General Surgery Coding Alert

Value-based care involves painting a more complete picture for payers.

Value-based contracts for care are becoming more ubiquitous, and the bundled payments, risks, upsides, downsides, and capitation are a whole different world than fee-for-service reimbursement, said Corella Lumpkins, CPC, CPCO, CDEO, CPB, CPMA, CPPM, CRC, CVBA, CPC-I, CEMC, CCS, CCS-P, CHC, in her HEALTHCON 2026 presentation “CPT^® Category II: Coding for Quality and Value-Based Contracts.” Shifting from fee-for-service to value-based reimbursement arrangements, which are attached to quality, can mean becoming more familiar with CPT^® Category II codes, which are specific codes tied to specific quality metrics, she explained.

“The administrative burden of not using them is going to be the reason why you want to start using them,” she said.

Define and Locate These ‘Funky’ Codes

The CPT^® Category II codes aren’t new — they’ve been in the CPT^® code books for years — but the change in care contracts and reimbursement structures is making them more useful in many practices. These are supplemental tracking codes; Lumpkins said she refers to them as “funky” codes because they have an “F” at the end.

They’re used to track quality, patient outcomes, and care processes — telling the story that an office-visit evaluation and management (E/M) code isn’t going to tell, she said. While they’ll never replace the Category I codes, which are tied to reimbursement, they’re supplemental because they help provide more context about the clinical picture.

“Every last one of these CPT^® II codes is attached to a metric that your payer plan or your value-based contract is tracking; and if you’re not providing that information through coding through CPT^® II, then they’re going to ask for the record later,” Lumpkins said.

She asked attendees whether assigning the code at the time of service, reporting the service, and then submitting is a preferable alternative to the carrier coming at the end of the year and saying they need to pull 500 records.

Some payers, like Medicaid, are adding incentives to use Category II codes, outlining in contracts that practices will be paid a sum, like $10, to submit blood pressure values for diabetic patients.

Although the codes are updated twice a year, they’re a fairly static code set, she said. There hasn’t been a new or deleted Category II code in some time.

Notice Spectrum of Communication and Documentation Value

“Ultimately, the value is to communicate and document whether a quality measure has been met during a patient encounter,” she said. “There’s so much that can be reported with the use of these codes: screenings, immunizations, causes of disease, chronic disease management outcomes. It helps with clinical decision-making processes, patient safety.”

Experienced Category II code users can also develop meaningful performance tracking. “If you get savvy with the codes, and you start to have dashboards, and you start keeping track of them, we can actually see where we can use these codes to be proactive, to use the codes to actually identify stuff ahead of time,” Lumpkins said.

In addition to being a vehicle for payer-provider incentives for reporting quality metrics, some payers build comparisons into their contracts with providers. Lumpkins explained that the way one of her value-based contracts was written involved her practice having to pay money back because the payer was evaluating their quality performance against the same data from the previous year. She advised attendees to read their contracts carefully, as payers increasingly use Category II codes to validate, monitor, and align reimbursement.

Consider and Communicate These Cat II Selling Points

If you’re trying to get your providers to start using or more regularly use Category II codes, you may need to do a bit of “selling,” as they aren’t as obviously tied to reimbursement as Category I codes.

Lumpkins explained that Category II codes can ensure that documented care was provided — they help close the care gap.  

They support risk adjustment, helping to provide a complete patient profile or clinical picture. The codes provide evidence of care quality and performance benchmarking, as well.

Additionally, Category II codes provide a way to report compliance or noncompliance with quality contract measures like immunization. “When your patients are not getting the vaccines, not going to get the test done, we document that in the record, but if we’re not establishing or putting a code out there, to the insurance plan, it looks like we never did it or never recommended it. So, we want to make sure that we pick up any noncompliance immunizations not carried out because of patient refusal and the like,” she said.

Check back next month for more information on using CPT^® Category II codes, like how to link them with ICD-10-CM diagnosis codes and tips for navigating Category I and Category II together.

Rachel Dorrell, MA, MS, CPC-A, CPPM, Production Editor, AAPC