Get Expert Medical Coding and Billing Guidance to Make Category III Codes Work for You


Read this coding and compliance article and get a rundown on how to use your category III codes correctly.

Firstly, there is some confusion between Category III and HCPCS level III. And if you've been in this as long as I have, you'll remember that we used to have local codes that were identified usually by WXYZ as the first letter. And they will call HCPCS level III code.

Well, the HCPCS level III code were abolished when HIPAA was took effect several years ago. But some people have gotten confused. Now it's HCPCS level III codes that's we can't use.

Category III codes, we definitely need to use and want to use, if that correctly reflects the service we're performing.

Now, emerging technology, this is the distinction to get that Category III code. We said that we can't give it a Category I code or a full-pledged CPT code so to speak if it's not FDA approved. Well how can we track a service to stay how often it going to be done? How can we help the FDA collect this data that's needed in the approval process unless we've got to code this on?

So now, a new procedure, a fairly new procedure that is not FDA approved yet, and it maybe FDA approved but it might not be. So it may not be FDA approved but we don't know how often it's being done, so we don't know whether it deserves its own code, then we can get in this Category III code or the CPT advisory panel or editorial panel will perhaps assign it a Category III code. But in order to that, it must be at least one of these three criteria.

We have to have a protocol that studies are being performed. So, there have to be studies design performed around this code so they are in this service that we need the code for to see that it's being done.

We have to have the specialist involved really want to do it and care about it and push for this code. So, there has to be that specialty involvement. As we said, if there's just one doctor doing a service, you know, it's not going to merit even a Category III code. And the way they gauge that is to see if the specialist societies are interested and see if they are going to be involved.

And then the availability of reviewed literature, this service is being done. And it's being written up in one of the recognized medical journal. That could be one of the reasons to have a Category III code. Or there is current US trial that are actually working on.

Coding and Compliance Tip: Now, you need to remember is that we can't accomplish this data collection with our old system. With the old system if you'll remember, if you didn't have a code for it, we use an unlisted code. Well since an unlisted code can be used for a variety of things and basically it means what you want it to mean, there is no data collection involved with it. We can't get the information we need.

Also note that these are not necessarily experimental but that they're new, you know. And distinction between experimental and new is the one that sometimes insurance companies will cross and will argue with you. Just because it's new doesn't mean it's experimental. So, just that it's new and it's being tracked by the various agencies to determine how often it's being done.

Now, we can have new category III codes twice a year. Now, it's a little different. The Category I codes we're going to get other than the vaccine code, we're going to get once a year. Vaccine codes or updated twice a year. But most of the part, our Category I CPT code are updated once a year.

Category III codes, again think about this, new technology. Do we really want to wait even a full year to get a new code when it's possible to get it once every six months? But there is a sort of a six months window between the time the code is released and when it becomes effective. So, codes may be released January 1st, they're effective July 1st.

Now, you can go to the AMA website. You're not going to buy a middle of the year book. But you can go to the AMA website and download a list of the new Category III codes that are going to be effective July 1st. That's the only way you're going to be able to get those. But again there is not going to be a book in the middle of the year.

Now, there is a five year sunset on this Category III code. And that means that look, remember what we're doing here. We're looking at new technology to see if it's done enough. It's got to be FDA approved. And if it's effective enough to get a code, well, we should know that within five years. It's not a new service if we've been doing it for at least five years.

So after a code has set in Category III status for five years, it'll be moved to Category I status or it will sunset. It will be removed from the book. And the code number will not be reused. And if you think about how confusing that could be if they tried to reuse those codes. But the codes will not be reused once they're sunset.

Now, there are some (distort) distinctions that come from Medicare, some descriptions that come directly from CMS about Category III code. They refer to them as more specific, more functional versions of unlisted code. So they're looking at it as, okay, this is an unlisted code. But again, it gives us more information about that service than just necessary unlisted.

Another quote from CMS, these Category III codes are part of the CPT codes set. All health care payers must be able to accept Category III codes in order to comply with the coding and compliance standards under HIPAA.

So, a health care payer can not tell you that they don't accept them. They have to accept them under HIPAA. Now, just because there's a code for it doesn't mean anybody pays for it. Nothing says that the payer has to pay for these codes. That's a benefit issue. But they do have to be able to accept these medical coding and billing codes. And that's something that's certainly could be reported under HIPAA if they do not accept the code. So, they need to accept them in their system. But it doesn't necessarily mean that it's going to be paid on their system.

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