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CPT Coding in Dermatopathology

Izak B. Dimenstein MD, PhD, HT(ASCP)
DOI: http://dx.doi.org/10.1309/LMPB2BIWVHB9RPNK 151-156 First published online: 1 March 2009


Current Procedural Terminology (CPT) coding in dermatopathology can be a challenge, although it is simple in the majority of cases. The presented case studies and examples show possible mistakes that can be the reason for overcharge or unnecessary loss of revenue.

The table method is used as a CPT coding methodological educational tool in surgical pathology by taking dermatopathology as an example.

The material is divided into two groups: coding situations clearly defined in the CPT manual and clinical situations that can have different interpretations while coding. The incorrect coding in the first group is determined by different “masks” during accession. The second group requires definite justification of the coding choice in the pathology report.

Charge codes assigned for surgical pathology services are regulated by the Current Procedural Terminology (CPT) manual’s taxonomy and instructions.1 The CPT manual is a copyrighted text that’s owned and maintained by the American Medical Association (AMA). In contrast to the CPT code assignment, which is governed by the AMA’s rules, the dollar amount charged per code is up to each physician and institution. The principle of CPT coding in surgical pathology is that named specimens are classified by code based on the “average” physician work/time. The CPT coding is the official regulation that must be followed, even if the performing physician feels the system is unfair in a particular situation. Publications, like this presented article, can discuss deficiencies in the CPT manual with a presumed hope that coding authorities (the AMA and the College of American Pathologists [CAP]) will make adjustments.

Skin only appears to be a relatively simple task for CPT coding, but mistakes do occur. Pathologists, overwhelmed by the amount of cases and preoccupied with diagnostic problems, may be far away from everyday supervision of CPT coding, or the support staff may not be familiar with the details of diagnoses in individual cases as far as correct coding is concerned. Pathologists are also sometimes ignorant of the principles of CPT coding, let alone knowing CPT coding in detail. In dermatopathology, these circumstances have practical significance due to the variety of clinical diagnostic situations.

The presented case studies and examples demonstrate common reasons for mistakes that might be the grounds for potentially damaging overcharges as well as unnecessary loss of revenue. As a methodological educational tool, this article tries to give a general approach to CPT coding in dermatopathology, as an example, with concentration on details, as well as on disputable and intricate issues. The same principles and methods can be used in different coding situations (eg, gastroenterology, gynecology, urology, etc).

This article only touches on the specimen’s main CPT code. If the main code is incorrectly chosen, modifiers and other coding techniques (the realm of billing managers) cannot help. Special stains and other so-called “add-on” procedures are separately coded. They are more technical than medical issues, if they are applied appropriately and supported by the pathology report.

CPT Code Denotations

Two denotations in the CPT manual directly or indirectly related to skin encompass most specimens in dermatopathology practice:

  • 88304 Level III—Skin—Cys/Tag/Debridement,

    as well as

  • Anus, Tag; Conjunctiva—Biopsy/Pterygium; Foreskin, Other than Newborn; Pilonidal Cyst/Sinus; Lipoma.

  • 88305 Level IV—Skin, Other than Cyst/Tag/Debridement/Plastic Repair,

    as well as

  • Lip, Biopsy/Wedge Resection; Vulva/Labia, Biopsy.

88302 Level II—Foreskin, Newborn and Skin, Plastic repair is rare in dermatopathology practice. These specimens are sometimes excluded from a pathology examination per the institution’s tissue committee policy.

Just for completeness of skin-related coding, immunohistochemistry (including tissue immunoperoxidase, each antibody) 88342; Group I special stains (microorganisms; eg, acid-fast, methenamine silver) 88312; Group II special stains (all other; eg, iron, trichrome) 88313; and immunofluorescence, each antibody, direct method 88346.

Most hospitals and commercial laboratories use computer dictionaries in their anatomic pathology information systems (for instance, in CoPath and PowerPath). Computer dictionaries have a CPT coding module plugged into their information module that combines clinical procedures (shave, punch, excision, etc.) or diagnoses (cyst, tag, etc) with the CPT manual’s denotations. If an institution does not use an information system, the charge capture system is carried out manually.

