PTA/OTA Modifier Changes: CQ and CO Modifiers Explained

Physical Therapy Assistants (PTAs) and Occupational Therapy Assistants (OTAs) are valuable members of rehabilitation teams, but since January 2022, Medicare has paid services furnished by assistants at only 85% of the standard rate—a permanent 15% payment reduction compared to services provided by licensed PTs and OTs.

This reduction, implemented through the CQ modifier (for PTAs) and CO modifier (for OTAs), has forced practices to rethink their staffing models, productivity expectations, and the financial viability of employing therapy assistants under Medicare reimbursement.

This comprehensive guide explains the CQ/CO modifier requirements for 2025, the 85% payment rate, the 10% de minimis rule, updated supervision requirements, and provides a detailed cost-benefit analysis to help you determine the optimal PT-to-PTA staffing ratio for your practice.

What Are the CQ and CO Modifiers?

The CQ modifier and CO modifier are billing modifiers required by Medicare when Physical Therapy Assistants (PTAs) or Occupational Therapy Assistants (OTAs) furnish services in whole or in part.

CQ Modifier: Physical Therapy Assistant Services

Description: Outpatient physical therapy services furnished in whole or in part by a physical therapist assistant.

When to use:

• A PTA provides more than 10% of a timed service (de minimis threshold)
• Apply to each CPT code the PTA contributed to

Payment impact: 15% reduction (services paid at 85% of standard rate)

CO Modifier: Occupational Therapy Assistant Services

Description: Outpatient occupational therapy services furnished in whole or in part by an occupational therapy assistant.

When to use:

• An OTA provides more than 10% of a timed service (de minimis threshold)
• Apply to each CPT code the OTA contributed to

Payment impact: 15% reduction (services paid at 85% of standard rate)

Why Did CMS Implement the 15% Reduction?

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) required CMS to adjust payments for therapy services furnished by assistants to reflect the difference in resource costs.

CMS rationale:

• Assistants have lower educational requirements and licensing costs than licensed therapists
• Supervising therapists bear some responsibility and oversight burden, but don’t provide 100% of direct service time
• Payment should reflect actual practitioner involvement

Implementation timeline:

• 2020: 15% reduction proposed in Physician Fee Schedule
• 2022: 15% reduction finalized and implemented (effective January 1, 2022)
• 2025: Reduction remains at 15% (policy unchanged)

The 10% De Minimis Rule

The de minimis standard establishes a 10% threshold below which the CQ/CO modifiers are not required.

How the De Minimis Rule Works

If a PTA/OTA provides 10% or less of a timed service:

• The supervising PT/OT can bill the service without the CQ/CO modifier
• Service is paid at the full rate (100%)
• Service is attributed entirely to the supervising therapist

If a PTA/OTA provides more than 10% of a timed service:

• The CQ/CO modifier must be applied
• Service is paid at the reduced rate (85%)

Calculating the 10% Threshold

For a single 15-minute time-based service unit:

• 10% of 15 minutes = 1.5 minutes
• If PTA provides more than 1.5 minutes, use CQ modifier
• If PTA provides 1.5 minutes or less, no CQ modifier needed (bill at full rate as PT service)

For multiple units:

• Calculate total treatment time, then determine 10% threshold

Example 1: Below De Minimis (No CQ Modifier Needed)

• Total therapeutic exercise time: 15 minutes (1 unit)
• PT provides: 14 minutes
• PTA provides: 1 minute (assisting patient onto equipment)
• 1 minute = 6.7% of service
• Billing: 97110 (no CQ modifier) at 100% rate

Example 2: Above De Minimis (CQ Modifier Required)

• Total therapeutic exercise time: 30 minutes (2 units)
• PT provides: 25 minutes
• PTA provides: 5 minutes (supervising exercises while PT documents)
• 5 minutes = 16.7% of service
• Billing: 97110-CQ × 2 units at 85% rate

Example 3: Split Session (CQ Modifier Required)

• PT provides 15 minutes of therapeutic exercise (1 unit)
• PTA provides 15 minutes of neuromuscular re-education (1 unit)
• PTA provided 100% of the neuromuscular re-education service
• Billing:
  • 97110 (no modifier) × 1 unit at 100% rate (PT only)
  • 97112-CQ × 1 unit at 85% rate (PTA)

Billing Examples: Applying the CQ/CO Modifiers Correctly

Example 1: PTA-Only Treatment Session

Scenario: Patient seen entirely by PTA for 45 minutes.

