The Healthcare Common Procedure Coding System (HCPCS, pronounced “hix-pix”) maintained by the Centers for Medicare & Medicaid Services (CMS) comprises two medical code sets, HCPCS Level I and HCPCS Level II.
Level I consists of the Current Procedural Terminology© (CPT), a classification index which, as Applied Policy has previously discussed, is developed, maintained, and copyrighted by the American Medical Association.
With nearly 11,000 codes, CPT is obviously extensive. But it is far from comprehensive and is not intended to be. As its unabbreviated name states, CPT’s focus is the medical procedures provided and performed by physicians and other healthcare professionals. It was not developed to allow for the classification of thousands of medical products and services, especially those used or delivered outside of an office setting.
HCPCS Level II fills this classification gap by providing a coding system for such items as durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) used outside of a physician’s office; drugs and biologicals not classified by CPT; ambulance services; and even certain episodes of chaplain spiritual care.
The mechanics
Level II codes are developed and maintained by CMS. Because they are developed in response to market interests as well as emerging science and technology, Level II codes evolve more rapidly than Level I codes.
There are currently HCPCS Level II codes for nearly 8,000 separate categories of medical services and items. They can be distinguished from Level I/CPT codes by their naming convention. Both Level I and Level II codes are five characters in length. While Level I codes are almost always numeric, Level II codes always begin with single alphabetical character, ranging from A to V, followed by four numbers.
In coding and policy discussions the term HCPCS is typically used in reference to Level II codes, while Level I codes are referred to as CPT codes. Categories of HCPCS codes are often referred to by their leading letter. For example, one might hear discussions of E codes for DME, J codes for drugs delivered intravenously or by injection, or L codes for orthotics and prosthetics.
Special categories and special circumstances
CMS offers and recognizes sets of codes for unique circumstances which may be specific to payment models or product classification or the lack thereof.
C codes, also known as “pass through codes,” are temporary pricing codes used for new procedures, drugs, biologicals, or radiopharmaceuticals without other coding assignments. They can be used for a minimum of two years and are typically replaced with permanent codes. Established to facilitate the implementation of Section 201 of the Balanced Budget Refinement Act (BBRA) of 1999, C codes were originally restricted to use for hospital outpatient department procedures and items qualifying for pass through payment under the Outpayment Prospective Payment System. They are now also used by other providers under other payment systems.
G codes are used for procedures and services which might be expected to have a CPT code, but for which no adequate CPT code exists. Q codes are used in Medicare claims processing for drugs, biologicals, or medical equipment not yet identified by a permanent HCPCS codes.
In some instances, it may be necessary for a supplier to use a “miscellaneous/not otherwise classified” code in submitting a claim. While the use of a miscellaneous code might sound arbitrary, such submissions are recognized by CMS as appropriate when no existing code adequately describes an item or service which is rarely used or for which an application is pending.
CMS maintains a set of two-character code modifiers which is published as part of the HCPCS code set. These modifiers, which may consist of one letter and one number or two letters, are used when additional information or specificity is required regarding the provision of an item or service. A “UE” modifier, for example, would indicate that a product was used, while a “NU” modifier would be used to specify that a product was new.
HCPCS Level II also includes a subset of dental codes which are published, copyrighted, and licensed by the American Dental Association (ADA) and over which CMS does not have jurisdiction.
HCPCS development and revision
While anyone can request the establishment of a new Level II code and/or the revision or discontinuation of an existing one, such requests are generally made by drug or device manufacturers for whom having a HCPCS classification is a crucial step towards reimbursement.
CMS maintains a quarterly HCPCS coding cycle for drugs or biologicals and a bi-annual coding cycle for non-drug, non-biological items or services, but notes that it may not always be able to accommodate every request received in a given cycle and may need more than a single cycle to complete “particularly complex or multi-faceted decision(s).” The agency may also consider applications outside of regular cycles in the event of a public health emergency or urgent circumstances.
CMS instituted these coding cycles beginning in January 2020, stating it was an effort to facilitate the launch of new products into the marketplace for providers and patients. Prior to 2020, CMS only accepted and reviewed HCPCS Level II code applications annually.
HCPCS Level II applications and supporting documentation must be submitted through the Medicare Electronic Application Request Information SystemTM (MEARISTM).* This is also a newer development to the HCPCS Level II code application process. At the end of 2021, CMS noted that moving forward it would only accept HCPCS Level II applications submitted via the MEARIS system, previously submitted by paper or more recently, email. The MEARIS system allows CMS to better track applications and streamline the review process, helpful for both the agency and applicants. However, technical components of the MEARIS system including character restrictions for responses, limited places to upload attachments, and specific questions and answers that do not always apply can sometimes make the process challenging for applicants.
Applications are considered by CMS’s HCPCS Workgroup made up of physicians and healthcare professionals within CMS, as well as other pertinent federal agencies such as the Department of Veterans Affairs and the Department of Defense.
In reviewing requests for new codes, the Workgroup considers whether a product performs a significantly different function or operates in a significantly different manner from items in existing coding categories. The company requesting the code must show in the application that there is a significant therapeutic distinction compared to existing coded treatments or products. The application includes other questions to distinguish why a new code is needed. For example, for devices, there are questions pertaining to the coding for the FDA predicate device, and why the new device should not be coded in the same manner.
For requests for non-drug, non-biological items or services, the Workgroup makes a preliminary recommendation on applications in advance of a public meeting at which applicants and other interested parties have a chance to respond. The preliminary decisions are typically published three weeks before the public meeting, which is usually held over three days. Public stakeholders, including applicants, can submit written comments in response to the preliminary decision the day of the public meeting in which the application was discussed. Following the meeting and public feedback, CMS issues final decisions about 60 days after the public meeting.
As mentioned, there are two coding cycles per year for non-drug and non-biological items. For the first cycle, applications are due the first business day of January, the public meeting is held in June and the final decisions are published in July/August. Finalized codes are then effective in October. For cycle 2, applications are due the first business day of July, preliminary decisions are published in the beginning of November, the public meeting is held at the end of November/beginning of December, and final decisions are announced in January of the following year. Finalized codes are effective the following April.
CMS’s decisions on drug and biological coding actions are released on a quarterly basis. There are no public meetings for drug and biological applicants.
A code≠payment
CMS emphasizes that HCPCS codes are used to identify items and services, and do not indicate that the item or service is covered and/or will be paid for under Medicare. What is covered under Medicare is determined through evidence-based National Coverage Determinations (NCDs) or through Local Coverage Determinations (LCDs) established by Medicare Administrative Contractors (MACs) for processing claims. Payment rates for HCPCS codes for drugs and biologicals are generally published through fee schedules and pricing files established by the Agency. For non-drug and non-biological items and services, beginning in 2022, CMS started including payment determinations as part of the public HCPCS process in an effort to make the process for establishing reimbursement more transparent. Previously, the process for determining payment was not made public and reimbursement was only made available with the quarterly DMEPOS fee schedule update.
*Some Applied Policy staff remember the “hard copy, old days” when meeting the once yearly submission deadline meant driving to CMS headquarters outside Baltimore, Maryland, to drop off boxes containing 25 separately stapled copies of the full application between Christmas and New Year’s Eve.