Unfortunately, the two predominately biopsy-oriented codes are insufficient in complicated specimens. The dermatopathology practice has changed dramatically during recent decades. There is no way to put the full variety of clinical situations in the “Procrustean bed” of two CPT coding denotations.


All included case studies and examples have a similar format: the preliminary (accession) code, according to the requisition form’s specimen description, and the final report (professional billing fee) code with the sign-out diagnosis. Some institutions practice instant billing for the technical component (TC) with an established mechanism to validate or correct the preliminary (accession) code based on the final diagnosis by the professional billing manager or technical assistant.

The case studies and examples are compiled in tables that also include corrected coding (marked in bold). All cases have been simulated with a remote resemblance to the actual clinical event. Coding details unrelated to CPT were omitted. The pathology diagnoses were simplified to adjust to the CPT coding purposes.

The material is divided into two more or less equal groups. The first part includes indisputable clinical situations as far as CPT coding is concerned. The second part discusses cases with clinical situations that are not defined unequivocally in CPT coding. They might be subject to different coding interpretations.

Part 1: Indisputable CPT Coding Situations

Case #1

A 67-year-old man underwent removal of multiple skin lesions. The requisition forms described the procedures. The accession was correct according to the provided information (Table 1).

It turned out that specimen E had been accessioned as Level IV 88305 because the requisition form described the specimen as excision skin mass. The sign-out diagnosis stated a pilar cyst. Every skin cyst is CPT Level III 88304 (see the following section on cysts) (Table 2).

In the case of instant technical component billing, the billing manager should credit this case and make sure that the professional billing code is also 88304.


Skin cysts are the most frequent source of confusion in skin CPT coding. Sebaceous cysts are usually clinically prominent. They are almost always mentioned in the requisition forms, and the accession is correct.

The following examples demonstrate clinical situations in different cases. They have only one common “cyst” determinant as a sign-out diagnosis. The preliminary (accession) table (Table 3) shows different “masks” of the specimen description in requisition forms that confuse the accession person. The list can be much longer, but the presented examples can give an understanding of how common these mistakes might be (Table 3).

View this table:
Table 1

Case #1 Preliminary (Accession)

Specimen NumberSpecimen DescriptionCPT LevelCPT Code
APunch biopsy, left backIV88305
BShave biopsy, tip of noseIV88305
CExcision, left armIV88305
DExcision, skin tag, left earIII88304
EExcision, skin mass, left neckIV88305
View this table:
Table 2

Case #1 Final Report

Specimen NumberPathology DiagnosisCPT LevelCPT Code
ACompound melanocytic nevusIV88305
BMelanocytic nevusIV88305
CSeborrheic keratosisIV88305
DSkin tagIII88304
EPilar cystIII88304

Unfortunately, pilonidal cyst is also Level III 88304, although this specimen is challenging in clinical and surgical pathology practice. Sometimes, it is easy when the hair sticks out from the purulent contents of the cyst, but more often a definite visible cyst is absent or empty. The specimen requires time-consuming procedures. If the final pathology diagnosis is pilonidal sinus, that is not a skin specimen despite the presence of the hair component. The AMA’s Editorial Panel Board should reconsider pilonidal cyst/sinus coding.

Some computer dictionaries include the denotation Cyst, Histology Level IV, 88305 that becomes a trap for many unclear situations, although only thyroglossal duct/brachial cleft and odontogenic cysts are defined as Level IV by CPT. The computer dictionaries should include “skin, cyst” Level III, 88304, which can encompass the full variety of cysts besides the most frequent sebaceous cyst.

View this table:
Table 3

Cyst Examples

Example #Preliminary (Accession) Final Report
Specimen DescriptionCPT CodePathology DiagnosisCPT Code
#1Right neck, excisionLevel IV 88305Epidermal inclusion cystLevel III 88304
#2Top of scalp lesionLevel IV 88305Follicular (pilar) cystLevel III 88304
#3Sebaceous cyst of the scalpLevel III 88304Pseudocyst of the scalpLevel IV 88305
#4Mass, head scalp, excisionLevel V 88307Pilar cystLevel III 88304
#5Mass, left cheek, excisionLevel IV 88305Epidermal inclusion cystLevel III 88304
#6Mass, left back, excisionLevel IV 88305Follicular cystLevel III 88304
#7Coccygeal massLevel V 88307Pilonidal cystLevel III 88304
View this table:
Table 4

Case #2

Specimen NumberPreliminary (Accession) Final Report
DescriptionCPT CodePathology DiagnosisCPT Code
ARight angular dermoidLevel V 88307Skin excision, dermoid cystLevel III 88304
BRight back skin excisionLevel IV 88305Skin excision, congenital nevusLevel IV 88305

The skin cysts issue would be incomplete without the dermoid cysts as is presented in Case #2.

