An Inside Look at How the CPT Is Kept Balanced and Current

Developed and introduced by the American Medical Association (AMA) in response to the implementation of Medicare in 1966, the Current Procedural Terminology (CPT) coding system has since become the principal uniform language used by healthcare professionals and administrative personnel to describe specific medical services and procedures. To date, CPT encompasses some 10,000 codes, and the set is continually evolving to keep pace with ongoing advancements in science, technology, clinical protocols, data management, and more. Facilitating that tall order requires the complex and multifaceted system that exists today, under the watchful eye and hands-on maintenance and support of the AMA.

Although hospitals, clinics, and private medical practices across the country rely on CPT for billing reimbursement, among other things, the system itself, and the process by which it is kept balanced and current, may seem mysterious and even confusing to practitioners and their staff. Indeed, a closer look inside the workings of the CPT coding system reveals a complex world of moving parts that are synchronized enough to coordinate the reporting, supporting, advisory, and decision-making activities of hundreds of people—yet flexible enough to adapt to unanticipated emergencies, such as a global public health crisis.

Defining the Updating Process

The primary responsibility for the curation of the CPT code set lies with the CPT editorial panel (currently expanding from 17 to 22 members), appointed by the AMA board of trustees. The panel comprises an independent body of physicians who typically meet three times a year for multiple days at a time. There are 200 independent advisors to the CPT panel, also appointed by the AMA board of trustees. “This group intersects with all of the approximately 180 medical societies that have seats with the AMA’s house of delegates,” explained Laurie McGraw, senior vice president of Health Solutions at the AMA. The AMA staff supports the panel by providing information, documentation, people power, and technology support— in short, the fuel required to keep the machine running.

“From our perspective, the more we can educate people on CPT and be as transparent and accessible as possible, the better,” said McGraw. To that end, she offered a step-by-step description of the CPT process.

1. Code change requests. “Code change requests are put forth when it appears that there’s a novel innovation or procedure for which there is currently no existing code, an existing code or category of codes that needs to be modified, or a code that needs to be deleted altogether because it’s no longer applicable,” she said.

To submit a request, an applicant accesses an AMA online portal. Depending on the request, the applicant may have to provide peer-reviewed literature demonstrating clinical effectiveness or data that indicate widespread utilization across the U.S. “This is all to determine whether their application could pass through the panel process,” said McGraw, adding that the AMA provides technology and staff support “to answer the question of how this world of CPT works.”

2. Refining the proposal. Once an application is within the CPT editorial panel, a panel member or two are assigned as the lead reviewer(s) “to determine whether the proposal needs to be refined,” said McGraw. Society advisors might provide supporting information during this time. “There might be one specialty society that’s in favor of an application and another that isn’t, for a variety of reasons, so part of the application process includes trying to reconcile some of those points of view,” she explained.

3. Panel discussion and vote. At the subsequent scheduled CPT panel meeting, code change applications are “put on the floor” for discussion. Applicants are present, virtually or in person, as the panel considers whether the proposal meets the criteria, and there’s a debate that may culminate with a vote or a determination for further action. Results of the meeting are published shortly thereafter.

The AMA receives hundreds of code change requests per year. For the most part, the CPT code set is updated annually, although some codes are changed twice a year or quarterly. Due to COVID- 19, the past year has been especially active (see Coded Emergency, below). “Since the pandemic, instead of having to review every single application, we implemented a consent calendar to list applications that basically meet all of the criteria for panel review,” said McGraw. While the consent calendar contains only those applications that have broad support, any person attending the meeting can “extract” an item for further panel discussion without a specific rationale, facilitating the transparency of the process. “Of the applications that go through the meeting, some volume will be rejected, postponed, or withdrawn,” McGraw said, acknowledging that a low volume of applications ultimately come through with no modification, but that the AMA is continually doubling down on its efforts to smooth the path for CPT code requests.

Working the System

Richard Waguespack, MD, became interested in CPT early in his medical career. As the recently retired otolaryngologist explains it, he really had no choice: Having gone through general medical and postgraduate training in the 1970s, Dr. Waguespack “had heard virtually nothing about the CPT system,” he said. Upon beginning his practice at a multispecialty clinic in Birmingham, Ala., however, it soon became clear to the then-newly minted physician that his work needed to be coded. “The clinic had a central business/billing office, and the sum total of my training was being given a two- or three-year-old CPT book from which to select codes,” he recalled. “After about three years, I was so frustrated with the clinic’s poor collection of my fees that I sought courses on coding and reimbursement at the American Academy of Otolaryngology–Head and Neck Surgery’s [(AAO-HNS)] annual meeting.”

