When it comes to therapy billing under Medicare, few policies cause as much confusion as the assistant modifiers. The cq modifier (for physical therapy assistants) and the co modifier (for occupational therapy assistants) must be applied when an assistant furnishes services “in whole or in part.” These modifiers don’t just flag assistant involvement, they also activate a 15% payment differential for the affected claim line. Clinics that fail to apply them correctly risk denials, recoupments, or future audit scrutiny.
Medicare itself provides clarity through the CMS assistant billing examples page, which shows precisely when CQ/CO is required and how the 8-minute rule interacts with the last unit. According to CMS’s own Therapy Services hub, CQ applies to PT services when a PTA participates, and CO applies to OT services when an OTA participates.
The HHS Office of Inspector General has repeatedly flagged outpatient therapy billing as a high-risk area, noting in a national audit that over 60% of sampled claims failed one or more Medicare requirements for documentation, medical necessity, or coding. That statistic alone shows why assistant attribution isn’t just a compliance formality, it’s essential revenue cycle hygiene.
Understanding CQ/CO
The CQ modifier applies to PT services furnished in whole or in part by a physical therapist assistant, and the CO modifier applies to OT services furnished in whole or in part by an occupational therapy assistant, as explained in the CMS Therapy Services hub. These modifiers are line-level identifiers, not claim-level, and once appended, they trigger the 15% reduction.
CMS confirmed this differential in the CY 2022 Physician Fee Schedule Fact Sheet, which also outlined how the 8-minute rule interacts with the final unit when therapists meet the billing threshold themselves.
Who appends CQ vs CO
Assignment is discipline-driven. If the plan is under PT, append CQ; if it’s under OT, append CO. CMS’s claims processing instructions specifically note that these modifiers must appear on the line where the unit crosses the threshold, paired with the therapy GP/GO indicators.
Historical background and policy evolution
The requirement for CQ/CO didn’t appear overnight. The Bipartisan Budget Act of 2018 mandated the differential, giving CMS authority to adjust payment for therapy services furnished in part by assistants. Beginning in 2019, CMS required therapists to start reporting assistant involvement voluntarily, creating a two-year runway for compliance.
By 2020, voluntary reporting became mandatory reporting without payment adjustment, and finally, in January 2022, CMS implemented the 15% reduction. The transition period was designed to help clinics retool documentation workflows and update EHRs.
Advocacy groups like the American Physical Therapy Association pushed for clear rules on how minutes should be counted, which led CMS to publish the now-standard CQ/CO billing examples. These examples provided the transparency needed to avoid “double penalties” and clarified that only minutes furnished independently by assistants should count toward de minimis.
De minimis policy & timing
The de minimis standard determines when assistant minutes are significant enough to trigger CQ/CO. According to CMS MLN Matters MM12397, CQ/CO must be applied when an assistant independently provides more than 10% of a billed unit of a timed code or more than 10% of total time for an untimed service.
Compliance risk from misapplying de minimis
Errors often occur when clinics mistakenly include concurrent minutes as assistant time or fail to break out minutes unit-by-unit. OIG’s audit findings emphasize that improper documentation of minutes leads to significant improper payment rates. The extrapolation of such errors in RAC and MAC audits can result in hundreds of thousands of dollars in recoupments.
Operational strategies for accuracy
Clinics can reduce risk by embedding “Unit Math” prompts into their note templates. For example: Unit 1: PT = 12 min, PTA = 3 min (no CQ); Unit 2: PT = 7 min, PTA = 8 min (CQ). Many PROMBS clients standardize this workflow across specialties, referencing the PROMBS specialties hub to align therapy with orthopedics, neurology, and pain management.
Minutes split between PT and PTA
CMS instructs providers to calculate total units first using the 15-minute framework, then apply de minimis per unit. Worked examples, such as the split-unit scenarios on the CMS assistant billing examples page, demonstrate exactly how to allocate CQ/CO.
Real-world scenarios and case studies
Case Study 1:
Case Study 2:
Hospital outpatient defense. A hospital outpatient department successfully defended its claims by pointing directly to CMS’s billing examples for CQ/CO, showing how therapist time met the ≥8-minute threshold for the last unit.
Case Study 3:
Compliance-driven EHR upgrade. A multi-site practice reduced assistant-related denials by 40% after embedding de minimis alerts into its EHR, aligning workflows with MM12397.
Did You Know? The OIG’s national therapy audit revealed that documentation errors alone accounted for more than 60% of claim failures, making “unit math” sentences in notes one of the most powerful compliance tools.
Audit readiness and appeals strategy
Audit pressure on therapy billing is not hypothetical, it’s routine. Medicare Administrative Contractors (MACs), Recovery Audit Contractors (RACs), and the HHS Office of Inspector General (OIG) all include outpatient therapy in their risk-based sampling. When CQ/CO is misapplied or omitted, auditors often classify the claim as an overpayment, even if the clinical care was reasonable.
Being audit-ready means documenting both the clinical rationale and the unit math in a way that mirrors the rules published by CMS. For example, the CY 2022 Physician Fee Schedule Final Rule confirmed that therapists can bill the last unit without CQ/CO if they personally furnished ≥8 minutes of that unit. If an auditor flags the absence of a modifier, citing this exact CMS policy statement in your appeal letter can overturn the denial. Similarly, referencing the CMS assistant billing examples helps demonstrate that your unit allocation aligns with Medicare’s own illustrations.
