The Financial Times has a new story on one of RFK, Jr.s’ plans, should he be approved as chairman of the Department of Health and Human Services. He is threatening to end Medicare and presumably also Medicaid’s use of the current medical billing code system, which goes by the acronym CPT, with a new system. The reason for proposing a change is that the AMA charges hefty licensing fees. From the Financial Times:
Reforms to the CPT codes would also represent an existential threat to the AMA, which generates more than half of its $495mn annual revenues from its CPT work and other royalties payments. A person close to the lobbying group said reforms of Medicare’s billing system could unleash as much chaos as the hack of UnitedHealth’s Change Healthcare division, which affected 100mn patients and roiled healthcare providers for months.
And there is no long-term contract in force to obligate Medicare to keep using the CPT codes:
Medicare has no obligation to accept the proposals of the AMA committee, which meets three times a year to update physicians’ billing codes, but it typically accepts the proposals.
Mind you, RFK, Jr. isn’t wrong to see these licensing fees as a form of grifting. From the Financial Times comment section:
Progressive Patriot
The article talks about CPT (Current Procedural Terminology) codes that were developed by the American Medical Association (AMA) and are used within the US and around 60 countries internationally.
https://en.wikipedia.org/wiki/Current_Procedural_Terminology
One of the issues here is the “licensing fee” that the AMA receives just for someone using their coding system which, by all reasonable accounts, should be in the public domain. It is just a categorization system that has been amended countless times since its inception, maybe in the 1960’s or so.
It would be akin to having to pay to use the Dewey Decimal System or the Library of Congress Classification system.
And it may well be (or turn out in the end) that RFK, Jr. taking this issue to the press means he’ll seek to bargain the rates down instead.1 Perhaps RFK, Jr. is mainly interested in defunding or defanging the AMA, which has consistently and forcefully opposed single payer. But RFK, Jr. isn’t a supporter either:
RFK Jr. ran for president explicitly opposing single-payer and then campaigned for Trump, whose proposed 2020 budget would have cut $1.5 trillion from Medicaid over the next decade.
I could get these morons to chase a tennis ball across the freeway. pic.twitter.com/Pr7OsIRzG6
— Jesse Crall🕊 (@jessecrall) November 15, 2024
A longer discussion in Jacobin from early 2023 in Populist? RFK Jr Doesn’t Even Support Medicare for All.:
…it’s not hard to see why he might emerge as Biden’s most prominent challenger. On the one hand, he comes from a lineage of Democratic Party royalty. On the other hand, he’s an edgy antiestablishment “populist.”
Or at least that’s how he’s been widely portrayed — both by commentators who are repulsed by Kennedy’s proclivity for anti-vaccine conspiracy theories and by those who find his criticisms of the Biden administration compelling. But the populism label is false advertising. On key issues from Israel/Palestine to Medicare for All, RFK Jr’s politics are a thousand miles away from his branding….
In a recent interview with left-wing journalist Krystal Ball, Kennedy was asked whether, given the hostility to the pharmaceutical companies he often expresses while talking about vaccines, he’d be willing to support a “public option” for pharmaceuticals or maybe even the outright nationalization of the industry. He immediately dismissed this, saying, “Oh, I don’t think that’s the right thing,” and switching the subject to how to insulate regulatory agencies from the industry’s influence. He didn’t even pause to explain why it wouldn’t be the right thing. Apparently, he finds the suggestion too outlandish to even consider.
It’s worth noting that Kennedy’s hostility to even providing a public option to compete with privately manufactured medicine puts him to the right of California governor Gavin Newsom, a thoroughly mainstream Democrat who recently announced that California is going to start manufacturing its own insulin later this year.
In addition (unless MDs or hospital administrators can tell me otherwise), the AMA licensing of the codes is not even remotely the nexus where the abuse of billing codes come in. It’s not the codes themselves, but the massive gaming that takes place around them, the so-called upcoding. Procedures are regularly reclassified after the doctor puts in his description of the visit or procedure to depict it as more complicated and demanding than it often was. Big hospital systems are believed to regularly engage in upcoding, which is a fraud. However, it is very hard to root out because it occurs at the patient level across many records and takes many forms.
A 2024 study in the Health Economic Review addressed this very topic. From its abstract:
Upcoding in Medicare has been a topic of interest to economists and policy makers for nearly 40 years. While upcoding is generally understood as “billing for services at higher level of complexity than the service actually pro- vided or documented,” it has a wide range of definitions within the literature. This is largely because the financial incentives across programs and aspects under the coding control of billing specialists and providers are different, and have evolved substantially over time, as has the published literature. Arguably, the primary importance of analyzing upcoding in different parts of Medicare is to inform policy makers on the magnitude of the process and to suggest approaches to mitigate the level of upcoding. Financial estimates for upcoding in traditional Medicare (Medicare Parts A and B), are highly variable, in part reflecting differences in methodology for each of the services covered. To resolve this variability, we used summaries of audit data from the Comprehensive Error Rate Testing program for the period 2010–2019. This program uses the same methodology across all forms of service in Medicare Parts A and B, allowing direct comparisons of upcoding magnitude. On average, upcoding for hospitalization under Part A represents $656 million annually (or 0.53% of total Part A annual expenditures) during our sample period, while up- coding for physician services under Part B is $2.38 billion annually (or 2.43% of Part B annual expenditures). These numbers compare to the recent consistent estimates from multiple different entities putting upcoding in Medicare Part C at $10–15 billion annually (or approximately 2.8–4.2% of Part C annual expenditures). Upcoding for hospitalization under Medicare Part A is small, relative to overall upcoding expenditures.
Needless to say, if RFK, Jr. were to press forward, and HHS had developed a replacement coding scheme, the transition would nevertheless impose serious costs on medical providers. They would not only have to implement the new coding system, but would also be running two different systems for classifying procedures, one for CPT codes for non-Medicare patients, the other the new Medicare procedure codes for Medicare patients.
The next question is why did RFK, Jr. go public with this idea now? He must assume this will help and not hurt his chances of being appointed. While reducing the AMA’s lobbying budget and stopping what looks like rentierism sounds appealing, the transition costs and higher complexity for most medical providers of operating two billing approaches will increase medical administrative costs, which are already higher in the US than in other countries. But explaining that may take more than a soundbite, so perhaps RFK, Jr. and his allies will carry the day on this topic.
However, if RFK, Jr. does not unpack further what he intends to do here, this proposal will provide more grist for critics who say he does not understand the medical industry and wants merely to set up bogeymen to score press points while doing actual harm if he follows through with his schemes.
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1 It’s probably too much effort, but another angle if CMS wanted to be really bloody-minded would be to challenge the AMA’s ownership of its intellectual property, as in whether the licensees themselves have provided meaningful input, did not waive their rights and thus have claims o the intellectual property.