• 30 minutes therapeutic exercise (97110) = 2 units
• 15 minutes gait training (97116) = 1 unit

Billing:

• 97110-GP-CQ × 2 units (therapeutic exercise by PTA)
• 97116-GP-CQ × 1 unit (gait training by PTA)
• All codes require CQ modifier (PTA provided 100% of services)
• Payment: 85% of standard rate for all units

Note: The GP modifier (indicating physical therapy services) is required in addition to the CQ modifier.

Example 2: Combination PT and PTA Treatment

Scenario: 60-minute treatment session with both PT and PTA involvement.

• PT performs 20 minutes manual therapy (97140)
• PTA supervises 30 minutes therapeutic exercise (97110)
• PT performs 10 minutes neuromuscular re-education (97112)

Billing:

• 97140-GP × 1 unit (manual therapy by PT only—no CQ modifier) at 100% rate
• 97110-GP-CQ × 2 units (therapeutic exercise by PTA) at 85% rate
• 97112-GP × 1 unit (neuromuscular re-ed by PT only—no CQ modifier) at 100% rate

Example 3: Evaluation (No CQ Modifier)

Scenario: PT performs initial evaluation with PTA observing/assisting.

• 97163 (PT evaluation, high complexity)

Billing:

• 97163-GP (no CQ modifier)
• Evaluations are always billed under the supervising PT at 100% rate, regardless of PTA involvement

Rule: Service-based codes (evaluations, re-evaluations) cannot be billed with CQ modifier—only time-based treatment codes.

Example 4: Group Therapy with PTA

Scenario: PTA conducts group therapy session with 4 patients for 30 minutes.

• Each patient receives 30 minutes = 2 units of 97150 (group therapy)

Billing (per patient):

• 97150-GP-CQ × 2 units at 85% rate

Important: Each patient must be billed individually with CQ modifier applied.

Combining Modifiers: CQ + GP/GO + KX

Medicare requires specific modifier combinations depending on service type and patient status.

Required Modifier Combinations

For PT services by PTA:

• CQ (PTA furnished service)
• GP (physical therapy service)
• KX (if patient exceeds therapy threshold)

Example: 97110-GP-CQ-KX

For OT services by OTA:

• CO (OTA furnished service)
• GO (occupational therapy service)
• KX (if patient exceeds therapy threshold)

Example: 97110-GO-CO-KX

Modifier order: Most clearinghouses and Medicare systems automatically sort modifiers, but the common convention is: CPT code - Service Type Modifier - Assistant Modifier - Other Modifiers

Claim Rejection Scenarios

Rejection Reason: “Missing required modifier”

• Cause: CQ/CO modifier not applied when PTA/OTA provided service
• Fix: Add CQ or CO modifier and resubmit

Rejection Reason: “Invalid modifier combination”

• Cause: Using GP (PT service) with CO (OTA modifier), or GO (OT service) with CQ (PTA modifier)
• Fix: Ensure service type modifier matches practitioner type

Proactive Chart validation: Our billing system automatically validates modifier combinations before claim submission, preventing rejections.

PTA/OTA Supervision Requirements for 2025

Supervision requirements vary by practice setting and payer.

Medicare Part B Supervision Requirements (2025 Update)

Major change effective January 1, 2025:

• General supervision (not direct supervision) required for PTAs/OTAs in all outpatient settings
• This change aligns outpatient requirements with other Medicare settings (SNF, home health)

What is general supervision?

