The HCFA (Health Care Financing Administration) Common Procedure Coding System (HCPCS) is a system for healthcare providers, physicians and medical suppliers to report supplies, professional services and procedures. HCPCS is a three-level coding system. Each level is its own unique system.

HCPCS Level I - CPT-Current Procedural Terminology (CPT) is developed and maintained by the American Medical Association. It is a five-digit code with a possible two-digit or five-digit modifier.

HCPCS Level II - HCPCS National Codes - These are five-digit alpha-numeric codes used to identify those coding categories not included in level I HCPCS. This level is the result of the combined work of HCFA, the Health Insurance Association of America (HIAA), the American Dental Association (ADA) and the Blue Cross/Blue Shield Association (BCBSA). For information on the HCPCS level II modification process, please visit http://www.hcfa.gov/medicare/03INFOPKtweb.rtf

HCPCS Level III - Local Codes-This level of codes are maintained and assigned by individual Medicare Part B carriers.

Medicare implemented the outpatient prospective payment system (OPPS) in August 2000. OPPS applies to hospital outpatient departments, community mental health centers (CMHCs) for some services provided by comprehensive outpatient rehabilitation facilities (CORFs), and services provided to hospice patients for the treatment of a non-terminal illness. OPPS consists of groups of services known as Ambulatory Payment Classification (APC) groups. Services within an APC are similar clinically and require similar resource use. Hospitals are required to include HCPCS codes for all services in order to be paid accurately under OPPS.