Can I Keep Seeing Mr. Smith? A Guide to Medicare Plans of Care

One thing I love about outpatient therapists is that, for the most part, they build real relationships with their patients. When I was treating full time, I had patients on my schedule who I had seen for their shoulder, then their wrist, then their elbow.

Anytime they needed therapy, they requested me — not because I’m some amazing therapist, but because they had developed a relationship with me.

As a practice owner, you want to leverage that strength of your team to grow your business, but you also need to be aware of the compliance issues that may pop up as a result. For example, I’m sure you’ve had that patient — let’s call them Mr. Smith — who you’ve seen for 8 weeks.

Mr. Smith appears to have met his goals, and what you’ve been doing with him in the clinic seems less like advancing his skills, strength, or motor control, and more like running through the same or similar activities each session.

But because you’ve built a relationship with Mr. Smith, when you bring up discharge planning (or “graduating,” as we like to call it in our clinic), he tells you he needs to keep coming to therapy or he’ll “slide back to where I was.”

How do you handle that?

On the one hand, you want to maintain a good relationship with your patient. You want him to feel like you’ve taken his concern into consideration when making plans for “next steps.” But at the same time, no one wants to be on the receiving end of a clawback from Medicare. Extended plans of care with no documented progress, or poorly documented clinical reasoning or justification, potentially result in compliance issues — including having money ripped out of your account — with Medicare.

In fact, when I first bought the clinic, one of the previous owners told me about a time when Medicare clawed back $13,000 in payments. The way Medicare works, they simply reach into your account and pull the money out. It’s up to you then to provide documentation and prove those services were justified. If you satisfy them, they put the money back. If not, you’re out of luck.

So this poses a potentially huge problem for private OT/PT practices already struggling with downward pricing pressure and shrinking margins. Imagine waking up and having $10,000+ missing from your account, and payroll is due that week. This article — and the resource documents that go with it — aims to prevent that.

The Trap Is Bigger Than Mr. Smith

Here’s the thing: the instinct to keep Mr. Smith on your schedule isn’t a character flaw, and it’s not really a compliance problem on its own either. Most of us were simply trained to make this call on a feeling — “he still seems like he needs me” — instead of on a standard we could actually write down, defend, and teach to every clinician on our team the same way.

And the standard most of us were implicitly taught is wrong. We were trained to believe Medicare only pays for improvement — that once progress plateaus, the clock runs out. That belief is exactly what puts you in the impossible spot with Mr. Smith: either discharge someone who’s telling you, to your face, that he’ll get worse without you, or keep billing weekly visits you can’t really justify on paper and hope nobody ever asks.

There’s a third option, and it’s been sitting in writing since 2013.

Some of the larger PT chains have their own way of dodging this conversation entirely, and it’s worth naming because you’ve probably experienced it as a patient, if not as a competitor: a hard visit cap, built right into policy. Sixteen visits, done — no clinical reasoning required, no plan-of-care judgment call, no awkward talk about plateaus. When the patient pushes back, the front desk or the treating clinician gets to say, “you’re out of visits” or “your insurance won’t cover any more,” and the conversation is over. Sometimes that’s even true.

But plenty of times, it’s a policy standing in for a decision nobody wanted to make — and it conveniently moves the hard conversation off the clinician’s plate and onto “the mean old insurance company,” who isn’t in the room to correct the record.

It’s a tidy way to avoid training your staff to make the actual clinical call. It’s also not a compliance strategy — a visit cap with no clinical reasoning behind it is just as indefensible in an audit as a plan of care that runs too long with no reasoning behind it. The number was never the standard. The clinical need was.

The Question That Actually Matters

In 2013, a court settlement called Jimmo v. Sebelius forced CMS to put something in writing that a lot of us still haven’t caught up to: coverage of skilled therapy does not depend on whether the patient is improving. It depends on whether the patient needs your skill.

That’s a different question than the one most practices are running on autopilot. It’s not “is Mr. Smith getting better?” It’s: does keeping Mr. Smith safe, functional, or stable right now require a licensed clinician’s judgment — or could his wife, or a home exercise program, or the YMCA down the street do this just as well?

That question doesn’t automatically hand you a “keep billing” or a “discharge him” answer. It forces you to actually look at the case, which is the whole point.

