Medicare Compliance & Reimbursement

Sustaining a government-sponsored monopoly could cost $51 billion in savings.

Department of Health and Human Services (HHS) secretary Mike Leavitt has reiterated his commitment to consumer-driven health care, but critics allege that he is taking choices away from the very consumers he seeks to empower.

On Oct. 16, 2006, the Centers for Medicare & Medicaid Services (CMS) killed a project that Leavitt's predecessor, Tommy Thompson, initiated before his resignation at the end of President Bush's first term. Thompson had authorized Alternative Link, the parent company of ABC Coding Solutions, to use ABC codes for billing purposes in Alaska and New Mexico.

"ABC codes and related solutions allow more than 3 million health care practitioners to file electronic claims for health care services that are not adequately described in other national code sets," ABC officials said in a statement. And these codes reportedly reduced costs in both the New Mexico and Alaska trials.

"The pilot project was an amazing success, providing stunning statistics in a report showing the need for a revised billing code system--one that would include billing codes for all health practitioners," said Tim Bolen, a crisis management consultant for Jurimed.

For Alaska's 4,000 patients and 500 paraprofessionals who participated in the program, ABC codes created 50 percent savings in bush and rural communities, according to Bolen.

New Mexico also demonstrated the potential benefits of alternative billing methods. Insurance companies participating in the pilot program concluded after three years that seniors who participated in the program cost less than those who did not, Bolen said in a statement.

Despite the trial's apparent achievements, the CMS denied ABC's October 2006 request for a continuation of its right to use ABC codes in electronic claims transactions. Individuals using ABC billing codes must now file claims using manual transactions; this reversion to labor-intensive paper filing comes even as HHS officials tout the cost-saving potential of advances in health IT.

Melinna Giannini, president of ABC, wrote a letter to Daniel Levinson, HHS Inspector General, requesting an investigation into CMS' refusal to extend ABC's ability to file electronically. That decision could cost the United States $51 billion in health IT savings, Giannini alleges--a steep price to pay for the privilege of restricting competition in the medical billing field.

Does The AMA Suppress Alternative Treatments?

The current controversy over ABC's right to file electronic claims extends from an agreement between the American Medical Association (AMA) and the Health Care Financing Agency (HCFA), an organization which has since become CMS. "HFCA in 1983 granted the AMA what has been characterized as a 'statutory monopoly' by agreeing to exclusively use and promote the AMA's copyrighted CPT code for the purposes of reimbursing Medicare and Medicaid bills from doctors for outpatient services," explained Sen. Trent Lott (R-MS).

Because of this governmental support, the AMA's Current Procedural Terminology codes have remained the sole means by which health care professionals can report their services to the government for reimbursement. Even though concerns over the legality of this sponsorship prompted the AMA and HCFA to remove the exclusivity clause from their agreement, alternative coding systems have remained irrelevant at least in part because of governmental inaction as in the case of ABC, Lott argued.

The AMA could potentially use its monopoly on billing codes to restrict the growth and practice of health care providers not licensed by the AMA, and Bolen charges that they have done exactly that. AMA-licensed MDs have more than "8,000 codes to use for billing while the government and the AMA dole out a few token codes to osteopaths, nurses, chiropractors, acupuncturists, massage therapists" and other non-traditional health care providers, Bolen said in a statement.

Because ABC estimates that approximately 60 percent of the five million health care professionals operating in the United States do not practice under an MD, three million health care providers rely on a rival organization to provide them with appropriate billing codes. "Leaving the AMA to decide what's good in osteopathy, chiropractic, massage therapy, physical therapy, mental health, etc.--health practices they have no knowledge of or training in--is like putting the fox in control of the hen house," Bolen commented.

In its defense, the AMA claims to offer every medical treatment the opportunity to qualify for a CPT code upon demonstrating its clinical success. For new Category I CPT codes, the AMA's CPT Advisory Committee requires:

· That the service or procedure receive approval from the Food and Drug Administration for the specific use of devices or drugs;

· That the service or procedure is performed across the country in multiple locations;

· That many physicians or other health care professionals perform the service or procedure; and

· That the clinical efficacy of the service or procedure has been well established and documented.

It may be impossible to determine whether the AMA's CPT Advisory Committee has hindered the development of alternative medical treatments in the past, but its current standards seem to offer every treatment an equal opportunity to prove itself.

Given ABC codes' potential benefits, it seems only fair that CMS and HHS offer the same equality to the various billing codes now trying to compete with the well-established CPT codes, proponents argue. The potential reward of $51 billion in savings looms large, and American consumers deserve a fair trial for any innovation that could curb the rapidly rising costs of health care.