Best States to Open a Physical Therapy Practice in 2026, Ranked by Medicaid Rate

The best states to open a physical therapy practice, judged by what Medicaid pays, are Alaska, New Mexico and Montana. Alaska ranks 1st of the 49 states compared, paying $44.17 per 15 minutes ($176.68 an hour) for physical therapy, 84.0% above the national median of $96.04. New Mexico ranks 2nd at $41.41 ($165.64 an hour) and Montana 3rd at $36.76 ($147.04 an hour).

Therapy is the industry where location matters most at the bottom of the ranking. In four states the median therapist wage, after employer costs, is higher than what Medicaid pays for the hour. This guide ranks states on the physical therapy rate, sets each against the local therapist wage, and notes whether managed-care plans are bound by the published rate. Use it as one input alongside licensing, staffing, payer mix and local competition, which you will need to research yourself.

The table ranks the ten states that pay the most for physical therapy. Margin per hour is the hourly rate minus the median therapist wage after employer costs such as payroll taxes and benefits.

Physical therapists earn far more than aides in home care or technicians in ABA, so wages take a bigger slice here. Even in Alaska the wage is 44.6% of the rate. That makes the margin column more important than the rank: North Dakota, 5th by rate, keeps more per hour than Texas, 4th.

Alaska Medicaid pays $44.17 per 15 minutes for physical therapy, or $176.68 an hour. That ranks 1st of the 49 states compared and is 84.0% above the national median.

The median physical therapist wage in Alaska is $55.43 an hour, the highest among the top five, and it takes 44.6% of the rate. After a loaded wage, the margin is $97.90 an hour, the largest in the ranking.

That margin has to cover a clinic, equipment, front-desk and billing staff, documentation time and cancellations. We have no managed-care rule on file for therapy in Alaska, so ask the state how claims are paid. The other questions are local: how many patients a new clinic can draw, how many Medicaid members need outpatient therapy in your service area, and how hard it is to recruit therapists.

See every therapy code on the Alaska therapy Medicaid rates page.

New Mexico pays $41.41 per 15 minutes, or $165.64 an hour, ranking 2nd of the 49 states compared and 72.5% above the national median.

The median therapist wage is $51.38 an hour, 44.1% of the rate, leaving $92.61 an hour after a loaded wage.

New Mexico's advantage is predictability. Therapy is paid directly by the state, outside managed care, so the published rate is what you are paid rather than an opening position in a plan negotiation. For a new practice without contracting leverage, that makes revenue easier to forecast. It also pairs that predictability with the second-largest margin in the ranking, $92.61 an hour.

Details are on the New Mexico therapy rates page.

Montana pays $36.76 per 15 minutes, or $147.04 an hour, ranking 3rd of the 49 states compared and 53.1% above the national median.

Montana's median therapist wage is $43.97 an hour, well below Alaska and New Mexico, at 42.5% of the rate. The margin after a loaded wage is $84.55 an hour.

The lower wage is what keeps Montana close to the top two on margin despite a lower rate. We have no managed-care rule on file for therapy in Montana. Before committing, research the distances your patients would travel, whether you can recruit therapists at the local wage, and what share of your patients would be on Medicaid versus commercial or Medicare coverage.

See the Montana therapy Medicaid rates.

Texas pays $33.75 per 15 minutes, or $135.00 an hour, ranking 4th of the 49 states compared and 40.6% above the national median.

The median therapist wage is $50.87 an hour, 53.6% of the rate, the highest wage share in the top five. The margin after a loaded wage is $62.70 an hour, lower than North Dakota's despite a higher rate.

In Texas, plans negotiate their own therapy rates and the published rate applies out of network. A practice whose Medicaid patients are mostly in plans will be paid what its contracts say. Use the published rate as the anchor for those negotiations and as the rate you can expect when you see a patient out of network.

Read more on Texas therapy Medicaid rates.

North Dakota pays $32.29 per 15 minutes, or $129.16 an hour, ranking 5th of the 49 states compared and 34.5% above the national median.

Its median therapist wage is $41.02 an hour, the lowest in the top 10, at 45.1% of the rate. That leaves $70.86 an hour after a loaded wage, more than Texas keeps despite Texas's higher rate.

We have no managed-care rule on file for therapy in North Dakota, so ask the state how claims are paid. A lower wage helps the margin, but it can also signal a smaller pool of therapists to hire from. Find out how quickly local clinics fill open positions before you plan your staffing.

