Outpatient physical therapy providers are facing growing financial pressure. A major reason is the steady decline in Medicare reimbursement for therapy services over the past several years. Between 2020 and 2024, Medicare systematically reduced payment rates each year for common physical therapy procedures. These cumulative cuts, though a few percent at a time, add up to a significant drop in payments for providers. In turn, providers struggle to sustain care delivery in clinics and at patients’ homes.
Below, we document what happened with Medicare payments from 2020 through 2024, how it affects specific therapy services (using common CPT codes like 97110, 97112, 97530, 97140 as examples), and why these changes make it harder for providers to keep their doors open - potentially limiting patient access in some communities.
Medicare’s Year-Over-Year Cuts to PT (2020-2024)
Medicare reimburses outpatient physical therapy services under the Physician Fee Schedule (PFS), which updates payment rates annually. Unfortunately for therapy providers, each year from 2020 through 2024 brought a reduction in the base payment rates. The cuts were driven by Medicare’s budget rules and policy changes that required lowering fees for many specialties (including physical therapy) to offset increases elsewhere. While the exact percentage varied by year, the trend was consistently downward:
- 2021: About a 3.3% decrease in payment for physical therapy services compared to 2020. Medicare initially planned an even larger cut (~10%), but late congressional action softened it to roughly 3.3%. This was implemented by reducing the “conversion factor” (a dollar multiplier for services) from $36.09 in 2020 to $34.89 in 2021.
- 2022: An additional roughly 1% cut (initially slated ~3.5% cut was pared down by lawmakers). The 2022 conversion factor ended up just slightly lower than 2021’s, leading to about a 1.2% drop in PT payments on average. This is on top of the previous year’s decrease - meaning by 2022, Medicare rates were roughly 4-5% below 2020 levels.
- 2023: About a 2% reduction compared to 2022. The conversion factor fell again (from around $34.6 to $33.9), extending the downward trend. By 2023, Medicare payments for therapy were roughly 6-7% lower than in 2020 in aggregate.
- 2024: Approximately a 3.4% cut in the fee schedule’s base rate from 2023. Medicare initially set the 2024 conversion factor at $32.74 (about 3.4% less than 2023’s $33.89). A law passed in early 2024 provided a small temporary increase, reducing the effective cut to about 1.8% for the latter part of 2024. Even so, the reimbursement level remained well below earlier years. In total, by 2024 the Medicare conversion factor (a key component of payment) had dropped from roughly $36.09 in 2020 to around $33 - a decline of about 8% in four years.
These percentage cuts may sound small in isolation, but year after year they compound into a significant loss of payments for providers. To illustrate, consider a typical physical therapy treatment that might have been reimbursed at $100 in 2020; by 2024, the same service would be paid only around $92-93 for Medicare patients, before any other adjustments. Providers have been forced to absorb this difference or find ways to offset it, even as their own operating costs (office rent, staff salaries, supplies) have risen with inflation. The Medicare Economic Index - a measure of practice cost inflation - rose by about 4%-5% each of the last two years, meaning providers face higher expenses while Medicare payments have been trending in the opposite direction.
Impact on Commonly Used CPT Codes
Medicare has steadily decreased payment rates from 2020 to 2024 for common outpatient PT services. Therapists bill using CPT codes - such as 97110 (therapeutic exercise), 97112 (neuromuscular re-education), 97530 (therapeutic activities), and 97140 (manual therapy) - which are among the most frequently used in rehab.
Each of these codes has seen meaningful cuts:
- 97110 (exercise): $31.40 in 2020 → $28.82 in 2024 (↓8%)
- 97112 (neuromuscular): $36.09 → $33.07 (↓8%)
- 97140 (manual therapy): $28.87 → $26.52 (↓8%)
- 97530 (therapeutic activities): $40.42 → $36.02 (↓11%)
These figures are national averages and vary slightly by region, but the trend is consistent: an 8-10% drop in payment. Over thousands of visits, these small per-unit cuts add up - leaving many providers under financial strain. In short, providers are getting paid noticeably less today for each therapy session than they were just a few years ago for Medicare patients.
From the patient’s perspective, the financial strain on providers can translate into longer wait times and fewer therapy options. Access challenges can lead to delays in rehabilitation or interrupted care, potentially slowing recovery from surgeries, falls, or managing chronic conditions. In short, when providers struggle financially, patients ultimately feel the impact through reduced and timely access to the care they need.
Figure: Trend in Medicare national average reimbursement for common physical therapy CPT codes, 2020–2024. Each line represents one CPT code’s payment over time. All four codes show a downward trend, reflecting the yearly cuts to the fee schedule.
Looking Ahead
Physical therapy professionals and associations are actively advocating for solutions - from fee schedule reforms to legislative fixes - to stabilize reimbursement and keep therapy accessible. The primary goal is to stop the annual cuts and ensure payment keeps up with the cost of delivering care, so that providers can continue serving patients without financial jeopardy. While this advocacy continues, it’s important for both patients and providers to be aware of why these trusted providers are under strain. The story of 2020-2024 is a clear example: consistent year-over-year Medicare cuts have put outpatient physical therapy services under significant financial pressure, jeopardizing the sustainability of practices (particularly in private outpatient and at-home settings) and, by extension, threatening patient access in some areas.
Despite these challenges, physical therapists remain committed to their patients’ well-being. Understanding the financial headwinds they face shines light on why some practices have had to make difficult adjustments. By recognizing the impact of Medicare’s reimbursement cuts, patients can better appreciate the value their local therapists provide - and why protecting access to therapy is so important as our population ages. The hope is that future policy changes will support, rather than strain, the delivery of outpatient physical therapy, allowing providers to remain financially viable and continue providing high-quality care to the patients who rely on them.
