CPT vs HCPCS: What’s the Difference in Medical Billing?

Did you know that poor billing practices cause American doctors to lose nearly $125 billion every year?

Medical billing and coding form the bridge between patient care and healthcare reimbursement, making them key to smooth financial operations. But the healthcare providers often encounter numerous challenges that act as a roadblock to ensuring timely and maximum reimbursement. Among the many challenges, one common issue is the confusion between CPT and HCPCS codes.

Both are essential for accurate claim submission, but they serve different purposes. CPT (Current Procedural Terminology) codes are used to describe medical procedures, tests, and services performed by healthcare providers. On the other hand, HCPCS (Healthcare Common Procedure Coding System) codes are used to classify these services and include additional items like medical equipment, ambulance rides, and certain drugs that CPT codes don’t cover.

In this blog, we will break down the key differences between CPT and HCPCS codes in detail so you can avoid costly billing errors.

CPT vs. HCPCS

Although CPT and HCPCS codes sometimes overlap, these two coding systems serve different purposes. Let’s explore the main differences between these codes:

• What are CPT and HCPCS Codes Used For?

CPT codes are used to report medical, surgical, and diagnostic procedures that doctors and other healthcare professionals perform directly on patients. These codes cover a wide variety of clinical services, from routine checkups to complex surgeries.

HCPCS codes include all CPT codes (called Level I), but they also have Level II codes for billing items and services not included in CPT. These are mostly medical equipment, supplies like wheelchairs or oxygen tanks, ambulance rides, and certain medications.

• How are the Codes Written?

CPT codes always have five numbers. For example, 99213 is a common code for a doctor's office visit. These numbers make the codes easy to read and understand, as the format is consistent and straightforward.

HCPCS Level II codes start with a letter followed by four numbers, such as E1399. This mix of letters and numbers helps identify a wide range of medical supplies and services that the numeric-only CPT codes cannot cover.

• Who Creates and Updates these Codes?

The American Medical Association (AMA) creates and updates CPT codes every year. These codes are copyrighted, which means healthcare providers must follow AMA rules and often pay to use the official codes.

The Centers for Medicare & Medicaid Services (CMS) manage HCPCS codes. These codes are updated every few months and are free to use as they are in the public domain. This helps keep codes current, especially for equipment and supplies.

• How are the Codes Organized?

CPT codes are split into three groups:

• Category I covers the most common medical services and procedures.
• Category II is optional and helps track healthcare quality.
• Category III codes are temporary and used for new or experimental services.

HCPCS has two primary levels:

• Level I is the same as CPT codes.
• Level II codes cover additional items like durable medical equipment, ambulance rides, and medications that don’t fit into CPT codes.

There used to be a Level III for local codes, but it was discontinued in 2003.

• Which Medical Specialties use these Codes?

All medical specialties use CPT codes to bill for services provided directly to patients. Doctors, surgeons, radiologists, therapists, and many others rely on CPT codes to describe their work clearly.

HCPCS Level II codes are often used by specialties that provide medical equipment or supplies. For example, physical therapy may use HCPCS codes for braces, while ambulance companies use them for transport services.

• Which Insurance Programs use these Codes?

Most health insurance programs accept CPT codes. These include private insurance companies and government programs like Medicare and Medicaid. CPT codes are the most common way to report medical procedures.

HCPCS Level II codes are mainly used to bill Medicare, Medicaid, and other government insurers. Some private insurers also recognize these codes, especially for billing medical supplies and equipment.

• How do CPT and HCPCS Codes handle New Services?

CPT has Category III codes for new or experimental medical services and procedures. These codes are temporary and help track how often these new services are used during their evaluation.

HCPCS Level II has “Q” codes that allow billing for new medical supplies and services not yet included in CPT. These codes make it possible to get reimbursed for new items quickly, especially in government programs.

• How are Modifiers Used with These Codes?

Modifiers are two-digit codes added to CPT codes to provide additional information. For example, a modifier can show that a procedure was done on both sides of the body or that multiple services were done during the same visit.

HCPCS codes also use modifiers to explain exceptional circumstances, like medical necessity or specific equipment features. These modifiers help insurance companies understand the exact service or item billed.

• Why is Accurate Coding Important for Compliance?

As CPT codes are copyrighted and controlled by the AMA, it is very important to use them correctly. Incorrect coding can lead to denied claims, audits, or legal penalties.

Since HCPCS codes are mainly for government programs, errors can trigger audits by Medicare or Medicaid. Accurate coding helps providers avoid delays or loss of payment, especially when billing for equipment and supplies.

• How do these Codes Help in Healthcare Research?

CPT codes help researchers track the frequency of medical procedures and assess the quality of care. This information can improve healthcare standards and policy decisions.

HCPCS codes provide data on the use of medical equipment, supplies, and other non-clinical services. This helps in planning healthcare resources and managing costs, especially in government programs.

Conclusion

Many healthcare providers unknowingly lose revenue when they do not include the right CPT and HCPCS codes for billable items. However, the correct use of both code sets ensures insurance claims are processed faster, payments are received on time, and the number of claim rejections is reduced. It also creates a clear and accurate record of patient care, which is important for compliance, audits, and insurance negotiations.

Additionally, the healthcare providers can benefit significantly from regular coding reviews, staff training, and advanced billing software to make sure no billable service or supply is missed. Outsourcing medical billing and coding services to companies like 24/7 Medical Billing Services can further improve accuracy. They can handle coding updates, double-check claims before submission, and identify revenue opportunities that might otherwise go unnoticed. This leads to better financial performance, fewer delays, and more time for providers to focus on patient care.

FAQs

Q1. Can CPT and HCPCS codes appear on the same claim?

They are often used together to describe services and supplies fully.

Q2. Do both codes require documentation proof?

Accurate records must support all codes used with the help of documentation.

Q3. Are CPT and HCPCS codes used outside the U.S.?

They are mainly U.S.-specific but can influence coding globally.

Q4. Is training necessary for correct CPT and HCPCS use?

Ongoing training is vital to stay updated and compliant.