• Supervising PT/OT must be available by telecommunication (phone, text, video)
• On-site presence not required during PTA/OTA treatment
• Supervising therapist maintains overall responsibility for plan of care

Previous policy (2022-2024):

• Direct supervision required in private practice settings
• PT/OT had to be physically present in the office suite during PTA/OTA treatment
• Created significant scheduling and productivity challenges

Why the change matters:

• Increased flexibility for scheduling PTA-only visits
• Improved productivity potential for practices employing PTAs
• Reduced burden on supervising PTs

State Practice Act Requirements

Critical note: Medicare supervision rules do not override state physical therapy practice act requirements.

State variations:

• Some states require direct supervision (on-site presence) regardless of Medicare rules
• Some states limit PTA/OTA scope of practice (e.g., cannot perform certain evaluations or techniques)
• Some states require specific supervision ratios (e.g., 1 PT supervising max 2 PTAs)

Compliance requirement: You must follow the more restrictive of Medicare or state rules.

Example:

• Medicare allows general supervision (PT off-site)
• Your state requires direct supervision (PT on-site)
• You must follow state rules (direct supervision)

Check your state’s PT practice act before implementing PTA-focused scheduling based solely on Medicare supervision changes.

The 85% Payment Impact: Financial Analysis

The 15% payment reduction fundamentally changes the economics of employing PTAs.

2025 Medicare Reimbursement Comparison

Example treatment session (3 units):

• PT billing: 3 units × $28.46 = $85.38
• PTA billing: 3 units × $24.19 = $72.57
• Revenue loss per visit: $12.81

Annualized impact (PTA seeing 15 patients/day, 240 days/year):

• 15 patients × 240 days × $12.81 = $46,116 annual revenue loss compared to same patient load seen by PT

Cost-Benefit Analysis: PT vs. PTA Staffing

Should you hire a PTA or another PT?

Scenario: Small practice considering adding a second clinician.

Option 1: Hire a PT

Annual revenue potential (15 patients/day, 240 days):

• 15 patients/day × 3.5 units/patient × $28.46/unit = $1,494/day
• Annual: $358,560

Annual costs:

• PT salary + benefits: $85,000 - $95,000 (varies by region)
• Malpractice insurance: $2,000
• Continuing education: $1,500
• Total costs: ~$88,500 - $98,500

Net contribution: $260,000 - $270,000

Option 2: Hire a PTA

Annual revenue potential (15 patients/day, 240 days):

• 15 patients/day × 3.5 units/patient × $24.19/unit = $1,270/day (at 85% rate)
• Annual: $304,800

Annual costs:

• PTA salary + benefits: $55,000 - $65,000 (varies by region)
• Malpractice insurance: $1,500
• Continuing education: $1,000
• Total costs: ~$57,500 - $67,500

Net contribution: $237,300 - $247,300

Comparison Summary

Key finding: Even with lower salary costs, the 15% Medicare payment reduction makes PTs more profitable than PTAs when treating Medicare patients—by approximately $20,000-$25,000 annually.

When PTAs Still Make Financial Sense

Scenario 1: High Commercial Insurance Patient Mix

• Commercial payers often do not impose the 15% assistant reduction
• If 60%+ of your patients are commercial insurance, PTA economics improve significantly

Scenario 2: Productivity Leverage

• If PT can oversee PTA while simultaneously treating other patients (general supervision allows this), productivity multiplier effect occurs
• Example: 1 PT treating 12 patients/day + supervising 1 PTA treating 12 patients/day = 24 patients/day with 1.5 FTE clinicians

Scenario 3: PT Recruitment Challenges

• In rural or underserved areas, hiring qualified PTs may be difficult
• PTAs provide continuity of care even if PT-level staffing is constrained

Scenario 4: Specialized PT Roles

• If PT focuses on evaluations, complex cases, and high-value interventions while PTA handles routine therapeutic exercise supervision, practice efficiency improves

Mixed Staffing Model: Optimal Ratio

Best practice for Medicare-heavy practices:

