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Frequently Asked Questions About Code Sets

1. What is a code set?

Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), a “code set” is any set of codes used for encoding data elements, such as tables of terms, medical concepts, medical diagnosis codes, or medical procedure codes.

Medical data code sets that are used in the health care industry include coding systems for: diseases, injuries, impairments, other health related problems, and their manifestations; causes of injury, disease, impairment, or other health-related problems; actions taken to prevent, diagnose, treat, or manage diseases, injuries, and impairments and any substances, equipment, supplies, or other items used to perform these actions. Code sets for medical data are required for data elements in administrative and financial health care transaction standards adopted under HIPAA for diagnoses, procedures, and drugs.

2. What code sets are recommended in the NPRM?

The code sets being proposed as initial HIPAA standards are all de facto standards already in use by most health plans, health care clearinghouses, and health care providers. They are:

ICD-9-CM: The International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM), classifies both diagnoses (Volumes 1 & 2) and procedures (Volume 3). All hospitals and ambulatory care settings use this classification to capture diagnoses for administrative transactions. The ICD-9-CM procedure system is used for all inpatient procedure coding for administrative transactions.

CPT-4: Physician Current Procedural Terminology (CPT) is used by all physicians to code their services for administrative transactions. CPT-4 is level one of the Health Care Financing Administration Procedure Coding System (HCPCS).

Alpha-numeric HCPCS: Alpha-numeric Health Care Financing Administration Procedure Coding System (HCPCS) contains codes for medical equipment, injectable drugs, transportation services, and other services not found in CPT-4. Alpha-numeric codes are level 2 of HCPCS. They are used in ambulatory settings.

CDT-2: Current Dental Terminology (CDT) is used for reporting dental services. CDT-2 codes are also included in alpha-numeric HCPCS with a first digit of D.

NDC: National Drug Codes (NDC) are used for reporting prescription drugs in pharmacy transactions and some claims by health claim professionals.

3. How will the implementation of national standard code sets reduce burden on the health care industry?

Standardized data content is essential for accurate and efficient electronic data exchange between the many producers and users of administrative health care transactions. Currently, these national codes sets are mandated for use in some Federal and State programs, such as Medicare and Medicaid. The Accredited Standards Committee X12N and National Council for Prescription Drug Programs standards setting organizations have adopted these codes sets for use in their standards.

4. What will be the impact of these standards on the health care industry?

By adopting standards for code sets we are requiring that all parties accept these codes within their electronic transactions. We are not requiring payment for all services for which there are codes. However, when the HIPAA code set standards become effective, all health plans will have to receive and process all standard codes, regardless of reimbursement or coverage policies for certain conditions or procedures. The requirement to use standard coding guidelines will simplify claims submission for health care providers who deal with multiple health plans and improve data quality. Health plans and others that do not follow official coding guidelines today will be required to modify their systems to accept all valid codes in the standard or engage a health care clearinghouse to process the standard transactions for them.

5. Have decisions been made about the introduction of new code set standards (e.g., ICD-10-CM)?

No decisions have been made regarding changes in code set standards. However, it is certain that there will be changes to coding and classification standards because of the international adoption of ICD-10. Therefore, those who produce and process electronic administrative health transactions should anticipate these changes and build in system flexibility to allow them to implement different code set formats within a year following adoption of the initial standards. Any recommendation regarding the implementation of new standards will require a new Notice of Proposed Rule Making.

6. What has been done to eliminate redundancy among some codes sets?

We are proposing modifications to alpha-numeric HCPCS to eliminate overlaps and duplications in three areas:

1. We propose that dental codes be eliminated from HCPCS. The American Dental Association (ADA) has agreed to become the sole source for the authoritative dental code set.
2. We propose that NDC codes become the national standard for all types of transactions requiring drug codes and that “J” codes be deleted from alpha-numeric HCPCS. Therefore, health plans, health care clearinghouses, and health care providers will have to process 11-digit NDC codes as part of the standard electronic transactions. With this change, greater national uniformity can be achieved, the workload of providers who previously had to utilize two drug coding systems will be reduced, and the need for local codes will diminish substantially.
3. We propose that HCPCS Level 3 codes established on a local basis by health insurers be eliminated. These codes have been created when no specific code could be found in Levels 1 or 2. To replace these local codes, we propose that a national process be established to review and approve codes that are needed by any public or private health insurer. This new centralized process for establishing national temporary codes would run parallel to the process for establishing national CPT codes, alpha-numeric HCPCS codes, and NDC codes.

7. Where can I get more information about the code sets?

ICD-9-CM: Official version is available on CD-ROM from the Government Printing Office (GPO) at 202-512-1800 or fax 202-512-2250. The CD-ROM contains the ICD-9-CM classification and coding guidelines. Versions of ICD-9-CM are also available from several not-for-profit and other private sector vendors.

CPT-4: Official version is available from the American Medical Association. Versions are also available from several not-for-profit and other private sector vendors.

Alpha-numeric HCPCS: Official versions of the 1998 alpha-numeric HCPCS files (excluding the D procedure codes copyrighted by the ADA) are available from the HCFA website at http://www.hcfa.gov/stats/pufiles.htm

CDT-2: Official version is available from the American Dental Association, 800-947-4746.

NDC: Official versions of the files are available on the Internet’s World Wide Web on the CDER Home Page at http://www.fda.gov/cder/ndc/index.htm. NDC codes are also published in the Physicians’ Desk Reference under the individual drug product listings and “How supplied.” The supplements are available quarterly on diskette from the National Technical Information Service at 703-487-6430.

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