Case #2

A 6-year-old boy had an excision of angular dermoid along with a congenital nevus of the back (Table 4).

Some computer dictionaries have a definition of dermoid cyst that is an ovarian cyst. With some exceptions, ovarian dermoid cysts (actually teratoma) can be considered as neoplastic. In this situation it is Level V 88307 according to CPT “Ovary with or without Tube, Neoplastic.” The accession person should have recognized that this is a skin specimen and not ovary. Sometimes billing managers also overlook the dermoid cyst coding. This can be a very common mistake.


The term “mass” is the source of permanent confusion, predominately in lipomas. Traditionally, lipomas are in the realm of dermatopathology unless they are resected from deep areas in the body as soft tissue tumors.

The following examples present different situations of wrong coding in “lipoma” cases.

Usually, the wrong choice is Level V 88307 Soft tissue mass (except Lipoma), biopsy/simple excision (Table 5). In example #8, the requisition form “mass” diagnosis was confusing, although the accession person might choose at least skin punch biopsy (Level IV 88305). In example #10, the accession person chose Level V 88307 due to the large size of the subcutaneous tissue that was lipoma, according to the final diagnosis.

In both examples, it could be tempting to consider them as “soft tissue mass” Level V 88307 because they are definitely soft tissue tumors. However, both of these diagnoses fall under the general category of “Lipoma” (214) in ICD-9. An insurance company will object to this interpretation, especially since the AMA has specifically advised that any “Lipoma” is appropriately reported with 88304. This is also a reminder that even in the category of simple cases, there can be some questionable situations.

The cases and examples presented above are relatively easy to fix. The incorrect coding is a result of misinterpretation of the clear and direct definitions in the CPT manual.

View this table:
Table 5

“Mass” Examples

Example #Preliminary (Accession) Final Report
Specimen DescriptionCPT CodePathology DiagnosisCPT Code
#8Mass, upper back, punch biopsyLevel V 88307LipomaLevel III 88304
#9Right wrist, mass excisionLevel V 88307LipomaLevel III 88304
#10Skin, left forearm, excisionLevel V 88307LipomaLevel III 88304
#11Mass, left upper flank, excisionLevel V 88307LipomaLevel III 88304
#12Mass, forearm, excisionLevel V 88307AngiolipomaLevel III 88304
#13Skin right upper flank massLevel V 88307MyxolipomaLevel V 88304
Another example of the confusing “mass” definition:
#14Mass, soft tissue plantar, excisionLevel V 88307Verruca vulgarisLevel IV 88305
#15Right leg, mass, excisionLevel V 88307Benign hybrid cyst, epidermoid with proliferation, unusual benign neoplasmLevel V 88307

Despite the “cysts” diagnoses, this case is defensible as Level V 88307, Cyst, NOS, Neoplastic, if this coding is appropriately supported by the pathologist’s report.

Not every “mass” is wrong and not every cyst is Level III 88304, although all “skin” cysts are. The denotation “mass” is a trap in computer dictionaries; it ought to be abandoned. This can prevent temptations to follow the requisition form literally during accession and oversights of wrong coding by the pathologist and billing manager.

Part 2: Disputable CPT Coding Situations

Deep Excision With/Without Tumor
Case #3

A 55-year-old man underwent diagnostic surgeries of suspicious lesions on his shoulder and abdomen. Two ellipses of skin were sent to pathology (right shoulder, 3.5 × 1.2 × 1.1 cm suture at the 6 o’clock margin, and abdomen 3.1 × 1.7 × 1.4 cm suture at 12 o’clock tip) along with a right shoulder punch biopsy (1.0 × 0.7 × 0.4 cm) (Table 6).

