Physical Therapy CPT Codes 2025: Essential Guide

Physical therapy reimbursement is under pressure in 2025. For the fifth consecutive year, Medicare has reduced the conversion factor that determines how much you’re paid for every CPT code you bill. The 2025 Medicare Physician Fee Schedule (MPFS) conversion factor dropped to $32.3465—a 2.83% decrease from 2024’s $33.2875.

For a solo practice seeing 20 Medicare patients per day, this translates to approximately $12,000-$18,000 in lost annual revenue before you’ve even opened your doors. Understanding which CPT codes to use, when to use them, and how to maximize reimbursement within compliant parameters has never been more critical.

This comprehensive guide covers everything you need to know about physical therapy CPT codes in 2025, including updated Medicare reimbursement rates, strategic code selection (like 97110 vs 97530), and how to adapt to shrinking margins while maintaining quality care.

Understanding CPT Codes: The Foundation of PT Billing

CPT (Current Procedural Terminology) codes are five-digit numeric codes maintained by the American Medical Association (AMA) that describe the medical, surgical, and diagnostic services you provide. For physical therapists, CPT codes answer the question: “What did you do during this patient encounter?”

CPT Codes vs. ICD-10 Codes

Both are required on every claim, but they serve different purposes:

Critical rule: Your CPT codes must be medically necessary for the ICD-10 diagnosis(es) you’re treating. Billing 97110 (therapeutic exercise) for a diagnosis of acute fracture may be denied as not medically appropriate for the condition stage. For comprehensive guidance on selecting the right diagnosis codes, see our ICD-10 codes for physical therapy in 2025.

Time-Based vs. Service-Based CPT Codes

Physical therapy CPT codes fall into two categories:

Time-Based Codes (follow 8-minute rule):

• Can be billed multiple times per session
• Each unit = 15 minutes (but only 8 minutes required for first unit)
• Examples: 97110, 97112, 97116, 97140, 97530
• Learn more about calculating units with our complete guide to the Medicare 8-minute rule

Service-Based Codes (billed once per session):

• Billed one time regardless of time spent
• Not subject to 8-minute rule calculations
• Examples: 97161-97164 (evaluations), 97010 (hot/cold packs), G0283 (electrical stimulation unattended)

The 2025 Medicare Conversion Factor Crisis

The Medicare conversion factor is the dollar amount Medicare assigns to each relative value unit (RVU) in the Physician Fee Schedule. Every CPT code has an assigned RVU value, which is then multiplied by the conversion factor to determine the payment amount.

2025 Conversion Factor: $32.3465

This represents a $0.94 decrease from 2024’s rate of $33.2875.

Historical trend:

• 2021: $34.89
• 2022: $34.61
• 2023: $33.89
• 2024: $33.29
• 2025: $32.36

Total decline since 2021: -7.3%

Why Are Payments Decreasing?

Medicare’s Physician Fee Schedule operates under a budget-neutral framework. When certain changes are expected to increase total payments by more than $20 million, CMS is required by law to reduce the conversion factor so overall spending doesn’t exceed budget targets.

In 2025, several factors contributed to the cut:

• Increased utilization of certain services
• Addition of new higher-valued codes
• Practice expense adjustments
• Work RVU redistributions

The result: Physical therapy services subsidize increases in other specialties’ reimbursement.

Congressional Response

The Medicare Patient Access & Practice Stabilization Act was introduced in October 2024 to provide a 4.73% payment increase to offset the conversion factor cut. If enacted, this would result in a net increase of 1.9% instead of the 2.83% decrease.

Status as of January 2025: Pending Congressional action. Physical therapy advocates should contact legislators to support this legislation.

Real-World Impact: Revenue Loss Calculations

Example Practice:

• 20 Medicare patients/day
• 5 days/week
• 48 weeks/year
• Average 3.5 billable units per visit
• Average payment per unit: $30 (2024 rates)

2024 annual revenue: 20 × 5 × 48 × 3.5 × $30 = $1,008,000

2025 revenue (2.83% reduction): $1,008,000 × 0.9717 = $979,153

Annual revenue loss: $28,847

This doesn’t account for increases in operating costs (rent, utilities, salaries), which typically rise 3-5% annually. The effective revenue erosion could be 6-8% when accounting for inflation.

