A physician-turned-prominent senator has put the American Medical Association (AMA) on notice again, demanding an accounting of the profits it earns from its “monopoly” over the coding system used for provider reimbursement.
The letter from Republican Senator Bill Cassidy, MD, chair of the Senate Health, Education, Labor, and Pensions Committee, is the latest push to understand how the nation’s leading physician organization maintains control over the Current Procedural Terminology (CPT) system. Hospitals and clinicians must license the more than 11,000 CPT codes to bill and operate, and they pay annual royalties for that access. Provider reimbursement rates are also tied to the code set.
The inquiry follows an announcement from the Centers for Medicare and Medicaid Services (CMS) of an upcoming 2.5% “efficiency” cut to physician payments, adding to concerns about how provider reimbursements are calculated.
An AMA official who declined to speak on the record told Medscape Medical News that the organization has received Cassidy’s letter and plans to respond.
Here’s what you need to know about the request.
1. How Code Became National Standard
The AMA published the first CPT code set in 1966 to standardize terms and descriptions in medical documentation and insurer communications. While the first edition focused primarily on surgical procedures, the second edition in 1970 expanded to include other specialties, and subsequent versions have added codes as medicine has advanced.
However, a series of federal legislative changes in the 1980s strengthened CPT’s role in provider reimbursement. CMS first adopted the CPT framework in 1983 as part of its Healthcare Common Procedure Coding System for reporting Part B Medicare services. Three years later, the agency extended the requirement to Medicaid programs.
But the passage of the Health Insurance Portability and Accountability Act a decade later cemented CPT codes’ status by designating them the national standard for physician and provider billing. CMS, with input from an AMA advisory committee, assigns each code a relative value unit (RVU) that determines reimbursement. Private payers typically base their payments on similar rates.
2. Panel Oversees Code, Updates
While the AMA owns the code set copyright, oversight falls to the organization’s CPT Editorial Panel. The 21-member group is “broadly representative of physicians and other stakeholders,” including 12 seats appointed by national medical specialist groups, John Whyte, MD, MPH, CEO and executive vice president of the AMA, explained in response to Cassidy’s October probe. Other members come from the CPT Health Care Professionals Advisory Committee and major payer and hospital groups, such as the Blue Cross Blue Shield Association and the American Hospital Association. Another seat belongs to a representative from an umbrella organization for private insurers, he said.
The panel also includes nonvoting liaisons from CMS, the CDC, and the FDA, giving each agency a platform to provide input and suggestions. Panel meetings are held three times per year to discuss code and RVU changes. Whyte said that meetings are open to any stakeholder and that groups and individuals can request “interested party” status to review applications under consideration by the panel.
Cassidy’s initial letter to the AMA questioned whether this format provides physicians with sufficient input into the code-finalization process. Dissatisfied with Whyte’s response, he now wants more information on how the organization incorporates feedback from all physicians, including a growing percentage of doctors who are opting out of AMA membership.
3. Demands Fee Transparency
Cassidy’s letter this week doubles down on concerns he initially raised in October about the AMA’s control of — and profit from — the CPT code set. Although the codes are often thought of as a billing tool, their reach is broader. The AMA requires that any organization that “uses, references, or displays CPT content” obtain an appropriate license, and codes are updated and published annually.
He questioned how much of the AMA’s “enormous revenue,” including the $513.2 million generated last year, comes from CPT licensing, publications, and related subscriptions.
Cassidy also asked for greater transparency into how costs for CPT access are calculated, noting that licensees often pay a per-user fee, a $1050 annual royalty fee, and a separate $13,000 annual acquisition fee for CPT Link, the software the AMA sells to streamline the integration of CPT codes into workflow systems. The current pricing structure results in higher healthcare costs, Cassidy said, which are “anti-patient and anti-doctor.”
“We respectfully disagree with the characterization that the AMA charges ‘exorbitant fees’ for the use of CPT or that those charges lead to higher healthcare costs,” said Whyte in his letter to Cassidy. Annual CPT license fees are $18.50 per user, with health plans paying $0.24 per member per year for access, he added.
4. Questioned AMA ‘Woke’ Policies
The Louisiana senator’s issues with the AMA extend beyond CPT codes. Cassidy criticized the physician organization in September for what he described as the adoption of increasingly ideological views that advocate “woke policies…inconsistent with many of its members’ views.”
At the time, Cassidy argued that the AMA has taken “policy positions related to gender transitions, abortion, forced diversity, equity, and inclusion (DEI) mandates, and other positions that run contrary to science and ignore the day-to-day issues providers and patients face.” His comments come after President Trump issued an executive order earlier this year that placed more restrictions on gender-affirming care for young patients.
His letter this week revisited those concerns, stating that the AMA’s House of Delegates has repeatedly endorsed policies supporting DEI mandates and gender-transition care. Whyte confirmed in his October response that while the AMA House of Delegates adopts policies that advance diversity in medical education, the AMA “did not directly spend any funds supporting such policy mandates” in 2024.
In addition to his questions about CPT licensing, Cassidy has asked the AMA to explain any partnerships tied to DEI or gender-transition care, how that work is funded, and whether members can opt out of specific advocacy efforts.
5. What Happens Next?
Cassidy has given the AMA until December 15 to respond to his list of questions, promising to utilize other means to secure the requested information from the AMA if they do not voluntarily comply.
