Final answer:
Functional reporting codes use severity/complexity modifiers, often known as 'G-codes', not 'KX modifiers', to indicate the level of restriction for the patient's functional limitations.
Step-by-step explanation:
The statement that functional reporting codes use 'KX modifiers' to indicate the level of restriction is false. In functional reporting, particularly for Medicare, therapists use severity/complexity modifiers, often referred to as 'G-codes'. These G-codes, along with the associated severity modifiers, indicate the extent of the patient's functional limitations. The KX modifier, on the other hand, is a specific Medicare modifier used to indicate that services are medically necessary and that documentation is on file to support the medical necessity.