Back to Mr. Smith: Three Honest Answers

Let’s actually work the case, because “it depends” isn’t useful to a practice manager trying to build a system your whole team can follow. When you sit down and honestly answer the skilled-need question for Mr. Smith, you land in one of three places:

1. He’s plateaued, and nobody else needs to be in the room. His strength and motor control are where they’re going to be, the exercises are the same ones you gave him three weeks ago, and there’s no meaningful fall risk, comorbidity, or complexity that requires ongoing clinical oversight. This is a discharge — full stop. But it doesn’t have to feel like abandonment, and I’ll get to that in a second.

2. He’s plateaued on the specific goals you wrote, but there’s a real reason he still needs you. Maybe he’s got a comorbidity — diabetic neuropathy, a cardiac history, early Parkinson’s — that means his presentation could change in ways that genuinely require a clinician’s judgment to catch early. That changes what you’re dealing with: his case has quietly become a maintenance case, and the plan of care needs to say so. The fix isn’t more of the same visits under the same rehabilitative goals. It’s rewriting the plan of care to reflect what’s actually happening, with documentation that explains, specifically, why his case still requires skilled care.

3. He hasn’t actually plateaued — your goals did. Sometimes “he’s not progressing” really means the original goals were too narrow, or too short-term, and nobody revisited them. That’s a plan-of-care update with new, legitimately achievable goals — a different fix again, and worth naming as its own category so your team doesn’t lump it in with the other two.

Three different situations, three different next steps, and every one of them requires you to actually answer the skilled-need question instead of defaulting to “well, he wants to keep coming.”

Get the Paperwork Right: Plan of Care Designation vs. Modifiers 96/97

Once you’ve made the clinical call, there’s a coding question I hear from practice managers constantly, and it’s worth clearing up directly: is there a modifier that flags a case as rehabilitative vs. maintenance for Medicare?

No — and that surprises people. There’s no dedicated HCPCS modifier that tells Medicare “this is a maintenance case.” The rehab-vs-maintenance designation lives entirely in the plan of care itself: the goals you write, the frequency and duration you certify, and the clinical rationale in your notes. That’s what an auditor actually reads.

Your standard modifiers — GP for PT, GO for OT, CQ/CO if an assistant provided the service, KX once a patient crosses the annual threshold — apply the same way regardless of which mode the case is in. None of them tell Medicare which mode you’re in. Only your documentation does.

Here’s where it gets genuinely confusing, and where I want to save you a mistake: modifiers 96 and 97 sound like they might be the answer, but they’re a different distinction entirely. Modifier 96 flags habilitative care — a patient learning a skill for the first time. Modifier 97 flags rehabilitative care — a patient recovering a skill they used to have.

That’s a real, meaningful distinction, but it’s not rehab-vs-maintenance, and Medicare Part B doesn’t universally require either one on outpatient claims — it’s mostly commercial payers, under ACA essential-health-benefit rules, who use 96/97 to keep habilitative and rehabilitative visit limits separate.

Why this matters for your practice, in three directions at once:

Compliant: Train your team that the real designation is written in the plan of care narrative, not picked from a modifier dropdown. A mismatched plan of care — rehabilitative goals on a patient you’re actually maintaining — is the audit risk. A missing modifier usually isn’t.
Business smart: For your commercial payer mix, confirm per-payer whether 96/97 apply. Applying the wrong one doesn’t just risk a denial — it can draw down the wrong visit-limit bucket entirely, which becomes its own headache weeks later when a patient unexpectedly runs out of covered visits.
Patient-focused: Getting this right protects your patient’s actual benefit. A patient billed under the wrong category on a commercial plan can burn through visits meant for a different kind of care, and find themselves without coverage right when they still need you.

The short version: don’t reach for 96/97 to solve a Medicare rehab-vs-maintenance question — it’s the wrong tool for that job. Solve it in the plan of care, where Medicare is actually looking.

Protecting the Relationship While Protecting the Practice

Here’s where the business owner in me actually likes this framework, instead of just tolerating it as a compliance chore: it gives you a better answer for Mr. Smith than “sorry, insurance won’t let me see you anymore.”

