CPT® Codes: What Are They, Why Are They Necessary, and How Are They Developed? (2022)

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CPT® Codes: What Are They, Why Are They Necessary, and How Are They Developed? (1)

Mary Ann Liebert, Inc.Mary Ann Liebert, Inc.JournalsSearchAlerts

Advances in Wound Care

Adv Wound Care (New Rochelle). 2013 Dec; 2(10): 583–587.

PMCID: PMC3865623

PMID: 24761332

Peggy Dotson*

Author information Article notes Copyright and License information Disclaimer


Qualified healthcare professionals (QHPs) need to identify the professional services they provide and to report those services in a way that can be universally understood by institutions, private and government payers, researchers, and others interested parties. The QHPs' data are used to track healthcare utilization, identify services for payment, and to gather statistical healthcare information about populations. Each year, in the United States, healthcare insurers process over 5 billion claims for payment.1 To ensure that healthcare data are captured accurately and consistently and that health claims are processed properly for Medicare, Medicaid, and other health programs, a standardized coding system for medical services and procedures is essential. The Current Procedural Terminology (CPT®) system, developed by the American Medical Association (AMA), is used for just these purposes. The AMA system provides a standard language and numerical coding methodology to accurately communicate across many stakeholders, including patients, the medical, surgical, diagnostic, and therapeutic services provided by QHPs. The CPT descriptive terminology and associated code numbers provide the most widely accepted medical nomenclature used to report medical procedures and services for processing claims, conducting research, evaluating healthcare utilization, and developing medical guidelines and other forms of healthcare documentation.

(Video) Basics of US Healthcare Chapter 4 - What is CPT, ICD and Modifiers
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Peggy Dotson, RN, BS


History of Current Procedural Terminology coding development

The first publication, in 1966, of the American Medical Association (AMA) Current Procedural Terminology (CPT®) edition of standardized codes and terms was a means to code procedures (mainly surgical) for medical records, insurance claims, and information for statistical purposes.

By 1970, the AMA had broadened the system of terms and classification codes to include diagnostic and therapeutic procedures in surgery, medicine, and the specialties as well as procedures relating to internal medicine. This timeframe also coincided with the introduction of the five-digit numeric coding system. With the release of the fourth edition of CPT in 1977, the AMA introduced a system for periodic updating of the codes to keep up with the ever-changing medical environment.

In 1983, CPT was adopted as part of the Centers for Medicare & Medicaid Services (CMS), Healthcare Common Procedure Coding System (HCPCS). This HCPCS code set is divided into two principal subsystems: (1) Level I of the HCPCS, which comprised the CPT and (2) Level II of the HCPCS (see Marcia Nusgart's article).1,2

Level I CPT codes are the numerical codes used primarily to identify medical services and procedures furnished by qualified healthcare professionals (QHPs). CPT does not include codes regularly billed by medical suppliers other than QHPs to report medical items or services. The AMA is responsible for all decisions for additions, deletions, or revisions of the CPT codes [Level I HCPCS code set]. CPT codes are updated annually.

In 1983, CMS mandated that CPT codes be used to report services for Part B of the Medicare Program and in 1986 required state Medicaid programs to also use the CPT codes. As part of the Omnibus Budget Reconciliation Act in 1987, CMS mandated use of CPT for reporting outpatient hospital surgical procedures. As part of the Health Insurance Portability and Accountability Act (HIPAA) of 1996, the Department of Health and Human Services designated CPT and HCPCS as the national standards for electronic transaction of healthcare information.

Today, the CPT coding system is the preferred system for coding and describing healthcare services and procedures in federal programs (Medicare and Medicaid) and throughout the United States by private insurers and providers of healthcare services.

Types of CPT codes

The CPT code can be identified by one of the following three categories.

Category I CPT codes describe distinct medical procedures or services furnished by QHPs and are identified by a 5-digit numeric code [e.g., 29580: Unna boot]. New Category I CPT codes are released annually.

Category II CPT codes are supplemental tracking codes, also referred to as performance measurement codes. These numeric alpha codes [e.g., 2029F: complete physical skin exam performed] are used to collect data related to quality of care. Category II codes are released three times a year in March, July, and November by the CPT Editorial Panel.

Category III CPT codes are temporary tracking codes for new and emerging technologies to allow data collection and assessment of new services and procedures. They are used to collect data in the FDA approval process or to substantiate widespread usage of the new and emerging technology to justify establishment of a permanent Category I CPT code. Category III CPT codes are issued in a numeric alpha format [e.g., 0307T: near-infrared spectroscopy study for lower extremity wounds].

