Who Does the AMA Really Represent?

People are fond of believing that the American Medical Association (AMA) represents physicians. But if representation follows revenues, the AMA’s most important customer is probably the federal government.

In1983, an agreement between the Health Care Financing Administration (HCFA) and the AMA made the AMA’s copyrighted Current Procedural Terminology codes (CPT) the sole coding system that could be used for billing Medicare.

An outline of the history of the CPT coding system is contained in a letter from Senator Trent Lott to the Secretary of the Department of Health and Human Services. It is posted on the Association of American Physicians and Surgeons website.

As the letter and an August 25, 2000, Wall Street Journal article make clear, the codes were only one of many competing coding systems when they were developed in 1966. As part of the 1983 agreement, HCFA agreed not to use any other coding system. A lawsuit caused this stipulation to be modified after 1997, but by then, of course, CPT coding had become the Medicare and Medicaid standard.

According to Senator Lott’s 2001 letter, revenues from the AMA’s monopoly control of the coding system generated about $71 million in sales and royalty income a year. If anything, the codes are even more important now than they were then. Medical device companies introducing new products routinely issue press releases when a code is awarded to a new device, and the award can move the price of a company’s stock.

The AMA does not specifically report revenues from CPT codes. Its 2008 financial report says that revenues from publications like Journal of the American Medical Association, the Archives journals and American Medical News were $64.6 million. Revenues from database products were $47.6 million. Revenues from “AMA-published books, AMA affinity products and the reimbursement products, such as Current Procedural Terminology (CPT®) books, workshops and licensed data files” were $69.9 million. Revenues from the AMA’s insurance agency were $35.1 million.

In all, net membership dues accounted for less than 16 percent of 2008 revenues. At $43.9 million, dues revenues were down considerably from the $57.7 million and 22 percent of revenues reported in 2000. [See 2008 and 2000 financial statements]

In 1962, membership in the AMA reportedly peaked at 70 percent of physicians. It has been declining ever since and at present less than a third of physicians are AMA members. Possibly in response to the AMA’s recent history of increasingly strident advocacy for its ever expanding list of things that must be government controlled in the name of health, the fraction of physicians belonging to the AMA began declining even more rapidly after 1990.

In 2008, the AMA’s devotion to pushing for more government control of patient lives took the form of spending $15.6 million for its “Voice for the Uninsured” media campaign at a time when its expenses were $74.7 million more than revenues, and general and administrative expenses were increasing by 7.9 percent.

Among other things, the Campaign promotes a reform proposal that would expand government spending on health coverage, increase federal control of private health plans, and promote laws requiring individuals to buy health insurance or “face tax implications.”

In 2001, the AMA received almost $20 million from the Robert Wood Johnson Foundation in exchange for managing a nationwide effort to ban smoking.

In 2000, The Wall Street Journal quoted Donald Palmisano, then a “surgeon and AMA trustee” as saying that “The AMA is not in favor of Internet sites that advertise services to the lowest bidder without a relationship between the physician and the patient.” According to Dr. Palmisano, the story said, money from the CPT codes “helps fund the AMA’s nonprofit mission of advancing medicine and the public interest.”

Comments (23)

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  1. Ken says:

    The answer to your question is: certainly not the doctors!

  2. Larry C. says:

    When you stop to think about it, this is really disgusting.

  3. Brian W. says:

    There is a lot of great info in this post. Thanks, Linda.

    I’m struck by the similarities between the AMA and an average labor union.

  4. Sara says:

    I knew some of this because my son is a physician and he has discussed some of this. He does not belong to the AMA. I believe the reliance on the AMA to represent the views of the majority of doctors is one of the classic ruses of our day.

  5. Joe S. says:

    Who do they represent? They represent themselves.

  6. J. James Rohack, M.D. says:

    It has become an unfortunate routine for critics on the left and right to launch sharp, partisan attacks against the AMA in order to promote a narrow agenda. Despite these intentional efforts to sow division, the AMA remains the nation’s largest physician organization with the influence to move the whole profession, even the nation, toward change.

    The AMA is the voice of the medical profession because its policies are created by the nation’s only democratic assembly of physicians and medical students representing all state and specialty medical societies. Only the AMA gives all physicians and medical students a voice in the future of medicine.

    This democratic forum of grassroots physicians and medical students directed the AMA in 1983 to have Reagan Administration recognize CPT as the standard for physician coding. At the time, physicians struggled to cope with the multiple code sets used by third party payers, including the government. AMA brought calm to this chaos by securing a physician-driven standard used to describe medical services.

    Certainly, our health care delivery system has benefited from having a uniform, coherent means of communicating medical information. Without such a system, communication between physicians, hospitals and health plans would break down, resulting in frustration and confusion. That is a price no physician, patient or health system can afford.

