What is Functional Limitation Reporting?

Functional Limitation Reporting (FLR) is a complex term for a simple, and essential, process. The Centers for Medicare and Medicaid Services (CMS) requires FLR as a means of tracking a patient’s progress through physical, occupational, or speech rehab treatment from start to finish.

CMS will not provide Medicare or Medicaid reimbursement for eligible therapy without completed FLR; they need to know that the therapy a patient receives is making progress over time in a demonstrable way, and the data they receive from patient FLR provides them with the understanding they need to plan payment structures for the future.

Who is eligible for the Functional Limitation Reporting (FLR) program?

what is functional limitation reporting

Eligible physical, occupational, or speech rehabilitation therapists include those who work in hospitals, clinics, private offices, nursing facilities, and home health agencies. FLR provides these therapists, as well as the CMS, with data points for a patient’s limitation and the effects of the treatment on that limitation.

CMS requires an initial evaluation at the start of the treatment process, as well as a re-evaluation at least every ten visits. This is a minimum, however, and eligible professionals may find it both necessary and beneficial to re-evaluate more often to track their patients’ progress.

The patient’s functional limitation is, simply, the primary concern that is being treated. A recently injured knee that affects mobility, for example, would indicate mobility as the functional limitation requiring a report for a physical therapist, while a persistent stutter will be the focus of FLR for a speech therapy patient.

Only one limitation is reported at a time; if multiple limitations are being treated for a single patient, the reports must reflect a discharge of the patient for treatment of one limitation before they may begin on another.

Once the functional limitation is identified and noted with the appropriate G-code, the reporting professional must quantify the severity of the limitation. This is an estimate of just how much the limitation impairs normal function expressed as a percentage.

The data collected from evaluation tools and clinical judgment during the first visit serves to establish a baseline modifier code, as shown below. The aforementioned knee injury might reduce mobility by 50%, for example, indicating roughly half mobility as a direct result of that limitation.

From there, the reporting professional establishes a projected goal for that impairment by the end of treatment. This is often 0% for normal function after rehabilitation, but the goal must be realistic based on the effectiveness of treatment and the overall severity and permanence of the limitation.

This same process is used to track the progress a patient makes towards rehabilitating their limitation as therapy moves forward. The severity of the functional limitation is re-assessed with each report, ideally indicating progress towards the goal defined in the initial report.

CMS receives these reports as part of the Medicare and Medicaid program requirements, where these services pay for the treatment received in whole or in part. CMS will not provide reimbursement when the appropriate FLR is not provided, which may impact the patient’s ability to receive further therapy with Medicare assistance.

What final report must include?

The final report must include a discharge code to note that the patient has concluded the therapy regimen, as well as one final note of the severity of impairment. As stated, the discharge code must also be used before an eligible facility can begin reporting a new limitation. CMS will automatically deny any claims without the necessary reporting, or multiple reports filed for the same patient with different limitations.

Ultimately, the goal of FLR is to make sure that the rehabilitation therapy is showing results, thus letting CMS develop its payment structures to properly accommodate therapeutic treatment. The CMS relies on this information to define its expectations and to better understand the effects of therapy in the Medicare and Medicaid populations.


Falsely reporting patient progress will skew the data, which can damage the understanding the CMS has worked hard to develop and may have a negative impact on future payment structures. FLR is not about passing or failing a requirement; instead, it is about understanding the nature of therapy treatment to make more informed financial decisions so that the Medicare program can continue to assist people in need in as effectively and efficiently a manner as possible.

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