Current Procedural Terminology (CPT)

What Is CPT?

CPT stands for Current Procedural Terminology. CPT codes are standardized 5-character alphanumeric codes that medical billers and coders use to report health care services and procedures to insurance companies for reimbursement.

CPT codes were first developed in 1966 by the American Medical Association as a means of providing a uniform language that could accurately describe medical, surgical, and diagnostic services. It serves as an effective means for reliable nationwide communication among professionals in the health care industry.

Why Are CPT Codes Important?

In addition to reporting medical services for health care insurance systems, CPT codes also provide a reliable nationwide data collection. One use of this data collection is cost control and management in both private and public health care systems.

Where Is CPT Used?

The Health Care Financing Administration (HCFA) has adopted CPT as part of its Health Care Common Procedure Coding System (HCPCS) for use in reporting medical services in Medicare and Medicaid. HCFA has also required Medicaid agencies to report some services using HCPCS since the late 1980’s.

Medicare’s payment schedule is also based on CPT coding and is known as a Resource-Based Relative Value Scale (RBRVS). The RBRVS has replaced the practice previously used by many insurers that based payments on a percentage of billed charges, often called “a usual and customary” payment system. Today, the RBRVS is used by most private health care insurers, many state Medicaid agencies and several state workers compensation plans to determine reimbursements.

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