    J. James Rohack, M.D.
    American Medical Association

  7. James says:

    Miss Gorman is way off theme attacking the AMA for its success with the copyrights to the CPT coding system because it didn’t subscribe to right-wing physicians oppossed to reform on basis of a government take over.

    If there is anyone guilty of losing focus, its those physicians, and Miss Gorman, who oppose reform on the basis of unfounded scare tactics at the expense of patients who cannot afford insurance. These are people who prefer to see no reform, preserve the status quo, and defend profits of the private insurance industry at the expense of the health and well-being of those they are supposed to be advocating for–the millions of uninsured who cannot have prompt, affordable access to basic preventive medicine and management of chronic diseases outside of the emergency rooms. Shame on them.

  8. T says:

    As far as access to “basic preventive medicine” is concerned,prevention is up to the patient, not the physician. We can do early detection, but no matter how much we advise, only the patient can prevent problems, and most of them ignore advice about smoking, alcohol, drugs and diet. I have taken care of thousands of patients, and no matter how poor, huge percentages of them seem to have enough money for cigarettes and alcohol, not to mention drugs, like cocaine, marijuana, heroin. I worked in an ER where hardly any of the patients had to pay for the care to which they had access at will. There was rampant overuse of the ER for trivial complaints, and of course, for life-threatening, but preventable problems, like alcohol-withdrawal seizures, drug overdoses, gunshot wounds, trauma from incidents while drunk, and what with the “reimbursement” from Medicare/Medicaid, what happened? The hospital went bankrupt, and closed.

    Also, Dr Rohack, why should your organization be able to move the entire nation toward change of any type? It was founded on freedom, not coercion. You are not elected by the people.

    Re CPT code books. People struggle with them, also. Let’s let Congress have some code books for what they do, and see how we can trip them up, and slow them down, frustrate the hell out of them. Your code books were originated by you, but the codes have the force of law for people caught in this system. Nobody can own the law. If people are required by government to use the code books, they must be in the public domain, with free access to anyone who NEEDS them. ( Another “access” problem! ) The Veeck case told you that.

  9. Mark Kellen, MD says:

    I have been involved in organized medicine for number of years. The AMA is not freedom loving physicians; it is a group of socialists who happen to be physicians. The AMA does not care about patients or physicians or it would be promoting efforts to improve patient access to medical care, not promoting a complete government take over of our system of medical care. Remember 83% of physicians do not belong to the AMA and through it’s actions the AMA continues on a pathway to irrelevance. The AMA is a self appointed oligarchy and does not represent the views of the majority of physicians.

  10. R Cihak, MD says:

    I quit the AMA a long time ago, when I saw that it certainly didn’t represent me politically. It should have stuck with scientific information (journals, conferences, etc.) and patient education information.

  11. Wayne Iverson, MD says:

    As a long time member of AMA, I am very disappointed by the disregard the AMA leadership has for medical professional issues raised by the grass roots membership. Policy at AMA is cultivated and generated by a small number of political activists at the top and then thrust upon the membership. It is no wonder that only a small fraction of physicians belong to AMA. AMA’s support position for HR3962 Radical Health Care Reform is a perfect example.

    The AMA needs new leadership and needs to start serving the professional interests of its membership and not the other way around. The latter is a fatal flaw of many organizations that have grown too big financially. Having AMA give its CPT copyrights and franchise freely to the public would be an excellent first step. Then AMA should return to task of genuinely serving its membership .

  12. Ken Christman says:

    It is obvious that the more complicated the AMA can make things for practicing physicians, the more money it can make via its publishing ventures. The AMA has been rendered irrelevant by its wholesale support for Obamacare, Nancycare, or whatever one wishes to call it. No American should be required to pay fines or go to jail for not having health insurance, life insurance, homeowner’s insurance, etc. Yet, the AMA is calling for this! A thorough investigation of the AMA’s “business activities” is in order.

  13. Alieta Eck, MD says:

    When you look at the work of Dr. Edward Annis, former President of the AMA, who fought eloquently against the government takeover of medicine back in the early 1960’s, you can see how far adrift the AMA has gone.

    The AMA no longer advocates for patients or physicians, but seems to promote an agenda that maintains its own income. The AMA has been compromised, and needs to reform or just fade away. The AAPS is the real voice of freedom in medicine.

  14. George Watson, D.O. says:

    Dr Rohack says, “the AMA brought calm to this chaos.” What a perverse joke! The AMA brought more excuses for third parties to deny payment. By changing 200-300 codes per year, the AMA forces an unnecessary expense on insurance-participating doctors. Do you want proof? How many times has the insurance company read your progress note or operative report, and denied payment, because you used the wrong code or modifyer? If they can READ THE ENGLISH and tell you the code is wrong, it is obvious the code is for tracking your services, not paying you. The fact that use of CPT is recommended, but OPTIONAL with regular (not medicare or medicaid) insurance is further evidence that the codes are an unnecessary cost of treating our patients. The Association of American Physicians and Surgeons showed me how to have a booming practice with NO INSURANCE CONTRACTS!! Do I still see people with Medicare, BCBS, other plans, and no insurance? Sure! Because the patients PAY ME a fair fee (not inflated by insurance) at the time of service.

