert

Partnering with a medical billing company that specializes in physical therapy can help you stay compliant, reduce denials, and get paid faster—even as rules change.

💬 Final Thoughts

The 2025 Medicare Physician Fee Schedule may bring more financial pressure, but it also brings an opportunity to sharpen your billing strategy, improve documentation habits, and streamline your operations.

You don’t have to navigate these changes alone. We help physical therapy practices like yours understand what’s changing, how it affects you, and how to adjust—so you can focus on what matters: patient care.

Need help planning for the 2025 Medicare updates?
Let’s talk. We’ll help you analyze the impact, optimize your billing workflow, and protect your revenue in the year ahead.