CPT – Current Procedural Terminology

CPT Codes describe medical or psychiatric procedures performed by physicians and other health providers. The codes were developed by the Health Care Financing Administration (HCFA) to assist in the assignment of reimbursement amounts to providers by Medicare carriers. A growing number of managed care and other insurance companies, however, base their reimbursements on the values established by HCFA.

Since the early 1970s, HCFA has asked the American Medical Association (AMA) to work with physicians of every specialty to determine appropriate definitions for the codes and to try to determine accurate reimbursement amounts for each code. Two committees within AMA work on these issues: the CPT Committee, which updates the definitions of the codes, and the RUC (Relative Value Update Committee), which recommends reimbursement values to HCFA based on data collected by medical societies on the going rate of services described in the codes.

CPT Codes Glossary of Frequently Used Terms

CONVERSION FACTOR. A numerical figure, determined by the Health Care Financing Administration, that is multiplied by the total rvu for a service to determine its reimbursement amount. As of January 1, 1998, there is a single conversion factor for all medical specialites: $36.6873.

CORRECT CODING INITIATIVE. A program run by the Health Care Financing Administration to monitor the coding practices of providers under Medicare. In the past, many physicians routinely misused the CPT coding system to obtain multiple payments for a single procedure. For example, amputation of the left foot would have been incorrectly coded as amputation of each of the left toes as well as the foot, resulting in much larger reimbursements. The government now runs sophisticated computer programs that analyze coding patterns and report on questionable billing practices, and with the monies saved in finding fraud, the government funds a large staff of thorough auditors who will report and prosecute fraud whether intentional or not.

COUNSELING. In CPT ’98, counseling is defined as a discussion with a patient and/or family concerning medical information, such as diagnosis, test results, prognosis, treatment risks and benefits, treatment instructions and risks of noncompliance, and education. Counseling is an E/M service, and must be distinguished from psychotherapy, which refers to specific treatment procedures coded in the 908XX series (AMA, 1998).

FAMILY HISTORY. For the purposes of CPT, family history is a review of medical events in the patient’s family, including parents’ and siblings’ morbidity and mortality, especially as related to the presenting concerns or risk of morbidity (AMA, 1998).

PAST HISTORY. A review of the patient’s prior experiences with illnesses, injuries, and treatments, including hospitalizations, medications, allergies, surgeries, etc. Current medications, immunizations, and feeding/nutritional information are included in this category (AMA, 1998).

PRACTICE EXPENSE. An estimation, by the Health Care Financing Administration, of the costs of providing a medical service to a patient under Medicare. Practice expense is divided into both DIRECT and INDIRECT costs. Direct costs include materials consumed (tissues, play materials, crayons, photocopies, paper, pens, etc.), and personnel time (nursing, billing, reception, etc.) Indirect costs include commodities such as rent, utilities, advertising, etc., that are not procedure-specific but factor into a provider’s expenses (Department of Health & Human Services, 1997).

PHYSICIANS’ CURRENT PROCEDURAL TERMINOLOGY (CPT). A systematic listing and coding of procedures and services performed by physicians and other clinicians that is widely used for coding in billing and payment. The CPT listing, developed over decades by the American Medical Association, assigns a unique code to each medical procedure, with modifiers to refine the descriptions of the services provided.

RELATIVE VALUE UNIT (RVU). A unit of measure designed to permit comparison of the amounts of resources required to perform various provider services by assigning weight to such factors as personnel time, level of skill, stress level, and sophistication of equipment required to render a service. The Health Care Financing Administration requires that the three major components of a service or procedure provided under Medicare have RVUs assigned to them: physician work, practice expense, and malpractice expense (JCAHO, 1994).

. The actual figure or value arrived at in relative, nonmonetary work units (rvu’s) that can later be converted into dollar amounts as a means for determining reimbursement for services. The formula for RBRV for a given service is: RVRB = (TW) (1 + RPC) (1 + AST), in which TW = total work by the provider; PRC = an index of relative specialty practice cost; and AST is an index of amortized value for the opportunity cost of specialized training. Total work input is defined by four attributes: time, mental effort and judgment, technical skill and physical effort, and psychological stress (JCAHO, 1994).

RESOURCE-BASED RELATIVE-VALUE SCALE (RBRVS). A method of reimbursement under Medicare that attempts to base reimbursements on the amount of resources, including cognitive and evaluative skils, required to diagnose and treat a patient’s condition. The approach weighs the resources, including practice expenses and total work input, that go into the “manufacture” of a service or procedure (JCAHO, 1994). SOCIAL HISTORY. A review of the patient’s past and current activities and circumstances, including marital status; employment/education; sexual history; financial status; and patterns of use of drugs, alcohol, and tobacco (AMA, 1998).

SYSTEM REVIEW (or Review of Systems). An inventory of body systems obtained through a series of questions seeking to identify the patient’s current and/or prior signs and/or symptoms (AMA, 1998). (See the AACAP 1997-98 CPT Training Module for detailed information on system review.)

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