If Mr. Smith genuinely doesn’t need skilled care anymore, that’s the win you were both working toward. The conversation can be, “your body just told us something great — you don’t need a clinician in the room for this anymore. Here’s how we keep you moving in the right direction” — a self-pay wellness membership, a maintenance class, a home program with periodic check-ins. You keep the relationship. You keep him in your building. You just stop billing Medicare for a service he no longer clinically requires, which, not for nothing, is also what keeps you out of a post-payment review.

If he genuinely does still need skilled care, that conversation is just as easy: “We’re going to change what we’re working on and how often we see you, because your situation needs a different kind of plan going forward” — and now your notes actually back that up.

Either way, Mr. Smith stays a patient who trusts you. The relationship stops making the clinical decision for you, and starts being the thing you protect by making the decision well.

Why This Needs to Be a System, Not a Feeling

If you’re a solo practitioner, you can maybe get away with making this call in your head, case by case, and living with the inconsistency. If you’re running a practice with a team, you can’t. Every clinician on your schedule has their own version of Mr. Smith right now, and if the decision about when to discharge, when to transition to maintenance, and when to revise goals runs on individual gut feeling instead of a shared standard, you don’t have a clinical philosophy — you have a liability sitting in twelve different treatment rooms.

That $13,000 clawback I mentioned at the top wasn’t a fluke or bad luck. It’s what happens when “we kept seeing him because he seemed like he still needed it” is the entire clinical rationale in the chart. Medicare doesn’t ask whether your team meant well. It asks whether the documentation justifies the visit.

There’s an adage I picked up in a business development course years ago that’s shaped every business I’ve run or advised since: policy trumps preference. Left to individual judgment in the moment, people — good, well-meaning, clinically sharp people — will make inconsistent decisions, because the moment always has a personality attached to it. Mr. Smith is sitting right in front of your clinician, and he’s likable, and he’s asking nicely. Preference will lose that fight almost every time. A policy doesn’t have to. A policy is the decision you made on a calm day, in advance, before a specific patient’s face was attached to it — which is exactly why it holds up in the room, and exactly why it holds up in an audit.

This is why I built out a full internal framework for my own practice — something my clinicians actually use at evaluation, at every plateau, and at every recertification to make this call the same way, every time, and document it so it holds up.

I’m making both pieces of that framework available to paid subscribers over on Substack:

The Plan of Care Philosophy & Framework — grounded directly in the Medicare Benefit Policy Manual and the Jimmo settlement, built as a decision tool for you as the practice owner or clinical director to adapt into your own compliance and onboarding materials.
The Team Guide — the plain-language companion your clinicians will actually read and use in the room with the next Mr. Smith, without wading through regulatory citations to get there.

Both can be white-labeled — just add your own letterhead and company info. Put your practice’s name on them and hand them to your team this week, or at your next team meeting.

The Bottom Line

Your therapists’ ability to build real relationships with patients is a genuine strength of your practice — arguably one of the best predictors of outcomes and retention you have. It shouldn’t be the thing that gets your practice audited, and it shouldn’t be the reason a patient who’s ready to graduate gets stuck in your schedule out of guilt, or a patient who genuinely still needs you gets discharged because nobody updated the plan of care. Build the system once, and you get to keep the relationship and keep the money in your account.

References

Centers for Medicare & Medicaid Services. Medicare Benefit Policy Manual, Pub. 100-02, Chapter 15 — Covered Medical and Other Health Services, §220.2, “Reasonable and Necessary Outpatient Rehabilitation Therapy Services,” as revised to implement the Jimmo v. Sebelius Settlement Agreement. Read the full chapter (PDF)

Jimmo v. Sebelius, Civil Action No. 5:11-cv-17 (D. Vt. 2013), Settlement Agreement. CMS Jimmo Settlement page

Centers for Medicare & Medicaid Services. Medicare Claims Processing Manual, Pub. 100-04, Chapter 5 — Part B Outpatient Rehabilitation and CORF/OPT Services. Read the full chapter (PDF)

CMS Transmittal R13437CP, 2026 Annual Update of Per-Beneficiary (KX Modifier) Threshold Amounts. View the transmittal

Centers for Medicare & Medicaid Services, Transmittal 3940 (2018), introducing modifiers 96 (habilitative) and 97 (rehabilitative) to replace the SZ modifier for habilitative services. View the transmittal (PDF)

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