HCPCS - Healthcare Common Procedure Coding System (HCPCS)

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The Healthcare Common Procedure Coding System (HCPCS) is a set of coding standards required by CMS to submit claims for billing Medicare.


In 1978, the Health Care Financing Administration (HCFA) established the HCFA Common Procedure Coding System. Originally this was a modified version of the CPT coding system created by the AMA, designed for filing claims with the government. In 1983, HCFA adopted the CPT system and mandated its use in billing Medicare. In 2001 HCFA changed its name to the Centers for Medicare & Medicaid Services (CMS), and retroactively changed the meaning of HCPCS to Healthcare Common Procedure Coding System, replacing HCFA in the initialism with Healthcare.


HCPCS is divided into two sub-categories:


HCPCS Level I codes are equivalent to the codes in the Current Procedural Terminology (CPT) code set. These codes are 5 characters long and comprise 4 numeric characters followed by an alphanumeric character. They are used for procedures and services provided by physicians or other healthcare providers.


HCPCS Level II codes are 5 characters long and comprise an alpha character followed by 4 numeric characters. These codes are used for material supplies and services provided by non-physicians, otherwise not represented in the CPT.

Use in Practice

When services or material goods are used in caring for a patient insured by medicare, HCPCS codes are assigned to the care provided for billing purposes. These codes determine how the services are reimbursed by Medicare for all healthcare services aside from an inpatient hospital stay, which is determined by the Diagnosis Related Group (DRG). Despite the fact that inpatient hospital stays are reimbursed according to DRGs, specific services provided during these stays are determined by HCPCS Level I codes per Medicare Part B. All reimbursement by Medicare in outpatient or ambulatory settings is determined by HCPCS codes. Relative Value Units (RVUs) are assigned to each of these HCPCS codes, modified by other factors including geography to determine the ultimate amount that is reimbursed. The list of RVUs assigned to individual codes is maintained by CMS and is available at cms.gov as part of the Physician Fee Schedule. HCPCS codes are often used for billing purposes by private insurance companies as well.


  1. Aapc. (2019, October 24). All About HCPCS Codes. Retrieved October 29, 2020, from https://www.aapc.com/resources/medical-coding/hcpcs.aspx
  2. PFS Relative Value Files. (n.d.). Retrieved October 29, 2020, from https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Relative-Value-Files

Submitted by Eric Wecker