2025 Medicare Reimbursement Rates: Common PT CPT Codes

The following are national average non-facility payment amounts for common physical therapy CPT codes in 2025. Important: Actual rates vary by Medicare Administrative Contractor (MAC) locality. Use the CMS Physician Fee Schedule Lookup Tool to find your specific regional rates.

Evaluation Codes (Service-Based)

Coding tip: Choose evaluation complexity based on:

• Low (97161): Stable condition, minimal comorbidities, straightforward clinical presentation
• Moderate (97162): Evolving condition, some comorbidities, moderate clinical decision-making
• High (97163): Unstable condition, significant comorbidities, complex clinical presentation requiring extensive analysis

Therapeutic Procedure Codes (Time-Based)

Key observation: 97530 (therapeutic activities) continues to reimburse approximately $6.16 more per unit than 97110 (therapeutic exercise), representing a 27.5% premium. Understanding when to appropriately use 97530 instead of 97110 is a critical revenue optimization strategy (more on this below).

Modality Codes (Time-Based)

Unattended Modality Codes (Service-Based)

Billing note: Unattended modalities have low reimbursement and high audit risk. CMS scrutinizes practices with high utilization of these codes, especially when billed in combination with time-based therapeutic codes without clear medical necessity documentation.

Group Therapy Code (Time-Based)

Important: Each patient must be documented individually, and the 8-minute rule applies per patient.

CPT Code 97110 vs. 97530: The $6 Question

One of the most frequently asked questions in physical therapy billing is: “When should I use 97530 instead of 97110?”

The answer has significant financial implications—97530 reimburses approximately $6.16 more per unit than 97110. For a practice billing 10 units of 97530 per day instead of 97110 (when appropriate), this represents $15,000+ in additional annual revenue.

CPT 97110: Therapeutic Exercise

Official description: “Therapeutic procedure, one or more areas, each 15 minutes; therapeutic exercises to develop strength and endurance, range of motion and flexibility.”

Key characteristics:

• Exercises designed to improve isolated body functions
• Focus on developing specific physical capacities (strength, endurance, ROM, flexibility)
• Typically more structured and repetitive
• Does not necessarily simulate functional tasks

Examples of 97110 activities:

• Resistance band exercises for rotator cuff strengthening
• Free weight bicep curls and shoulder presses
• Stationary bike for cardiovascular endurance
• Hamstring stretching on treatment table
• Straight leg raises for quadriceps strengthening
• Balance board exercises (when focused on ankle stability, not functional balance)

CPT 97530: Therapeutic Activities

Official description: “Therapeutic procedure, one or more areas, each 15 minutes; therapeutic activities, direct (one-on-one) patient contact (use of dynamic activities to improve functional performance).”

Key characteristics:

• Dynamic activities that improve functional performance
• Simulate real-world tasks the patient needs to perform
• Integrate multiple body systems (strength, coordination, balance, ROM) simultaneously
• Task-specific and contextual to patient’s functional goals

Examples of 97530 activities:

• Sit-to-stand transfers from various heights (simulating getting out of chairs, toilet, car)
• Lifting weighted objects from floor to counter height (simulating groceries, laundry)
• Walking while carrying objects (simulating functional mobility at home)
• Step-up exercises simulating stair negotiation in patient’s home
• Reaching and placing tasks simulating kitchen activities
• Balance training during functional tasks (walking, reaching, bending)
• Simulation of work-specific tasks (assembly line motions, construction activities)

The Critical Distinction: Isolated vs. Integrated

Use 97110 when: The focus is on developing specific physical capacities through isolated exercises.

Use 97530 when: The focus is on integrating those capacities into functional, task-specific activities that simulate real-world demands.

Documentation Requirements for 97530

To justify billing 97530 instead of 97110, your documentation must clearly demonstrate:

1. The functional task being simulated or practiced

   • “Patient practiced sit-to-stand transfers from various seat heights to simulate home environment (standard chair, low couch, toilet height).”

2. Dynamic, integrated movement patterns

   • “Patient performed step-ups onto 8” platform while carrying 10lb weighted bag, simulating grocery carrying up stairs to apartment."

3. Connection to patient’s functional goals

   • “Patient worked on reaching overhead and placing objects on high shelf, specific to goal of independent kitchen management.”

