What are CPT codes and what do they mean in medical billing? (2023)

Medical pricing structures are a mystery to many people. For many of them, this could result in exorbitant and seemingly conflicting medical bills. In this article, we'll try to demystify medical pricing and give people like you the power to choose the most valuable care solutions.

The medical billing process relies heavily on CPT codes. Essentially, these codes indicate the type of care that was provided. CPT codes exist for almost everything a certified medical provider can do, and new ones are added every year.

HeThe American Medical Association assigns a unique 5-digit codebased on current procedural terminology (CPT) for each unique medical treatment or procedure offered by a physician. CPT is used throughout the United States medical system.

The CPT Editorial Board of the American Medical Association manages and approves changes to the CPT Code List and meets three times a year."Seek direct input from practicing physicians, medical device manufacturers, developers of the latest diagnostic tests, and consultants to more than 100 societies representing physicians and other qualified healthcare professionals."

If you are a healthcare provider, CPT medical coding refers to the codes that you and other healthcare professionals and laboratory workers use to document the medical services and treatments provided to your patients.

CPT stands for Current Procedural Terminology, and medical billing professionals who process laboratory billing claims enter the five-digit codes. Depending on the method or service, each unique code is related to a specific service and is converted to a numeric or alphanumeric code.

CPT codes (Current Procedural Terminology) are a worldwide coding system for medical treatment. Each process is assigned a five-digit code, which indicates the type of service to health insurance companies. For example, the code 90387 is described as“Individual Psychotherapy. 60 minutes."

Also read:Challenges and opportunities for the medical billing industry

Here is a very brief history of CPT

The American Medical Association created the system in 1966 and is still responsible for it today. The system was originally designed to code only surgical procedures, but in 1983 the Health Care Financing Administration (HCFA), now known as the Centers for Medicare & Medicaid Services, adopted it to report all provider services ( CMS).

(Video) What are CPT Codes?

HeHealth Insurance Portability and Accountability Act (HIPAA) of 1996established guidelines for the electronic storage and transmission of health data and the CPT system to identify medical operations.

CPT codes differ from ICD-10 codes, which identify the medical diagnosis rather than the treatment provided. These codes are also required for insurance company billing, as they clarify why the CPT code treatment was provided.

The different categories of CPT codes

Category 1

Medical providers and laboratories use Category 1 CPT codes to describe specific surgeries and services. Because it is one of the most important categories of the three, many medical coders focus on these codes and use them more. Category 1 is divided into the following six sections:

  • Evaluation and administration
  • Pathology and Work
  • anesthesiology
  • Radiology
  • Operation
  • medicine

Smaller details or services are also documented and coded. For example, additional materials such as sterilization or medication could be coded. Modifiers are used in conjunction with codes.

Modifiers are two-digit (usually numeric) extensions added to the end of a CPT code to provide additional information about the service or procedure. These modifiers are necessary for accurate lab billing as they provide the information insurance companies need to approve claims.

Category 2

Category 2 CPT codes track any additional information you submit. These codes are never intended to replace Category 1 or Category 3 codes; rather, they are intended to provide additional information. For example, additional information about the patient's treatment, medical history, and follow-up could be recorded.

Category 2 CPT codes allow you to provide a lot of information, but these are just a few examples. To ensure they are classified accurately, Category 2 alphanumeric codes always end with "F". These (and all other category codes) are categorized in a very specific way based on information or disclosures provided by vendors.

Category 3

Category 3 CPT codes, on the other hand, apply to developing and innovative technologies and services. Temporary codes for experimental and urgent services form Category 3. They help health care providers and the government track emergency medical best practices.

(Video) Overview of PT CPT Codes and BIlling

Many Category 3 codes are later reclassified to Category 1, but only after being approved by the CPT Editorial Board. Category 3 codes are alphanumeric codes with a "T" at the end.

Much of the code in these three categories is updated, modified, and even discarded when it is no longer relevant or useful. You need trained lab billing professionals who stay up to date with new CPT codes and understand the need for accurate coding to ensure you get the most money for the services you provide.

To keep up with contemporary medical treatments, a panel of 11 experts appointed by various insurance and medical agents advise on annual changes to the CPT Codes. WADA announces these changes in September and they take effect on January 1 of the following year. It is vital that all professionals are aware of any code changes in their field, as the use of outdated CPT codes on a super invoice will result in the client's claim being rejected immediately.

Also read:Robust case management system helps overcome medical billing challenges

How are CPT codes created and maintained?

The CPT Code Set is regularly updated by the CPT Editorial Board with input from clinical and industry experts to reflect current clinical practice and the latest developments, and to help improve care.

For more than 50 years, CPT has been the primary medical language for communication across the healthcare system, enabling seamless processing and enhanced analysis for medical operations and services.

The AMA Board of Directors appoints the CPT Editorial Board responsible for maintaining and reviewing the CPT code set. The CPT Editorial Board is a non-profit organization of volunteer experts from many areas of the healthcare industry.

