Bridging the Health Policy Gap Between Congress, the President, and Doctors: Where Does the American Medical Association Lie?

Transcription

1 Bridging the Health Policy Gap Between Congress, the President, and Doctors: Where Does the American Medical Association Lie? TATIANA E. SEMERJIAN University of California Los Angeles Historically, the American Medical Association (AMA) has opposed all government initiated health reform proposals: Roosevelt (1934), Truman (1949), Medicare (1965), Clinton (1993). However, they demonstrated support for the 2010 Patient Protection and Affordable Care At (PPACA). This advocacy is puzzling given lawmakers failure to include two of the AMA s largest points of advocacy (reform of the medical liability system and reform of physician reimbursement rates the doc fix ) in the bill. This paper examines the shift in AMA advocacy between the Clinton and Obama administrations as an effect of four factors: presidential and congressional influence, AMA corporate interests, the health economy, and the influence of other interest groups in the health lobby. The American Medical Association was founded in 1847 as the first medical society. The goal of the organization was to bring together physicians to collaborate on matters of public health and medical education. In 1883, they began publishing the Journal of the American Medical Association, which is a wellrespected publication of current medical research. The organization used to have the sole responsibility of licensing physicians and accrediting them to practice approved forms of medicine. However, their duties became political as the twentieth century progressed. As the federal government began to play a larger role in the provision of medicine, the AMA became more politically involved with protecting physician interests. The AMA has its own Political Action Committee (PAC), called AMPAC. AMPAC s generous contributions to political candidates have contributed to making the AMA an influential voice on Capitol Hill. Wilkerson suggests that the history of AMPAC contributions follows the access hypothesis (1999). Rather than demonstrating an allegiance for a particular political party, the PAC is more likely to contribute to incumbents, leaders in health-committees, and majority party candidates. Historically, their campaign contributions have had the most effect in the House Ways and Means Committee and the House Energy and Commerce Committee both committees that have significant jurisdiction over the influence of healthcare policy. Like the tobacco PACs, AMPAC contributes broadly in anticipation of the wide range of policy initiatives that may affect the objectives of AMA physicians. AMPAC contributes to the

2 campaigns of most incumbents, rarely gives to challengers, and gives more to a legislator who holds an important institutional position (Wilkseron 1999). While voting for incumbents, AMPAC shows the most allegiance for the Republicans and those who have influential committee positions. Their contribution behavior varies in the House and the Senate. In the House, their allegiance is more to the majority party than to the incumbent party because the structure of the House grants the majority party more power to determine the agenda of bills that are introduced to the floor (Wilkerson 1999). In the 2008 election, when both presidential candidates John McCain and Barack Obama had healthcare reform on the agenda, this behavior was true in their contributions to congressional candidates. Contributions to Democratic House of Representative candidates exceeded those to Republican ones. However, in the Senate, the allegiance to Republican incumbents outweighed their allegiance to Democratic incumbents. Two points of advocacy that the AMA has long fought for are: Reform of the Physician Reimbursement Payment Formula: When doctors see patients insured by Medicare or Medicaid, the federal government reimburses them. This is clearly a physician interest because physicians would want to secure a reimbursement rate that is correlated to the services that they provide. The AMA has long been opposed to the flawed formula they believe is currently in existence (AMA, Current Topics in Advocacy). Medical Liability Reform: The medical liability system was instituted to reduce the prevalence of medical error. Patients who feel that a doctor has distributed care negligently can file a lawsuit and recover damages for adverse medical outcomes. Because of this system, all physicians seek medical liability insurance. The recent crisis for doctors is that premiums for liability insurance are extremely high, which has caused physicians in high risk professions to leave their office. Physicians have long advocated for a reform of the system through setting caps on damages that patients may recover for damages (AMA, C3urrent Topics in Advocacy). AMA membership has been on the decline in context of the physician population in the United States. Although the AMA has been a well-respected organization with their policy suggestions and the standards they set for medical practice, they have been struggling in recent years. Membership has been on the decline and many of their physician constituents have protested their endorsement of the PPACA. Currently, they have 230,000 members, which is about one-third of all practicing physicians in the US. In 1993, they were closer to having 300,000 in membership. They have sought to remedy this by changing marketing tactics and appointing leaders who can reach out to the physician population. AMA BEHAVIOR FOLLOWING THE PASSAGE OF THE PPACA