The pathologist and the billing manager should not change the accession coding (88305, Level IV), despite the difference of work on these specimens. In the author’s experience, pathologists often express dissatisfaction with the official coding in this situation (Table 7).

Wide Skin Excision

Skin excisions due to melanoma and other tumors have become more sophisticated and complex. The following cases show possible questionable situations in CPT coding in different wide skin excisions.

View this table:
Table 6

Case #3 Preliminary (Accession)

Specimen NumberSpecimen DescriptionCPT LevelCPT Code
ASkin, right shoulder, punch biopsyIV88305
BSkin, right inferior shoulder, excisionIV88305
CRight abdomen, excisionIV88305
View this table:
Table 7

Case #3 Final Report

Specimen NumberPathology DiagnosisCPT LevelCPT Code
ASkin, right superior shoulder, malignant melanoma, margins involvedIV88305
BSkin, right inferior shoulder, lentiginous melanocytic nevus, excisedIV88305
CSkin, right abdomen, lentiginous compound melanocytic nevus, excisedIV88305

Case #4

A 49-year-old man with right lower extremity melanoma underwent wide local excision with sentinel node dissection and skin graft. A nearly round fragment (4.9 × 4.6 × 1.3 cm) of skin was sent to pathology. The previous punch biopsy had been diagnosed melanoma (Table 8).

There was an apparent mistake in accession of specimen B. Only sentinel lymph nodes are Level V 88307 (Table 9).

Specimen D remains a subject of interpretation. On one hand, there is an enormous amount of work required to prove that no residual tumor remains in the soft tissue. Actually, this specimen is close to a soft tissue tumor, with extensive resection, that would be Level VI 88309; however, it does not have any formal descriptors for justification of 88309 and that can be a reason for objections by Medicare or other insurers. More detailed discussion follows.

On the other hand, there might be cases with down-coding interpretation as can be seen in the following two examples (Table 10).

Any temptation by a billing manager faced with the scar diagnosis to down-code for Skin, Debridement 88304 or Soft Tissue Debridement (or, worse, 88302 Skin, Plastic Repair) would be wrong. Although scar is not mentioned in the CPT manual, usually it is defined in computer dictionaries as Level II 88302, the closest to Skin, Plastic Repair.

Keloid is a scar with hypertrophic collagen development covered by skin. Dennis Padget’s Pathology Services Coding Handbook2 advises Scar, Keloid as 88305—Skin, Other Than Cyst, Tag, Debridement, Plastic Repair, but keloid removal in dermatology (for example, on the ear lobe) is usually a plastic repair or cosmetic surgery procedure. A commonsense way to distinguish between 88302 and 88304/88305 skin scar specimens is the clinical focus or objectives: (1) scar tissue removed purely for cosmetic enhancement warrants the 88302 code; but (2) such tissue excised for medical therapeutic or diagnostic purposes typically justifies an 88304 or 88305 code, depending on the amount of pathologic work required.

Mohs micrographic surgery (MMS) had its CPT coding (17311–17315) changed in 2007. These codes are appropriate for reporting only if the dermatologist fulfills the functions of both surgeon and pathologist. If the skin excision after MMS is received in surgical pathology, it is skin excision Level IV 88305, although in essence it is wide excision without tumor.

View this table:
Table 8

Case #4 Preliminary (Accession)

Specimen NumberDescriptionCPT LevelCPT Code
ARight groin sentinel node #1Level V88307
BRight groin nonsentinel node #1Level V88307
CRight groin sentinel node #2Level V88307
DWide excision, right leg, melanomaLevel IV88305
View this table:
Table 9

Case #4 Final Report

Specimen NumberPathology DiagnosisCPT LevelCPT Code
AOne lymph node, negative for malignancyLevel V88307
BOne lymph node, negative for malignancyLevel IV88305
COne lymph node, negative for malignancyLevel V88307
DFibrosis and chronic inflammation, scarLevel IV88305

Complicated cases of skin excision are not represented in the CPT manual. The following case studies present deep skin excisions with tumors.

