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CALL SENATE ON WEDNESDAY / SENATE UPDATE |
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July 27, 2001
The Honorable Tommy G. Thompson Dear Tommy: Before the Senate Finance Committee considers modernizing and reforming Medicare and adding a prescription drug benefit as a feature of the program, I have several factual and policy related questions concerning the relationship between the former Health Care Financing Administration (HCFA) � now called the Centers for Medicare and Medicaid Services (CMS) � and the American Medical Association (AMA) concerning the use of the Current Procedural Terminology (CPT) coding system and the impact of that agreement on the future of our nation�s health information system. It is my understanding that HCFA in1983 granted the AMA what has been characterized as a �statutory monopoly� by agreeing to exclusively use and promote the AMA�s copyrighted CPT code for the purposes of reimbursing Medicare and Medicaid bills from doctors for outpatient services. As a result of HCFA�s and the federal government�s endorsement of the AMA�s copyrighted outpatient code -- to the exclusion of all competitors -- private insurance companies and others were also forced to adopt the CPT as their billing standard as well. The CPT code has thus become a fixture in doctor offices around the country. This predictably led to a financial windfall for the AMA in the form of CPT-related book sales and royalties approaching $71 million a year according to a report by the Wall Street Journal. By using its CPT copyright aggressively in court, the AMA has also been able to control who uses the codes and who knows what about the cost of doctor services. For instance, 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. Without this ubiquitous code, such comparisons are impossible even though they are important to uninsured Americans and will become increasingly important in the future as more employers explore defined benefit plans -- such as Medical Savings Accounts -- where workers get to keep any savings they achieve in their health insurance or medical costs. The AMA�s proprietary interest in the CPT has also reportedly hampered efforts to educate doctors about proper practices in billing Medicaid, Medicare, and insurance companies. Of course, 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 help keep millions of Americans uninsured. For public policy purposes, it is noteworthy that the Ninth U.S. Circuit Court of Appeals held in 1997 that the AMA�s exclusivity agreement with HCFA for using CPT �gave the AMA a substantial and unfair advantage over its competitors� and �constituted a misuse of the copyright by the AMA.� Since the Court found against the AMA on these grounds, it did not feel it necessary to go on to address whether or not the AMA�s conditions and high prices for a licensee�s use of the CPT code constituted violations of anti-trust law as well. I have been informed that subsequent to this case the AMA and HCFA eliminated the exclusivity clause in their agreement -- thereby providing the AMA a legal defense in similar lawsuits in the future. Obviously, the change in the agreement came far too late to prevent the AMA�s code from becoming a de facto public law monopoly owned by the AMA. The costs, controversy, and legal pitfalls surrounding the CPT�s exclusive use by HCFA for outpatient service bills stand in stark contrast to the code controlled and owned by HCFA itself which is used by hospitals and others to bill Medicare and Medicaid for inpatient services. Since that code is copyrighted by the government, it is free to everyone. As a result, web sites and others are currently able to post hospital comparison prices and publishers can write books educating doctors and the general public on the proper use and meaning of the inpatient codes. And no one is being hauled into court for doing so. As you know, Congress as part of the Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191) charged the Department of Health and Human Services to help develop a uniform health information system. I have some questions below regarding progress in developing such a uniform system and the role, if any, that the AMA�s CPT code and other procedure codes are meant to play -- and have played -- in our nation�s health information system. As a result of the 1996 law, HCFA � now CMS -- reportedly contracted with 3M Corporation to update HCFA�s inpatient codes and that that effort is complete or nearly complete.
I thank you for your attention to this matter and hope that a response can be provided by August 20, in time to prepare for our deliberations on reforming and modernizing the Medicare system in the Finance Committee sometime in September when Congress returns from the August recess. Sincerely yours, Trent Lott
cc: The Honorable Thomas A. Scully
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