Introduction to HCPCS Level I Coding
If this article seems confusing with all its acronyms and its descriptions of the healthcare reimbursement system, it is because it is. Medical billing and medical coding is a specialized profession that entails a thorough understanding of ever-changing issues and regulations. With appropriate training from an accredited education program, professional medical billers and certified medical coders navigate these issues every day as part of their workday routine. It is a rewarding career, and it is an essential part of the healthcare industry.
Medical billing and medical coding are based on the Healthcare Common Procedural Coding System (HCPCS), the foundation of how medical claims are submitted to commercial health insurers and government healthcare programs.
The Healthcare Portability and Protection Act of 1996 (HIPPA) mandated that all healthcare claims be reported using HCPCS. Medical billers ensure that all healthcare claims are compliant with HIPPA through the accurate application of medical codes based on the documentation in the patient’s medical record, and based on the standards established by HCPCS.
How HCPCS Codes are Used
The federal Centers for Medicare and Medicaid Services (CMS) oversees the definition and use of HCPCS codes. HCPCS are divided in two levels. Level I codes are commonly referred to as CPT codes because they belong to the Current Procedural Terminology (CPT) administered by the American Medical Association (AMA).
Commercial health insurance companies use CPT codes, and refer to them as such, generally following AMA guidelines for their use. CMS, through its Medicare program, always refers to CPT codes as HCPCS. codes, and CMS follows the guidelines promulgated through the National Correct Coding Initiative (NCCI).
CMS annually publishes the NCCI Policy Manual, and issues quarterly updates. Professional medical billers and certified medical coders are trained to understand the difference between CPT and HCPCS. While CPT codes are used to describe medical services provided to patients, HCPCS codes are used specifically to bill Medicare.
NCCI was established to prevent fraud and abuse of the Medicare system by preventing improper payments for services. Medical billers with the proper training understand that HCPCS Level I codes are used to bill Medicare, a government health insurance program that covers 48 million Americans, who make up a large percentage of any healthcare facility’s patient population. Understanding the use of HCPCS Level I codes is essential for professional medical billers to obtain maximum, legal reimbursement for their employers.
CMS reviews the guidelines the AMA uses to define CPT codes, then it establishes coding methodologies and policies that promote correct coding on a national scale. Because of the number of healthcare claims processed and paid by the Medicare Part B program, NCCI policies have been in place since 1996 to ensure that only appropriate claims are paid. The system has been expanded to include claims submitted under the Outpatient Prospective Payment System (OPPS) and claims submitted by skilled nursing facilities (SNFs).
HCPCS Codes and NCCI
Medical billers and medical coders need to be aware of the current guidance established by the NCCI when they submit claims to Medicare. While the guidelines are updated quarterly, a basic understanding of the use of HCPCS, and how they are meant to be used according to the NCCI, is essential to adapt to the ongoing changes in the healthcare industry. Employers can be assured that professional medical billers and certified medical coders have this understanding after they have successfully completed a formal program of study offered by an accredited institution that teaches medical billing and medical coding.
By utilizing a number of NCCI edits when a claim is received, contracted Medicare carriers can recognize when inappropriate coding may be submitted to receive fraudulent reimbursement. Through NCCI, HCPCS are paired in two sets of edits to detect improper coding.
Medically Unlikely Edits (MUEs) are also called Column One/Column Two edits. This is because the NCCI arranges codes in one column (Column One) and lists codes unlikely to be reported at the same time in an opposing column (Column Two). Each code represents a performed medical service. In CPT, the AMA does not determine whether services can, or should, be performed together, leaving that up to the discretion of the healthcare provider. Through the NCCI, CMS determines that some procedures are included in the performance of other procedures performed during the same patient encounter, and that only one code is likely to appropriate for reimbursement purposes.
If a Medicare claim contains codes that are governed by MUEs, one of the codes will be denied payment based on the NCCI. Professionally trained medical billers and certified medical coders are able to review the patient’s medical record to determine if the codes are appropriate to be reported together. They utilize modifiers to the correct codes used to bypass NCCI MUEs, and receive the proper payment for delivered medically necessary services.
The NCCI also employs Medically Exclusive Code Pairs (MECs) which identify codes that cannot reasonably be reported together. The NCCI Coding Policy Manual that is published annually by CMS describes why the NCCI considers how some codes cannot be logically reported on the same healthcare claim. Most of these mirror the instructions contained in CPT, but because CMS deals with HCPCS codes rather than CPT codes, the rationale is not universal. Commercial health insurance policies may consider some pairs of codes acceptable for reimbursement, while the NCCI does not. Professional medical billers need to be able to recognize that while all CPT codes are HCPCS codes, not all CPT codes are used the same way when they are HCPCS codes. CPT is designed to report what actually occurred for statistical purposes. HCPCS is designed to report services as succinctly as possible for reimbursement.
The NCCI Coding Policy Manual is divided into chapters that mirror the systematic divisions in CPT by specialty. Each chapter includes an introduction that addresses specific codes and how CMS defines their use. Each chapter of NCCI also offers general guidelines about how each code set should be interpreted and reported.
Medical Coding in the Field
All CPT codes are HCPCS codes, but not all HCPCS codes are CPT codes. HCPCS contains more than Level I codes. A trained medical biller knows the difference between the two, and he or she knows there are more codes than are contained in HCPCS Level I. There are revenue codes, place-of-service codes, type of service-codes, and diagnosis codes, as well as HCPCS Level II. There are also other procedure codes in ICD-9-CM Volume 3, and there will be more in ICD-10-PCS.
Healthcare reimbursement and the management of healthcare data is the responsibility of professional medical billers and certified medical coders. It is a profession that requires the mastery of a specialized body of knowledge. No one can teach themselves the many intricacies involved, and the details change on a regular basis as new standards and interpretations are established. With a solid foundation in the basics that formal education provides, a successful career can be built on the understanding of medical code and its proper use in submitting clean, accurate medical claims.