HCPCS coding is the standard acronym for Healthcare Common Procedure Coding System (HCPCS). The system is designed to help simplify and organize the billions of medical claims that are processed for payment each year in the United States. Knowledge of HCPCS coding is a specialty in medical administration.

HCPCS coding is broken down into two primary subsystems, which are referred to as level I and level II. Level I HCPCS coding includes the Current Procedural Terminology (CPT) codes, which are a numerical coding system maintained by the American Medical Society. CPT codes numerically identify medical services and procedures.

HCPCS coding level II was established in the 1980s as way to assign codes to services, supplies, and procedures not included in the CPT coding system, but still covered by and billable to insurance companies. Level II HCPCS coding consists of a single letter followed by four numbers instead of the standard 5 number CPT code.

For those in the medical administration field, including those working in doctors’ offices, hospitals, and private and public health insurance, knowledge of HCPCS coding is essential. HCPCS coding is essentially governed in a clearinghouse fashion operated by the American Hospital Association (AHA) and the Center for Medicare and Medicaid Services (CMS). Together they serve as a centralized location that maintains and distributes the system and a source for answers to questions regarding HCPCS coding for medical professionals, insurers, and the general public.

As of 2003, HCPCS level III codes became established. Rather than being nationally accepted, the level III codes became considered local codes that established a code for items or services not included in either of the two previous levels. As the healthcare industry continues to advance, the need to refine and expand the HCPCS coding continues. This allows insurance companies and providers to determine billing and coverage. Each time a new procedure or service is developed, a code that identifies it must also be established.

Because of the constantly changing medical industry, those medical professionals who work with HCPCS coding must continually stay updated on changes. Expert knowledge of HCPCS coding is an employment skill that remains in high demand and has a very promising outlook for years to come.