3 Several developments after the AMA s sponsorship of the PPACA suggest that the decision was beyond a genuine belief in the merits of the bill. Foremost, although they endorsed the PPACA, in the 2010 election, which was held 8 months after the passage of the bill, they did not contribute at all to Senator Harry Reid (D- NE), who had sponsored the bill (CRP). Second, the CEO of the AMA stepped down from his term without much of an explanation. Third, just months later, they were back on Capitol Hill advocating for health-reform laws that had not been addressed by the PPACA. At the 2010 Annual Meeting of the House of Delegates, the AMA passed Resolution 214, which asks that our American Medical Association advocate for modification of the Patient Protection and Affordable Care Act through legislation, regulation or judicial action to remove or oppose any components of the Act that are not consistent with existing AMA policy. During the debate, they had set these issues with the bill aside to provide their support for the PPACA. Their rhetoric is in line with Wilkerson s access hypothesis. Although the PPACA has been officially signed into law, the AMA continues to lobby Congress. By supporting the bill, it gives them more institutional leverage to propose amendments and resolutions. In fact, just months after the President signed the PPACA into law; they were back on Capitol Hill lobbying for the physician reimbursement rate. Had they adamantly opposed the bill, they would not have had the standing to propose amendments and further reforms. This kind of behavior is not new to the health lobby. In 2003, the American Association of Retired Persons endorsed President George W. Bush s Medicare Prescription Drug, Improvement, and Modernization Act in exchange for modification of key provisions of the bill. Just as President Obama used the AMA s endorsement of the PPACA to make the bill more favorable to the public, Republican leaders sought the AMA s endorsement of the Medicare Prescription Drug Bill. In exchange for this endorsement, Republicans promised AMA leadership a positive update in the Medicare fee schedule for physician services. This update in the fee schedule is precisely what the AMA consistently advocates. Thus, in context of their endorsement of the PPACA, their advocacy of the doc-fix following their support of the bill is unsurprising. By establishing close relations with the agencies responsible for administering healthcare, the AMA has put itself in a good position to influence implementation. Heaney argues that the reputation of an interest group in the health policy domain is an important way of gaining leverage to influence policy. The AMA website, under the page titled Advocating for Improvements to the Affordable Care Act writes, A number of key provisions in the law will be implemented this year, but many others will not become effective until a number of years in the future, allowing the AMA and state and specialty societies to have a maximum input into the regulatory process and to seek further legislative changes (AMA: Topics in Advocacy). The AMA s support of the bill combined with their

4 networking and coalition forming puts them in a good position to advocate for modifications within the Centers for Medicare and Medicaid Services. HEALTH CARE CLIMATE: WAS IT TIME FOR CHANGE ALREADY? Between Clinton and Obama, the healthcare system underwent significant changes. Managed care over private practice became more predominant. For long the AMA argued that managed care threatens physician autonomy, as it requires physicians to adhere to the rules of a Health Maintenance Organization or a particular health group. As time progressed between the 1980s and early 2000s, more physicians sought enrollment in group practices. Health economists explain this phenomenon as a product of group practices offering more of a security blanket for practicing physicians. Often, group practice organizations subsidize malpractice insurance and also have more levels of bureaucracy to go through in order to file a claim of malpractice. Moreover, group practice organizations also offer more lenient hours and benefits. Overall, with health costs skyrocketing and with malpractice insurance premiums still presenting a burden, these types of organizations offer a desirable environment to practice medicine. The phenomenon of managed care has had implications for physicians and physician reimbursement. Many physicians fear that it will reduce competition among providers and thus lead to lower qualities of care. Physician autonomy is one of the points of advocacy that the AMA has long stood to protect. However, with more managed care plans, AMA rhetoric has shifted in a way that shows a willingness to cooperate with this new development (Pracht 1993). In 1993 at a hearing hosted by the Subcommittee on Health of the House Ways and Means Committee, James Todd, the EVP of the AMA testified at a hearing before the House Ways and Means Committee that physicians do not fear managed care because the times are calling for these kinds of changes (US Congress, 1993). As time progressed, the AMA continued to accept the reality of managed care. The growth of specialty physicians has implications for the AMA because they are more inclined to join specialty societies rather than the AMA. This could account for why a lower percentage of the physician population is a member currently than before. Although the period between 1989 and 1993 saw drastic increases in the number of uninsured Americans, these problems continued to worsen. Between 1994 and 1998, 4.2 million more Americans lost coverage. Medicaid and public coverage also saw significant drops because of declines in military and private coverage. Moreover, in 2009, the number of uninsured reached an unprecedented high at 50.7 million Americans (US Census). While Democrats blamed it on a broken healthcare system, Republicans blamed it on the weak status of the economy. It was as though by the Obama administration, the health disparities had crossed a threshold that necessitated a kind of overhaul.

