Compliance and the Law

Category III CPT codes: Coming of age in new health care environment

This process, which was created to facilitate data collection while clinical trials were being performed, has become accepted by physicians and payors.
Alan E. Reider, JD
Alan E. Reider
Allison Weber Shuren, MSN, JD
Allison Weber Shuren

If you are the type of physician who embraces new technology, then you are probably at least somewhat familiar with Category III CPT codes.

Some refer to these Category III codes as “T” codes because they all have the format of four numbers followed by the letter T, eg, 0177T. What follows is a description of the purpose and history of Category III codes, followed by my perspective on the role and function of these codes.

Category III codes first emerged in 2001. The Category III code process was created to provide a means for establishing specific codes for new procedures and new technology that do not meet the criteria for Category I CPT codes. The key differences between Category I and Category III codes are described briefly below.

Category III CPT codes

John S. McInnes, MD, JD
John S. McInnes

Category III codes are for “emerging technology, services and procedures.” They are temporary 5-year codes, with the expectation that within 5 years the Category III code will be converted to a Category I code. The most significant advantages of the Category III application process are that neither U.S. Food and Drug Administration approval or clearance (of a drug or medical device used in the procedure) nor published peer-reviewed evidence are necessarily required to obtain a Category III code.

This allows an applicant to establish a dedicated CPT code and possibly a payment assignment during the investigational phase of a procedure, which can be advantageous in obtaining early and favorable reimbursement for a new technology. The following criteria are the basis for American Medical Association CPT Editorial Panel review of Category III applications (although only one criterion is necessary for the panel to review the application, meeting one criterion is not necessarily sufficient for panel approval of a Category III code request):

  • A protocol for a study of procedures being performed;
  • Support from the specialties that would use the procedure;
  • Availability of U.S. peer-reviewed literature; or
  • Descriptions of current U.S. trials outlining the efficacy of the procedure.

Although the overall hurdle is not very high for obtaining a Category III code, it is difficult for a code applicant to gain approval from the CPT Editorial Panel without support from the relevant specialty societies. The panel usually will be reluctant to second guess a specialty society’s reasons for not supporting an application. Also, if an applicant only has a study protocol that has not been initiated at the time of application, the panel may ask the applicant to wait until the procedure is further along in clinical trials before granting approval.

Category I CPT codes

Category I codes “are restricted to clinically recognized and generally accepted services, and not emerging technologies, services or procedures.” Category I codes are the “permanent” CPT codes listed in the CPT book, eg, 66984, cataract surgery. All of the following criteria must be met to obtain a Category I CPT code:

  • The service or procedure has received approval from the FDA for the specific use of devices or drugs (provided FDA approval would be required);
  • The suggested procedure or service is a distinct service performed by many physicians or practitioners across the U.S.;
  • The clinical efficacy of the service or procedure is well-established and documented in U.S. peer-reviewed literature;
  • The suggested service or procedure is neither a fragmentation of an existing procedure or service, nor currently reportable by one or more existing codes; and
  • The suggested service or procedure is not requested as a means to report extraordinary circumstances related to the performance of procedures or services that already have a specific CPT code.

The criteria that are most difficult to satisfy are that the service be “performed by many physicians or practitioners across the U.S.” and that the “clinical efficacy … [be] well-established and documented in U.S. peer-reviewed literature.” The AMA has not defined what is meant by “many physicians” and “across the U.S.” Presumably these depend upon the prevalence of the condition for which the service is indicated and the number of physicians who are potentially qualified to perform the service.

Although I have been told that inclusion in one U.S. peer-reviewed publication is the minimum for a therapeutic service (and three is the minimum for a diagnostic test), I believe that unless a single study was considered definitive with certain key attributes (eg, large population, large number of investigators, no methodological flaws, strong results, strong clinical need for the service), it would be difficult to gain approval for a Category I code with a single study.

Category III code controversy and current status

Since its inception in 2001, the Category III code system has gradually become more accepted by the various stakeholders that use CPT codes (physicians, payors, etc.). Initial bias that still lingers today was that Category III codes were for unproven or experimental or investigational procedures. As a result, some payors would take a shortcut to making a non-coverage decision for services described by Category III codes, based on the incorrect conclusion that Category III code status was a de facto determination that the service was experimental or investigational. This shortcut to non-coverage happened despite all payors (Medicare and private) advising that coding and coverage are not related (ie, that the existence of a particular code does not imply coverage and the lack of a particular code does not limit coverage because coverage is based on a reasonable and necessary [or similar standard] determination that mostly depends upon the clinical evidence). This approach has caused problems, as some physicians have been unwilling to adopt new technology if there was no prospect of being reimbursed until the Category III code was converted to a Category I code.

Although this attitude among payors still persists to some extent (at least with new Category III codes), payors are slowly coming to appreciate that Category III codes were created to facilitate data collection while clinical trials were being performed, but that sufficient evidence for coverage may come well before a Category I code is approved and on the books.

A significant factor in this greater acceptance of Category III codes among payors is a willingness among physicians to embrace new technology that begins with a Category III code and greater tolerance for some of the initial bumps in the reimbursement road that frequently accompany claims submissions for new procedures.

Physicians are important and necessary advocates for new technology, and it is through their continued efforts in advocating for new technology — despite early resistance from payors — that the AMA Category III CPT system will continue to advance its purpose of providing a pathway for new technology and greater physician and patient access to advanced technology and better outcomes for patients.

Reference:

  • CPT Assistant. 2009;19(5):3-5.

