Current Procedural Terminology

Current Procedural Terminology (CPT) is a listing of descriptive terms and codes that are used to describe a medical procedure or service. CPT was developed and published by the American Medical Association (AMA) in 1966. The original four-digit codes were expanded to five-digit numeric (or five-character alphanumeric) codes in 1970.

The purpose of the CPT codes is to provide a uniform language that accurately describes a service (diagnostic, medical, or surgical), to serve as a method of communication among physicians, patients, and third parties.

In 1987, the Centers for Medicare and Medicaid Services (CMS), formerly the Health Care Financing Administration (HCFA), mandated that hospitals report CPT codes for outpatient hospital procedures. In August 2000, the CPT codes were named as the national standard under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Although originally designed as a form of communication, CPT codes are now used to provide the basis for physician and hospital reimbursement for outpatient hospital services received by Medicare patients.

The CPT Editorial Panel of the AMA updates the CPT nomenclature on a yearly basis to reflect [Page 552]advances in medicine and technology. New CPT books are available in late fall of each year preceding their implementation, and January 1 is the effective date for using new CPT codes. Using a deleted code could cause the denial of a claim for physician or hospital outpatient services.

The Healthcare Common Procedure Coding System (HCPCS), developed by CMS in 1983 as a way to standardize the coding system used to process Medicare outpatient claims, also makes use of the CPT codes. The HCPCS has three levels, each consisting of a unique coding system. Level I is the AMA's CPT codes, and these codes make up the majority of the procedures and services performed by physicians and other health care professionals.

Level II codes are five-character codes and consist of a letter (A through V, except I and S) followed by four numeric digits. The American Dental Association owns the copyright on the “D” codes. Level II codes describe services and supplies not found in Level I codes. They include drugs, orthotics and prosthetic devices, surgical supplies, dental procedures, vision services, ambulance services, and medical equipment. Level II codes are also known as alphanumeric codes.

Level III codes are known as local codes and are assigned by local medical carriers to describe procedures and services not identified in the other two levels. Local codes can vary from state to state. These five-digit codes begin with an alphabetic character (W through Z) followed by four numeric digits.

Category III codes, a subset of CPT, became effective in January 2001. Category III codes are temporary codes used to describe emerging technology. Category III CPT codes are alphanumeric. Category III codes are not assigned a dollar value. These codes are reported to describe new technology or new procedures that are not described by the Level I CPT codes. A procedure note is submitted to the payer when a Category III code is used. The payer will determine the appropriate reimbursement. Typically, a code is deleted after 5 years if the code has not been accepted for placement in the Category I section of CPT.

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