CPT-Why physicians always get screwed, thanks AMA

blog_survey_results_lg.pngOn July 16th, the AMA publicly endorsed the House Healthcare Reform Bill.  Like many physicians in this country, I was shocked and surprised, given the fact that the Bill fails to address any of the issues that physicians in this country have been saying are necessary for true healthcare reform.

So what does the Bill do?  For starters, it maintains the AMA’s monopoly on billing codes (known as Current Procedure Terminology or CPT codes).  As the AMA membership has shrunk to less than 15-20% of US physicians, it now earns far more money from selling those CPT codes to insurance companies than it does from membership dues.  With estimates ranging that 15-40% of each healthcare dollar spent going towards administration overhead and physicians largely blaming CPT codes for this problem, one has to wonder why this has remained conspicuously out of the debate.

For healthcare reform to succeed the real issues need to be understood.  Lack of pricing transparency and collusion among insurers to manipulate those prices must be part of that discussion.  The AMA is the key enabler of this through the CPT system.  The following posting I presented on July 8, 2009 on Sermo addresses these issues.  As the nearly 2,000 votes and close to 400 comments provided by US physicians on Sermo show, the real issues just are not being addressed.

Daniel Palestrant, MD
Founder & CEO
Sermo, Inc.


First posted to the Sermo physician community on July 08, 2009:

From the Founder: CPT Codes-Why physicians always get screwed,  thanks AMA

In the healthcare debate it is rare that we find a single issue that all parties can agree is a big part of the problem.  Too much paperwork and complexity in the billing process is one of those few things.  Lately, EMRs have been lavished much of the attention and money; however, medical records are not the problem.  CPT codes are.

For most physicians, Current Procedure Terminology or CPT codes have become a defining aspect of how we must practice medicine.  They have become the “currency” of healthcare, mandating all manner of payments to physicians from the most complex surgical procedures to routine office visits.  In the process, the CPT coding system has turned into an incredibly complex system of codes, modifiers, and exceptions.  Add to that the RVU formulas, and it is no wonder that most physicians are drowning in paperwork.

Physicians feel the impact of this system in their day-to-day practice, especially on cash flow.  Not only do we have to maintain an extraordinary overhead of staff to submit, resubmit and document around CPT codes, the system robs the physician of any leverage we have with payors.  Once we have rendered care for our patients, we must submit (and often resubmit) forms to outside parties to get paid. Make no mistake, the more complex the system, the greater the opportunity payors have to delay and/or refuse payment to physicians, not to mention manipulate those reimbursements to their own advantage, as we have seen in the recent case led by the New York Attorney General against insurance companies.  Their profits grow at the expense of your cash flow.

The negative impact on physicians might be even greater when considering how handicapped physicians are in negotiating reimbursements for a given CPT code.  The current system allows payors to aggregate physician payment statistics, carefully playing one physician off another to negotiate down physician payments, while it is an anti-trust violation for physicians to compare data with one another, much less unionize.  It helps explain why physician compensation goes down every year while demand for those same services continues to explode.

As the national healthcare debate rages on, it is important to recognize that physicians are not the only victims of the CPT codes, the general public is too.  Beyond the massive administrative overhead (it is estimated that 20-50 cents of every healthcare dollar goes to administration), there is something worse, much worse.  The CPT system is privately owned.  Its use is strictly limited so that licensing fees can be obtained.  This has the unfortunate side effect of keeping the general public from doing easy comparisons of healthcare goods and services, also benefitting the insurance companies (who do not want those side by side comparisons because they promote competition and transparency).  There have been many attempts to break the CPT monopoly, most notably by Senator Lott in August of 2001.  Somehow they have always managed to remain in control.  Of course it’s a reliable revenue source.

Beyond offering a tremendous opportunity for improving our healthcare system, one has to wonder why this issue hasn’t been a topic of more focus.  With so much consensus around the excessive complexity and overhead in the billing process, this is completely baffling.  Dentists, lawyers, plumbers pretty much every professional in this country has avoided the fate physicians now face, allowing the market forces of supply and demand to create balance.  Only physicians have seen third parties come between them and their patients.

So who do CPT codes benefit? Well for starters, the AMA receives approximately $70 million in “licensing fees” from anyone who needs to use those codes.  Add to that insurance companies (who pay the AMA many of those millions) who can use the CPT coding system to further their own gains at the expense of the physicians, and it starts to make you realize why CPT codes have been so conveniently left out of the current debate.

So what’s the alternative?  Pretty simple.  Physicians have a service and people are willing to pay for it.  We are the single most critical part of the healthcare system.  We need to start acting like it.  We are at the dawn of a new era in the medical profession.  There is a New Business of Medicine upon us.  Sermo’s data shows that there is a trend towards alternative practice styles (fee for service being among the most prevalent) that is quickly turning mainstream.   To quote another Sermo member, “the new CPT: Cash Please, Thanks.”.  Leave the old CPT to the insurance companies.

The current CPT coding system represents a collusion of convenience between the business side of the AMA and the insurance companies…. at the expense of physicians and patients.  Perhaps most galling, thousands of physicians work on the CPT codes, for which they receive no compensation, while the AMA generates millions of dollars in revenue.  Clearly this presents a massive conflict of interest as the AMA is supposed to be advocating for physicians, yet it receives the majority of its revenues from the very same insurance companies that the rest of the physicians increasingly find themselves facing off against in the deepening healthcare debate.

As overwhelmed as we are with the offers from this community for financial contributions and your willingness to volunteer on behalf of this effort, for now we’d ask that you help us in mobilizing our colleagues in this effort. Remember:

Focus on the things that unite us, ignore the things that divide us. Concentrate on large numbers.

Take a stand. Tie a knot.

Daniel Palestrant, MD
Founder & CEO
Sermo, Inc.

View nearly 400 comments from the Sermo physician community