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Clarice Grote, MS, OTR/L

2023 Medicare Part B Cuts for Occupational Therapy: Medicare Physician Fee Schedule

** Update ** The cuts mentioned in this article were reduced thanks to advocacy from OT Amplifiers like you and strong advocacy from AOTA, APTA, and ASHA. Cuts are pending again for 2024 however, and advocacy efforts are ongoing for permanent reform. Read about the calendar year 2023 advocacy win here**

Every fall, the Medicare Physician Fee Schedule is finalized, and for the past few years, it has brought cuts to occupational therapy and physical therapy services. The Medicare Physician Fee Schedule dictates how much Medicare will pay for Part B services. The primary billers of Medicare Part B include skilled nursing facilities, hospitals, outpatient clinics, and private practice settings.

The Medicare Physician Fee Schedule (MPFS) is how the Centers for Medicare & Medicaid Services (CMS) determines reimbursement for health care services, such as OT, under Medicare Part B.

This certainly isn’t our first time hearing about cuts to therapy services. It’s practically a Thanksgiving tradition at this point. For example, check out this article from 2020 (one of my very first on this site) about the 9% cut we faced that year.

For a full update on the pending cuts and other advocacy issues facing the profession, please view the video below.

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Medicare Physician Fee Schedule Cuts: An Annual Tradition

The difficult thing with the Medicare Physician Fee Schedule (MPFS) is that it must be adjusted in a budget-neutral manner, meaning if payment for one service goes up, payment for something else must come down. Each summer, the Centers for Medicare & Medicaid Services (CMS) releases the proposed rule for the MPFS. This proposed rule is then open for comment and the final rule is released in early November.

In 2020, we faced a 9% cut which thanks to advocacy and legislation, was reduced to 3%. In 2021, OT faced another 9ish% cut. But once again, thanks to advocacy and legislation, this was also reduced to a 0.75% cut for Part B and a 2% cut starting July 1, 2022 for all of Medicare (the Medicare Sequester). No, once again, in 2022, we are facing a total of 8.5% cut.

Why 8.5%? Let’s do the math.

Why OT is facing an 8.5% cut for Medicare Part B in 2023

Overall, occupational therapy is facing a ~4% cut from the Medicare Physician Fee Schedule in addition to a 4% pay-go cut starting January 1, 2023.

Although 4% seems really high (and it is), it isn’t all coming just from MPFS adjustments. You see, in 2021, OT (along with the other therapies and some other services) were facing a 3.75% reduction from the MPFS alone. Plus the 2% from the sequester and 4% from the pay-go. I talk about these 2021 advocacy efforts in two podcast episodes linked below.

Congress actions in 2021 impact 2022

To mitigate the cuts for CY 2022, Congress passed a temporary 3% increase to the overall spending for the MPFS, delayed the Medicare Sequester, and punted the 4% pay-go for another year. That 3% increase, however, was only good for 1 year. Meaning, it expires on January 1, 2023, if Congress doesn’t pass any further legislation.

So, if you’re still with me, that leaves 1% leftover. The 1% cut comes from an adjustment to the conversion factor. Heather Parsons explains the conversion factor perfectly in this episode of the Amplify OT Podcast. But essentially, CMS assigns a value (Relative Value Unit (RVU)) to each service and then makes adjustments (conversion factor) to those values. The Conversion Factor for OT went down by $1.55 (~0.95%) for CY 2023 for our RVU.

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What is being done to stop the Physician Fee Schedule Cuts?

AOTA and many other OT advocates are tirelessly working on your behalf. AOTA has posted articles (which I linked below for your convenience) and has been engaging g in a month of advocacy this November to encourage everyone to contact your legislators! Unfortunately, the cuts are out of the hands of CMS and AOTA at this point. The only people who can mitigate the cuts is Congress.

Congress MUST pass legislation if we hope to see these cuts stopped. The good news is, there is a good chance Congress will take action. First and foremost they will delay the 4% pay go. That 4% is cuts to ALL of Medicare which includes Part A and Part B. It is a budgetary gimmick that kicks in automatically when Congress spends a certain amount of money. So, assuming Congress addresses that cut, we are now looking at ~4% cuts just to Part B.

Some good news

It is likely that Congress will waive the pay-go, but we still need action on the fee schedule. There are two different approaches being discussed in the House and Senate. On could lead to a slight increase in reimbursement and one could lead to a 3% decrease in the overall cuts.

The House of Representatives and the Senate are both considering legislation to address the current issues. Essentially, a quick fix. The House bill (H.R. 8800) would potentially give OT a slight increase in funding this year and the Senate version would reduce the 4% to 1%. So either way, we have a good chance of mitigating majority of the cuts discussed in this article.

In addition to the quick fix, we’re looking for a permanent solution!

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Here’s what you can do!

There are two things you can do right now to advocate for OT….

First, contact your legislators! It is great to have AOTA advocating for us on a daily basis, but your legislators want to hear from you first. Your stories and your patients are what matters to them the most. So, we need to tell them what is going on so they can help. Fortunately, AOTA has made that easy for us with the Take Action page. Simply visit, fill our the address where you’re registered to vote, edit the letter with your story, and hit send! I swear it takes no more than five minutes tops. I encourage you to get creative and host an advocacy party or luncheon with your work or SOTA to get everyone involved!

Second, I encourage you to be a member of AOTA. None of us have time to navigate the complexities of our healthcare system alone. We especially don’t have time to contact Congress, read all of the bills before Congress, submit comments to CMS, figure out what it all means for OT, and more. Actually, to do all that takes multiple people working full time on our behalf. You know who does that? AOTA. AOTA staff work every day on our behalf to support our work and the profession so we can continue to change lives.

By being a member you are supporting them and supporting your ability to be an OT for many years to come. If we didn’t have AOTA advocating on our behalf, there’s a strong chance we would have been left out of many of the bills I’ve mentioned in this article. Being an OT practitioner isn’t a given in this world. We must continue to advocate for our profession if we want it to remain viable. Remember, if you don’t advocate for OT, who will?

Make sure to contact your legislators today and share your story about how these cuts will impact you and your patients! use to take action today.

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Clarice standing in a light room smiling wearing black pants and a light green puff sleeve shirt

hi there,

I’m  Clarice

Occupational therapist & medicare specialist helping practitioners understand policy, engage in advocacy, and own their value!

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