Health Information Management

Guidance for proper use of Category III CPT codes

APCs Insider, January 13, 2006

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Guidance for proper use of Category III CPT codes

QUESTION: I am confused as to when we should report Category III CPT codes. I thought they were strictly for surgical procedures, but I noticed there are codes for CAT scans and other types of services. I haven't been able to find clear guidelines that explain how to use them. Should our hospitals use them for Medicare billing only, or should we use them to bill all payers? What is the purpose of Category III codes?

ANSWER: Category III CPT codes are the American Medical Association's (AMA) answer to new technology introduced in the industry. These codes end with the letter "T" and you can find them in the back of the CPT Manual. The Manual states:

The following section contains a set of temporary codes for emerging technology, services, and procedures. Category III codes will allow data collection for these services/procedures. Use of unlisted codes does not offer the opportunity for the collection of specific data. If a Category III code is available, this code must be reported instead of a Category I unlisted code.

The AMA updates the codes bi-annually, and for 2006, Medicare will incorporate these codes when they are released by the AMA. You can find the AMA's most current listing at the AMA Web site:

You can find additional information in Addendum B here at the CMS Web site: Click on the link for "January 2006 release of Addendum B" for the latest updates.

CMS will incorporate Category III codes under the OPPS payment methodology when applicable. The status indicator (SI) identified with each Category III code lets you know how CMS will pay for the procedure/service/test. But remember that even with a payable SI, medical necessity and coverage issues are of primary importance. Most of the Category III codes are considered experimental, investigational, and non-covered. Other third party payers will have their own policies and procedures regarding payment.

Above all, always report the appropriate CPT code, even if Category III, to identify your procedure, test or service based on the documentation in your medical record.

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