What is HCPCS Coding?

HCPCS coding is the standard acronym for Healthcare Common Procedure Coding System (HCPCS). The system is broken into two subsystems, both designed to help simplify and organize the billions of medical claims that are processed for payment each year in the United States. The system uses computer data to code and organize medical information, and is continually being updated as new medical procedures are invented. Knowledge of HCPCS coding is a specialty in medical administration and requires its users to stay updated with changes.

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 is a numerical coding system maintained by the American Medical Association (AMA). CPT codes numerically identify medical services and procedures that a patient received, and the code is made up of five numbers.

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 billed to insurance companies. Level II HCPCS coding consists of a single letter followed by four number, instead of the standard five number CPT code.

HCPCS level III codes were considered local codes that established a code for items or services not included in either of the two previous levels. These codes were discontinued on 31 December 2003, and are no longer considered valid coding for either local or national work. As the healthcare industry continues to advance, the need to refine and expand the HCPCS coding continues; each time a new procedure or service is developed, a code that identifies it must also be established.

Expert knowledge of HCPCS coding is an employment skill that remains in high demand and has a very promising outlook for years to come. For those in the medical administration field, including those working in doctors’ offices, hospitals, and private and public health insurance, knowledge of the healthcare coding is essential as it is used on a daily basis. The coding is essentially governed in a clearinghouse fashion, which means that all information passes through the same source before being distributed; in this case, the clearinghouse location includes 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 as well as a source for answers to questions regarding coding system.