August 7, 2001

     Senate Minority Leader Trent Lott is seeking to end the American Medical Association's federally approved "monopoly" of the codes that doctors use to define Medicare and Medicaid outpatient services.

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     In a letter to Health and Human Services Secretary Tommy G. Thompson, Mr. Lott said the system is unfair to patients and contributes to rising health care costs. The AMA receives a reported $71 million in annual royalties and book sales by controlling the codes, he said.
     By aggressively guarding its copyright in court, Mr. Lott said, "the AMA has also been able to control who uses the codes and who knows what about the cost of doctor services."
     The complex issue arises just as the Senate Finance Committee, of which Mr. Lott is a member, prepares to take up reforming the Medicare system and adding prescription drug benefits to the program. It also comes as a House-Senate conference committee addresses a patients' rights bill that President Bush said must include restrictions on lawsuits.
     "The intellectual property rights in a federally mandated billing system for Medicare and Medicaid has a major impact on public policy," said Lott spokesman Ronald Bonjean. "Senator Lott believes that Americans should not have to pay more for their health care because the AMA owns the nation's outpatient billing system."
     The federal government sets the costs that doctors can charge Medicare and Medicaid for various medical procedures.
     But by owning the codes that define each procedure and controlling who has access to that information, Mr. Lott argues, the AMA is keeping the public in the dark about "comparison shopping" for doctors and forcing private insurers to adopt the AMA's billing standards as well.
     A spokesman for the AMA would not comment on the issue yesterday, but the organization has said patients should not choose doctors based on billing comparisons.
     The Medicare billing system has been in place since 1983, when the federal government granted the AMA exclusive use and copyright of the "current procedural terminology" (CPT) code system for the purpose of reimbursing Medicare and Medicaid bills from doctors for outpatient services.
     But Mr. Lott told Mr. Thompson in the letter that the system had hampered efforts to reduce fraud in billing the government and in allowing patients to shop for reasonably priced health care.
     "The AMA has been able to impose on the entire nation the AMA's obviously self-interested policy against consumers comparison shopping for medical care based on price by suing Web sites and others to prohibit them from posting comparisons of doctor and other medical fees on the Internet using the CPT code," Mr. Lott said. "Comparison shopping and proper billing to avoid mistakes and fraud are two of the most potent weapons we have to combat the routine double-digit increases in health care costs that keep millions of Americans uninsured."
     The government's Centers for Medicare and Medicaid Services controls the codes used by hospitals and other providers to bill Medicare and Medicaid for inpatient services. That information is available to the public.
     Mr. Lott is asking HHS to:
     • Develop a universal coding system "for all of the federal government's health information needs."
     • Determine how much the government and private insurers could save from a universal code system.
     • Find out how much the AMA has received in royalties, book sales and other revenue from its copyright of the CPT code since 1983.

Updated at 11:00 p.m.