Which code set is most commonly used by Medicaid?

The correct choice is the HCPCS code set, as it is specifically designed to accommodate the needs of Medicare and Medicaid in billing for services, supplies, and non-physician services. Medicaid primarily utilizes HCPCS codes for various services, including durable medical equipment, ambulance services, and certain other medical supplies that are not covered by CPT coding.

The HCPCS coding system includes two levels: Level I codes, which are the same as CPT codes, and Level II codes, which cover services and supplies not included in the CPT coding system. This dual structure ensures comprehensive coverage of all necessary medical items and services billed through Medicaid.

While ICD-10 codes specifically categorize diseases and illnesses, and CPT codes are primarily used for reporting medical procedures and services provided by physicians, they play a different role in the billing process. DRG codes are used primarily in inpatient hospital settings to classify hospital cases for payment purposes under the Medicare system.