New Category III CPT codes are released biannually (January and July) with a 6-month delay before activation for implementation in the Medicare system. Codes released on January 1st are effective July 1st, and codes released on July 1st are effective January 1st. The codes usually remain active for five years from the date of implementation, if the code has not been accepted for placement in the Category I section of CPT.

Obtaining a CPT Level III code requires less clinical data and has a shorter review timeframe. It allows billing and tracking through the local and regional contractors for Medicare and other payers. There are no assigned fees to these codes, but payment is available at the discretion of the Insurance Carriers or Medicare contractors. When considering payment, the Medicare contractors and insurers consider evidence of effectiveness, improved outcomes, and potential cost savings.

Criteria used by the CPT Advisory Committee and the CPT Editorial Panel for evaluating Category III code for emerging technology include any one of the following for consideration:

  • 1. A protocol for a study of procedures being performed.

  • 2. Support from the specialties that would use the procedure.

    (Video) Module 1: Current Procedural Terminology (CPT)

  • 3. Availability of U.S. peer-reviewed literature.

  • 4. Descriptions of current U.S. trials outlining the efficacy of the procedure.


Who manages the CPT process?

The responsibility to update or modify code descriptors, coding rules, and guidelines for the CPT code set lies with the AMA CPT Editorial Panel, authorized by the AMA Board of Trustees. The panel comprised 17 members [11 physicians nominated by the national medical specialty societies; 4 physicians nominated from the Blue Cross and Blue Shield Association, America's Health Insurance Plans, the American Hospital Association, and the CMS; and two seats reserved for members of the CPT Health Care Professionals Advisory Committee (HCPAC)]. Five of these members serve as the panel's Executive Committee. In addition, the CPT Advisory Committee supports the panel. Members of CPT Advisory committee are primarily physicians nominated by the national medical specialty societies represented in the AMA House of Delegates as well as the AMA HCPAC, organizations representing limited license practitioners and other allied health professionals. The Performance Measures Advisory Group, which represents various organizations concerned with performance measures, also provides expertise.

How is a new code developed?

Any individual QHP, medical specialty society, hospital, third-party payer, and other interested party may submit an application for changes to CPT for new or revised codes to the CPT Editorial Panel. This ongoing process has a schedule for submission deadlines and meetings of the CPT Panel, which can be found on the AMA site.3 It is important to understand that an applicant needs to carefully plan to submit their request in the appropriate timeframe to coincide with the scheduled meetings for the CPT Editorial Panel reviews.

Step 1: AMA staff determines if the request is new

If the Editorial Panel has already reviewed the request, the staff will notify the requestor of the panel's coding recommendation. If the request is a new issue or includes significant new information on an item that the panel reviewed previously, the application moves to step 2.

Step 2: Refer application to the CPT Advisory Committee for evaluation and commentary

The process allows at least 3 months for the AMA staff to prepare all the submitted materials and dispense them to the Editorial Panel reviewers. Steps 1 and 2 are complete when all appropriate CPT Advisors have responded and all information requested of an applicant has been provided to AMA.

Step 3: Refer application to the CPT Editorial Panel

The 17 member CPT Editorial Panel meets three times each year and addresses nearly 350 major topics per year, usually involving more than 3,000 votes on individual items.4

  • • AMA staff prepare an agenda item that includes the application, compiled CPT Advisor comments, and a ballot for decision by the CPT Editorial Panel.

  • • Thirty days before a scheduled meeting, the panel members receive the agenda documents and the CPT Advisor comments. The panel members can confer with experts as appropriate.

  • • If an applicant does not receive the CPT Advisor support, then the applicant is notified 14 days before each CPT Editorial Panel meeting. Applicants can withdraw their applications up until the agenda item is called at the meeting.

  • • Applications that have not received any CPT Advisor support will be presented to the CPT Editorial Panel for discussion and possible decision.

Step 4: CPT Editorial Panel takes an action and preliminary approvals

If applying for a Category I or Category III code, the CPT Editorial Panel votes and determines into which category the code(s) should be assigned. A decision can result in one of the following four outcomes:

  • 1. Add a new code or revise the existing nomenclature; this change would appear in a forthcoming volume of the CPT Book.

  • 2. Refer to a workgroup for further study.

  • 3. Postpone to a future meeting [to allow submittal of additional information in a new application].

  • 4. Reject the request.

