CPT Code

How It Works

CPT codes are the universal language of outpatient medical billing in the United States. Maintained by the AMA CPT Editorial Panel since 1966 and updated annually each January, the CPT code set contains approximately 10,000 active codes across three categories: Category I (procedures, roughly 7,800 codes), Category II (performance measurement tracking codes, optional), and Category III (emerging technology codes, temporary). CPT codes are the basis for Medicare outpatient payment under the Outpatient Prospective Payment System (OPPS), where groups of CPT codes map to Ambulatory Payment Classifications (APCs), and for physician payment under the Medicare Physician Fee Schedule, where each CPT code has Relative Value Units (RVUs) for work, practice expense, and malpractice. Common inpatient hospital services use CPT for professional billing while the facility side uses MS-DRG. Familiar high-volume CPT codes include 99213 (office visit, established patient, level 3, about $96 Medicare allowed amount for 2025), 45378 (diagnostic colonoscopy, about $400-$900 facility fee plus professional fee), 70551 (MRI brain without contrast, Medicare allowed near $320), 29881 (knee arthroscopy with meniscectomy, about $550-$750 facility fee), and 99284 (emergency department visit, moderate severity, near $210). Hospitals list CPT codes line-by-line on the UB-04 claim for outpatient services. For chargemaster management, every CPT code maps to a hospital gross charge, and in the machine-readable file it carries payer-specific negotiated rates and the discounted cash price. AMA licenses CPT code usage and derives significant revenue from licensing fees, a politically contentious arrangement given the codes' mandatory role in federal billing.

Related Terms

• ICD-10 Code, The International Classification of Diseases, 10th Revision, code used to identify patient diagnoses on hospital claims, replacing ICD-9 in the U.S. on October 1, 2015.
• MS-DRG (Medicare Severity DRG), The severity-adjusted version of the DRG system used by Medicare since 2007, expanding groupings to capture complication and comorbidity burden and refine payment accuracy.
• UB-04 Claim Form, The standardized hospital billing form (also called CMS-1450) used by hospitals and other institutional providers to bill Medicare, Medicaid, and commercial insurers for facility services.
• Machine-Readable File (MRF), The comprehensive hospital pricing file, required by the Hospital Price Transparency Rule, containing gross charges, cash prices, and payer-specific negotiated rates for every item and service.
• Chargemaster (Charge Description Master), A hospital's master list of prices for every item and service, from a single aspirin to a heart transplant, typically containing tens of thousands of line items with prices that bear little relation to actual costs.