Medicare's new plan of care exception ends the physician-signature chase for OT and SLT referrals, but the discharge letter at the other end just got stricter

Ask a solo OT or SLT what a referral letter is for, and most will describe it as paperwork the referring physician needs, followed by a plan of care that same physician has to sign before treatment counts. Both halves of that belief are wrong in ways that cost real admin time. Medicare has never required a physician order or referral for outpatient occupational therapy or speech-language pathology in the first place. And since 1 January 2025, a specific, narrow exception means the signature-chasing that follows a referral doesn't have to happen at all for a growing share of patients. The document most clinicians spend the least time worrying about, the discharge note, carries the stricter legal obligation of the two.

What actually gets you paid isn't the referral

Medicare's own outpatient therapy documentation rule, set out in Section 220.3 of Chapter 15 of the Medicare Benefit Policy Manual, requires five things in the medical record: an evaluation, a plan of care, daily treatment notes, progress reports, and a discharge note (Medicare Benefit Policy Manual, Chapter 15, Section 220.3, cited via ASHA's Medicare documentation guidance, checked August 2026). A referral or order isn't on that list. What Medicare actually conditions payment on is a physician or nonphysician practitioner's certification of the plan of care, a distinct step that can happen with or without a referral ever existing. If a patient walks in without one and doesn't need treatment beyond an evaluation, a physician's certification of that evaluation stands in for a referral after the fact.

So what this means for you: the referral letter is a professional courtesy and a documentation input, not the thing Medicare is actually checking for. The plan of care certification is the real gate, and that's where the January 2025 change lands.

The 30-day rule that replaced the signature chase

Before 2025, if a patient came in with a physician referral, the therapist still had to send the plan of care to that referring provider and get a signed, dated copy back as proof of certification, often meaning repeated calls and faxes chasing a signature before a claim could be paid. Under the CY2025 Medicare Physician Fee Schedule final rule, effective for dates of service on or after 1 January 2025, CMS created an exception: if a signed and dated order or referral naming the type of therapy (PT, OT, or SLP) is already in the patient's record, and the therapist documents that the plan of care was transmitted to the referring physician or nonphysician practitioner within 30 days of the initial evaluation, that satisfies initial certification without a returned signature (American Physical Therapy Association, "Medicare's New Exception to the Plan of Care Certification Requirement," published 23 December 2024, citing 42 CFR Part 424 Subpart B and 89 Fed. Reg. 97710, 97912-97918; confirmed the exception applies to PT, OT, and SLP alike). Silence from the referring provider now counts as assent. The therapist's clinical judgment carries the certification, not a chased-down signature.

One caution worth flagging before anyone changes their workflow on this alone: as of August 2026, CMS has not yet updated the actual text of Chapter 15 Section 220 to reflect this exception, even though the rule itself has been in effect since January 2025 (APTA, same source, note dated 2026). The exception is real and operative; the reference manual just hasn't caught up in writing. Any AI drafting tool or template built by scraping the current Chapter 15 text alone would miss it entirely.

So what this means for you: if you're still budgeting staff time each week to follow up on unsigned plans of care for referred patients, that specific task can likely be cut for anything dated from January 2025 onward, provided you can document the 30-day transmission. That's a concrete, recoverable slice of the admin hours a solo OT or SLT loses to paperwork nobody is checking is still required.

What a referral letter actually needs to contain

AOTA's documentation guidance treats referral information as part of the intake and screening record, and specifies what it should capture: the date and source of the referral, the services being requested, and the reason for the referral (American Occupational Therapy Association documentation guidance, corroborated via Oregon Occupational Therapy Licensing Board's Guidelines for Documentation of Occupational Therapy, checked August 2026). That's a professional association standard, not a Medicare requirement, and it sits alongside the certification rule above rather than replacing it.

ASHA's own guidance is structured differently. Eligibility for speech-language services can be established through referral from several distinct sources, including the individual themselves, a family member, a physician, a teacher, an audiologist, another speech-language pathologist, or an interdisciplinary team (American Speech-Language-Hearing Association, Medical Review Guidelines for speech-language pathology, checked August 2026). Rather than a fixed set of required fields, SLT practice treats referral as a wider intake question: who identified the need, and does that source meet the payer's own eligibility test for starting services.