    (Video) Transitional Care Management (TCM): CPT Codes, Billing, and Reimbursements

Step 5: AMA staff inform the applicant of the CPT Editorial Panel's decision

Applicants or other interested parties can seek reconsideration of the panel's decision. Information of this process is available on the AMA/CPT website.5

Step 6: Refer code to AMA/Specialty Society Relative Value Update Committee (RUC)

Once the new/revised CPT codes are approved by the CPT Editorial Panel, the code is then referred to the RUC, which will conduct a survey of QHPs from relevant medical specialties that provide the service or procedure. This survey will measure the QHP work involved in performing the service/procedure to determine an accurate relative value recommendation for the service.6 The RUC committee schedule can be accessed at the AMA website.

Step 7: Implementation of the new/revised CPT code

  • • Category I service and procedure CPT codes are updated annually and effective for use on January 1 of each year, except for Category I vaccine product codes, Molecular Pathology, which are released January 1st or July 1st. The new CPT book, with the newly released codes, is released in the fall to allow for implementation on January 1.

  • • Category II codes are released for reporting three times yearly (March 15th, July 15th, and November 15th) to become effective three months subsequent to the date of release, allowing 3 months for implementation.

  • • Category III codes are released for reporting either January 1st or July 1st of a given CPT cycle and become effective six months subsequent to the date of release.

NOTE: This entire new CPT Code application process can take from 18 to 24 months.

What do the CPT Advisory Committee and CPT Editorial Panel need?

Success in obtaining a new or revised CPT code is dependent on understanding the process and preparing an application with the complete information required. Obtaining support from the appropriate medical community, society, or provider group that requires or endorses the need for the code is essential for the CPT approval process.

The major information requirements for a new or revised CPT code application include the following.

  • • A complete description of the procedure or service (e.g., describe in detail the skill and time involved. If a surgical procedure, include an operative report that describes the procedure in detail).

  • • A clinical vignette, which describes the typical patient and work provided by the physician/practitioner.

  • • The diagnosis of patients for whom this procedure/service would be performed.

  • • A copy(s) of peer reviewed articles published in the U.S. journals indicating the safety and effectiveness of the procedure.

  • • Frequency with which the procedure is performed and/or estimation of its projected performance.

  • • A copy(s) of additional published literature, which further explains the request (e.g., practice parameters/guidelines or policy statements on a particular procedure/service).

  • • Evidence of FDA approval of the drug or device used in the procedure/service if required.

  • • Rationale why the existing codes are not adequate and can any existing codes be changed to include these new procedures without significantly affecting the extent of the service?

Where can I find more information?

The AMA website has all the information available concerning the CPT process, access to the application forms, the schedule for the CPT Editorial Panel, and the reconsideration process forms.7

CPT is a registered trademark of the AMA.

(Video) Overview of PT CPT Codes and BIlling

Abbreviations and Acronyms

AMAAmerican Medical Association
CMSCenters for Medicare & Medicaid Services
CPTCurrent Procedural Terminology
HCPCSHealthcare Common Procedure Coding System
HIPAAHealth Insurance Portability and Accountability Act
QHPqualified healthcare professional

Author Disclosure and Ghostwriting

No competing financial interests exist. No ghostwriters were used to write this article.

About the Author

Peggy Dotson, RN, BS, earned her nursing diploma in 1971 at Our Lady of Lourdes School of Nursing (Camden, NJ), and graduated from Philadelphia University (Philadelphia, PA) in 1993 with a Bachelor's of Science degree. She has 9 years of experience in clinical practice working in surgical, coronary care, intensive care, and as a field trainer for the Mercer County Paramedic Project in New Jersey. She worked for 23 years in Bristol-Myers Squibb's ConvaTec Division in varying roles, including clinical trial monitor for ostomy, wound care, and incontinence devices; medical sales representative; sales management; international marketing; worldwide business development; and Director of Reimbursement & Payer Alliances, analyzing the U.S. healthcare market and developing strategic approaches for the company. Since 2003, she is the owner and President of Healthcare Reimbursement Strategy Consulting, which evaluates healthcare policy, coverage, coding, and payment issues, and the impact of reimbursement on the healthcare market. She serves the Association for the Advancement of Wound Care (AAWC) as the Chair of the Regulatory Committee (2008 onward) and a member of the AAWC Quality Measure Task Force and Finance Committees. Since 2012, she serves on the Board of the Alliance for Wound Care Stakeholders.


