Hospital outpatient departments lose thousands in revenue each year from incorrect HCPCS coding. C codes, temporary Level II codes starting with “C”, directly impact Medicare Outpatient Prospective Payment System (OPPS) claims. Updated January 1, 2026, these codes ensure pass-through payments for new devices, drugs, and procedures.
This guide delivers every essential fact from official sources so you bill accurately, avoid denials, and capture full reimbursement.
What Are HCPCS C Codes?
HCPCS Level II C codes identify drugs, biologicals, devices, magnetic resonance angiography (MRA), and new technology procedures without permanent codes. CMS created them under Section 201 of the Balanced Budget Refinement Act of 1999 to support transitional pass-through payments in the Hospital Outpatient Prospective Payment System (HOPPS).
C codes consist of the letter “C” plus four digits (e.g., C1607). They appear only in the annual and quarterly HCPCS alpha-numeric files released by CMS.
Purpose in Medical Billing
- C codes enable separate payment for high-cost, innovative items under OPPS for at least two but no more than three years.
- After this period, CMS packages payment into the primary APC or assigns a permanent code.
- Hospitals report C codes on claims to receive pass-through reimbursement reduced by the device offset amount.
Key Differences Between C Codes and Other HCPCS Codes
| Versus CPT (Level I) Codes | Versus Permanent HCPCS Level II Codes (A, J, Q, etc.) | Versus G Codes |
| CPT codes describe physician procedures and services. C codes cover hospital outpatient supplies, devices, and drugs not included in CPT. | Permanent codes (e.g., J codes for drugs) apply nationwide. C codes remain temporary and OPPS-specific until replaced. | G codes identify professional services without CPT equivalents; CMS creates them internally. C codes follow a distinct pass-through application process tied to OPPS. |
When and Where Are C Codes Used?
C codes apply exclusively to Medicare OPPS claims in hospital outpatient departments (HOPD). Non-OPPS hospitals, Critical Access Hospitals (CAHs), and certain waiver hospitals may use them optionally. Report C codes alongside the primary CPT code for the procedure or service.
Use them only when the item matches the exact descriptor and meets pass-through criteria—no substitution with other codes.
Types of Services Covered by C Codes
Drugs and Biologicals
CMS assigns C codes to certain new drugs and biologicals qualifying for pass-through status. Payment equals ASP + 6% (or +6%/+8% for biosimilars). In January 2026, six new drug/biological codes received pass-through status.
Medical Devices and Implants
Most C codes cover implantable devices, catheters, neurostimulators, and prosthetics. January 2026 added new device pass-through codes C1607 and C1608.
New Technology Procedures and MRA
C codes also report emerging procedures and MRA services without permanent assignments.
How to Access and Use the Latest C Codes (2026 Updates)
Download the official January 2026 Alpha-Numeric HCPCS File ZIP directly from the CMS Quarterly Update page: CMS releases quarterly updates (January, April, July, October). The January file contains all active codes effective for the year.
New C Codes Effective January 1, 2024-2026
CMS added 19 new C codes for hospital outpatient services and devices. Examples include:
- C1607: Neurostimulator, integrated (implantable), rechargeable with all implantable and external components, including charging system.
- C1608: Prosthesis, total, dual mobility, first carpometacarpal joint (implantable).
- C7566: Arthrodesis, interphalangeal joints, with or without internal fixation, with autografts (includes obtaining grafts).
- C7567: Bronchoscopy, rigid or flexible, including fluoroscopic guidance when performed, with transbronchial needle aspiration biopsy(s), trachea, main stem and/or lobar bronchus(i), with computer-assisted image-guided navigation.
Two new device codes, C1607 and C1608, received pass-through status effective January 1, 2026. Existing codes, such as C1741, received descriptor updates.
Pass-Through Payment Eligibility
Devices qualify via quarterly CMS review or the alternative FDA Breakthrough Device pathway. Payment lasts 2–3 years. CMS publishes offset amounts in OPPS Addendum P.
Step-by-Step Billing Guidelines for C Codes
- Verify the exact descriptor in the current HCPCS file matches the item provided.
- Report the C code on the same claim line as the primary CPT procedure code.
- Include all charges; the Outpatient Code Editor (OCE) calculates pass-through payment automatically.
- Apply device offset: CMS subtracts the packaged device portion from the pass-through payment.
- Use correct status indicators (e.g., “H” for pass-through devices).
- Document medical necessity and FDA clearance in the patient record.
Follow the Medicare Claims Processing Manual, Chapter 4, Section 60.4.2, for complete rules.
Common Examples of C Codes in 2026
- C1737: Joint fusion and fixation device(s), sacroiliac and pelvis, including all system components (implantable)—now billable with additional CPT codes 92930 and 92945.
- C1741: Anchor/screw for bone fixation, absorbable, metallic (implantable)—updated descriptor October 2025.
- C1735 / C1736: Catheters for renal denervation (radiofrequency or ultrasound)—device offset set to $0 effective January 2026.
Pass-through status for C1826, C1827, and C1747 expires December 31, 2025—payment becomes packaged.
Challenges and Best Practices in C Code Billing
Common errors include mismatched descriptors, missing offsets, and failure to update quarterly files. Best practices:
- Subscribe to CMS MLN Matters transmittals (e.g., MM14361 for January 2026).
- Run claims through the I/OCE before submission.
- Train staff on pass-through expiration dates.
- Use CMS Addendum B and P for current APC and offset values.
Conclusion
HCPCS C codes serve as temporary but critical tools for accurate hospital outpatient billing under Medicare OPPS. They deliver pass-through payments for innovative drugs, devices, and procedures while CMS transitions them to permanent codes. In 2026, 19 new C codes, including C1607 and C1608, plus updated descriptors and offsets, demand immediate attention. Master the official CMS definitions, download the quarterly files, follow precise billing rules, and avoid common pitfalls to prevent denials and secure full reimbursement.
Ready to eliminate C code errors and maximize your outpatient revenue? Contact Delaware Medical Billing today for expert coding, compliance, and revenue cycle management tailored to 2026 CMS rules. Let our team handle the complexity so you can focus on patient care. Visit our website or call now to schedule a free audit.
Frequently Asked Questions
What are C codes in medical billing?
C-Codes. The C series of HCPCS (“C codes”) reports drug, biological, and device codes that must be used by Outpatient Prospective Payment System (OPPS) hospitals for reporting facility (technical) services.
What is the ICD-10 code for D and C?
The ICD-10 code for non-obstetrical dilation and curettage is 58120, while 59840 is used for first-trimester abortion procedures.
What is medical coding C?
Medical coding is the process of taking a patient’s health care information, such as medical procedures, diagnosis, necessary medical equipment, and medical services information, from the physician’s notes.