• 3:1 or 4:1 PT-to-PTA ratio
• PTs handle evaluations, manual therapy, complex patients, and high-skill interventions
• PTAs handle therapeutic exercise supervision, gait training, and routine follow-up visits

Example practice:

• 3 PTs each seeing 12 patients/day = 36 patients/day
• 1 PTA seeing 12 patients/day = 12 patients/day
• Total: 48 patients/day with 4 FTE clinicians
• PTA utilization: 25% of patient visits

Financial analysis:

• Revenue from PT visits: 36 patients × 3.5 units × $28.46 × 240 days = $1,076,544
• Revenue from PTA visits: 12 patients × 3.5 units × $24.19 × 240 days = $304,800
• Total revenue: $1,381,344

Compare to all-PT model (same 48 patients/day with 4 PTs):

• Revenue: 48 patients × 3.5 units × $28.46 × 240 days = $1,435,392
• Revenue difference: $54,048 less with mixed model

But consider:

• PTA salary savings: ~$30,000 (difference between PT and PTA salary)
• Net difference: $24,048 (all-PT model still wins by ~$24K annually)

Conclusion: For practices with high Medicare volume, all-PT staffing is financially optimal. PTAs make sense primarily when: (1) commercial insurance dominates, (2) PT recruitment is difficult, or (3) productivity leverage is achieved through efficient supervision models.

Documentation Requirements for PTA/OTA Services

Medicare requires specific documentation when PTAs/OTAs provide services.

Supervising Therapist Responsibilities

The supervising PT/OT must:

1. Conduct the initial evaluation (PTAs cannot perform evaluations under Medicare)
2. Establish the plan of care (including goals, treatment frequency, and interventions)
3. Provide ongoing supervision (general supervision under 2025 rules)
4. Document regular supervisory activities (progress reviews, plan modifications)
5. Countersign PTA/OTA documentation (requirements vary by state and payer)

PTA/OTA Documentation Standards

PTAs must document:

• Patient response to treatment (objective measures of progress)
• Interventions provided (specific exercises, modalities, techniques)
• Any changes in patient status requiring PT review
• Patient education provided

Example compliant PTA documentation:

“Patient completed therapeutic exercise program consisting of: (1) Resistance band shoulder external rotation, 3 sets × 10 reps, progressed from red to blue band; (2) Wall slides for shoulder flexion ROM, 3 sets × 15 reps; (3) Scapular stabilization exercises, 3 sets × 10 reps. Patient demonstrated improved scapular control with less winging noted during overhead movements. Shoulder flexion AROM measured at 155° (improved from 145° last visit). Patient tolerated exercise program well without increased pain. Patient educated on proper scapular positioning during overhead activities. Supervising PT [Name] available for consultation.”

Red flags (inadequate PTA documentation):

• “Patient performed exercises as directed.”
• “Continue per plan of care.”
• “Tolerated well.”

PT Review and Countersignature

Best practice:

• Supervising PT reviews PTA documentation within 24-48 hours
• PT documents supervisory review and plan modifications (if any)
• PT countersigns PTA notes (if required by state practice act or facility policy)

Example PT supervisory note:

“PTA note reviewed. Patient demonstrating continued progress toward goals. Shoulder flexion ROM improvement noted (now 155°). Approve PTA’s progression to blue resistance band. Will re-evaluate patient next visit (scheduled [date]) to assess for discharge readiness. Continue current treatment plan.”

Common Billing Errors with CQ/CO Modifiers

Error #1: Forgetting to Apply CQ/CO Modifier

Problem: PTA provides service, but claim is billed without CQ modifier.

Result: Claim is paid at 100% rate (overpayment). If caught in audit, practice must repay the 15% difference.

Solution: EMR systems should prompt for assistant involvement and auto-apply modifiers.

Error #2: Applying CQ Modifier to Evaluation Codes

Problem: Billing 97163-CQ (PT evaluation with CQ modifier).

Result: Claim rejection—evaluations are always attributed to the supervising PT, never to the PTA.