4. Real-world context

   • “Practiced picking up objects from floor and placing on table height surface repeatedly, simulating laundry tasks at home.”

What NOT to Bill as 97530

Red flag documentation that will trigger audits:

• Simply renaming 97110 exercises as 97530
• Billing 97530 for exercises on equipment (treadmill, bike, weights) without functional context
• Vague documentation: “Performed therapeutic activities” (doesn’t describe what activities)
• Billing 97530 for every patient every visit without clear functional integration

Audit risk: Practices with 97530 utilization exceeding 35-40% of total timed codes may face increased scrutiny from Medicare contractors.

Optimization Strategy: The 70/30 Rule

Best practice: Aim for approximately 70% of timed units as 97110/97112/97140 and 30% as 97530 (when clinically appropriate).

Example compliant treatment session:

• 15 minutes 97110 (therapeutic exercises - resistance band rotator cuff strengthening, core exercises)
• 15 minutes 97112 (neuromuscular re-education - proprioceptive training, motor control)
• 15 minutes 97530 (therapeutic activities - functional reaching/lifting tasks simulating home activities)

Total units: 3 units (2 units 97110/97112, 1 unit 97530) Reimbursement: (2 × $28.46) + (1 × $34.62) = $91.54

If all coded as 97110: 3 × $28.46 = $85.38 Additional revenue with appropriate 97530 use: $6.16 per session Annual impact (15 patients/day, 240 days/year): $22,176

Strategic Code Selection: Maximizing Compliant Reimbursement

With shrinking reimbursement, strategic code selection within compliant guidelines is essential.

Strategy 1: Prioritize Higher-Value Codes (When Appropriate)

Application: When your treatment legitimately includes functional activities or neuromuscular training components, document and code them appropriately rather than defaulting to 97110 and 97140.

Strategy 2: Emphasize Skilled Services Over Modalities

Modalities are lower-paying and higher-risk from an audit perspective. Shift clinical focus toward skilled therapeutic procedures.

Comparison:

• 97035 (Ultrasound): $22.11/unit
• 97110 (Therapeutic exercise): $28.46/unit (+$6.35)
• 97530 (Therapeutic activities): $34.62/unit (+$12.51)

Revenue impact: Reducing modality utilization from 20% to 10% of timed codes and replacing with skilled therapeutic procedures can increase per-visit revenue by $8-12.

Strategy 3: Maximize Group Therapy Efficiency (Where Appropriate)

97150 (Group therapy) allows you to treat 2-6 patients simultaneously, each following the 8-minute rule.

Example:

• Group of 3 patients performing balance and gait training exercises
• 30 minutes of treatment time
• Billing: Each patient receives 30 minutes = 2 units of 97150
• Revenue: 3 patients × 2 units × $21.38 = $128.28 for 30 minutes

Compared to individual treatment:

• 30 minutes with one patient = 2 units of 97116 (gait training)
• Revenue: 2 × $28.66 = $57.32

Group therapy efficiency multiplier: 2.24× revenue per 30-minute period

Important compliance requirements:

• Each patient must be working toward their individual goals
• You must provide direct, skilled intervention to each group member
• Individual documentation required for each patient
• Group composition should facilitate therapeutic benefit (similar diagnoses, functional levels)

Strategy 4: Use Evaluation Complexity Appropriately

Don’t default to 97162 (moderate complexity) for every evaluation. Use 97163 (high complexity) when patient presentation warrants it.

97163 justification indicators:

• Multiple comorbidities affecting rehabilitation (diabetes, cardiovascular disease, obesity)
• Complex surgical history or trauma
• Cognitive or communication barriers
• Psychosocial factors complicating treatment (depression, anxiety, chronic pain syndrome)
• Need for extensive coordination with other providers
• Unstable condition requiring careful monitoring

Payment difference: 97163 ($170.04) vs. 97162 ($126.32) = $43.72 more

Over 500 evaluations/year: Appropriate use of 97163 for complex patients (even 20% of cases) = $4,372 additional revenue

Common CPT Coding Errors That Cost You Money

Error #1: Under-Documenting Treatment Time

Problem: Providing 23 minutes of therapeutic exercise but only documenting 20 minutes.

