HCPCS Billing Glossary

Key terms used in HCPCS Level II coding and Medicare billing. Understanding these definitions is essential for accurate claim submission and compliance.

HCPCS (Healthcare Common Procedure Coding System)

The Healthcare Common Procedure Coding System is a standardized code set used for billing Medicare, Medicaid, and other health insurance programs. It is divided into Level I (CPT codes, maintained by the AMA) and Level II (alphanumeric codes maintained by CMS). Level II codes cover supplies, equipment, drugs, and services not found in CPT. Browse all HCPCS codes.

CMS (Centers for Medicare & Medicaid Services)

The federal agency within the U.S. Department of Health and Human Services that administers Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and other federal healthcare programs. CMS maintains the HCPCS Level II code set, publishes fee schedules, and administers the NCCI edit system. Learn about CMS data sources.

NCCI (National Correct Coding Initiative)

A CMS program that establishes which pairs of HCPCS or CPT codes cannot be billed together on the same claim for the same beneficiary on the same date of service. NCCI edits prevent duplicate billing and improper payment for services that are components of a more comprehensive procedure. Learn about NCCI edits.

CPT (Current Procedural Terminology)

A set of five-digit numeric codes maintained by the American Medical Association (AMA) that describe medical, surgical, and diagnostic services. CPT codes are Level I of the HCPCS system. This site covers HCPCS Level II only — CPT codes are AMA-copyrighted and are not included.

DME (Durable Medical Equipment)

Medical equipment ordered by a physician for use in the home that can withstand repeated use, is primarily and customarily used to serve a medical purpose, is not useful to a person in the absence of illness or injury, and is appropriate for use in the home. Examples include wheelchairs, hospital beds, walkers, and canes. Browse E-codes for DME.

DMEPOS (Durable Medical Equipment, Prosthetics, Orthotics, and Supplies)

The broader category covering DME plus prosthetic devices, orthotic devices, and medical supplies. DMEPOS suppliers must be enrolled with Medicare and must accept assignment on Medicare claims. The DMEPOS fee schedule sets payment rates for this category.

ASC (Ambulatory Surgical Center)

A Medicare-certified outpatient facility where surgical procedures are performed that do not require hospitalization. ASCs bill under the ASC Payment System, which is separate from both the Physician Fee Schedule and the hospital OPPS rates. Surgeons bill their professional fees separately.

PFS (Physician Fee Schedule)

The annual schedule published by CMS setting payment rates for services provided by physicians and other qualified healthcare professionals. Rates are based on relative value units (RVUs) multiplied by a geographic cost index and an annual conversion factor. The physician fee schedule includes both facility and non-facility rates.

OPPS (Outpatient Prospective Payment System)

The payment system used by Medicare for services provided in a hospital outpatient department. OPPS rates are grouped by Ambulatory Payment Classifications (APCs) and are generally higher than physician office rates for the same service. The OPPS fee schedule applies to hospital outpatient billing.

J-Code

A HCPCS Level II code beginning with J, used to bill Medicare Part B for injectable, infused, or inhaled drugs administered by a healthcare professional. Each J-code covers a specific drug and unit of measure. J-code claims under Part B also require reporting the National Drug Code (NDC). Browse all J-codes.

NDC (National Drug Code)

A unique 10-digit or 11-digit identifier assigned by the FDA to each drug product — identifying the labeler, product, and package. Medicare Part B drug claims must include the NDC alongside the J-code. Use the NDC lookup tool to find the HCPCS J-code for a specific NDC.

Modifier

A two-character alphanumeric code appended to a HCPCS or CPT code to indicate that a service was modified in some clinically significant way — such as indicating laterality, a separate encounter, or the professional vs. technical component of a service. Modifiers can affect payment and may be used to bypass NCCI edits when clinically appropriate. Browse the modifier reference.

Prior Authorization

Advance approval from a payer required before certain services, supplies, or equipment may be provided and billed. Medicare requires prior authorization for certain high-cost DMEPOS items (e.g., power wheelchairs) and some procedures. Without prior authorization where required, the claim may be denied as not medically necessary regardless of clinical documentation.