  • John S. McInnes, MD, JD, is an associate in Arnold & Porter LLP’s health care and food, drug and medical devices practice groups. He can be reached at 555 12th St., NW, Washington D.C., 20004-1206; 202-942-6293; e-mail: john.mcinnes@aporter.com.
Alan E. Reider, JD
Alan E. Reider
Allison Weber Shuren, MSN, JD
Allison Weber Shuren

If you are the type of physician who embraces new technology, then you are probably at least somewhat familiar with Category III CPT codes.

Some refer to these Category III codes as “T” codes because they all have the format of four numbers followed by the letter T, eg, 0177T. What follows is a description of the purpose and history of Category III codes, followed by my perspective on the role and function of these codes.

Category III codes first emerged in 2001. The Category III code process was created to provide a means for establishing specific codes for new procedures and new technology that do not meet the criteria for Category I CPT codes. The key differences between Category I and Category III codes are described briefly below.

Category III CPT codes

John S. McInnes, MD, JD
John S. McInnes

Category III codes are for “emerging technology, services and procedures.” They are temporary 5-year codes, with the expectation that within 5 years the Category III code will be converted to a Category I code. The most significant advantages of the Category III application process are that neither U.S. Food and Drug Administration approval or clearance (of a drug or medical device used in the procedure) nor published peer-reviewed evidence are necessarily required to obtain a Category III code.

This allows an applicant to establish a dedicated CPT code and possibly a payment assignment during the investigational phase of a procedure, which can be advantageous in obtaining early and favorable reimbursement for a new technology. The following criteria are the basis for American Medical Association CPT Editorial Panel review of Category III applications (although only one criterion is necessary for the panel to review the application, meeting one criterion is not necessarily sufficient for panel approval of a Category III code request):

  • A protocol for a study of procedures being performed;
  • Support from the specialties that would use the procedure;
  • Availability of U.S. peer-reviewed literature; or
  • Descriptions of current U.S. trials outlining the efficacy of the procedure.

Although the overall hurdle is not very high for obtaining a Category III code, it is difficult for a code applicant to gain approval from the CPT Editorial Panel without support from the relevant specialty societies. The panel usually will be reluctant to second guess a specialty society’s reasons for not supporting an application. Also, if an applicant only has a study protocol that has not been initiated at the time of application, the panel may ask the applicant to wait until the procedure is further along in clinical trials before granting approval.

Category I CPT codes

Category I codes “are restricted to clinically recognized and generally accepted services, and not emerging technologies, services or procedures.” Category I codes are the “permanent” CPT codes listed in the CPT book, eg, 66984, cataract surgery. All of the following criteria must be met to obtain a Category I CPT code:

  • The service or procedure has received approval from the FDA for the specific use of devices or drugs (provided FDA approval would be required);
  • The suggested procedure or service is a distinct service performed by many physicians or practitioners across the U.S.;
  • The clinical efficacy of the service or procedure is well-established and documented in U.S. peer-reviewed literature;
  • The suggested service or procedure is neither a fragmentation of an existing procedure or service, nor currently reportable by one or more existing codes; and
  • The suggested service or procedure is not requested as a means to report extraordinary circumstances related to the performance of procedures or services that already have a specific CPT code.

The criteria that are most difficult to satisfy are that the service be “performed by many physicians or practitioners across the U.S.” and that the “clinical efficacy … [be] well-established and documented in U.S. peer-reviewed literature.” The AMA has not defined what is meant by “many physicians” and “across the U.S.” Presumably these depend upon the prevalence of the condition for which the service is indicated and the number of physicians who are potentially qualified to perform the service.

Although I have been told that inclusion in one U.S. peer-reviewed publication is the minimum for a therapeutic service (and three is the minimum for a diagnostic test), I believe that unless a single study was considered definitive with certain key attributes (eg, large population, large number of investigators, no methodological flaws, strong results, strong clinical need for the service), it would be difficult to gain approval for a Category I code with a single study.

Category III code controversy and current status

Since its inception in 2001, the Category III code system has gradually become more accepted by the various stakeholders that use CPT codes (physicians, payors, etc.). Initial bias that still lingers today was that Category III codes were for unproven or experimental or investigational procedures. As a result, some payors would take a shortcut to making a non-coverage decision for services described by Category III codes, based on the incorrect conclusion that Category III code status was a de facto determination that the service was experimental or investigational. This shortcut to non-coverage happened despite all payors (Medicare and private) advising that coding and coverage are not related (ie, that the existence of a particular code does not imply coverage and the lack of a particular code does not limit coverage because coverage is based on a reasonable and necessary [or similar standard] determination that mostly depends upon the clinical evidence). This approach has caused problems, as some physicians have been unwilling to adopt new technology if there was no prospect of being reimbursed until the Category III code was converted to a Category I code.

Although this attitude among payors still persists to some extent (at least with new Category III codes), payors are slowly coming to appreciate that Category III codes were created to facilitate data collection while clinical trials were being performed, but that sufficient evidence for coverage may come well before a Category I code is approved and on the books.

A significant factor in this greater acceptance of Category III codes among payors is a willingness among physicians to embrace new technology that begins with a Category III code and greater tolerance for some of the initial bumps in the reimbursement road that frequently accompany claims submissions for new procedures.

Physicians are important and necessary advocates for new technology, and it is through their continued efforts in advocating for new technology — despite early resistance from payors — that the AMA Category III CPT system will continue to advance its purpose of providing a pathway for new technology and greater physician and patient access to advanced technology and better outcomes for patients.

Reference:

  • CPT Assistant. 2009;19(5):3-5.

  • John S. McInnes, MD, JD, is an associate in Arnold & Porter LLP’s health care and food, drug and medical devices practice groups. He can be reached at 555 12th St., NW, Washington D.C., 20004-1206; 202-942-6293; e-mail: john.mcinnes@aporter.com.