Visual Reference: Common Findings and Appeals Strategies
| Audit Finding | Why It’s Flagged | Appeals Strategy |
|---|---|---|
| CQ/CO missing on a unit where PTA furnished >10% | MAC assumes improper payment | Cite MM12397 explaining the de minimis threshold; show unit math sentence in note |
| CQ applied to last unit where PT furnished ≥8 min | Over-reduction identified | Reference the 2022 Final Rule fact sheet clarifying last-unit exception |
| No documentation of minutes split | “Insufficient documentation” denial | Provide amended note that matches CMS’s unit-by-unit allocation in billing examples |
Building an internal appeals playbook not only saves time but also signals to auditors that your compliance program is mature. PROMBS recommends quarterly mock audits where sample notes are tested against CMS policies. Embedding this discipline protects revenue and prepares clinics for external scrutiny.
Edge cases with last unit ≥8 minutes
A major source of confusion is when the last unit should carry CQ/CO. CMS clarified in the CY 2022 PFS Final Rule Fact Sheet that if the therapist independently furnishes ≥8 minutes of that unit, it can be billed without CQ/CO, even if the assistant participated elsewhere.
The billing scenarios on the CMS CQ/CO examples page illustrate this principle, showing how therapists can “carry” the last unit under the 8-minute rule.
Final unit billed without CQ/CO when PT time > half
To apply the exception in practice, document it clearly: “Final unit: PT = 9 min, PTA = 4 min ⇒ PT > half ⇒ no CQ.” CMS discussed this scenario in the CY 2022 PFS Proposed Rule, describing when “one unit with and one without” CQ/CO is appropriate if PTs and PTAs each furnish 9–14 minutes of care.
Claims examples
Correct claim formatting is where compliance translates into revenue. CMS emphasizes that CQ/CO must be applied line by line, never at the claim header.
Visual Reference: Correct vs Incorrect Claims
| Scenario | Incorrect Claim | Correct Claim | Source |
|---|---|---|---|
| 2 units 97110, PTA >10% on 1 unit | Both lines billed without CQ | Line 1 without CQ; Line 2 with CQ | CMS billing examples |
| 3 units split 97110/97530; PT ≥8 min on final | All three lines with CQ | Two lines with CQ; last unit without CQ | CY 2022 PFS Final Rule |
| Untimed service with PTA >10% | Billed without CQ | Single line with CQ | MM12397 |
| PT & PTA each 9–14 min (2 units left) | Both lines CQ | One line CQ; one line no CQ | CY 2022 PFS Proposed Rule |
Future outlook on technology, AI, and regulatory trends
The future of therapy billing will be shaped by automation and oversight. CMS is moving toward real-time claim edits, which could automatically flag missing CQ/CO modifiers. Predictive analytics may soon pre-screen notes for de minimis compliance before claims are transmitted.
EHR vendors are already embedding modifier logic into note templates, while AI-driven tools are being tested to auto-assign modifiers based on documented time splits. PROMBS has observed early adopter clinics cut assistant-related denials by over 50% after deploying real-time claim scrubbers aligned with CMS’s assistant billing examples.
Regulators may also expand differential policies to new service categories. Analysts have speculated in Health Affairs that broader site-neutral payment reforms could extend assistant attribution rules. Clinics that prepare now with structured documentation and consistent claim workflows will be better positioned to adapt.
Revenue cycle impact of CQ/CO
Compliance with CQ/CO is not just about avoiding denials, it directly affects revenue cycle performance. Each unit carrying CQ/CO reimburses at 85% of the Physician Fee Schedule rate. For high-volume therapy practices, this adds up to significant revenue adjustments over time.
For example, if the standard rate for 97110 is $30 per unit, a line carrying CQ would reimburse at $25.50. Multiply that reduction across hundreds of visits each month, and the financial effect becomes clear. According to the CY 2022 PFS Final Rule, CMS designed this reduction to reflect the differential in practice costs, but for providers, it means tighter cash flow forecasting.
Visual Reference: Payment Impact Example
| Code | Units | Allowed Rate (100%) | CQ/CO Rate (85%) | Total Payment Difference |
|---|---|---|---|---|
| 97110 Therapeutic Exercise | 2 | $30 × 2 = $60 | $25.50 × 1 + $30 × 1 = $55.50 | - $4.50 |
| 97530 Therapeutic Activities | 1 | $40 | $34.00 | - $6.00 |
| Visit Total | 3 | $100 | $89.50 | - $10.50 |
This $10.50 reduction may look small in isolation, but across 1,000 visits per year, that’s $10,500 less revenue. For multi-site practices, the cumulative effect can run into six figures annually.
Clinics also see a secondary impact in accounts receivable (AR) days and denial rates. Denials tied to assistant billing errors extend AR cycles, sometimes by 30–60 days if appeals are needed. By aligning claim workflows with PROMBS resources such as the CMS-1500 Claim Form Guide and operational strategies in Cut Prior Authorization Denials by 30%, practices can reduce both the financial hit from the 15% reduction and the administrative drag from denials.
In short, accurate pt assistant billing is not just a compliance box, it’s a revenue cycle necessity. Practices that treat CQ/CO as a financial KPI, tracking the percentage of lines carrying modifiers each month, can better forecast revenue and manage cash flow.
Conclusion
At its core, mastering PTA/OTA modifiers (CQ/CO) requires three steps: determine total units, apply the de minimis test per unit, and evaluate whether the therapist’s ≥8 minutes on the final unit allow billing without CQ/CO. By aligning documentation with CMS’s official Therapy Services guidance and claim logic with the CQ/CO billing examples, clinics can reduce denials, improve first-pass yield, and ensure compliance under OIG scrutiny.
As CMS continues to refine policy, clinics that embed “unit math” sentences into their notes, leverage PROMBS claim guides like the CMS-1500 Claim Form Guide, and train staff with visual examples will be best positioned to balance compliance with revenue integrity.