1. U.S. Centers for Medicare and Medicaid Services: HCPCS—General Information. www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/index.html

2. Nusgart M. HCPCS coding: an integral part of your reimbursement strategy. Adv Wound Care. 2013;2:576. [PMC free article] [PubMed] [Google Scholar]

3. American Medical Association: CPT Editorial Panel Process—AMA/Specialty Society RVS Update Process. www.ama-assn.org/go/cpt-calendar

6. The American Gastroenterological Association: The RUC Process. www.gastro.org/practice/coding/the-ruc-process

Articles from Advances in Wound Care are provided here courtesy of Mary Ann Liebert, Inc.

(Video) How CPT codes end up in an APC and can they get out?!


What is the purpose of CPT coding? ›

The Current Procedural Terminology (CPT®) codes offer doctors and health care professionals a uniform language for coding medical services and procedures to streamline reporting, increase accuracy and efficiency.

Who developed the CPT coding system? ›

The American Medical Association (AMA) created and published CPT codes in 1966. The first edition was used as a standard of terms and descriptors of documentation for procedures in a patient's medical record or chart. This system was comprised of a four-digit coding system.

What is a CPT code quizlet? ›

CPT stands for current procedural terminology. It provides ervices and procedure codes reported on insurance claims. Overview of CPT. CPT provides a list of identifying and descriptive codes for procedures and service. CPT coding is the uniform language that describes surgical procedures and services.

How and when were the CPT and Hcpcs coding systems developed? ›

How and when were the CPT and HCPCS coding systems developed? In 1966 the AMA published the first edition, it focused primarily on surgical procedures and was one of many attempts to translate medical and surgical procedures. What are level I HCPCS codes? Level II codes?

How are CPT codes created? ›

The CPT data set is updated twice a year by the CPT editorial panel with the help of the perspectives of clinical and industry experts. A committee meets three days each year to review applications for updated codes or revisions to existing codes or revisions of codes already in use.

What is an example of a CPT code? ›

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.”

When was CPT developed? ›

Development of the CPT code

The AMA first developed and published CPT in 1966.

Why is it important to understand CPT coding and the surgical guidelines associated with each section? ›

Knowing the surgery coding guidelines related to procedures is essential to ensure practice revenue and for submitting claims that are compliant with CPT® and CMS rules.

What codes are considered to be the most important of the CPT codes? ›

Evaluation and management codes that are often considered the most important of all CPT codes. The E/M section guidelines explain how to code different levels of services.

What is the full meaning of CPT? ›

Current Procedural Terminology (CPT) is a medical code set that is used to report medical, surgical, and diagnostic procedures and services to entities such as physicians, health insurance companies and accreditation organizations.

How many characters does a CPT code have? ›

Each CPT code is five characters long, and may be numeric or alphanumeric, depending on which category the CPT code is in.

What does the symbol mean in CPT? ›

Throughout the CPT book, whenever you see the # symbol in front of a numerical CPT code, it means that the code has been re-sequenced so that it is not listed in numerical order with the rest of the CPT codes within that section.

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

CPT is a code set to describe medical, surgical ,and diagnostic services; HCPCS are codes based on the CPT to provide standardized coding when healthcare is delivered.

How does CPT coding differ from other types of coding? ›

CPT codes refer to the treatment being given, while ICD codes refer to the problem that the treatment is aiming to resolve. The two work hand-in-hand to quickly provide payors specific information about what service was performed (the CPT code) and why (the ICD code).

What is the purpose of CPT modifiers? ›

CPT modifiers (also referred to as Level I modifiers) are used to supplement the information or adjust care descriptions to provide extra details concerning a procedure or service provided by a physician.

How many types of CPT codes are there? ›

Types of code

There are three types of CPT code: Category I, Category II, and Category III.

Is a CPT code a procedure code? ›

CPT codes®, or the Current Procedural Terminology codes, are five-digit procedure codes that describe the service rendered by the healthcare professional. The MNT codes 97802, 97803, and 97804 are CPT® codes that RDNs use on claims to report nutrition services provided by the RDN.

Who owns CPT code? ›

The Current Procedural Terminology (CPT) code set, created and maintained by the American Medical Association, is the language of medicine today and the code to its future.

What is the purpose of CPT and ICD 10 codes? ›

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

What are CPT guidelines? ›

CPT codes are maintained and copyrighted by the American Medical Association and are the United States standard for how medical professionals document and report medical services. All medical facilities and payers use thousands of CPT codes which are updated on an annual basis.

How many CPT codes are in a claim? ›

However, OT claim records for medical services, such as outpatient hospital services, physicians' services, or clinic services are generally expected to have at least one diagnosis code. States can submit up to 2 diagnosis codes per claim on the OT file.

