2026 Occupational Therapy Billing & Payment Updates
Your Blueprint to Navigating Reimbursement and Compliance in 2026
Table of Contents
- Introduction
- 1. Medicare Payment Update for Occupational Therapy – 2026
- 2. Remote Therapeutic Monitoring (RTM) Expansion
- 3. OTA Modifier & Payment Reduction (Continues in 2026)
- 4. Therapy Thresholds & Medical Review
- 5. Telehealth Status for Occupational Therapy
- 6. Patient Responsibility & Cash Flow
- 7. Quality Reporting (MIPS)
- Key Takeaway
- Action Plan for 2026
Similar to PT, 2026 is a stabilization year for OT, offering modest payment improvements along with expanded opportunities, while maintaining strict documentation and audit expectations.
1. Medicare Payment Update for Occupational Therapy – 2026
For the first time in several years, Medicare has finalized a net payment increase under the 2026 Physician Fee Schedule.
- Most OT practices will see an approximate 3.2%–3.3% increase in Medicare reimbursement.
- Timed treatment codes (e.g., therapeutic activities, self-care training, neuromuscular re-education) benefit the most.
- Certain non-timed services, including OT evaluations, may experience slight payment pressure due to CMS efficiency adjustments.
Practices with consistent treatment utilization and balanced evaluation-to-treatment ratios should see a modest positive revenue impact in 2026.
2. Remote Therapeutic Monitoring (RTM) Expansion
RTM continues to be a growing revenue opportunity for OT in 2026.
Key updates include:
- Tiered RTM billing, allowing reimbursement for:
- 2–15 days of device data transmission
- 10–19 minutes of monthly treatment management
- New and revised RTM codes designated as “sometimes therapy”
- When RTM is provided under an OT plan of care, the GO modifier is required.
RTM can now be used for shorter episodes of care and partial patient compliance, enabling OT practices to generate additional non-visit-based revenue, provided documentation and modifier usage are accurate.
3. OTA Modifier & Payment Reduction (Continues in 2026)
- The CO modifier remains mandatory for services furnished by an Occupational Therapy Assistant (OTA).
- OTA-provided services continue to be reimbursed at a reduced rate under Medicare.
Improper or missing CO modifier usage remains a high-risk audit and recoupment trigger. Accurate therapist vs. assistant role documentation is essential.
4. Therapy Thresholds & Medical Review
For 2026:
- KX threshold: $2,480 (OT is tracked separately from PT/SLP)
- Targeted Medical Review threshold: $3,000
- Claims exceeding these thresholds remain subject to increased scrutiny.
Documentation must clearly support:
- Medical necessity
- Skilled OT intervention
- Functional improvement related to ADLs and IADLs
5. Telehealth Status for Occupational Therapy
Standard Medicare telehealth privileges for OT services expired in early 2026, unless extended by legislation.
- OT services may no longer be billed independently via Medicare telehealth under Part B
- RTM and in-person services remain the primary compliant pathways
6. Patient Responsibility & Cash Flow
Medicare Part B deductible for 2026: $283
Higher patient responsibility early in the year may impact collections. Clear communication and point-of-service collections will be increasingly important for cash flow stability.
7. Quality Reporting (MIPS)
- MIPS performance threshold remains 75 points
- Additional quality measures related to preventive screening and functional assessment have been added to the OT specialty set
Failure to meet MIPS requirements may negatively impact future Medicare reimbursement, particularly for smaller OT practices.
Key Takeaway
2026 rewards operational discipline and documentation strength in Occupational Therapy. Practices that:
- Implement RTM correctly
- Maintain strict CO and KX modifier compliance
- Demonstrate functional progress clearly
will be best positioned to protect revenue and minimize audit risk.
Our team will continue to support you with:
- RTM billing and documentation guidance
- CO and KX modifier audits
- Denial prevention and compliance reviews
Please contact us if you would like a practice-specific OT billing impact assessment or assistance preparing your workflows for 2026.
Action Plan for 2026
- ✔ RTM implemented with GO modifier compliance
- ✔ OTA services monitored for payment impact
- ✔ KX and threshold documentation strengthened
- ✔ Telehealth risks eliminated
- ✔ Cash flow protected against higher deductibles
- ✔ MIPS performance actively managed
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