The Trump administration is looking into alternatives to the current fee-for-service-based payment system for physicians who treat Medicare patients.
The request for information issued on July 14 by the Centers for Medicare & Medicaid Services (CMS) noted that the Current Procedural Terminology (CPT) coding system, on which the Medicare reimbursement program is based, is owned by the American Medical Association (AMA). The AMA assigns a CPT code to each service and procedure and then collects its own data to develop recommendations for CMS on how much each CPT code should be worth. “There has … been longstanding concern expressed over the federal reliance on a private organization with such an obvious conflict of interest as providing information on the time and resource requirements to conduct physician services when this information may influence their own payment,” the authors of the request stated.
“For nearly 20 years, MedPAC [the Medicare Payment Advisory Commission] has expressed concern over the influence of the AMA … to value services, specifically noting that CMS has ‘over-relied on specialty societies with a financial stake in the process’ and has recommended that CMS establish a separate group of experts to make payment recommendations,” they continued. In addition, “we note a recent National Academies of Sciences, Engineering, and Medicine report recommending … alternatives for establishing primary care payment valuation and recommendations for alternative sources for data collection.”
In the request, CMS asked for input in a number of areas, including:
- What, if any, evidence is there for CMS to consider regarding the harms or challenges associated with AMA’s monopoly over CPT licenses for healthcare entities?
- What objective alternatives exist, or could be developed, to maintain a more objective process for developing CPT payment recommendations?
- What are the benefits and drawbacks of paying for physician procedural services on the basis of the underlying International Classification of Diseases, 10th Revision (ICD-10) procedure code as an alternative to CPT?
The AMA did not respond by press time to a request for a comment on the CMS announcement.
Major Point of Concern
The issue of having a private organization — especially one with a potential for conflicts of interest — make recommendations for physician reimbursement “has been a point of concern for policymakers of both major parties over the years,” Alex Cottrill, MPH, senior policy analyst at KFF, said in an email.
“This issue is part of a broader conversation about the way different types of care are valued under Medicare’s current payment system,” he wrote. “Primary care physicians tend to be paid less overall than specialty physicians under Medicare, and some of that has to do with the fact that medical procedures (such as surgeries or tests) are easier to code and bill for under this type of coding system, compared to things like patient education or care coordination that make up a larger share of primary care work.”
Recently, CMS has become interested in updating its methods for assigning payment rates while still using the CPT codes themselves, Cottrill said — “for example, exploring ways to independently verify the time, effort, or resources associated with a given service and relying less on recommendations from the AMA and other medical specialty societies.” And the agency has shown interest in increasing provider participation in value-based payment models such as accountable care organizations, “which can be a way of incentivizing primary and preventive care without changing the broader fee-for-service system.”
David Glaser, an attorney with the Fredrikson law firm in Minneapolis, said the idea of possibly getting rid of CPT codes “is a major thing,” and not necessarily a good idea. “When you have a system, even when it’s flawed and everyone agreed it’s flawed, that doesn’t mean change is a good thing,” he said in a phone interview.
“Love it or hate it, CPT is very ingrained in our system,” he said. And although you could always come up with a better system, “does that make it wise to come up with a new system here? It seems to me like it would be quite an earth-shattering thing to start again.”
Instead, CMS could consider keeping CPT codes but revising the relative value scale (RVS), which designates how much time, effort, and overhead is required for each CPT code as compared to other CPT codes, Glaser suggested.
Chuck the RUC?
Michael Baker, director of healthcare policy at the American Action Forum, a right-leaning think tank, said he liked the idea of considering a move from CPT to ICD-10. “Because of how ICD-10 is structured, this could move the entire Medicare payment system toward a patient-centric view rather than a provider-centric view,” he told MedPage Today in an email.
But whether the CPT coding system is retained or not, Baker liked another idea: cutting out the AMA’s RVS Update Committee (RUC), the committee that recommends changes in or additions to the relative value units used in the RVS. “[With] the RUC maligned for numerous reasons, CMS should rely less heavily (or not at all) on the committee’s input,” he said. “CMS already must validate the [RUC’s] recommendations, so removing the RUC from the process can create a more responsive payment environment without additional, duplicative inputs.”
Other alternatives, such as adopting site-neutral payments, enacting episode-based payment reform, and creating service-bundled payments “could all move traditional fee-for-service Medicare toward how care is practically delivered and create better value for both patients and the federal government,” said Baker.
Interest in the Senate
CMS is not the only place on Capitol Hill where there is interest in possibly moving away from use of CPT codes. Last October, Sen. Bill Cassidy, MD, (R-La.) sent the AMA a letter seeking an explanation of how CPT codes are generated, whose input is incorporated in developing them, and how much revenue the publication and licensing of these codes provides.
“I am particularly offended by the AMA abusing its government-endorsed CPT monopoly to charge every stakeholder in the healthcare system significant amounts of money while advancing an anti-patient agenda,” wrote Cassidy, who is chairman of the Senate Health, Education, Labor, and Pensions Committee.
In his letter, Cassidy asked what steps AMA leadership has taken to “ensure that this mandatory process incorporates the feedback and concerns of all providers.” Cassidy estimated that the group has made hundreds of millions in revenue from publishing content related to CPT codes and services. He indicated that more than half of the $500 million AMA generated in revenue in 2024 came from publishing books and digital content that included CPT codes, which the AMA has held an exclusive monopoly over for more than 40 years.
The AMA responded on Oct. 23, but Cassidy was not happy with the answer, calling it “anything but open and transparent,” as he wrote in a letter to then-AMA President Bobby Mukkamala, MD. “I am concerned that the status quo focuses on enriching the AMA at the expense of patients, while the organization subsequently uses the revenue to advance a political agenda that is not representative of the majority of the medical community,” Cassidy wrote. “Your recent response did not answer my questions [in a way] that could assuage this concern.”
