Every year, U.S. healthcare insurers process more than 5 billion claims for payment.
While mistakes are definitely made, they're able to handle that many claims, and for the most part accurately, because of medical billing codes.
There are three coding systems in wide use: ICD, HCPCS, and CPT.
What is a CPT Code?
CPT codes are used to designate any task or service that a healthcare provider can offer. That's why they're sometimes known as "service codes."
They can be recognized as five-digit numeric codes (or, sometimes, four numbers followed by one letter), without decimals or dashes.
CPT codes ensure uniformity in the tracking and billing of services. A CPT code determines the reimbursement a healthcare practitioner receives from the insurer, but it also determines what the patient has to pay.
What Does CPT Stand For?
CPT stands for Current Procedural Terminology.
CPT codes were originally developed to codify surgical procedures, but after the system was adopted by Medicare, the codes expanded to include diagnostic and medical services as well.
Some CPT codes indicate bundled services that are commonly go together. In other cases, the bundled code describes various aspects of what laymen might consider a single event.
For example, bundles are commonly used to describe injections – a single bundle code will specify that a patient received an injection (service 1) of a certain substance (service 2) for a certain reason (service 3) in a certain location (service 4).
It's a lot more informative than one generic "injection" code, and a lot less confusing than breaking that event into 4 separate codes.
What Puts the "Current" in Current Procedural Terminology Codes?
As healthcare practices change, new codes are developed and out-of-date codes are discarded. Sometimes current codes need to be revised.
CPT codes are updated every year, as advised by a panel of physicians. These doctors are nominated by healthcare stakeholders, including 11 by various American Medical Association specialty societies, one by the American Hospital Association, and three "physician payer" (insurance) representatives. There are also two non-doctor panel members.
Are CPT Codes Different From HCPCS?
Both CPT and HCPCS codes designate healthcare services and procedures. The systems are also connected because Level I HCPCS codes are based on (and identical to) the CPT codes provided by physicians.
Level II HCPCS codes indicate healthcare services and procedures that aren't provided by physicians, including medical equipment, supplies, and ambulance services. HCPCS Level II codes start with a letter, which makes them easy to distinguish from CPT codes that always have a digit in the first position.
Healthcare Common Procedure Coding System (HCPCS) codes are used by Medicare and Medicaid.
You'll notice we haven't mentioned codes for diagnoses, yet. That's because they're a separate coding system, called the International Classification of Disease (ICD-10) codes.
What Are Category I CPT Codes?
CPT codes are divided into three categories: CPT I, CPT II, and CPT III.
Category I is the original category and the most commonly used.
CPT I Codes
Category I CPT codes (as in, "Category One") are the codes assigned to procedures that are accepted as standard medical practice in the U.S. Items in this category are supported by medical literature, proven to be effective for certain diagnoses, and cleared by governing bodies.
In other words, they're the bread and butter of CPT coding. They're the most commonly used, and they're critical to accurate billing.
CPT I codes (as in, "CPT1") may include services, devices, drugs, and vaccines.
Their codes consist of numbers only, not letters, and they're updated every year. CPT I code changes are announced in September, then they become effective on January 1st of the following year.
CPT II Codes
Category II CPT codes are supplemental performance tracking codes. They're optional and not used for billing. CPT II codes hope to decrease administrative burdens by reducing the need for chart review. They document things like level or history of tobacco use, the category of risk indicated by their cholesterol results, or care that was recommended but not given (if, for example, a patient refused).
In addition to organizing important information for healthcare workers, CPT II codes are referred to as "performance measurement codes" because they're intended to facilitate the collection of information regarding quality of care.
CPTII codes consist of four digits followed by an F. They're updated three times a year (March 15, July 15, and Nov 15).
CPT III Codes
Category III CPT Codes are temporary. They're assigned to new or emerging services that are outside the accepted standard of care. They can be used for billing, but their main purpose is to collect data for the FDA approval process or prove widespread usage that would justify the establishment of a permanent Category I CPT code.
After five years, a CPT III code either becomes a permanent CPT I code, gets rejected, or has to reapply for Category III status. Before a procedure or service can be assigned to Category I, it needs to have FDA approval.
CPT III codes consist of four digits followed by a T. They're updated twice a year (Jan 1 and July 1).
The AMA calls Proprietary Laboratory Analysis (PLA) codes "an addition to the CPT code set" rather than a category of it. They're for labs or manufacturers that want to specifically identify their test. Thus, the word "proprietary."
PLA codes sometimes overlap with Category I CPT codes. For example, a test might have a CPT I code, but each manufacturer that makes that test might have its own PLA code. In these cases, the PLA code takes precedence, since it provides more specific information.
PLA codes are alpha-numeric – so far, four digits ending with a U.
CPT Code Lookup
CPT codes are developed, maintained, and copyrighted by the American Medical Association (AMA). The copyright means access is restricted for the full listing of CPT medical billing codes.
Healthcare professionals have subscriptions that allow access to detailed explanations of all CPT codes. There's also software that generates medical billing code suggestions based on descriptions.
Patients have limited access to the meaning of medical billing codes so they can understand (and, if necessary, correct) their bills, discharge paperwork, and/or Explanation of Benefits. The AMA offers five free searches a day through their online CPT code lookup. You just need to register first.
It's worth noting that HCPCS Level II codes are more freely accessible. They're developed and maintained by the Centers for Medicare & Medicaid Services (CMS), which is the agency under the Department of Health and Human Services (DHHS) that administers government-run healthcare.
Since HCPCS Level I codes are identical to CPT codes, those are subject to the same restrictions as CPT code lookups.
Want to Learn More?
Accurate use of CPT and other medical billing codes is critical to the U.S. healthcare system. Coding errors can lead to rejected insurance claims or patients being charged for services they didn't receive.
Medical coders are responsible for ensuring that codes are applied accurately and appropriately. Medical billing codes aren't always black and white. Medical coders have to make judgment calls on which codes provide the best match to services rendered. Some medical coders even say their job is like detective work!
Medical coding is an in-demand job that doesn't require a degree. It's a way to contribute to the healthcare industry without hands-on patient interaction.
You can become a Certified Billing and Coding Specialist (CBCS) online from the comfort of your own home in just a few months.
Want to learn more? Reach out to us today!