The CQ and CO Modifiers: Billing PTA and OTA Services

When a physical therapist assistant or occupational therapy assistant furnishes outpatient therapy under Medicare Part B, two things happen at the claim level: the line must carry the CQ (PTA) or CO (OTA) modifier, and Medicare pays 85 percent of what it would otherwise pay. The modifier requirement has applied since January 1, 2020, and the payment reduction since January 1, 2022, both mandated by Section 53107 of the Bipartisan Budget Act of 2018 (Social Security Act §1834(v)).

What makes this territory hard is not the 85 percent. It’s the 10 percent de minimis standard that decides when a service was furnished “in part” by an assistant, and the unit-by-unit arithmetic that follows from it. Applied naively, the standard costs practices money they’re entitled to; applied wrong in the other direction, it produces claims that misstate who treated the patient. This guide works from the primary sources: the CY 2019 and CY 2022 Physician Fee Schedule final rules, the Medicare Claims Processing Manual, Ch. 5, §20.1 (Pub. 100-04), and CMS’s official billing examples page. Current as of August 2026.

The payment math: 85 percent of the 80 percent

The reduction does not come off the allowed amount. It comes off Medicare’s 80 percent share, after other reductions like the multiple procedure payment reduction and right before sequestration, and the beneficiary’s 20 percent coinsurance is untouched. CMS’s own arithmetic from the CY 2026 final rule: the effective total payment is 0.20 + (0.80 × 0.85) = 88 percent of the allowed amount.

The worked example from CMS Transmittal R11129CP, for a service with a $100 allowed amount:

Two consequences practices get wrong. First, the patient’s coinsurance is calculated on the full allowed amount, so the beneficiary pays the same $20 whether a PT or a PTA furnished the service. Second, you cannot bill the beneficiary for the reduction; the transmittal is explicit that the patient is not liable for it. On the remittance, the reduction shows as group code CO with CARC 45 and RARC N851 (“Payment reduced because services were furnished by a therapy assistant”).

When the modifier applies: the 10 percent standard

The modifier is required when the assistant furnishes more than 10 percent of a service, evaluated per 15-minute unit, not across the whole visit (42 CFR 410.60(a)(4) for PT; 410.59(a)(4) for OT). Three ground rules from the regulation and the CY 2020 rulemaking:

1. Minutes the assistant spends furnishing the service alone count toward the 10 percent.
2. Minutes the assistant and therapist work together count as therapist minutes.
3. A unit furnished entirely by the assistant always takes the modifier.

CMS publishes two equivalent calculation methods. The percentage method: assistant minutes divided by total minutes for the unit, times 100, rounded to the nearest integer; at 11 percent or more, the modifier applies. The simple method: divide the unit’s total minutes by 10, round to the nearest integer, add 1; that’s the assistant-minute floor at which the modifier applies. For a standard 15-minute unit the floor is 3 minutes.

The two CY 2022 exceptions that protect your unmodified units

The original policy overcounted assistant involvement, so the CY 2022 final rule (86 FR 65169) added two exceptions. They matter because each one converts a reduced-payment unit into a full-payment unit when the therapist actually did the work.

Exception 1: the final-unit 8-minute rule. When allocating the last unit of a multi-unit day, if the therapist’s own remaining minutes reach the 8-minute billing midpoint on their own, that unit is billed without CQ/CO regardless of the assistant’s leftover minutes. CMS’s Example D: a PTA furnishes 22 minutes of 97110 and the PT furnishes 23 minutes, 45 total minutes, 3 units. One unit carries CQ (the PTA’s full 15 minutes), one doesn’t (the PT’s full 15), and the final unit is billed without CQ because the PT’s remaining 8 minutes alone support it, even though the PTA has 7 minutes in the pool.

