HCPCS vs. CPT: what every medical device startup must know about reimburcement codes

Understanding the difference between HCPCS and CPT codes in the U.S. healthcare system can be tricky. No worries, I got you!

TLDR: one is for the doctor's actions (CPT), and the other is for the things they use or give you (HCPCS).

As someone deeply involved in the medical device industry in the U.S., I’ve often found myself navigating the complex maze of coding systems that are crucial for billing, reimbursement, and regulatory processes. Two of the most important coding systems you’ll encounter are HCPCS (Healthcare Common Procedure Coding System) and CPT (Current Procedural Terminology). If you’re new to the industry, these acronyms might sound intimidating, but understanding them is essential for anyone working in healthcare, particularly in medical devices. Let me walk you through the differences and how each plays a role in the healthcare ecosystem.

What are HCPCS and CPT codes?

At their core, both HCPCS and CPT codes are systems used to standardize and categorize medical procedures, services, and products to ensure accurate billing and reimbursement. However, they serve slightly different purposes and are used in distinct ways within the healthcare system.

CPT codes (Current Procedural Terminology):

CPT codes are a set of medical codes developed and maintained by the American Medical Association. They are used primarily to describe medical, surgical, and diagnostic services and procedures provided by healthcare professionals. CPT codes are divided into three categories:

- Category I: These codes cover the majority of procedures and services that healthcare providers offer, including surgeries, lab tests, and patient consultations.

- Category II: These codes are supplemental and used for performance measurement and tracking purposes. They’re not mandatory for billing but help in reporting the quality of care provided.

- Category III: These are temporary codes for emerging technologies, services, and procedures that are not yet widely accepted or standardized.

HCPCS codes (Healthcare Common Procedure Coding System):

HCPCS, pronounced as "hick-picks," is a set of codes used to describe products, supplies, and services not covered by CPT codes. The system is managed by the Centers for Medicare & Medicaid Services (CMS) and consists of two levels:

- Level I HCPCS: This is essentially the same as CPT codes and includes identical Category I, II, and III codes. When people refer to HCPCS, they are often specifically talking about Level II codes.

- Level II HCPCS: These codes cover non-physician services, such as ambulance services, durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS), and certain drugs and biologicals. These codes are alphanumeric, consisting of a single letter followed by four numbers (e.g., A0426 for an ambulance service).

Key differences between HCPCS and CPT codes

While both coding systems are used for billing and reimbursement, they serve different functions and are applied in different contexts.

1. Scope of use:

- CPT Codes: Used primarily by physicians and other healthcare providers to describe the services and procedures they perform.

- HCPCS Codes: Used more broadly for billing of services and supplies not covered under CPT codes, particularly for Medicare and Medicaid beneficiaries.

2. Maintenance and updates:

- CPT Codes: Maintained by the American Medical Association (AMA). The AMA updates the CPT code set annually.

- HCPCS Codes: Maintained by CMS. While Level I codes are aligned with CPT codes, Level II codes are updated quarterly to reflect changes in Medicare policies and the availability of new medical products and services.

3. Structure:

- CPT Codes: Numeric, with each code consisting of five digits (e.g., 99213 for an office visit).

- HCPCS Codes: Alphanumeric, with Level II codes typically starting with a letter followed by four digits (e.g., E0601 for a CPAP machine).

4. Application in medical devices:

- CPT Codes: If you’re working with a medical device that is used in a procedure or service, it will likely be billed using a CPT code. For example, a surgical procedure involving a medical device might be coded with a CPT code.

- HCPCS Codes: If your medical device falls under durable medical equipment or is a supply used by patients (e.g., a wheelchair or a glucose monitor), it will be billed using an HCPCS Level II code.

Why do these codes matter?

Understanding the distinction between HCPCS and CPT codes is crucial because they directly impact how medical services and devices are billed and reimbursed. For those of us in the medical device industry, this knowledge can significantly affect how a product is brought to market, how it is priced, and ultimately, how it is adopted by healthcare providers.

For example, if you’re developing a new type of medical equipment, you’ll need to know if it falls under HCPCS Level II. This will determine whether you need to apply for a new HCPCS code, which involves a rigorous process including clinical evidence and cost-effectiveness analyses. Conversely, if your product is used during a procedure, understanding which CPT codes apply can help you position your device more effectively with healthcare providers.

Practical considerations for medical device companies

1. Product classification:

Early in the development process, determine whether your product is more likely to be coded under CPT or HCPCS. This will guide your regulatory and marketing strategies.

2. Reimbursement strategy:

Work with reimbursement specialists to develop a strategy that maximizes your product’s potential for being reimbursed under the appropriate code. This might involve applying for a new HCPCS code or ensuring your device fits within existing CPT codes.

3. Documentation and compliance:

Ensure that all documentation, including clinical trials and performance data, aligns with the requirements for the relevant coding system. This is especially important if you need to apply for a new HCPCS code, which requires substantial evidence to support its inclusion.

4. Collaboration with healthcare providers:

Understand how healthcare providers will use your product and which codes they will use for billing. This can inform your product design and development, ensuring it meets the needs of the end-users.

5. Stay updated:

Both HCPCS and CPT codes are regularly updated. Keep abreast of changes to ensure your product remains compliant and that you’re aware of any new opportunities or challenges in the reimbursement landscape.

Navigating the complexities of HCPCS and CPT codes is critical for anyone involved in the U.S. healthcare industry, particularly in the medical device sector. These codes are more than just numbers—they represent the gateway to successful billing, reimbursement, and ultimately, the widespread adoption of your product. By understanding the differences and nuances between these coding systems, you’ll be better equipped to position your medical devices for success in the market.

If you have more questions or need further clarification on how these codes apply to your specific situation, feel free to reach out. As someone deeply embedded in this industry, I’m here to help you navigate these waters with confidence. Follow me Lisa Voronkova