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CPT Coding - Category I, Category II, Category III

Category I CPT Codes

Category I CPT codes describe a procedure or service identified with a five-digit CPT code and descriptor nomenclature. The inclusion of a descriptor and its associated specific five-digit identifying code number in this category of CPT codes is generally based upon the procedure being consistent with contemporary medical practice and being performed by many physicians in clinical practice in multiple locations.

In developing new and revised regular CPT codes the Advisory Committees and the Editorial Panel require:

  • That the service/procedure has received approval from the Food and Drug Administration (FDA) for the specific use of devices or drugs;
  • That the suggested procedure/service is a distinct service performed by many physicians/practitioners across the United States;
  • That the clinical efficacy of the service/procedure is well established and documented in U.S. peer review literature;
  • That the suggested service/procedure is neither a fragmentation of an existing procedure/service nor currently reportable by one or more existing codes; and
  • That the suggested service/procedure is not requested as a means to report extraordinary circumstances related to the performance of a procedure/service already having a specific CPT code.

Category II CPT Codes — Performance Measurement

CPT Category II codes are supplemental tracking codes that can be used for performance measurement. The use of the tracking codes for performance measurement will decrease the need for record abstraction and chart review, and thereby minimize administrative burdens on physicians and other health care professionals. These codes are intended to facilitate data collection about quality of care by coding certain services and/or test results that support performance measures and that have been agreed upon as contributing to good patient care. Some codes in this category may relate to compliance by the health care professional with state or federal law.

The use of these codes is optional. The codes are not required for correct coding and many not be used as a substitute for Category I codes.

Services/procedures or test results described in this category make use of alpha characters as the 5th character in the string (i.e., 4 digits followed by an alpha character). These digits are not intended to reflect the placement of the code in the regular (Category I) part of the CPT code set. Also, these codes describe components that are typically included in an evaluation and management service or test results that are part of the laboratory test/procedure. Consequently, they do not have a relative value associated with them.

Tracking codes for performance measurement are released biannually (January 1 and July 1) on the AMA CPT internet site, http://www.ama-assn.org/go/cpt and published annually in the CPT book as part of the general CPT code set. Codes released on January 1st are effective July 1st, allowing 6 months for implementation, and codes released on July 1st are effective January 1st.

Tracking codes are reviewed by the Performance Measures Advisory Group (PMAG), an advisory body to the CPT Editorial Panel and the CPT Health Care Professionals Advisory Committee (CPT/HCPAC). The PMAG is comprised of performance measurement experts representing the Agency of Healthcare Research and Quality (AHRQ), the American Medical Association (AMA), the Centers for Medicare and Medicaid Services (CMS), the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), the National Committee for Quality Assurance (NCQA), and the Physician Consortium for Performance Improvement. The PMAG may seek additional expertise and/or input from other national health care organizations, as necessary, for the development of tracking codes. These may include national medical specialty societies, other national health care professional associations, accrediting bodies, and federal regulatory agencies. PMAG recommendations are then forwarded to the CPT/HCPAC Advisory Committee just as requests for Category I CPT codes are reviewed.The PMAG is interested in:

  • Measurements that have been developed and tested by a national organization;
  • Evidence-based measurements with established ties to health outcomes;
  • Measurements that address clinical conditions of high prevalence, high risk or high cost; and
  • Well-established measurements that are currently used by large segments of the health care industry

Category III CPT Codes — Emerging Technology

Category III CPT codes are a temporary set of tracking codes for new and emerging technologies. These codes are intended to facilitate data collection on and assessment of new services and procedures. The Category III codes are intended for data collection purposes in the FDA approval process or to substantiate widespread usage. As such, the Category III codes may not conform to the usual CPT code requirements for Category I. The Panel has established the following criteria for evaluating Category III code requests, any one of which is sufficient for consideration by the Editorial Panel: 1) a protocol for a study of procedures being performed; 2) support from the specialties who would use the procedure; 3) availability of U.S. peer-reviewed literature; 4) descriptions of current United States trials outlining the efficacy of the procedure.

These codes will be assigned a numeric-alpha identifier (eg, 1234T). These codes will be located in a separate section of CPT, following the “Category II” section. Introductory language in this code section explains the purpose of the Category III codes.

Since Category III CPT codes are intended to be used for data collection purposes to substantiate widespread usage or in the FDA approval process, they are not intended for services/procedures that are not accepted by the Editorial Panel because the proposal was incomplete, more information is needed, or the Advisory Committee did not support the proposal.

Once approved by the Editorial Panel, the newly added Category III CPT codes are released biannually (January 1 and July 1) on the AMA CPT internet site, http://www.ama-assn.org/go/cpt and published annually in the CPT book as part of the general CPT code set. Codes released on January 1st are effective July 1st, allowing 6 months for implementation, and codes released on July 1st are effective January 1st.

Category III CPT codes are not referred to the AMA /Specialty RVS Update Committee (RUC) for valuation because no relative value units (RVUs) will be assigned. Payment for these services/procedures is based on the policies of payers and local Medicare Carriers. However, the assignment of a CPT Category III code to a service does not indicate that it is experimental or of limited utility, but only that the service or technology is new and is being tracked for data collection. In the Final Rule for the 2002 Medicare Physician Fee Schedule (Federal Register, Thursday, November 1, 2001), the Center for Medicare and Medicaid Services (CMS) stated that they believed that Category III codes “will serve a useful purpose” and that payment for the service is at the discretion of the Carriers, but that the codes could be paid after entered into the computer systems. Local payment determination is reasonable for Category III CPT codes. It is not reasonable to categorically deny payment for CPT Category III codes since they are effectively more specific, more functional versions of unlisted codes which many payers cover with appropriate documentation. Once payment policies are established of a Category III Code, the need for documentation will be minimized since Category III Codes are associated with unique and specific descriptions of the service or procedure. Since Category III codes are part of the CPT code set, all health care payers must be able to accept Category III codes into their systems to comply with the standards for transactions and code sets under HIPAA.

These codes will be archived 5 years from the date of implementation, if the code has not been accepted for placement in the Category I section of CPT, unless demonstrated that a Category III code is still needed. These codes will not be reused.

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