Getting a Category III code is often considered a milestone on the path to reimbursement. But it sometimes can have the opposite effect, so deciding whether to pursue a Category III code requires careful deliberation.
A Category III code provides a standardized, trackable code that is useful for building utilization and outcomes data, and Category III codes have sometimes been reimbursed. However, there is a risk: payers can automatically deny payment for all claims submitted under a Category III code. And an increasing number of payers are doing this. Specifically, many payers treat new Category III codes by default as “noncovered, experimental/investigational” (E&I) and therefore automatically denied, without any review of the medical necessity of individual claims. E&I determinations can be overturned, but doing so is difficult.
A Category III code may still be a strong approach for some technologies, particularly where standardized tracking and evidence development are central to the reimbursement strategy. For others, however, a different pathway may better support coverage, payment, and adoption. The key is to understand the full range of coding, coverage, and reimbursement options before deciding which route gives the technology the best chance of successful market access.
What is a Category III code?
The American Medical Association’s CPT Editorial Panel created Category III codes for emerging technologies, services, and procedures that haven’t yet met the bar for a permanent Category I code but that need a standardized way to be tracked and potentially reimbursed. Identified by four numbers followed by a “T” (e.g., 0123T), these temporary codes are reviewed every five years to determine whether they should be archived, extended, revised, or promoted to Category I.
A Category III code’s primary purpose is to give an emerging technology a standardized way to be tracked while it builds the clinical efficacy, utilization, outcomes record that could eventually support a permanent Category I code.
Payers increasingly default to E&I for Category III codes
Payers have internal medical policies that determine how they review Category III codes for reimbursement. These policies can provide for reimbursement of claims under a Category III code if the medical device meets specified criteria showing it is medically necessary. Alternatively, the policies can list the Category III code in its E&I policy, which in turn places an edit in the payer’s system that causes automatic denial of each claim under that code, without any review of the clinical documentation.
As of late, several major national payers have initiated standing policies that presume Category III codes are E&I by default, unless a specific exception applies. This can effectively block reimbursement before the first claim is submitted, potentially delaying payment for years.
Overturning an E&I designation is difficult, but not impossible
Payers regularly revisit their medical policies, and the designation of a Category III code as E&I can be reconsidered. But changing this designation is a difficult, uphill battle that involves advocacy with payers, such as providing evidence packets, direct engagement with the payer’s medical policy committee, and education on the clinical literature. If successful, the medical device will be moved out of the E&I policy and into a gray area where it’s reviewed for medical necessity case by case until a permanent code is in place. However, any such effort must start with quality data, a medical need for the device, and support by physicians within the payer’s network.
The HcFocus market access team
HcFocus takes clients from strategy through execution, with decades of experience and deep payer and physician relationships across reimbursement, coding, coverage, and policy. Whether a product is in early-stage development, preparing for launch, or already facing a reimbursement cutback, we build the client-specific strategy and hands-on execution needed to secure coverage and reimbursement. Reach out to schedule a strategy call.