Healthcare Common Procedure Coding System (HCPCS)

Key facts

Maintained by

Level I by the AMA (CPT); Level II by CMS

Level II format

One letter followed by four digits

HIPAA status

Standard medical data code set under 45 CFR 162.1002

Level II updates

Quarterly, with an annual file effective January 1

What is HCPCS?

HCPCS, usually pronounced "hick picks," gives payers and providers a shared set of codes for describing what was delivered to a patient. It was built for Medicare, and the Health Insurance Portability and Accountability Act (HIPAA) later made it a national standard for claims across public and private payers.

The system has two levels. Level I is Current Procedural Terminology (CPT), the American Medical Association code set for physician and other professional services. Level II, maintained by the Centers for Medicare and Medicaid Services (CMS), covers products, supplies and services that CPT does not, such as ambulance services, durable medical equipment, prosthetics, orthotics and drugs administered in a clinic.

A former Level III of local codes, created by Medicare contractors and state Medicaid agencies, was phased out after HIPAA required national standard code sets.

How HCPCS Level II codes are organized

Level II codes are alphanumeric: a letter followed by four digits. The first letter groups codes by type, for example:

CMS processes applications for new Level II codes on published cycles and releases updated files quarterly. Level II also has its own modifiers, such as LT and RT for the left and right side of the body.

• A codes: ambulance services and medical and surgical supplies.
• C codes: items and services under the Medicare hospital Outpatient Prospective Payment System.
• E codes: durable medical equipment.
• G codes: temporary codes for professional services, often created for Medicare payment or quality programs.
• J codes: drugs generally administered other than by mouth, plus some oral anticancer and immunosuppressive drugs.
• L codes: orthotics and prosthetics.
• Q codes: temporary codes, including codes for many biosimilars.

Why HCPCS matters

HCPCS codes are how most items and services outside the pharmacy benefit become visible in claims data:

• Medicare Part B drug payment limits, published in the Average Sales Price (ASP) files, are set per HCPCS code.
• Durable medical equipment fee schedules and competitive bidding are organized by HCPCS code.
• Tracking a physician-administered drug in claims usually means following its J-code or Q-code, then mapping it to NDCs with a crosswalk.
• A new product without its own permanent code is billed under a miscellaneous code, which makes its utilization hard to measure until a specific code is issued.