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This was defined by the Catholic Church at Vatican II. Prior to 1964, it was an undetermined matter of Catholic sacramental theology. During the middle ages, the mainstream Catholic theological opinion was that the episcopate was not a higher level of the sacrament of orders. For example, St. Thomas Aquinas, the Angelic Doctor of the Church, held this position (see here).The Episcopate IS a higher level of Sacrament of Orders.
From the CATHOLIC Encyclopedia (see here):The idea that Presbyter and Bishop are the same order is a PROTESTANT idea, not a Catholic one.
With regard to the episcopate the Council of Trent defines that bishops belong to the divinely instituted hierarchy, that they are superior to priests, and that they have the power of confirming and ordaining which is proper to them (Sess. XXIII, c. iv, can. 6, 7). The superiority of bishops is abundantly attested in Tradition, and we have seen above that the distinction between priests and bishops is of Apostolic origin. Most of the older scholastics were of opinion that the episcopate is not a sacrament; this opinion finds able defenders even now (e.g., Billot, “De sacramentis”, II), though the majority of theologians hold it is certain that a bishop’s ordination is a sacrament. With regard to the sacramental character of the other orders see DEACONS; MINOR ORDERS; SUBDEACONS.