An Overview of CPT Codes in Medical Billing

Common Procedural Technology (CPT codes) are numbers assigned to every task and service a medical practitioner may provide to a patient including medical, surgical, and diagnostic services. They are used by insurers to determine the amount of reimbursement that a practitioner will receive by an insurer for that service. Since everyone uses the same codes to mean the same thing, they ensure uniformity.

CPT codes serve both tracking and billing purposes and are similar to, but not exactly the same as, codes tied to the Healthcare Common Procedure Coding System (HCPCS). If you use Medicare, you'll see HCPCS codes in your paperwork instead of CPT codes.

A CPT code is a five-digit numeric code with no decimal marks, although some have four numbers and one letter. Codes are uniquely assigned to different actions. While some may be used from time to time (or not at all by certain practitioners), others are used frequently (e.g., 99213 or 99214 for general check-ups).

CPT codes are developed, maintained and copyrighted by the AMA (American Medical Association). As the practice of health care changes, new codes are developed for new services, current codes may be revised, and old, unused codes discarded. Thousands of codes are in use and updated annually.

Uniformity in understanding what the service is and the amount different practitioners get reimbursed will not necessarily be the same. That is determined by the contracts between individual providers and insurers.

For example, Doctor A may perform a physical check-up (99396) and be reimbursed $100 by your insurance company. If you went to Doctor B, his reimbursement by your insurance company for that same checkup/CPT code might only be $90.

There are several categories of CPT codes, including:

• Category I: Devices and drugs, including vaccines
• Category II: Performance measures and quality of care
• Category III: Services and procedures using emerging technology
• PLA codes, which are alpha-numeric CPT codes used for lab testing

Here are some examples:

• 99214 may be used for an office visit
• 99397 may be used for a preventive exam if you are over 65
• 90658 indicates a flu shot
• 90716 may be used for chicken pox vaccine (varicella)
• 12002 may be used when a doctor stitches up a one-inch cut on your arm

Some CPT codes indicate bundled services. That is, one code describes a number of aspects of care that are performed in combination.

Because CPT codes directly affect how much a patient will pay for medical care, offices, hospitals, and other medical facilities are very strict about how coding is done. They usually employ professional medical coders or coding services to ensure procedures are coded correctly.

Initial Coding

Your practitioner (or her office staff) will usually start the coding process. If they use paper encounter forms, they will manually note which CPT codes apply to your visit. If they use an electronic health record (EHR) during your visit, it will be noted in that system; typically, systems allow staff to easily call up codes based on the service name.

Verification and Submission

After you leave the doctor's office, your records are examined by medical coders and billers so they can assign the correct codes, if not done already.

The billing department then submits a list of the services you were provided to your insurer or payer. Doctors and facilities generally use electronic means to store and transfer this information, although some may still be done by mail or fax.

Claim Processing

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

Research

Health insurance companies and government statisticians use coding data to predict future healthcare costs for the patients in their systems.

State and federal government analysts use data from coding to track trends in medical care and to determine their budget for Medicare and Medicaid.

CPT are found and used in various documentation as you transition through any healthcare experience.

Discharge Paperwork

As you leave a doctor's appointment or are discharged from a hospital or other medical facility, you are given paperwork that includes a numeric summary of the services they provided to you. The five character codes are usually CPT codes. There are other codes on that paperwork too, such as ICD codes, which may have numbers or letters and usually have decimal points.

Bills

When you receive a bill from the doctor, before or after it has been sent to your payer, it will have a list of services. Next to each service will be a five-digit code. That's usually the CPT code.​

Explanation of Benefits

When you receive an explanation of benefits (EOB) from your payer, it will show how much of the cost of each service was paid for on your behalf. Like the doctor's bill, each service will be aligned with a CPT code.

Your interest in these codes is usually related to your doctors' and insurance billings. CPT codes are copyrighted by the AMA. The organization charges fees for the use of the codes and access to full listings, which means you won't find a comprehensive list online for free.

To make them more accessible to patients, the AMA provides a means for looking up the individual CPT codes you might encounter in medical paperwork.

If you have paperwork that has a CPT code on it and you want to figure out what that code represents, you can do so in a number of ways:

• Do a CPT code search on the American Medical Association website. You will have to register (for free) and you are limited to five searches per day. You can search by a CPT code or use a keyword to see what the associated CPT code for a service might be.
• Contact your doctor's office and ask them to help you match CPT codes and services.
• Contact your payer's billing personnel and ask them to help you.
• Remember that some codes may be bundled but can be looked up in the same way.

An important reason to try to understand CPT codes is so you can make sense of your hospital bill and catch any billing errors—which do happen often. In fact, some patient advocacy groups cite that nearly 80 percent of bills contain minor errors. These seemingly simple mistakes can have a big impact on your wallet. The wrong code can mean that your insurance won't cover any of the costs.

Try to take time to sit down and slowly review your bill and compare it with your EOB to check for any possible errors. It is possible for your doctor or the facility to make a typographical error, coding for the wrong type of visit or service.

There are also fraudulent practices like upcoding (charging you for a more expensive service) and unbundling (billing bundled services or procedures as separate charges) that should be on your radar. When in doubt, don't be shy to call your provider to discuss any possible discrepancies. 

HCPCS codes are used and maintained by the Centers for Medicare & Medicaid Services (CMS) and are used to bill Medicare, Medicaid, and many other third-party payers.

There are two levels of codes:

• Level I codes are based on CPT codes and used for services and procedures usually provided by physicians.
• Level II codes cover healthcare services and procedures that aren't provided by physicians.

Examples of items billed with level II codes are medical equipment, supplies, and ambulance services. HCPCS level II codes start with a letter and have four numbers. They can have modifiers that are either two letters or a letter and a number.

HCPCS level II code lists can be found on the CMS website. Level I codes, however, are copyrighted by the AMA just like CPTs.

A Word From Verywell

Being an informed patient is part of ensuring you receive the best medical care. When you see something you don't understand in your medical record or bill, discuss it with your healthcare provider or insurer. You have a right to take an active role in ensuring your health care is accurately tracked.