  15. Joseph Gauta, MD says:

    This is the simplest way to describe it:
    The AMA has forgotten who their membership consists of.

  16. Nevada MD says:

    I recently learned of the provision in the current health care bill to punish those states that have enacted tort reform. As an open minded physician I expected the head of the AMA to address this issue. Dr. Rohack, I am still awaiting. The AMA has taken a cowardly position that promotes an additional entitlement program, fails to adequately address the issue of personal responsibility on the part of patients, and squeezes the hard working physician from both ends.
    Shame on Dr. Rohack and the AMA. You do not and will not represent me.

  17. John Slatosky D.O. says:

    The AMA is loosing memebership now faster than ever. Dr Rohhack have you read you email lately? I have read some of the letters from current AMA members that they emailed to Dr Rohack lately letting him know why they are dropping their membership. Many physicians on Sermo.com recently checked and found out that they are listed as AMA members but have not been memebers for years. These physicians are now calling the AMA to have their names removed from the roster. Wake up AMA you have sold us out and your membership is decreasing. I wonder if there will be any members in the future that are not students, residents or employed physicians. The AMA sold out the primary care docs years ago which is why we are paid poorly compared to specialists and now no medical students are choosing primary care as a specialty. I do not believe that the AMA has represented the interests of their current members in the health care debate and never even polled their members before speaking for them.

  18. Jeffrey C. Hutchins, D.O. says:

    As a small town family practitioner who built a practice from the ground up, I am very concerned about the future of medicine and the well being of my patients. Even more, I’m concerned about the role government is trying to play in not only our profession but in the lives of every American. I always thought the AMA was on my side, doing its part to help insure good quality care for our people. WRONG!!! They are despicable! And I know nothing about Dr Rohack but I’d wager to say he never built a practice or practiced in a private setting for very long? Just a guess! Doctors who excel at patient care tend to stay in an environment where their talents are best utilized. Others move on to become polititians, perhaps like Dr Rohack.

  19. Joy says:

    What is even more egregious is that Advanced Practice Nurses who do not want to function as “little physicians” are forced to do so in order to be reimbursed at all. When APNs adopted the RBRVS they unintentionally limited their scope of practice to medically reimburseable acts. The American consumer has been the loser.

  20. Jason Boardman, MD, FACS says:

    As most of those before me have mentioned, the AMA is not for physicians. There is out right anger at by most physician in regards to the AMAs actions and inactions in the health care reform debate.

    When President Obama stood in front of the assembly at the national meeting in the early summer and stated taht there would basically be no tort reform, the AMA did nothing. When President Obama used false analgies to villianize physicians for performing operations to benefit patients, the AMA did nothing. When the House passed a bill that does nothing but expand government, prohibit true tort reform and creates the largest government bureaucracy to date, the AMA throws it full support behind such a bill in the hopes of getting another spending bill passed (HR3961). These actions are not he actions of a group that is for physicians, but of a group that is fighting to maintain control promote their own self interests.

    AS a former memebr of the AMA who is also a board member of my lcoal chapter, I am disgusted and ashamed of these actions. I have recently writtne a letter to the AMA expressing such.

  21. […] Why is the AMA selling out doctors? So it can keep its monopoly on billing code revenues. (See also Linda Gorman’s previous post on who the AMA really represents.) […]

  22. marbee says:

    The AMA is complicit with the loss of freedom in this nation and the loss of business owners’ private property rights! Stated in this article, “In 2001, the AMA received almost $20 million from the Robert Wood Johnson Foundation in exchange for managing a nationwide effort to ban smoking”.
    Pharma giant Johnson & Johnson’s main shareholder and smoking ban shill, the RWJohnson Foundation, depends on it’s livlihood from J&J making and marketing cessation products. They have hoodwinked many people and gov’t officials that without smoking bans forcing 1/3 of the entire population of the U.S. and the rest of the world into submission, that smoking and second hand smoke will kill. They have spent over one Billion dollars to influence legislation to take away freedom and private property rights in the grand marketing scam of the century, and their created obesity crisis, along with global warming. The U.S. Surgeon General managed to avoid testifying under oath to a congressional committee along with the commissioner from the FDA. I say that is a conflict of interest to say the least, especially with FDA regulation of tobacco. The “harm” from second hand smoke is nothing but a way to a means!

  23. Bart Williams MD says:

    The disconnect between the AMA and the average “in the trenches” physician could hardly be greater—they are so out of touch–they no longer represent our interests or this country’s–I gave up my membership long ago and wouldn’t join now even if it was free. They have declined from 70 to sub 30 for good reason—and they will eventually become nothing more than a fringe group unless they get new leadership