Case #5

A 56-year-old man underwent wide local scalp excision with craniotomy and bone resection due to scalp cancer. A circular full-thickness scalp skin measuring 12.0 × 12.0 × 2.5 cm with a 9.0 × 6.0 × 1.0 cm defect in the center with stitch marked 12 o’clock margin, and with the underlying parietal/occipital bone 9.0 × 7.0 × 1.2 cm was sent to pathology (Table 11).

Level VI 88309 was coded due to the bone resection. Level IV 88305 for the scalp full excision due to carcinoma looks completely down-coded. Level VI 88309 would be justified but the coding manual does not have a descriptor.

The unbundling rule is applied in this case. Wide skin excision and craniotomy are different CPT coding entities.

The unbundling rule is controversial. For example, the Whipple procedure in a block specimen in one container is, according to the CAP, only one specimen for coding (Level VI 88309), although some institutions code it as two (Level VI and Level V) specimens. Why not three specimens? Or, as it is recommended by the Pathology Service Coding Handbook,2 spleen, segments of duodenum and stomach, gallbladder, omentum, as well as lymph nodes can be coded in addition. The Whipple procedure is mentioned as a parenthetical remark to show how the CPT coding manual for surgical pathology is open to interpretation, and sometimes conventional wisdom and practice is at odds with one of the coding authorities such as the CAP.

View this table:
Table 10

Examples of Scars

Example #Preliminary (Accession) Final Report
DescriptionCPT CodePathology DiagnosisCPT Code
#16Skin, posterior thigh, wide excision, skin ellipseLevel IV 88305Dermal fibrosis, scar, no evidence of residual melanomaLevel IV 88305
#17Skin, left chest lesion, wide excisionLevel IV 88305Dermal fibrosis, scar, ulcer, no evidence of malignancyLevel IV 88305

The “Square” Procedure

The “square” procedure (stages I and II) that is used in face/neck skin cancer surgery is an interesting coding challenge. It reflects the relativity of the rational definition of “specimen” as a coding entity, as well as unbundling/bundling rules.

Every frame-margin is a part of the main, central “square.” During stage I, the central square is examined only as a punch biopsy. As coding entities, the specimens are: nFrames + punch biopsy. During stage II, when the central “square” itself is examined, the formula goes nFrames + the main skin wide excision.

Case #6

A 72-year-old man underwent a two-stage square procedure due to lentigo maligna of the nose. Frames-margins during stage I revealed melanoma in situ, lentigo maligna type in specimen F. A focus of lentigo maligna melanoma in the central square after wide excision with negative for malignancy margins was diagnosed during stage II (Tables 12 and 13).

The central square specimen is a wide skin excision with, presumably, tumor. Again, the interpretation of it can be different depending on established coding practices, but according to the CPT manual it is Level IV 88305.

Each frame-margin specimen in the square procedure is a subject of separate attention, although in regular ellipse excision margins they are not coded separately, but as a part of the same procedure in one container. The charge for a regular skin excision with obligatory examination of margins is many times less than for the square procedure with numerous frames in different containers.

According to the CPT manual, “A specimen is defined as tissue or tissues that is (are) submitted for individual and separate attention, requiring individual examination and pathologic diagnosis.”1 For example, two tonsils (right and left) in two containers are two specimens as billing entries. Although two tonsils (one with a suture for the right) in one container represents (according to CAP and AMA advice as well as common sense) two billing entities also. In practice with computer accession, however, the principle “one container (or a different collecting device), one specimen” is the most appropriate. Otherwise, confusion and specimen misidentification might occur. This is more important for patient care than for coding/billing issues.


Case studies are ubiquitous in clinical presentations as well as in coding analysis. This variant of case studies, the method of comparing the provisional code (generated during accession) and the final report (after the case is signed out), has been used for CPT coding analysis in surgical pathology. Mastectomy CPT coding can be mentioned as one of the attempts to follow the process of coding from the provisional (accession) code (technical component) during the specimen’s accession to the professional bill.3 This comparative method of coding stages can be used in other anatomic pathology situations (for instance, urology, gynecology, soft tissue tumors, etc.). The method is especially beneficial for dermatopathology, owing to the variety of clinical situations and diagnoses including many “masks” that are confusing during the coding process.

