Procedural Coding:
Introduction to HCPCS
Learning Outcomes
When you finish this chapter, you will be able to:
Discuss the purpose of the HCPCS code set.
Define durable medical equipment.
Compare permanent national codes and temporary
national codes.
Explain how to locate the periodic updates to HCPCS.
List the steps for assigning correct HCPCS codes and
Discuss the tools used to verify Medicare billing rules for
specific HCPCS codes.
State the purpose of the Certificate of Medical Necessity.
Key Terms
• Certificate of Medical
Necessity (CMN)
• CMS HCPCS Workgroup
• Coverage Issues Manual
• durable medical equipment
• durable medical
equipment, prosthetics,
orthotics, and supplies
• Durable Medical
Equipment Medicare
Administrative Contractor
• Healthcare Common
Procedure Coding System
• Level II
• Level II modifiers
• Medicare Carriers Manual
Key Terms (Continued)
• never event
• permanent national codes
• Pricing, Coding Analysis,
and Coding (PDAC)
• temporary national codes
6.1 Overview of HCPCS
• The Healthcare Common Procedure Coding
System (HCPCS) was set up to give health care
providers a coding system that describes specific
products, supplies, and services that patients
• HCPCS is technically made up of two sections of
procedural codes:
1. Level I, the CPT (from Chapter 5)
2. HCPCS Level II Codes—national codes that identify
supplies, products, and services not in Level I
6.2 Level II Codes
• Level II codes are five characters, beginning with
a letter and followed by four numbers
• Durable medical equipment (DME)—reusable
physical supplies ordered by the provider for
home use
– Can withstand repeated use
– Primarily and customarily used for a medical purpose
– Generally not useful to a person in the absence of an
illness or injury
– Appropriate for use in the home
6.2 Level II Codes (Continued)
• CMS has four Durable Medical Equipment
Medicare Administrative Contractors (DME
MAC)—contractors that process Medicare
claims for DMEPOS
• Durable medical equipment, prosthetics,
orthotics, and supplies (DMEPOS)—category
of HCPCS services
6.3 Permanent versus Temporary Codes
• CMS HCPCS Workgroup: government committee
that maintains the Level II HCPCS code set
– Maintains the permanent national codes—HCPCS
Level II codes
– Temporary national codes—HCPCS Level II codes
available for use but not part of the standard code set;
may become permanent codes
• Pricing, Coding Analysis, and Coding (PDAC)
contractors—contractors responsible for helping
to determine which HCPCS code describes
DMEPOS items
6.4 HCPCS Updates
• Annual updates to HCPCS codes are released
on the CMS HCPCS website, effective for use
January 1 of each year
– Interim updates for temporary codes are also
found on the CMS HCPCS website
• Annual HCPCS code books are published as a
code reference
6.5 HCPCS Coding Procedures
• Correct HCPCS coding follows the same
general guidelines as ICD-9-CM and CPT
– Begin by locating the item to be coded in the index
(or the Table of Drugs)
– Then verify the probable code in the main sections
– Assign appropriate modifiers
• Level II modifiers—HCPCS national code set
– Provide additional information about services,
supplies, and procedures
6.6 HCPCS Billing Procedures
• Medicare billing rules for specific HCPCS codes
are shown by references in the main sections
next to the codes
• Medicare Carriers Manual (MCM)—guidelines
established by Medicare about coverage for
HCPCS Level II services
• Coverage Issues Manual (CIM)—information
about Medicare-qualified clinical trials,
treatments, therapeutic interventions, diagnostic
testing, durable medical equipment, therapies,
and services
6.7 The Certificate of Medical Necessity
• Certificate of Medical Necessity (CMN)– document
used to assist DME MACs in gathering information
– Useful for providing medical necessity information in a
concise manner formatted for efficient claims processing
• The following DMEPOS items require a CMN:
Pneumatic Compression Devices
Osteogenesis Stimulators
Transcutaneous Electrical Nerve Stimulators (TENS)
Seat Lift Mechanisms

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