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.”