What is the history of CPT? ›

CPT History

CPT is owned and maintained by American Medical Association, which has copyright protection on CPT. In 1966, the AMA published the first edition of CPT, which at that time focused on surgical procedures. The first edition sought to standardize terminology and reporting.

What are the 4 types of medical coding systems? ›

Right now, there are five major types of medical coding classification systems that are used by medical coding professionals — ICD-11, ICD-10-CM, ICD-10-PCS, CPT and HCPCS Level II. If you're interested in becoming a medical billing and coding professional, it's important to learn more about each system.

Why is accurate coding important? ›

Why is coding accuracy important? Accurate coding is critical in today's health industry. Coding is utilized for appropriate patient treatment, reimbursement, research, the basis of financial and clinical decision making and worldwide comparative trending.

Which of the following are official resources for CPT coding guidelines? ›

Only the AMA, with the help of physicians and other health care experts, create and maintain the CPT code set. And only CPT® Professional Edition can provide the official guidelines to code medical services and procedures properly.

Which of the following is not a reason for CPT coding system? ›

CPT Coding
Which of the following is NOT a reason for the CPT coding system?increased reimbursement
What is the function of an add-on code?identifies a code that is never used alone
The rules that govern coding in various health care settings are:nationally established
36 more rows

What type of CPT code is used for procedures that are usually carried out in addition to another procedure? ›

An Add-on Code (AOC) is a Healthcare Common Procedure Coding System (HCPCS) / Current Procedural Terminology (CPT) code that describes a service that is performed in conjunction with the primary service by the same practitioner.

What is the importance of knowing HCPCS coding? ›

The Healthcare Common Procedure Coding System (HCPCS) is used to report hospital outpatient procedures and physician services. These coding systems serve an important function for physician reimbursement, hospital payments, quality review, benchmarking measurement and the collection of general medical statistical data.

What is the purpose of CPT modifiers? ›

CPT modifiers (also referred to as Level I modifiers) are used to supplement the information or adjust care descriptions to provide extra details concerning a procedure or service provided by a physician.

What is 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.

Why is coding necessary in health insurance? ›

Having the proper medical coding ensures that insurers have all the diagnostic codes required for appropriate payment. Coding is also critical for demographic assessments and studies of disease prevalence, treatment outcomes and accountability-based reimbursement systems.

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

CPT is a code set to describe medical, surgical ,and diagnostic services; HCPCS are codes based on the CPT to provide standardized coding when healthcare is delivered.

Who maintains CPT? ›

The CPT® Editorial Panel is responsible for maintaining the CPT code set. The Panel is authorized by the AMA Board of Trustees to revise, update, or modify CPT codes, descriptors, rules and guidelines. The Panel is composed of 21 members.

What are CPT guidelines? ›

Current Procedural Terminology, more commonly known as CPT®, refers to a set of medical codes used by physicians, allied health professionals, nonphysician practitioners, hospitals, outpatient facilities, and laboratories to describe the procedures and services they perform.

How many numbers does a CPT code contain? ›

Each CPT code is five characters long, and may be numeric or alphanumeric, depending on which category the CPT code is in.

How many types of CPT codes are there? ›

There are three types of CPT codes: Category 1, Category 2 and Category 3. CPT is a registered trademark of the American Medical Association.

What is the importance of knowing proper CPT coding How does it differ from other codes? ›

CPT codes describe the physical procedures (including injections, lab tests, exams, etc.) that healthcare providers perform when patients come in for an office visit. Understanding these codes is an essential part of doing your job as a medical coder. Without CPT codes, you cannot bill anything to an insurance company.

How does CPT coding differ from other types of coding? ›

CPT codes refer to the treatment being given, while ICD codes refer to the problem that the treatment is aiming to resolve. The two work hand-in-hand to quickly provide payors specific information about what service was performed (the CPT code) and why (the ICD code).

What is HCPCS stand for? ›

The Healthcare Common procedure Coding System (HCPCS) is divided into two principal subsystems, referred to as level I and level II of the HCPCS.

How do you know when to use HCPCS codes? ›

Coders use HCPCS codes much like they would ICD or CPT codes. Upon receiving a medical report, you'd take notes on which procedure was performed, which products were prescribed, injected, or otherwise delivered to the patient, and then you'd use your HCPCS code set to find the appropriate code.

What codes are the most frequently used codes in most medical offices? ›

Evaluation and Management (E) codes are the most frequently used codes and are used by all medical specialties, so they are placed first in the CPT.


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