See the North Dakota therapy rates page.

Hawaii pays $30.72 per 15 minutes, or $122.88 an hour, ranking 6th of the 49 states compared and 27.9% above the national median.

The median therapist wage in Hawaii is $48.90 an hour and takes 56.6% of the rate, leaving $53.38 an hour after a loaded wage. That is a clear step down from the top five: Hawaii's rate is close to North Dakota's, but its wage is higher, so the margin is smaller.

Hawaii's plans negotiate their own therapy rates, and the published rate applies out of network. As in Texas, your plan contracts will decide most of your Medicaid revenue if your patients are enrolled in plans. Hawaii is a reminder that a state can rank well on rate and still offer a middling margin once local pay is counted. If you are weighing it, look closely at rent and recruiting costs, which the margin figure does not include.

See the Hawaii therapy Medicaid rates.

The bottom of the therapy ranking is where Medicaid stops covering the cost of the therapist.

Maine ranks last, 49th of the 49 states compared, at $11.66 per 15 minutes ($46.64 an hour), 51.4% below the national median. Its median therapist wage takes 146.1% of the rate, a margin of -$21.50 an hour. California ranks 48th at $12.22 ($48.88 an hour), with the wage at 173.6% of the rate and a margin of -$35.99 an hour. New Jersey pays $14.70 ($58.80 an hour), a margin of -$17.82, and Pennsylvania $16.75 ($67.00 an hour), a margin of -$2.27.

Kentucky ($70.16 an hour) and Florida ($71.84 an hour) stay just above water, with margins of $1.34 and $2.79 an hour.

A practice can still operate in these states, but Medicaid patients there are likely to be served at a loss unless plan contracts pay more than the published rate. Commercial and Medicare volume would have to carry the practice.

States are ordered by their Medicaid rate for physical therapy, ranked among the 49 states compared. Rates are converted to a per-hour figure so states paying by different units can be compared directly.

Therapist wages are median hourly wages from Bureau of Labor Statistics data for physical therapists, where available. The margin takes the hourly rate and subtracts that wage after employer costs. It is a gross margin before rent, equipment, administration and unbilled time.

Every rate is compiled from official state Medicaid publications, and each one on the site links to its source document. The methodology page explains how codes, units and provider levels are matched.

A high physical therapy rate means each billed hour earns more. It does not mean a state has more patients, or that a practice there will fill its schedule.

Several things the rate leaves out:

• Payer mix. Outpatient therapy draws on Medicare and commercial insurance as well as Medicaid. A high Medicaid rate matters most if Medicaid will be a large share of your visits.
• Productivity. The margin figure assumes every paid hour is billed. Evaluations, documentation, cancellations and authorization work reduce that.
• Staffing. A lower wage helps the margin only if you can hire at that wage.
• Licensing and competition. Research state licensing rules, any requirements for opening a clinic, and how many practices already serve your target area.

Treat the ranking as a shortlist, not a decision.

Where Medicaid members are enrolled in managed-care plans, the plan pays the claim, and the state's rules decide whether the plan must honor the published rate. Four patterns appear in the top 12:

• The state sets the rate plans pay (Tennessee): the published rate carries through to plan claims.
• Plans must pay at least the published rate (Nevada): the fee schedule is a floor.
• Plans negotiate; the published rate applies out of network (Texas, Hawaii, Utah, Delaware): your contract decides your rate.
• Paid directly by the state, outside managed care (New Mexico, Maryland): you are paid the published rate.

Where no rule is on file, as in Alaska, Montana, North Dakota and Wyoming, check how therapy claims are routed before you budget.

Physical therapy is the anchor, but most outpatient practices bill more than one discipline. National medians across ranked states:

• Occupational therapy: $110.60 an hour.
• Speech-language therapy: $61.64 per billed unit.
• Physical therapy evaluation: $81.72 per billed unit.

The national medians differ widely by service, and so do the state rankings, so a multi-discipline practice should compare each line it plans to offer on the state pages rather than relying on the physical therapy rank alone.

Open the therapy Medicaid rates by state hub to compare PT, OT and speech codes everywhere. Then check the state pages on your shortlist, such as Alaska, New Mexico, Montana and Texas, for every code with its source document.

When you are ready to build a pro forma or prepare for plan contracting, see pricing for full access, and the methodology for how rates are compared.