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CPT-4 Code Process — How a Code Becomes a Code

What is CPT?

Current Procedural Terminology (CPT®), Fourth Edition (CPT-4), is a listing of descriptive terms and identifying codes for reporting medical services and procedures. The purpose of CPT is to provide a uniform language that accurately describes medical, surgical, and diagnostic services, and thereby serves as an effective means for reliable nationwide communication among physicians, and other healthcare providers, patients, and third parties.

How is CPT used?

CPT descriptive terms and identifying codes currently serve a wide variety of important functions. This system of terminology is the most widely accepted medical nomenclature used to report medical procedures and services under public and private health insurance programs. CPT is also used for administrative management purposes such as claims processing and developing guidelines for medical care review.

The uniform language is likewise applicable to medical education and research by providing a useful basis for local, regional, and national utilization comparisons.

How was CPT developed?

The American Medical Association (AMA) first developed and published CPT in 1966. The first edition helped encourage the use of standard terms and descriptors to document procedures in the medical record; helped communicate accurate information on procedures and services to agencies concerned with insurance claims; provided the basis for a computer oriented system to evaluate operative procedures; and contributed basic information for actuarial and statistical purposes.

The first edition of CPT contained primarily surgical procedures, with limited sections on medicine, radiology, and laboratory procedures. The second edition was published in 1970, and presented an expanded system of terms and codes to designate diagnostic and therapeutic procedures in surgery, medicine, and the specialities. At that time, a five-digit coding system was introduced, replacing the former four-digit classification. Another significant change was a listing of procedures relating to internal medicine.

In the mid to late 1970s, the third and fourth editions of CPT were introduced. The fourth edition, published in 1977, represented significant updates in medical technology and a system of periodic updating was introduced to keep pace with the rapidly changing medical environment. In 1983, CPT was adopted as part of the Centers for Medicare and Medicaid Services (CMS), formerly Health Care Financing Administration's (HCFA), Healthcare Common Procedure Coding System (HCPCS). With this adoption, CMS mandated the use of HCPCS to report services for Part B of the Medicare Program. In October 1986, CMS also required state Medicaid agencies to use HCPCS in the Medicaid Management Information System. In July 1987, as part of the Omnibus Budget Reconciliation Act, CMS mandated the use of CPT for reporting outpatient hospital surgical procedures.

Today, in addition to use in federal programs (Medicare and Medicaid), CPT is used extensively throughout the United States as the preferred system of coding and describing health care services.

HIPAA and CPT

The Administrative Simplification Section of the Health Insurance Portability and Accountability Act (HIPAA) of 1996 requires the Department of Health and Human Services to name national standards for electronic transaction of health care information. This includes; transactions and code sets, national provider identifier, national employer identifier, security, and privacy. The FinalRule for transactions and code sets was issued on August 17, 2000. The rule names CPT (including codes and modifiers) and HCPCS as the procedure code set for:

  • Physician services.
  • Physical and occupational therapy services.
  • Radiological procedures.
  • Clinical laboratory tests.
  • Other medical diagnostic procedures.
  • Hearing and vision services.
  • Transportation services including ambulance.

The Final Rule also named ICD-9-CM volume 1 and 2 as the code set for diagnosis codes, ICD-9-CM volume 3 for inpatient hospital services, CDT for dental services, and NDC codes for drugs.

All health care plans and providers who transmit information electronically are required to use established national standards by the end of the implementation period, October 16, 2003. In addition, all local codes have been eliminated and national standard code sets must be used after October 16, 2003.

Who maintains CPT?

The CPT Editorial Panel is responsible for maintaining the CPT nomenclature. This panel is authorized to revise, update, or modify the CPT codes. The Panel is comprised of 17 members. Of these, 11 are physicians nominated by the AMA; one physician each nominated from the Blue Cross and Blue Shield Association, the Health Insurance Association of America, the American Hospital Association, and the Centers for Medicare and Medicaid Services (CMS), and the co-chair and a representative of the Health Care Professionals Advisory Committee. The AMA’s board of trustees appoints the Panel members. Of the eleven AMA seats on the panel, 7 are regular seats, having a maximum tenure of two 4-year terms, or a total of 8 years for any one individual. One of these seats is designated for a physician who can represent the managed care viewpoint. The 4 remaining seats, called rotating seats, have one four-year term. These rotating seats allow for diverse specialty input.

Five members of the Editorial Panel serve as the panel’s Executive Committee. The Executive Committee includes the Editorial Panel chairman and co-chairman, and three panel members-at-large, as elected by the entire panel. One of the three members-at-large of the executive committee must be a third-party payer representative.

Supporting the CPT Editorial Panel in its work is a larger body of CPT advisors, the CPT Advisory Committee. The members of this committee are primarily physicians nominated by the national medical specialty societies represented in the AMA House of Delegates. Currently, the Advisory Committee is limited to national medical specialty societies seated in the AMA House of Delegates and to the AMA Health Care Professionals Advisory Committee (HCPAC), organizations representing limited-license practitioners and other allied health professionals. Additionally, a group of individuals, the Performance Measures Advisory Committee (PMAC), who represent various organizations concerned with performance measures, also provide expertise.

The Advisory Committees’ primary objectives are to:
  1. Serve as a resource to the CPT Editorial Panel by giving advice on procedure coding and appropriate nomenclature as relevant to the member’s specialty;
  2. Provide documentation to staff and the CPT Editorial Panel regarding the medical appropriateness of various medical and surgical procedures under consideration for inclusion in CPT;
  3. Suggest revisions to CPT. The Advisory Committee meets annually to discuss items of mutual concern and to keep abreast of current issues in coding and nomenclature;
  4. Assist in the review and further development of relevant coding issues and in the preparation of technical education material and articles pertaining to CPT; and
  5. Promote and educate its membership on the use and benefits of CPT.
When are CPT codes implemented?

As the designated standard for the electronic reporting of physician and other health care professional services under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), CPT codes are updated annually and effective for use on January 1 of each year. The AMA prepares each annual update so that the new CPT books are available in the fall of each year preceding their effective date to allow for implementation.

Category I vaccine product codes, Category II, and Category III codes are typically “early released” for reporting either January 1 or July 1 of a given CPT cycle. In order to comply with HIPAA requirements, the effective dates for these codes have been altered to become effective six months subsequent to the date of release following code set updates. As a result, codes released on January 1st  are effective July 1st, allowing 6 months for implementation, and codes released on July 1st  are effective January 1st.

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