Several years ago Medicare implemented the OPPS (Outpatient Prospective Payment System) to pay hospitals for services provided in the hospital outpatient department. This system includes billing codes called "C-codes," or "pass-through" codes. Medicare created over 90 pass-through categories of devices, each category with its own specific C-code (the letter "C" followed by four digits). If a hospital used a device that fell into a pass-through category, they could put the appropriate C-code on the bill they submitted to Medicare and receive an additional payment. These were commonly known as pass-through payments and were designed to expire after two to three years, after which this additional payment would be folded into the relevant Ambulatory Payment Classification (APC) payment rates.

Though the pass-through payments for most C-codes no longer exist, Medicare does require that C-codes continue to be included on hospital claims paid under the OPPS. This is done so that Medicare can adequately capture the resources required to provide services, and use this resource information to establish adequate payment rates in the future. In fact, Medicare has defined certain procedures as being device dependent, and claims for these procedures will be denied if they don’t also include the necessary C-code. See http://www.cms.hhs.gov/HospitalOutpatientPPS/ for additional information.