Impact: 23 minutes = 2 billable units; 20 minutes = 1 billable unit. You lose $28.46.

Solution: Use real-time documentation tools that automatically timestamp services.

Error #2: Not Billing All Appropriate Services

Problem: Providing manual therapy and therapeutic exercise but only coding one.

Impact: Lost revenue for services actually provided.

Example: 15 minutes manual therapy + 20 minutes therapeutic exercise

• Correct billing: 1 unit 97140 + 1 unit 97110 = $27.16 + $28.46 = $55.62
• If only billing 97110: 2 units = $56.92 (close, but missed manual therapy specificity)
• If only billing 97140: 2 units = $54.32 ($1.30 less)

Error #3: Billing Time-Based Codes for Service-Based Services

Problem: Billing multiple units of 97010 (hot/cold packs) or 97012 (mechanical traction).

Impact: Claims rejected—these codes are billed once per session regardless of time.

Error #4: Defaulting to 97110 for Everything

Problem: Billing all therapeutic procedures as 97110 even when 97530, 97112, or other higher-value codes are appropriate.

Impact: Up to $6-8 per unit in lost revenue when legitimate therapeutic activities or neuromuscular training are provided but coded as 97110.

Error #5: Insufficient Documentation for Code Selected

Problem: Billing 97530 (therapeutic activities) but documenting “patient performed exercises.”

Impact: Audit findings, recoupment demands, potential fraud investigation.

Solution: Documentation must support the specific CPT code selected, including functional context for 97530.

2025 Therapy Threshold Increase: $2,410

The Medicare therapy cap was permanently repealed in 2018, but a therapy threshold remains in place. For 2025, the threshold increased to $2,410 for PT/SLP combined services (up from $2,330 in 2024).

What the Threshold Means

When a patient’s cumulative PT/SLP charges exceed $2,410 in a calendar year:

• Claims are not denied automatically
• But the KX modifier must be appended to CPT codes to indicate services are medically necessary
• Claims may be subject to targeted manual medical review

KX Modifier Requirements

To append the KX modifier, you must have documentation supporting:

1. Continued medical necessity for therapy services
2. Expectation of additional functional improvement
3. Complexity of the patient’s condition requiring skilled therapy
4. Patient’s progress toward goals

Documentation essentials:

• Updated goals with measurable outcomes
• Objective progress measurements (ROM, strength, function scores)
• Justification for continued skilled therapy (not maintenance)
• Expected timeline for discharge

Audit risk: Practices with high percentages of patients exceeding the threshold should implement internal audits to ensure documentation supports continued treatment.

How to Adapt to Declining Reimbursement

With the fifth consecutive year of payment cuts, physical therapy practices must adapt to survive.

1. Diversify Payer Mix

Problem: Over-reliance on Medicare (which represents 40-60% of patient volume for many practices)

Solution: Expand marketing to attract:

• Commercial insurance patients (often paying 150-200% of Medicare rates)
• Workers’ compensation cases
• Personal injury/auto accident patients
• Cash-pay patients (wellness, sports performance, chronic pain management)

2. Optimize Scheduling and Productivity

Higher patient volume per therapist (when clinically appropriate) spreads fixed costs across more revenue.

Example:

• Current: 12 patients/day, 3.5 units/patient, $30/unit = $1,260/day
• Optimized: 15 patients/day, 3.5 units/patient, $30/unit = $1,575/day (+25% revenue)

Important: Productivity increases must maintain quality care and therapist wellbeing. Burnout from excessive caseloads creates long-term costs.

3. Reduce Overhead Costs

Target areas:

• Renegotiate supplier contracts (therapy equipment, office supplies)
• Review utility and telecommunications expenses
• Evaluate space efficiency (sublease unused rooms)
• Optimize staffing ratios (PT to PTA to admin)

Caution: Don’t cut costs that directly impact patient experience or clinical outcomes (equipment quality, cleanliness, staff training).

