Medicare covers occupational therapy when the treatment is medically necessary. A person could receive covered services on an inpatient or outpatient basis. Some out-of-pocket costs and rules usually apply.
When a person has been hospitalized, Medicare Part A covers eligible occupational therapy under its inpatient benefit.
If a person is not required to stay in a hospital, Medicare Part B covers occupational therapy costs.
Private insurance companies administer Medicare Advantage (Part C) plans, but, as a minimum, they must cover the same services as original Medicare. Often, Medicare Advantage plans include additional benefits.
In this article, we discuss occupational therapy and which parts of Medicare cover it.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare coverage for occupational therapy can come from different parts of the plan, depending on the setting of the treatment.
Medicare Part A covers medically necessary therapeutic care that a person may need when admitted to a hospital or rehabilitation facility.
The Part A deductible may apply, and in 2020, this amount is $1,408 per benefit period.
Medicare Part B covers medically necessary therapy received outside of the hospital on an outpatient basis.
Medicare-approved costs and services are covered at 80% when received from an approved healthcare provider. A person must pay the remaining 20% out of pocket.
In both instances, the types of covered therapies include:
- physical therapy
- occupational therapy
- speech-language pathology
If a person has a Medicare Advantage plan, general coverage will be the same as original Medicare, but specific rules may differ depending on the type of policy.
It is usually necessary for a person to visit an in-network healthcare provider.
Occupational therapy (OT) is a form of treatment that helps people recover skills they may need for everyday life and work following an injury, illness, or if they have a disability.
An occupational therapist will often:
- complete a review to find a person’s current skill level and determine goals
- make a custom plan to improve a person’s overall strength
- measure a person’s progress to be sure goals are on track
The therapist will look at a person’s daily activities and establish a plan that can help maintain and support independence. They often work with a person on strength and coordination.
For example, when the use of the small muscles in a person’s hand has been affected by a medical condition or injury, OT can help a person to regain control of cutlery, enabling freedom at mealtimes.
Therapists may also visit a person’s home to help find the right adaptive equipment that may be required for greater independent living.
Some rules and exclusions apply to OT services.
Eligible therapies should be received at the following locations:
- a therapist or doctor’s office
- an outpatient rehabilitation facility
- a skilled nursing facility (on an outpatient basis)
- a person’s home
When treatment is not medically necessary
A doctor or healthcare provider may sometimes recommend a therapy that is not medically necessary, and in these cases, Medicare does not cover the services.
If a treatment is not medically necessary, a provider must give a person an Advanced Beneficiary Notice of Noncoverage (ABN). This notice allows individuals to decide if they want to pay for the service out of pocket.
A person will only be eligible for inpatient OT for after the two-midnight rule has been satisfied. This means the doctor expects a person to stay in the hospital beyond two midnights.
Frequency or unauthorized treatment
A person’s doctor or therapist may recommend OT more often than Medicare allows. They may also recommend services that Medicare does not cover.
When this happens, a person may have to pay some or all of the cost.
If Medicare denies coverage for a service, a person can appeal the decision.
When a person has original Medicare, they must file the appeal within 120 days of receiving the Medicare Summary Notice.
The appeal process has five levels. If a person is denied on one level, they may escalate the appeal to the next level.
A person with a Medicare Advantage plan must appeal through the private insurance company that administers the policy.
Medicare uses medical facts to determine medical necessity for services. A person can help the appeals process by gathering information from their therapist and medical provider to help support their case.
Medicare used to have limits to how much OT a person could receive. This rule was removed in 2018.
However, if a person reaches an amount of $2,080, Medicare may require confirmation the therapy is still medically necessary. Confirmation must come from the healthcare professional who orders the OT.
There may be out-of-pocket expenses associated with OT, but there are support options available if needed.
Those with Medigap plans will receive help to pay for some expenses, such as:
- Part A deductible
- Part B excess charges
If a person has limited resources, they may be eligible for assistance from Medicaid or supplemental security income (SSI).
Medicaid is a joint federal and state program that helps with medical costs. They also have a spend-down program that lets a person subtract their medical expenses from their income to make them eligible for additional help.
SSI is a monthly benefit paid directly to a person’s bank account. It is not the same as Social Security retirement or disability benefits.
OT helps people regain independence and function using activities of daily living. Therapists may also recommend adaptive equipment to help a person at home.
Medicare Part A helps cover OT when a person is in the hospital. Medicare Part B pays for medically necessary therapy as an outpatient.
Medicare Advantage pays for services normally covered by Medicare parts A and B but may include additional benefits.
There is no limit on the amount of OT a person can receive in one year. However, Medicare places a $2,080 limit before a healthcare provider must confirm the therapy is still medically necessary.