Medicare HCPCS Codes Explained

An estimated 42.5 million Americans received health care through Medicare in 2005.  Medicare is the U.S. Government’s health insurance program offered to citizens and permanent residents who are at least 65 years old.  Most individuals are automatically enrolled in the free Medicare Part A program on their 65th birthday, and have the option to enroll in Part B, which requires a monthly premium.  People younger than 65 who meet certain specific requirements are also eligible for Medicare coverage.

Medicare spending is estimated to grow by 7% per year, so how will the system keep up?  The money issues are the responsibility of the government.  As far as patient care and recordkeeping goes, Medicare has a form for every situation, and will likely create more.  The system also has a Medicare code for every conceivable medical condition and drug.

A brief overview of how a Medicare code works and some examples are given below.

A Simple Example

The Medicare code is comprised of alphanumeric characters, which means it can contain both letters and numbers.  Every treatment a patient receives under Medicare has an associated Medicare code.  When a provider requests reimbursement from Medicare for patient services, it must provide the unique Medicare code for each medical service or product provided.

The Medicare system generally reimburses a specific amount for each medical procedure.  That amount is associated with a Medicare code.  When a medical provider’s reimbursement request reaches the system, each Medicare code on the request is matched to the reimbursable amount for that code.  Medicare then totals all the individual reimbursable amounts related to each Medicare code, and computes a total reimbursement for the provider.

Of course, this is a greatly oversimplified example and does not take real-world conditions into account.  Not all medical items have set reimbursable amounts, and not all are automatically covered either.  The point is that without the Medicare code list, the system would grind to a halt.

Healthcare Common Procedure Coding System

The Healthcare Common Procedure Coding System (HCPCS) is a collection of codes that represent procedures, supplies, products and services which may be provided to Medicare beneficiaries and to individuals enrolled in private health insurance programs. The codes are divided into three levels, or groups, as described below.

Level I is a Medicare code list containing descriptors used by the American Medical Association’s current procedural terminology. Each Medicare code is a 5 number representing both physician and non-physician services.

Level II is comprised of a list of each Medicare code and descriptor used by the American Dental Association’s current dental terminology. Each Level II Medicare code is a 5 character alphanumeric code comprising the D series.

The Level III Medicare code list includes codes and descriptors developed by Medicare carriers for use at the local level.  These are 5 character alphanumeric codes representing both physician and non-physician services not already represented by a Level I or II Medicare code.


These are simply three levels each type of Medicare code.  The degree of complexity of the Medicare code system is enough to give one a migraine headache.  And there’s a Medicare code for a migraine: J3030 (prescription Imitrex ™ with a dosage of up to 6 mg administered via subcutaneous administration).  The doctor and pharmacy visits to get the Imitrex ™ would generate even more Medicare codes.  Maybe we’re better off not knowing.

5 Responses to Medicare HCPCS Codes Explained

  • Brain gunn says:

    Simplified the codes and uses to understandable terms. Thanks,

  • admin says:

    Hi Brain,

    You’re preaching to the choir on this one. We agree that the HCPCS codes are not easy to use. Writing a letter to your Congressman and sending a letter to Medicare would be a good start to facilitating change.

    If they hear from enough practitioners and business people, they will be forced to listen.

  • orileassews says:

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  • VICTOR PFAUS says:


  • Andy says:

    Great post Andy, thanks for sharing. Look forward to reading more on this topic in future.


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