Solution: CQ/CO modifiers only apply to time-based treatment codes (97110, 97112, 97140, etc.), not evaluation/re-evaluation codes.

Error #3: Incorrect Modifier Combinations

Problem: Billing 97110-GO-CQ (using OT service modifier GO with PT assistant modifier CQ).

Result: Claim rejection—inconsistent modifiers.

Solution: Use GP-CQ (PT services by PTA) or GO-CO (OT services by OTA).

Error #4: Not Tracking De Minimis Threshold

Problem: PTA provides 2 minutes of assistance during 15-minute PT-led service; clinic bills with CQ modifier.

Result: Unnecessary 15% payment reduction (2 minutes = 13.3%, which is above de minimis, BUT if it had been 1.5 minutes or less, CQ wouldn’t be needed).

Solution: Time-tracking systems that calculate assistant involvement percentage.

Error #5: Billing PTA Services Without Supervising PT

Problem: PTA treats patient without established plan of care from supervising PT.

Result: Claim denial—PTA services require supervising therapist with established treatment plan.

Solution: Ensure initial evaluation by PT and documented plan of care before PTA treatment begins.

Proactive Chart’s PTA Billing Automation

Proactive Chart eliminates CQ/CO modifier errors:

✅ Assistant involvement tracking - Prompt identifies if PTA/OTA contributed to service ✅ Automatic de minimis calculation - System calculates whether 10% threshold was exceeded ✅ Smart modifier application - CQ/CO automatically added when required, skipped when below de minimis ✅ Modifier validation - Prevents invalid combinations (e.g., CQ with evaluation codes) ✅ Supervision compliance alerts - Ensures supervising PT is documented for PTA services ✅ Financial impact reporting - Dashboard shows revenue impact of PTA vs. PT service mix

No manual calculations. No modifier errors. Optimized reimbursement.

Conclusion: Strategic Decisions About PTA Staffing

The 85% payment rate for PTA services has fundamentally changed the economics of assistant staffing. While PTAs remain valuable clinicians who enhance patient care and practice efficiency, Medicare reimbursement math favors PT-heavy staffing models for practices with significant Medicare volume.

Key takeaways:

• CQ modifier (PTA) and CO modifier (OTA) trigger 15% payment reduction
• 10% de minimis rule: CQ/CO not required if assistant provides ≤10% of service
• 2025 supervision: General supervision now allowed (PT does not need to be on-site)
• Financial reality: PTs generate ~$20-25K more net revenue annually than PTAs for Medicare patients
• PTAs still make sense when: commercial insurance dominates, PT recruitment is difficult, or productivity leverage is achieved

Strategic recommendations:

1. Analyze your payer mix: If Medicare >50%, consider PT-heavy staffing
2. Optimize PTA utilization: Use PTAs for routine exercise supervision; reserve PT time for evaluations, manual therapy, and complex cases
3. Leverage supervision flexibility: With general supervision (2025), PTs can manage higher caseloads while overseeing PTA treatments
4. Monitor state practice act: Ensure compliance with state supervision requirements (may be more restrictive than Medicare)

Ready to optimize your PT/PTA staffing model and ensure compliant billing? Learn how Proactive Chart automates CQ/CO modifier management and provides financial analytics to guide staffing decisions. Schedule a demo today.

References:

• Centers for Medicare & Medicaid Services. (2024). Medicare Physician Fee Schedule Final Rule CY 2025. Federal Register.
• Centers for Medicare & Medicaid Services. (2025). Billing Examples Using CQ/CO Modifiers for Services Furnished by PTAs and OTAs. CMS.gov.
• American Physical Therapy Association. (2025). PTA Supervision and CQ Modifier Guidance. APTA.org.
• Federation of State Boards of Physical Therapy. (2025). State Practice Act Database. FSBPT.org.

Disclaimer: This article provides general guidance on Medicare billing for PTA/OTA services. State practice act requirements may impose additional restrictions on supervision and scope of practice. Always consult your state’s PT practice act and qualified billing specialists for practice-specific advice. Reimbursement rates vary by MAC locality.