Exception 2: the two-remaining-units rule. When two units of the same service remain and the therapist and assistant each furnished 9 to 14 minutes (combined 23 to 28), you bill one unit with the modifier and one without, rather than letting the 10 percent math taint both. CMS enumerates exactly 13 qualifying therapist-to-assistant minute splits (9:14, 10:13, 10:14, 11:12, 11:13, 11:14, 12:12, 12:13, 12:14, 13:12, 13:13, 13:14, 14:14). Example E: PT 12 minutes and PTA 14 minutes of 97110 plus PT 20 minutes of 97140 yields three units, billed as one 97140 without CQ, one 97110 with CQ, one 97110 without.

And the step that comes before either exception: assign full therapist units first. CMS’s Example C: PTA 5 minutes and PT 30 minutes of 97110 is two units, billed with no modifier at all, because the PT furnished two complete units; the PTA’s 5 minutes are documented but unbillable. Running the percentage math across the whole 35 minutes (14 percent) and modifying both units is exactly the error the examples warn against.

Untimed codes get the same 10 percent test applied to the whole service: in CMS’s group-therapy example, an OTA and OT each independently furnish 20 minutes of 97150, and the single unit takes CO because the OTA’s share is 50 percent.

Where the modifiers apply, and where they don’t

The requirement follows the payment system, not the building. It applies wherever outpatient therapy is paid at Physician Fee Schedule rates: therapists in private practice (including when billing rights are reassigned to a physician group), outpatient hospital departments, SNF Part B, rehab agencies, home health agencies billing Part B therapy, and CORFs. CQ must be paired with the GP therapy modifier and CO with GO; a mismatched claim is returned as unprocessable.

Two genuine exemptions: critical access hospitals (paid on reasonable cost, not PFS rates) and therapy billed incident to a physician or NPP, where the modifier never applies for a stricter reason: only personnel meeting full therapist qualifications may furnish outpatient therapy incident to a physician, so there are no billable assistant minutes to modify.

Supervision changed in 2025; the modifier logic didn’t

Since January 1, 2025, Medicare requires only general supervision of PTAs and OTAs in private practice (CY 2025 final rule, 42 CFR 410.60(c)(2)), aligning with the institutional settings, so the supervising therapist no longer has to be on site. Two cautions. State practice acts override where stricter, and many still require on-site supervision. And supervision has nothing to do with the modifier: CQ/CO turns on who furnished the minutes, not on who was supervising. A fully supervised PTA visit still takes CQ.

What the documentation has to support

CMS proposed, then declined to finalize, a requirement that treatment notes explain modifier application or record assistant minutes separately. But it kept the expectation with teeth: the record must be “sufficient to know whether a specific service was furnished independently by a therapist or a therapist assistant, or was furnished ‘in part’ by a therapist assistant, in sufficient detail to permit the determination of whether the 10 percent standard was exceeded.”

Read that against how therapy records are actually reviewed: if your notes only capture total treatment time, nothing in the record can defend the units you billed without the modifier. Practices that track who furnished which minutes per service, even though the rule doesn’t strictly require it, are the ones whose claims survive a records request.

The open question: KX threshold accrual

One interaction CMS has never stated outright: whether CQ/CO services accrue toward the $2,480 KX threshold at the full PFS rate or the reduced one. The closest primary language (86 FR 65177) says threshold tracking applies “the PFS rate for each service less any applicable MPPR amount,” naming only the MPPR as an adjustment, and the reduction itself is taken from the paid amount rather than the allowed amount. The reasonable inference is that accrual runs at the full PFS amount, unaffected by the assistant reduction, but treat that as inference: plan threshold tracking conservatively rather than assuming assistant visits buy extra headroom.

The CQ/CO rules are per-unit arithmetic layered on top of the 8-minute rule, which makes them exactly the kind of logic that shouldn’t live in a therapist’s head at 5pm. PrismEHR sums timed units across codes as you document and lets organizations define billing rules, including modifier and unit restrictions by code and payer, that fire at the point of documentation and are reinforced at claim creation. If your practice uses PTAs or OTAs, ask your current system to walk through CMS’s Example D and show you where the final unit’s modifier decision happens. See how it fits physical therapy practices.