Simply having a code does not, for many payers, automatically guarantee reimbursement. Each carrier has a process to determine the medical necessity of services represented in the CPT book. —Richard Waguespack, MD

Ultimately, Dr. Waguespack left that clinic. “I joined a more senior doctor, with my wife becoming office manager,” he said. “Together we learned nuances of CPT coding and healthy collection practices. She became very involved in the otolaryngology administrator group and got to know our physician leaders in health policy, especially coding and reimbursement.” When an opportunity to serve as the AAO-HNS CPT advisor opened, Dr. Waguespack took on the role. He remained involved in the CPT process for more than 20 years, during which time he also served as a specialty advisor for the Triological Society, as a member of the editorial board of the monthly publication CPT Assistant, and on the AMA CPT editorial panel.

“CPT is used very frequently to track the services and total work physicians and other providers in otolaryngology perform,” explained Dr. Waguespack, in this instance referring to Category I CPT codes, which encompass services and procedures, devices, and drugs, and are billable for reimbursement. Category II codes are not billable for reimbursement, as they are used for reporting performance measures, the data from which are used to help establish and improve quality of care. Category III codes are used for reporting emerging technologies and are meant to exist in this category up to a maximum of five years before they either “graduate” to Category I or are removed.

Although CPT codes were always meant as a vehicle for standardizing medical services rendered, it wasn’t until the early 1990s that the valuation process for coding became standardized with the resource-based relative value scale (RBRVS, as it is commonly known). “Each Category 1 code has a value assigned, measured in relative value units (RVUs),” Dr. Waguespack said. “The total RVU value is composed of physician work (wRVUs), practice expense (PE RVUs), and a small added amount representing professional liability. Physician productivity is often measured in terms of wRVUs, and one’s salary or payment is frequently derived from a formula based on this number by the academic or private practice in which one works.”

Physician fee schedules are built on CPT codes, and collections for physician services are based largely on the corresponding RVUs assigned to each code. “Most payers reimburse on a multiple of the RVU value,” said Dr. Waguespack. “CMS (Centers for Medicare and Medicare Services) sets the dollar amount of the multiplier for the Medicare program, and most commercial carriers set theirs at a percentage above, or below, Medicare’s.” It’s important to remember that “simply having a code does not, for many payers, automatically guarantee reimbursement,” he said. “Each carrier has a process to determine the medical necessity of services represented in the CPT book.”

Navigating the System

Today, physicians come into their field with some awareness of the CPT code set, but a learning curve remains. “Unfortunately, the nature of billing and reimbursement still isn’t greatly appreciated during stages of training,” said James Lin, MD, otolaryngologist and associate professor at the University of Kansas Medical Center in Kansas City. “Once a physician or provider becomes responsible for submitting bills for medical services, it is a rude awakening because they learn that on the one hand, if they play it too safe and underreport (or underbill), there is a risk of leaving money on the table, but being aggressive runs risks related to fraud claims and lack of recoupment of money by payers.”

Dr. Lin was introduced to the CPT process by his friend and colleague, pediatric otolaryngologist Larry Simon, MD, a current CPT editorial panel member. “The process was of particular interest to me because several otolaryngology procedures could be reported with multiple different codes and with variation in values,” said Dr. Lin. “I learned that there were sometimes formal rulings from the AMA CPT group regarding how to report certain procedures and very explicit logic behind those rulings. However, despite those guidelines, I saw several paradoxes in the reporting of certain procedures. Any otolaryngologist in practice understands that a tympanoplasty can be a very easy 20-minute surgery or a very difficult surgery requiring more than an hour. Yet, depending on how that procedure is performed in the more facile scenario, reimbursement may counterintuitively be higher.”

Fortunately, the CPT review process allows for extensive discussion and participation from people who choose to be involved. “The process allows practitioners, their specialty societies, coders, and payers, as well as other interested parties such as those from the industry, to participate,” noted Dr. Waguespack. “Otolaryngology has active CPT advisors from the Triological Society, the AAO-HNS, and the American Rhinologic Society, as well as representation from the American Academy of Otolaryngic Allergy and the American Academy of Facial Plastic and Reconstructive Surgery. Each of these societies is represented in the AMA house of delegates. The Triological Society and AAO-HNS advisors are highly engaged with the CPT process, and the goal is to present a balanced coding perspective across our specialty.”

From our perspective, the more we can educate people on CPT and be as transparent and accessible as possible, the better. —Laurie McGraw, senior vice president of Health Solutions at the AMA

The CPT coding system is like any complex machinery in that manipulating one part may affect the function of another. As Dr. Lin noted, when a new code is sent for RUC [an acronym for the RBRVS update committee] valuation, the whole family of codes is then opened for revaluation. Final setting of a code’s relative value is made by CMS after review of the RUC’s recommendation. “Medicare is regarded as a budget-neutral endeavor, so on the surface, when we create new codes to add to a family of existing codes, valuation is taken away from those existing codes. However, the process is much more complex than that,” Dr. Lin said.

