HCPCS Level II Codes: Medications, Supplies and Other Codes Required Specifically by Third Party Payers

HCPCS Level II codes and descriptors are five position codes approved and maintained jointly by the alpha-numeric editorial panel, which consists of Health Insurance Association of America, Blue Cross and Blue Shield Association and Centers for Medical Services. These codes represent services not described in Level I codes as well as additional services for drugs, supplies and other services required for reporting services by the panel mentioned above. CMS has expanded the number of codes in its specific section to report the PQRS codes. This section is the “G” section of the HCPCS book. There are also alpha modifiers, which are considered Level II modifiers used to communicate information to the third party payer. These modifiers may be specific to a certain payer or recognized by multiple payers. The HCPCS Level II codes are used to provide additional information for reporting not only drugs, supplies and durable medical supplies but also statistical information.

The most common use of the HCPCS Level II book for the allergist will be to report medications purchased and used in medical practice, the use of alpha modifiers to indicate additional information for appropriate payment, and the use of “G” code for CMS for PQRS reporting. 

An example in which an alpha modifier may be used would be the GA modifier – when a service is provided that is not covered for medical necessity by a patient’s insurance, but the patient and the provider feel it is necessary and the patient is willing to pay for the service.

Correct Coding and Bundling Guidelines

In 2006, CMS created coding guidelines for services reported for a single provider on one calendar day for an individual patient. The edits are revised quarterly and were created to stop fragmented billing by providers. The providers are obligated to correctly code for their services, so knowing bundling guidelines per payer is necessary. The most common bundling guidelines are published and posted by CMS. The third-party payers edit these guidelines or create their own guidelines per their contracts. There are payment modifiers assigned to the codes that are bundled. These payment modifiers indicate whether two codes with medical necessity may be billed separately or whether there is no circumstance under which both codes may be billed together. An example for the allergist is code 9410 (spirometry) and 94375 (flow volume loop), which has a payment indicator of 0. This payment indicator signifies there are no circumstances when CMSwillpay forbothcodesonthe samedateofservice for the same patient. The allergy testing codes and the evaluation and management codes have a payment indicator of 1. This signifies that if the definition of the 25 modifier is accurate for the encounter and assigned to the evaluation and management code, then both may be coded together on the same calendar day for the same patient. This became a requirement when the interpretation and report definition was added to the allergy testing codes. The addition of a modifier is required to “unbundle” two codes when it is medically necessary for the care of the patient. The appropriate modifiers for the allergist to consider most commonly are modifier 25 and modifier 59. These bundling edits may be found at www.cms.hhs.gov/cci.