So what this means for you: if you're evaluating any tool that drafts or manages referral correspondence, check which standard it was built against. A template trained only on AOTA's four-field structure will underserve an SLT practice fielding referrals from six different source types, and a generic tool trained on neither will satisfy nobody's documentation standard, even if the letter it produces reads well.

The discharge letter is a different, stricter document

Where the referral letter is mostly a professional courtesy, the Medicare discharge note is not. ASHA's own guidance on Medicare documentation is explicit: the discharge note is a progress report covering the reporting period from the last progress report to the date of discharge, must include all treatment provided during that period, and must confirm the treating clinician reviewed the record and agrees with the discharge (American Speech-Language-Hearing Association, "Overview of Documentation for Medicare Outpatient Therapy Services," asha.org, checked August 2026). Its job, under Medicare, is justifying medical necessity for the entire episode of care to a payer or auditor. That's a different primary audience and a different legal function from a courtesy letter telling a referring physician how a patient's treatment went.

AOTA's discharge and discontinuation report asks for more clinical breadth: a synopsis of services provided, frequency and number of sessions completed, the interventions used, progress against the initial evaluation, response to those interventions, any equipment or training provided, and forward recommendations, alongside client-identifying data such as diagnosis, precautions, and contraindications (American Occupational Therapy Association documentation guidance, corroborated via Oregon OTLB guidelines, checked August 2026). Both disciplines' discharge documents overlap heavily in content. They diverge on which audience the document has to satisfy first, the payer checking medical necessity, or the next clinician picking up the case.

So what this means for you: don't assume the letter your billing software calls a "discharge summary" is doing the same job in both directions. If you bill Medicare Part B, the version that goes in the chart has to read as a progress report proving necessity, whatever version you also send to a referring provider or the next care setting.

Where AI helps with this, and where it doesn't yet

An independent review of AI scribe tools marketed to rehab therapists found most are built as EHR-agnostic overlays trained on general SOAP-format documentation, not on a specific discipline's referral or discharge content rules, and flagged tools built solely on a general-purpose language model, rather than one trained on discipline-specific clinical documentation, as a red flag worth checking for before buying (OT Potential, "AI Scribes Compared: for OT, PT, and SLP," published 19 February 2026, updated 25 July 2026; vendor-adjacent independent compilation, pricing subject to change). None of the tools in that comparison were evaluated against the CMS certification exception or the discipline-specific discharge content described above, because that's not what a general note-writing scribe is built to check.

Separately, at least one ambient AI vendor has been reported piloting modules that draft referral letters directly from a session recording rather than from typed notes (trade coverage, April 2026; an emerging, vendor-reported feature, not independently confirmed, and worth verifying directly with any vendor before assuming it's a standard capability). Any tool drafting a letter from a recorded session also triggers AOTA Policy E.19's existing requirement that patients be informed in advance of the recording, its intended use, and how the data will be stored, a consent step that has nothing to do with which letter format the AI produces (AOTA Policy E.19, "Ethical Use of Artificial Intelligence," effective April 2025).

So what this means for you: the evidence points toward using AI to draft the first pass of a referral or discharge letter, then checking that draft against your own discipline's content rules yourself, rather than trusting a general scribe to know that a Medicare discharge note has a different job than a courtesy letter to a referring physician. No tool reviewed to date has been shown to make that distinction on its own.

The call

Two changes are worth making this month, independent of any software purchase. First, for any Medicare patient referred on or after 1 January 2025, stop budgeting staff time to chase a returned, signed plan of care if you can document that it was sent to the referring provider within 30 days of the evaluation. That admin task is no longer required. Second, treat your discharge note template as two documents doing one job: confirm the version filed for Medicare Part B actually reads as a progress report proving necessity across the whole episode, separately from whatever summary you send a referring provider.

If referral and discharge correspondence is eating into evening hours that should be clinical time, that's exactly the kind of concrete admin line item the AI Opportunity and Growth Assessment scores against your own caseload and payer mix, not a generic vendor demo. Start with a free 20-minute discovery call.

See also: our look at why OT's documentation has five distinct stages, not one, the same referral-volume pressure already showing up in dentistry's referral letter data, and what consent actually requires before an AI tool records an OT or SLT session.

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