New physical, occupational therapy rule may ease hospital burden

A policy change enabling physical and occupational therapy practitioners to treat Medicare beneficiaries with less oversight could benefit health systems and other providers.

Tucked inside the Physician Fee Schedule final rule for 2025, the Centers for Medicare and Medicaid Services relaxed supervision requirements for physical and occupational therapist assistants from “direct” to “general.”

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When the new rule takes effect Jan. 1, physical and occupational therapists who employ assistants will need to be immediately reachable by telephone, via video or in person, but don’t have to be physically present while care is administered. The former policy required supervisors to be on-site.

The modified regulation could help health systems and other providers manage patient volume, advance people through stages of care more quickly and reduce Medicare spending. The healthcare consulting firm Dobson & DaVanzo estimates the move will save $242 million over 10 years.

This change aligns Medicare policy with the healthcare system's broader shift to outpatient care, said Heather Parsons, vice president of federal affairs for the American Occupational Therapy Association.

The American Hospital Association backed the new supervision standards in its comments on the proposed rule CMS published in July, arguing it would mitigate workforce shortages and make better use of existing capacity.

“One office sees 50% Medicare, because that's their population mix. So in one given day, if the [physical therapist] had to be out of the office unexpectedly, that's half of the income that we're not getting, either, and we still have to pay our electric bill and our salaries and all those kinds of things,” said Sandra Norby, CEO and co-founder of Des Moines, Iowa-based HomeTown Physical Therapy.

Sometimes when a supervising therapist was unavailable, HomeTown Physical Therapy would forego Medicare reimbursements in order to maintain a patient's treatment regimen, Norby said.

Giving physical and occupational therapy providers more flexibility in how and where they provide care, including at home, alleviates pressure on hospitals, Norby said. Hospitals are struggling with heavy caseloads, and the stricter supervision requirements impede access to therapy, resulting in higher rates of returns to hospital outpatient departments, she said.

This is especially acute in rural areas with few therapists, Norby said. Medicare enrollees in rural areas are about 12% more likely to receive care from a physical or occupational therapy assistant than from a supervising therapist, Dobson & DaVanzo reported in 2021.

HomeTown Physical Therapy operates five locations, all in rural areas and one without a critical access hospital within 40 miles. When the supervising physical therapist is not working, Medicare patients must wait for therapy sessions, which makes it more likely they will need hospital care, Norby said.

“If you missed a week, that could lead to having to go back in and get a manipulation from your surgeon, which is more a cost to the Medicare system down the road. And then people can't walk up and down the stairs, they can't get on the floor and play with their grandkids. It is definitely a domino effect if they're not able to fulfill the required physical therapy plan,” Norby said.

In addition, the CMS policy resolves discrepancies between federal and state laws, said Justin Elliott, vice president of government affairs for the American Physical Therapy Association.

Every state except New York already allows physical therapist assistants to practice under general supervision and most states permit the same for occupational therapy, so providers have needed different protocols for Medicare beneficiaries than for other patients, Elliott said.

“Thank goodness Medicare recognized the fact that they should allow the state practice acts to work, and let us not have that handcuff so that we can take care of our neighbors,“ Norby said.