CPT Advisors, groups of physicians selected by national medical associations represented in the AMA House of Delegates and the AMA Health Professionals Advisory Committee, support the CPT Editorial Panel (HCPAC).

The primary role of CPT consultants, as clinical experts in their field, is to advise the CPT editorial board on procedure coding and proper nomenclature by proposing revisions to code sets, collaborating with industry stakeholders when considering additions and amendments to the CPT, and its members educate on the use and benefits of CPT codes.

Essentially, their job is to ensure that code changes are subject to aevidence basedreview and meet certain criteria.

What does this specifically mean for patients?

Depending on the number of services provided and the complexity of the associated decision-making processes, the CPT code system provides for five "tiers" of doctor visits. Prescription drugs, immunizations, surgeries and laboratory tests are billed separately from routine medical visits.

(Video) INTRODUCTION TO MEDICAL CODING - What is a medical coder and what do they do - Beginner Guide.

Because new patient visits take longer and require more paperwork than follow-up visits, new patient visits are more expensive for the same "level" of complexity. A "new patient" is defined as "someone who has not received professional services from the physician or another physician of the same specialty who is a member of the same practice group within the past three years."

Some doctors may decline certain types of insurance for financial reasons; others may be members of the concierge or other group practices that prevent them from accepting self-pay customers. Check with a doctor ahead of time to see if they accept your preferred method of payment.

Cash-before-visit patients have reason to be optimistic, as many clinics offer tiered discounts based on income, and many physicians offer discounts of 30% or more to those who pay cash before the visit.

How exactly are CPT codes used?

CPT codes have a direct impact on how much a patient pays for medical services. Because of this, surgeries, hospitals, and other medical facilities are extremely meticulous when it comes to coding. To ensure surgeries are accurately coded, they often contract with medical coders or coding services.

initial coding

Usually, your doctor (or his staff) starts the coding process. If they use paper forms, they manually note which CPT codes apply to their visit. If they use an electronic health record (EHR) during your visit, it will be recorded in this way. In general, the systems allow users to easily retrieve codes based on the name of the service.

Claims Processing

Your health insurance plan or payer then uses the codes to process the claim and figure out how much to reimburse your doctor and how much you owe.

Shipping and verification

Coders and medical billers look at your records after you leave the doctor's office so they can assign the correct codes if they haven't already.

The billing department will then send your insurer or payer a list of the services you have used. Physicians and facilities generally store and transmit this information electronically, while some continue to do so by mail or fax.

(Video) What are CPT codes?


The coding data is used by health insurance companies and government statisticians to forecast future health care spending for the people in their systems. Federal and state analysts use the data from the coding to track trends in health care and estimate their Medicare and Medicaid budgets.

Where are CPT codes expected to appear?

CPT codes can be found and used on a variety of documents as you progress through your medical treatment.

redundancy paperwork

When you leave a doctor's office or are discharged from a hospital or other medical facility, you will receive records with a numerical summary of the services you received.

CPT codes are the most common five-digit codes. There are also other codes on the papers, such as B. ICD codes, which can be numbers or letters and often contain decimals.

hospital bills

A list of benefits will be included on your medical bill, either before or after it is issued to your payer. A five-digit code is displayed next to each service. Generally, the CPT code is used.

Explanation of benefits

Your payer's Statement of Benefits (EOB) shows how much of the cost of each treatment has been covered on your behalf. Each service is assigned a CPT code, similar to a doctor's bill.


What are the 3 categories of CPT codes? ›

CPT® Category I: The largest body of codes, consisting of those commonly used by providers to report their services and procedures. CPT® Category II: Supplemental tracking codes used for performance management. CPT® Category III: Temporary codes used to report emerging and experimental services and procedures.

What is a CPT code example? ›

CPT (Current Procedural Terminology) codes are a worldwide coding system for medical treatments. Each operation is assigned a five-digit code that indicates the type of service supplied to health insurance companies. The code 90387, for example, is described as “Individual Psychotherapy. 60 minutes.”

What are the most common CPT codes? ›

Routine office visits (CPT codes 99213 & 99214) are the most common and heavily reimbursed of all physician procedures, numbering over 288 million with total Medicare payments of over $53.8 billion in 2021, according to Definitive Healthcare.

What does CPT stand for and what do they code for? ›

Earlier, we introduced you to Current Procedural Terminology, or CPT. This expansive, important code set is published and maintained by the American Medical Association (AMA), and it is, with ICD, one of the most important code sets for medical coders to become familiar with.

What is the difference between a procedure code and CPT code? ›

The ICD-10 procedural coding system (ICD-10-PCS) is used by facilities (e.g., hospital) to code procedures. CPT codes are, and will continue to be, used by physicians (and other providers) to report professional services. The two systems are unique and very different.

What is the difference between ICD and CPT codes? ›

While CPT codes are similar to ICD-10 codes, CPT codes identify services rendered, whereas ICD-10 codes represent patient diagnoses.


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2. Diagnosis codes (DX) & Procedure codes(CPT) MEDICAL CODING / Basic Medical billing / Basic RCMs/
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