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

If you’re 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 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

Category III codes are for “emerging technology, services, and procedures.” They are temporary five-year codes, with the expectation that within five 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 FDA 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.

John S. McInnes

The following criteria are the basis for AMA 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 who would use the procedure.
• Availability of U.S. peer-reviewed literature.
• 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. 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 United States.
• 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.
• 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 two criteria that are most difficult to satisfy are that the service be “performed by many physicians or practitioners across the United States” 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 United States.” 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 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/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/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 is 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 brand 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 the greater acceptance of Category III codes among payors is a willingness among physicians to embrace new technology that begins with Category III codes and greater tolerance for some of the initial bumps in the reimbursement road that frequently accompany submitting claims 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.

John S. McInnes, MD, JD, is a health care attorney specializing in reimbursement issues at Arnold & Porter LLP in Washington, D.C.