HIPAA: General Code Conversion

The Health Insurance Portability and Accountability Act (HIPAA) mandated changes to billing requirements for Healthcare Common Procedure Coding System (HCPCS) Level III codes. HCPCS Level III local codes will convert to HIPAA-compliant national codes to meet these mandated billing requirements.

Congress passed HIPAA in 1996. In addition to eliminating the use of HCPCS Level III local codes, HIPAA does the following:

• Provides the ability to transfer and continue health insurance coverage for millions of American workers and their families when they change or lose their jobs;
• Reduces health care fraud and abuse;
• Mandates industry-wide standards for health care information on electronic billing and other processes; and
• Requires the protection and confidential handling of protected health information.

California has historically used thousands of HCPCS Level III or local codes (also known as interim codes) for billing and reimbursement of services and supplies. National codes, such as Current Procedural Terminology (CPT^®) Category I or HCPCS Level II codes, are typically more specific in nature compared to local codes. Using HIPAA-compliant national codes will:

• Simplify the processes and decrease the costs associated with payment for health care services;
• Improve the efficiency and effectiveness of the health care system and decrease administrative burdens on providers (for example, medical practices, hospitals and health care plans);
• Provide standardization and consistency in medical service coding; and
• Characterize a general administrative situation, rather than a medical condition or service, by using non-clinical or non-medical code sets.

The code conversion from local codes to HIPAA-compliant national codes means that providers who currently submit HCPCS Level III local codes when billing for their services will be required to submit claims using specified HIPAA-compliant national codes, such as CPT Category I or HCPCS Level II. Reference the applicable crosswalks to know which local codes are converting and utilize the resources located on the HIPAA: Code Conversions web page for updated information regarding the changes expected for each code conversion.

No. The intent of the crosswalk is to be a general guide only to assist in the seamless transition from HCPCS Level III local codes to HIPAA-compliant national codes. Please adapt to your billing situation.

The code conversions to HIPAA-compliant national codes will be individually announced for each program and/or services affected. Watch for code conversion announcements and updates in the NewsFlash area of the Medi-Cal website and in the monthly Medi-Cal Update provider bulletins. Providers may complete the Medi-Cal Subscription Service (MCSS) Form to receive timely notifications related to code conversions.

TARs/eTARs or SARs/eSARs submitted on or after the policy effective date of the code conversion must include only HIPAA-compliant national codes.
Providers should review their existing TARs/eTARs or SARs/eSARs with HCPCS Level III local codes that extend beyond the policy effective date of the code conversion. TARs/eTARs or SARs/eSARs with HCPCS Level III local codes authorized beyond the policy effective date will need to be end-dated, and providers will need to submit new TARs/eTARs or SARs/eSARs with the appropriate HIPAA-compliant national codes to cover any remaining service period.

Some code conversions may allow grace periods for TARs and SARs. Refer to the applicable code conversion TAR/SAR Policy for these exceptions.