Written by Norene Anderson
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HCPCS (Healthcare Common Procedure Coding System) was designed to facilitate the processing of more than 5 billion claims every year. The need for standardization in coding was the impetus for ensuring all claims are processed fairly and equally. The Healthcare Common Procedure Coding System is divided into two levels or subsystems.

The first level of HCPCS utilizes a numeric coding system known as CPT-4. This system is maintained by the American Medical Association. The CPT-4 codes identify procedures or services delivered by healthcare providers such as physicians. The codes identify descriptive terms for services provided. The AMA decides when a code should be added, deleted, or changed.

Levels of HCPCS

The second level of the HCPCS is used to indicate supplies, products, and services not listed in the CPT-4 system. This includes items such as prosthetics and ambulance services. The Level II codes are one alphabetical letter and four numerical digits. This differs from the CPT-4 code of five numerical digits. The AHIP (America's Health Insurance Plans) and the CMS (Centers for Medicare and Medicaid Services) maintain the permanent codes for Level II.

The uniform coding for procedures, medications, and diagnoses makes it possible for the majority of insurance claims to be filed electronically and accurately. Monitoring the usage of specific equipment and medications is essential in tracking the trends and needs of healthcare. The rising costs of insurance and healthcare services mandate everything possible is being done to reduce the cost increase.

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