Glossary · Coding

HCPCS Level II

HCPCS Level II is the CMS-maintained alphanumeric code set used to bill products, supplies, and services—such as DME, orthotics, prosthetics, and injectable drugs—that CPT codes do not adequately describe. Each code consists of one letter (A–V) followed by four digits.

Verified May 8, 2026 · 7 sources ↓

Drawn from CMSGovinfoAAPCEnZimmerbiomet

Definition

Source · Editorial summary grounded in 7 cited references ↓

The Healthcare Common Procedure Coding System (HCPCS) has two levels. Level I is the AMA's CPT code set, which describes what a clinician did. Level II is a separate, federally maintained code set that describes what was used—devices, supplies, durable medical equipment (DME), orthotics, prosthetics, ambulance services, injectable medications, and other non-physician items. CMS established Level II codes under 45 CFR 162.1002 in 2000 as part of HIPAA's standardized coding mandate. Each code is five characters: a single letter from A through V followed by four numerals. Codes are grouped by category—for example, A-codes cover medical and surgical supplies, C-codes cover outpatient hospital items, and L-codes cover orthotic and prosthetic procedures.

In orthopedic practice, HCPCS Level II codes are most relevant for billing implantable hardware and DMEPOS furnished outside the operating room. Common orthopedic examples include C1713 (anchor or screw for bone-to-bone or soft-tissue-to-bone fixation), C1776 (implantable joint device), L-codes for off-the-shelf and custom-fabricated braces, and J-codes for injectable agents such as hyaluronic acid derivatives. These codes travel alongside—not instead of—CPT codes on the same claim.

CMS updates Level II codes throughout the year and conducts formal bi-annual coding cycles for non-drug, non-biological products (deadlines on the first business day of January and July). A 2025 final rule effective January 1, 2026 brought FDA-regulated skin substitutes and HCT/P products into those same bi-annual cycles. Crucially, receiving a Level II code does not guarantee Medicare coverage or a specific payment rate; coverage and payment are determined through entirely separate processes.

Why it matters

Using the wrong Level II code—or omitting one entirely—is a leading cause of outpatient claim edits and denials for orthopedic implants and DMEPOS. Under the hospital Outpatient Prospective Payment System (OPPS), device-intensive procedures require a matching C-code on the claim; missing that code triggers an automated edit and can eliminate pass-through payment eligibility. For orthopedic surgeons prescribing braces or injections in the office or ASC, an incorrect or unspecified L-code or J-code shifts reimbursement to an unlisted or not-otherwise-classified bucket, frequently attracting post-payment audits. Because HCPCS Level II codes carry no inherent coverage guarantee, selecting the most specific available code is the only defense against payer downcoding or medical-necessity denials.

Common mistakes

Where people most often go wrong with this concept.

Source · Editorial brief grounded in cited references ↓

Billing only the CPT surgical code and omitting the corresponding C-code for an implantable device on OPPS claims, triggering a device-intensive procedure edit.
Using J3490 (unclassified drugs) when a product-specific J-code exists—e.g., billing J3490 for a hyaluronic acid injection instead of the correct J7321 or equivalent—inviting manual review and payment delay.
Assuming that a product's newly assigned HCPCS Level II code means Medicare will automatically cover it; coverage determination is a separate CMS process.
Applying L-codes for custom-fabricated orthoses without supporting documentation of the custom fabrication, exposing the claim to DME MAC audit.
Failing to update to new or revised Level II codes after quarterly CMS updates, resulting in claims submitted with deleted codes.
Conflating HCPCS Level II modifiers (e.g., RT, LT, KX) with CPT modifiers when both appear on the same claim line, causing modifier stacking errors.

Related codes

Codes commonly involved when this concept appears in practice.

Modifiers

RT Right side LT Left side KX Medical-policy requirements met

Frequently asked questions

Source · Generated from the editorial pipeline, verified against 7 cited references ↓

01What is the difference between HCPCS Level I and Level II?

Level I (CPT) describes what a clinician did—procedures and services. Level II describes what was used—supplies, devices, equipment, and non-physician services. Both levels can appear on the same claim and serve complementary, not competing, functions.

02Do I need a HCPCS Level II code for every orthopedic implant?

Not always. Many devices used in physician office or ASC settings are bundled into the CPT payment and do not require a separate Level II code. However, for hospital outpatient (OPPS) device-intensive procedures, a matching C-code is required on the claim to satisfy CMS edits and preserve any pass-through payment eligibility.

03Does getting a HCPCS Level II code mean Medicare will pay for my product?

No. CMS explicitly states that assigning a Level II code is independent of coverage or payment determinations. A product can have a valid HCPCS code and still be non-covered by Medicare or subject to prior authorization.

04How often are HCPCS Level II codes updated?

CMS updates Level II codes throughout the year. Drug and biological codes can be updated quarterly; non-drug, non-biological products follow bi-annual cycles with application deadlines on the first business day of January and July.

05What is the PDAC and when should an orthopedic practice contact them?

The Pricing, Data Analysis and Coding (PDAC) contractor helps suppliers and manufacturers determine the correct HCPCS Level II code for DMEPOS items billed to Medicare. Practices uncertain about which L-code or E-code applies to a specific brace or device should consult PDAC before submitting claims.

06What happens if I submit a claim with a deleted HCPCS Level II code?

The claim will typically be rejected or denied. Because CMS updates codes throughout the year, practices should verify code validity in the current CMS HCPCS file before submission, especially after quarterly update effective dates.

Sources & references

Editorial content was developed using the following public sources. Last verified May 8, 2026.

Mira AI Scribe

When Mira detects documentation of a dispensed orthosis, prosthetic component, injectable agent, or implantable device, it flags the relevant HCPCS Level II code alongside any CPT code. For outpatient hospital encounters involving device-intensive procedures, Mira cross-checks that a C-code is present on the claim and alerts the coder if it is missing. For office or ASC injectable drugs (e.g., viscosupplementation), Mira maps the documented product name to the most specific current J-code rather than defaulting to J3490. For DMEPOS items such as knee braces or bone stimulators, Mira surfaces the applicable L-code or E-code and prompts documentation of whether the item is off-the-shelf or custom-fabricated, because that distinction determines modifier requirements and DME MAC coverage criteria. Mira does not make coverage or payment determinations; it surfaces the most specific code supported by the documentation and flags gaps for coder review.

See Mira's approach

OPPS (Outpatient Prospective Payment System) is the Medicare payment framework under which hospital outpatient department services—including most orthopedic procedures performed in that setting—are reimbursed through pre-determined rates assigned to Ambulatory Payment Classifications (APCs).

ICD-10-CM Coding

ICD-10-CM (International Classification of Diseases, Tenth Revision, Clinical Modification) is the U.S. diagnosis coding system used on every claim to communicate why a service was performed, establish medical necessity, and support reimbursement. Maintained by CMS and CDC, it has been required for all HIPAA-covered entities since October 1, 2015.