4. Implement Value-Added Services

Offer services that differentiate your practice and justify premium positioning:

• Specialized programs (vestibular rehab, pelvic floor therapy, sports performance)
• Telehealth for follow-ups or rural patients
• Remote therapeutic monitoring (RTM) for ongoing management
• Wellness programs and injury prevention services

5. Leverage Technology for Efficiency

Modern EMR systems like Proactive Chart reduce administrative burden and improve billing accuracy:

• Automatic coding suggestions based on documentation
• Real-time unit calculation preventing under-billing
• Integrated billing and claims submission reducing rejection rates
• Compliance alerts for missing documentation or threshold exceedances

Time savings: 45-60 minutes per day per therapist = 3-4 additional patient slots per week

6. Focus on Billing Accuracy

Every denied claim costs you:

• The reimbursement amount (temporarily or permanently)
• Staff time to research and resubmit (15-30 minutes)
• Delayed cash flow affecting operations

Proactive Chart reduces denials by:

• Validating CPT and ICD-10 code compatibility before submission
• Ensuring time-based unit calculations follow 8-minute rule
• Checking payer-specific requirements automatically
• Flagging missing modifiers (like KX when threshold exceeded)

Industry average denial rate: 5-10% of claims Proactive Chart users: 1-3% denial rate (60-70% reduction)

Looking Ahead: 2026 and Beyond

The 2026 Medicare Physician Fee Schedule proposed rule is expected mid-2025, with a final rule by November 2025.

What to Watch For:

1. Continued Conversion Factor Pressure Unless Congress acts, budget-neutral adjustments will likely continue pushing the conversion factor lower.

2. Increased Quality Measure Emphasis CMS is strengthening ties between payment and quality reporting (MIPS). Accurate coding and patient outcomes will increasingly affect reimbursement.

3. Telehealth Policy Evolution Temporary telehealth flexibilities adopted during COVID-19 have been extended through 2025 but face uncertainty beyond that.

4. PTA Supervision Changes The 2025 final rule changed PTA supervision from “direct” to “general” for outpatient settings, aligning with other Medicare settings and potentially improving practice flexibility.

5. Documentation and Audit Trends Expect continued emphasis on documentation that clearly demonstrates medical necessity, skilled service provision, and patient progress.

Conclusion: Code Smarter, Not Harder

The 2025 Medicare conversion factor reduction to $32.3465 is challenging, but understanding CPT code selection strategy can help offset losses. By appropriately using higher-value codes like 97530 instead of 97110 when clinical documentation supports it, emphasizing skilled services over modalities, and leveraging technology to eliminate billing errors, practices can maintain revenue despite rate reductions.

Key takeaways:

• 97530 pays $6.16 more per unit than 97110—use it when documentation supports functional, dynamic activities
• Strategic code selection within compliant guidelines can offset 2-4% of conversion factor losses
• Billing accuracy is critical—denied claims compound the impact of lower reimbursement rates
• Technology like Proactive Chart’s automated coding and compliance tools reduces errors and saves 45-60 minutes per day

The CPT codes you select and how you document them directly affect your practice’s financial health. Make every minute count.

Ready to optimize your billing and maximize compliant reimbursement? Learn how Proactive Chart automates CPT code selection and compliance or schedule a demo today.

Related Resources

• Medicare 8-Minute Rule 2025 Guide - Master unit calculation for time-based codes
• ICD-10 Codes for Physical Therapy 2025 - Updated diagnosis codes and medical necessity guidance
• KX Modifier for Therapy Services in 2025 - What to do when patients exceed the therapy threshold
• Complete PT Billing and RCM Guide - End-to-end billing and revenue cycle management
• Audit-Proof Physical Therapy Documentation - Protect your practice from recoupment demands

References:

• Centers for Medicare & Medicaid Services. (2024). Medicare Physician Fee Schedule Final Rule CY 2025. Federal Register.
• American Physical Therapy Association. (2024). Takeaways From the 2025 Medicare Physician Fee Schedule Final Rule. APTA.org.
• Centers for Medicare & Medicaid Services. (2025). Physician Fee Schedule Search Tool. CMS.gov/Medicare/Physician-Fee-Schedule.
• American Medical Association. (2025). Current Procedural Terminology (CPT) 2025 Professional Edition.

Disclaimer: This article provides general guidance on Medicare billing and CPT code selection. Reimbursement rates vary by MAC locality. Always consult current CMS resources and a qualified billing specialist for practice-specific advice. The strategies discussed assume appropriate clinical documentation supporting code selection.