View this table:
Table 11

Case #5

Example #DescriptionCPT CodePathology DiagnosisCPT Code
AFull thickness scalp with boneLevel VI 88309 decalcification 88311Ulcerated, deeply invasive basal cell carcinoma, examined margins and bone not involvedLevel IV 88305 Level VI 88309 decalcification 88311
View this table:
Table 12

Case #6 Stage I

Example #Preliminary (Accession) Final Report
DescriptionCPT CodePathology DiagnosisCPT Code
A-EFrames I-VLevel IV 88305Negative for malignancyLevel IV 88305
FPunch biopsy from most typical regionLevel IV 88305Melanoma in situ, lentigo maligna type, no evidence of invasionLevel IV 88305
View this table:
Table 13

Case #6 Stage II

Example #Preliminary (Accession) Final Report
DescriptionCPT CodePathology DiagnosisCPT Code
A-DFrames II-VLevel IV 88305Fibrosis, acute and chronic inflammation in scar tissueLevel IV 88305
ECentral square suture 12 o’clockLevel IV 88305Wide excision: a focus of residual lentigo maligna melanomaLevel IV 88305

Skin CPT coding has one particularity. The connection of CPT and ICD-9-CM in skin coding is more apparent and important than in other areas of CPT coding (the ICD-9-CM issues are beyond the scope of this article). The balance between a diagnostic approach in cyst, lipomas, scars, etc, cases and a procedural approach in complicated cases of deep/wide skin excisions or square procedure can ensure correct skin CPT coding in surgical pathology.

Although the CPT codes do not distinguish between a tiny punch biopsy and deep/wide skin excision that is based on an “averaging” principle (both are 88305), practitioners are not comfortable with this situation. Many cases are too time or work consuming.

Some computer dictionaries still follow the University of Michigan Health System’s online dictionary’s Specimen to Charge Code Rapid Finder List4 recommendation to have two additional denotations:

  • 88309 Skin—deep excision/re-excision with tumor;

  • 88307 Skin—deep excision/re-excision w/o tumor.

These denotations do not exist in the CPT manual. They are an extrapolation from “soft tissue” CPT coding denotations for skin specimens when (according to the Specimen to Charge Code Rapid Finder List) “the excision is so deep that any other layer of skin is incidental to the dominant subcutaneous tissue and/or muscle that comprises the true specimen.” Unfortunately, this recommendation has the trap of a voluntary assessment of the depth of the deep skin excision. Obviously, it is difficult to do this assessment during the accession. The billing manager cannot always be familiar with the details of the procedure. As the Finder List underlines, “the medical report language must fully support that judgment.” Two opposite ways of handling these specimens exist in practice: as a simple excision 88305 Level IV (to be on the safe side) or 88309 Level VI—deep excision with tumor (if the tumor is mentioned in the pathologist’s report). However, unless a denotation is not authorized by the AMA and CAP, this is no more than an opinion. In general, most coding consultants recommend no CPT code level higher than 88305 for any specimen that accurately translates to a “skin” ICD-9-CM diagnosis code.

Dermatopathology gets revenue by the amount of cases processed. Time-consuming skin specimens, such as deep/wide skin excisions, are not revenue-friendly; however, reimbursement ought to be fair for the laboratory and fair for the particular patient’s fee, at least as close to the ideal as possible. Practice shows that down-coded technical billing, due to wrong accession, is responsible for no less than a 15% loss of revenue. Unintentional overcharges can be an embarrassment or a cause for an audit. Although legal implications are doubtful, upcoding can have administrative consequences, such as loss of Medicare or other insurers’ contracts, and it can also cause direct damage to the patient in the case of out-of-pocket or deductible insurance payments.


Hopefully, this review will be helpful for CPT coding, not only in dermatopathology, but also in other surgical pathology specialties. By using the method of case studies and examples, following the sequence of stages in how the CPT code is generated and how it can be corrected, this more or less comprehensive review of skin CPT coding tries to show common mistakes and underline some coding situations unresolved by the AMA’s Editorial Board Panel.


The author greatly appreciates the generous contributions of Dennis Padget, MBA, CPA, FHFMA, in the development of this article.


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