CPT Codes-Why physicians always get screwed, thanks AMA

CPT Codes

  1. Set of health care procedure codes based on the American Medical Association’s Current Procedural Terminology
  2. Established in 1978 to provide a standardized coding system for describing specific items and services provided in delivering health care.

Daniel Palestrant comes right back from his opening salvo of last week to continue his crusade against the AMA. In another hard hitting email blast sent out to his 100,000 physician community he lays out the case of how the CPT system, maintained and propagated by the AMA, actually holds physicians hostage to the insurance cycle of care. He also lays the groundwork for the new retail health care economy where CASH will be king, relationship with the provider will be DIRECT, and physicians and patients will once again re-establish a relationship built on trust, advocacy, and professionalism.

This should be put in context with the recent announcement that Qliance just received $4M, Hello Health continues on an unprecendented media tear, and groups like Current Health and Crossover Health can emerge in this reality for American medicine. Whether or not we actually end up with health reform this year, you can be assured that Americans will want a separate system of “off the grid” providers.

July 8, 2009

Dear Dr. Shreeve,

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.

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2 Comments

Filed under Direct Practice, Innovation, Irony, Medical Home, Value

2 responses to “CPT Codes-Why physicians always get screwed, thanks AMA

  1. If only there was a ‘homogeneous’ physician voice; then innovation (i.e., reform) at every level of the health care delivery and financing paradigms could be re-engineered in perhaps one fiscal year budget cycle.

    Yet no such single voice can be found; or is likely to emerge anytime soon, IMJ.

    It’s the perennial primary care v. specialist debate, the fairness of RBRVS conversion factors to correctly value procedural v. cognitive episodes.

    What about the demographic tectonics of boomer docs v. those who live and breath via their digital devices and emerging technological platforms?

    Medicine is imploding by intentional yet ‘unconscious’ design; via it’s addiction to hierarchical societies that stratify, divide and ultimately dis-aggregate the profession from speaking with a single voice. There is little ‘shaman energy’ in our healers today; they are too distracted and divided to reinvest shaman capital into the health care value exchange.

    Yet if docs, the primary fiduciary in the patient advocacy equation can’t ‘get it together’, then we’re all doomed!

    The private sector will fail and Government will step in and mandate, no doubt, poorly architect-ed, solutions.

  2. Natalie Hodge MD FAAP

    Ahhh…. private sector will fail, government will step in and doctors and patients that want direct relationships will thrive. Now take direct medical practice marry it with high level web content, social media, blogging platforms for physicians, marry that with ecommerce, all run off a cloud based technology platform for PHR, EMR.
    NOW you’ve got something big. A niche solution for any primary care physician that wants high tech high touch direct medical practice. ( OB’s excepted)

    As well as a tech platform for a real national health program in which a primary care physician is fairly paid for attentive care in a radius of patients. NO big pharma, NO massive third party payor profit. Ahh now to PROVE it. Will just need a little cash, a little 10k town, 8 awesome ( mayo or otherwise) primary care docs, a wimax tower, a case of iphones and the new mac tablet pc’s coming out in september, and we’re good to go.

    Our early estimates are a reduction in health expenditures from 25 million to 10 million bucks.

    Natalie Hodge MD FAAP
    personalpediatrics.blogspot.com
    http://www.personalpediatrics.com
    http://www.personalmedicineinternational.com launch September 15th

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