CPT's dominance affects physician coding and payment

November 15, 2006

The field of physician coding and reimbursement has seen dramatic changes over the past 3 decades. One of the most significant developments has been the development of CPT (Current Procedural Terminology) as the system by which physician services are reported.

CPT's impact goes well beyond reporting, however, and directly influences physician reimbursement. Typically, physicians who are fully acquainted with CPT enjoy higher payment levels because they recognize correct code combinations, apply modifiers appropriately, and document adequately. They are also comfortable navigating through the complex realm of coding and reimbursement because they know the ground rules.

When questions of fraud or abuse arise, the defense often centers on interpretation of coding instructions and underlying principles. CPT comes into play in almost all these situations.

CPT mastery requires at least a basic understanding of its evolution and maintenance as a living system. Its story is one of the most interesting in the history of coding and reimbursement.

CPT is a proprietary system of the American Medical Association. Competing systems were eventually overcome by CPT, which has become the overwhelmingly dominant force in physician reporting.

The initial purpose of CPT was to allow for standard reporting of physician services. Standardization was desperately needed given the explosion of physician services and the resulting demands on communication among physicians, patients, and insurers.

The first edition of CPT, published in 1966, emphasized surgical services. CPT is now in its fourth edition. It has expanded to include services across all medical specialties. It is also used to report services provided by non-physician providers. Currently, more than 8,000 five-digit codes and narrative descriptors exist in CPT.

An important event in CPT's history occurred in 1983, when the Health Care Financing Administration (HCFA) embraced CPT and designated it as part of the HCFA Common Procedure Coding System (HCPCS). A federal Final Rule issued in 2000 indicated that CPT and HCPCS code sets were to be used for physician services, diagnostic procedures, clinical lab tests, radiologic services, vision services, and other purposes.

CPT is known as Level I of HCPCS. All federal and private payers accept these codes, emphasizing CPT's importance to every physician practice.

Importantly, CPT itself does not contain relative value units, fee schedules, or other payment data.

Valuation decisions, however, are in general heavily based on CPT descriptors.

Ophthalmologists often search through CPT looking for an appropriate code to describe a new or unusual service. You will make better decisions about reporting these services if you are familiar with how a code appears in CPT.

Changing the code

Any individual can submit a request for a CPT coding change. In reality, most requests for CPT coding changes are made through a specialty society (such as the American Academy of Ophthalmology or the American Optometric Association) or by a representative from a device manufacturer.

A variety of criteria must be met for a code to be considered as a Category I (permanent) CPT code. The procedure or service must be FDA approved, efficacious, and provided by many physicians in various geographic locations.

If these criteria are met, and if (among other requirements) the service is not adequately described by existing codes, the CPT Advisory Committee is asked to comment on the proposal.

I am a member of the CPT Advisory Committee and am constantly amazed by the broad spectrum of services that are presented for comment. The advisors with knowledge of the service are asked to respond to the code change proposal.

The responses are forwarded to the CPT Editorial Panel, which is a panel of physicians. The panel votes on these codes. The codes that are accepted as Category I codes are then sent to the Relative Value System Update Committee (the "RUC") for valuation. This valuation is denoted in Relative Value Units (RVUs). Payment for the service is based on these valuation decisions.