The CPT coding system is like any complex machinery in that manipulating one part may affect the function of another. As Dr. Lin noted, when a new code is sent for RUC [an acronym for the RBRVS update committee] valuation, the whole family of codes is then opened for revaluation. Final setting of a code’s relative value is made by CMS after review of the RUC’s recommendation. “Medicare is regarded as a budget-neutral endeavor, so on the surface, when we create new codes to add to a family of existing codes, valuation is taken away from those existing codes. However, the process is much more complex than that,” Dr. Lin said.

Suppose that a new otolaryngology-related coding change has been approved by the CPT editorial panel and is undergoing valuation by the AMA-appointed medical specialty delegates in the RUC panel. What happens next? 

“The family of existing codes, in addition to the new code, are opened for valuation or revaluation. The RUC advisory team from otolaryngology creates very granular surveys to be filled out by otolaryngologists regarding the technical difficulty, stress caused, risks involved, and, most importantly, time spent on the procedures performed,” Dr. Lin explained. “The older an existing procedure is, in general, the faster otolaryngologists become at performing it. So, when an older code is surveyed for revaluation, the time and difficulty of the procedure, by its nature, will also have decreased, in addition to the budget-neutral dilution of values. We may want to have new codes to describe cochlear implant removal or Draf procedures, but is it worth the risk of valuation to the older ones? That’s the big question.”

Navigating the coding system is especially challenging for physicians who aren’t yet trained in CPT code reporting. “Newer physicians will often report several codes that have overlapping work for a given procedure, and there are rules as to what codes may be reported together,” Dr. Lin said. “A classic example is reporting the use of the operating microscope for a tympanoplasty. A typical tympanoplasty uses some sort of magnification, traditionally microscopic, but that now includes endoscopic. Because of what’s typical for tympanoplasty, you don’t report use of an operating microscope separately.”

The reporting of novel procedures is another tricky area, such as when providers attempt to submit them under an established code. Dr. Lin pointed to the use of absorbable nasal implants to repair nasal valve collapse using the pre-existing spreader or batten graft code, when the amount of work performed in each procedure is very different. “When the use of existing codes for ‘squeezing in’ new or different procedures becomes more widespread, this increase in code use is picked up by AMA screens,” he said. “This may lead to undesirable results and, eventually, the devaluation of the pre-existing codes.” This devaluation is why, as appealing as unlimited expansion of CPT codes may sound, the ultimate effect could prove detrimental.

On the other hand, there are times when new codes are justifiable and needed, said Dr. Lin, referring to his earlier example: “We described the placement of absorbable nasal implants as a new technology procedure with FDA approval and supplied literature support to describe its efficacy,” he said. “We also argued that use of that procedure was consistent with the prevalence of nasal valve collapse. With these criteria fulfilled, we were able to get a novel code for placement of the implant for nasal valve collapse.”

Dr. Waguespack stressed that most CPT code changes are driven by the evolution of clinical medicine. “Truly obsolete procedure codes may be deleted; most often, new codes are added or existing ones modified to reflect the current practice of otolaryngology. Occasionally, a code’s meaning is ambiguous and must be clarified,” he said. “Another example is a procedure that was always performed in the hospital setting but now is almost exclusively an office or outpatient service, such as intratympanic installation of vestibulo active agents. The forces driving CPT changes are multifactorial and may even involve the code valuation process.”

Multipurpose Use

The CPT system serves important purposes beyond billing for practitioners. “CPT allows us to easily track case numbers and is used by the Accreditation Council for Graduate Medical Education for reporting training case volumes,” noted Dr. Lin. “It also allows payers and medical institutions to follow productivity with a great deal of specificity. Because of the widespread nature of CPT through the field of medicine, these benefits are shared by all specialties.”

Certainly, in an increasingly datadriven society, and when so much of medicine is moving toward a digital format, CPT is increasingly vital. “In today’s high-volume, high-activity areas, CPT describes how care is being delivered and how innovation in medicine is applied,” said McGraw. “The codes themselves have structure to them, they have modifiers, they have other mechanisms to describe the specifics at a level of detail that is particularly helpful for the data liquidity that is so needed across the U.S.—and across the globe, actually.”

The people who keep the CPT machine running realize that it can only remain truly effective to the extent that the medical community is well educated in its use and involved in its evolution. “As with any tool, CPT can be misused or misunderstood by physicians and their staffs,” acknowledged Dr. Waguespack, who noted that recent changes have been made to reduce administrative reporting burdens, such as the revision of office-based new and established patient evaluation and management codes that went into effect in 2021. “This supersedes the old CMS 1995 and 1997 guidelines that required very detailed, but sometimes irrelevant, documentation and contributed to a copy-andpaste approach to medical records. The current process focuses on time spent by the physician or well-defined medical decision making.”

The upcoming expansion of the editorial panel is designed to broaden representation across medicine. “I really encourage people to explore CPT, whether they’re innovators, company reps, or physicians who want to participate in the profession of the code set that represents the care that they deliver,” said McGraw. “We’ve done so much to make it available, and we encourage people to attend these meetings so they can see how the process works.”

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Linda Kossoff is a freelance medical writer based in Woodland Hills, Calif.