5 However, the worsened health economy alone cannot account for the AMA s shift in advocacy. This is because in 1993, they also recognized that health reform was necessary. They acknowledged that the health system was unsustainable at the time and that it did not provide affordable coverage for an unacceptable number of citizens. Thus, it would be wrong to say that the health economy alone explains why they decided to endorse Obama s proposal. Other factors relating to the contents of the bill and the strategies the administration used to sell the bill to the public influenced the AMA s position as well. There is an abundance of AMA rhetoric that indicates they supported government intervention in the health sector at the time of Clinton s proposal. THE INFLUENCE OF OTHER INTEREST GROUPS IN THE HEALTH LOBBY The entire structure of the health policy lobby has undergone significant changes since the Clinton years. While the AMA may have been identified as a central broker in health policy, they no longer are (Heaney). This is because a number of other powerful health interest groups have emerged with significant influence and access to policymakers. This change is a result of the health policy domain being more complex and filled with a variety of different stakeholders. More specialty societies have emerged and public health organizations have become more dominant. In order to condense these interests into substantive policies, collaboration and networking among interest groups is necessary. AMA leadership has declined over the past two decades, with the emergence of specialty societies and managed care organizations. As a professional trade group, many scholars have concluded that it is struggling. Although in 1987, they were ranked as the most influential organization in the health lobby, in 2003, Heaney demonstrates that they are ranked in an equal position with other major organizations. While still powerful, it is by no means as hegemonic as it once was. Other key players in the industry are the Pharmaceutical Research and Manufacturers of America (PhRMA) and the American Association of Retired PersonS (AARP). When healthcare reform is on the policy agenda, the number of active health policy lobbying groups increases. This was the case during the Clinton administration. In 1994, there were an estimated 650 organizations that spent $100 million to affect the health policy debate in some way. Even after Clinton s bill failed, the number of health policy interest groups continues to increase to become the largest sector by 1997 (Lowery 2005). As Heaney articulates, growth in the size of an interest community does not translate into more influence for its participants. Indeed the reverse is likely true, with more groups meaning less clout for each individual group. Moreover, as the interest community expands and diversifies, the importance of building formal and informal coalitions increases.

6 Paul-Shaheen suggests that the physician lobby was losing strength as early as the 1980s, making the AMA no longer the leading representative for the medical profession by 1990 (CRP). The changing healthcare climate, with more practitioners in managed care organizations and more specialty organizations has caused a change in the health lobby. The growth of specialty interest groups and interest groups that represent HMOs has changed how interest groups lobby for reform. Among PACS that represent Health Professionals, the AMA has been the leading political contributor. However in the most recent presidential election, they were ranked the 8 th greatest contributor, surpassed by other specialty medical interest groups. This is a significant change that calls attention to their influence in the health lobby (CRP). If healthcare climate were the sole explanation for the AMA s shift in advocacy, then we would expect other health interest groups traditionally opposed to reform efforts to also sponsor the PPACA. However, this was not the case. Health professional interest groups that expressed the same concerns that the AMA did during the Clinton administration did not endorse the PPACA. The American Dental Association (ADA) and the American Society of Anesthesiologists have been among the top Health Professional contributors to congressional elections (CRP). However, they remained opposed to the PPACA, primarily because they feared that the expansion of Medicaid under the bill would not be met with expansions in reimbursement for physicians (ASA) (ADA). In prior attempts at blocking reform, the AMA has had more leverage. With proximity to the Cold War and the fears of socialized medicine lurking, their credibility to block a federal reform package had more credibility. As Peterson articulates The federal government lacked a sufficiently tangible record of directly administering such large-scale programs (at least in official perceptions of what the public perceived (1997). However, as other interest groups emerged that focused more on public health and as the visibility of the uninsured population became more apparent, the necessity of a health reform bill became greater. Heaney (2006) emphasizes the increased importance of health policy interest groups joining coalitions to advance their agendas. As stated, the primary points of advocacy for the AMA include reform of physician reimbursement and medical liability reform. The theory suggests that in order to pass specific points of advocacy, interest groups collaborate to further their agenda. This behavior has become increasingly important as the size of the health sector has grown so vastly between the Clinton and the Obama administration. A coalition is defined as a standard part of interest groups strategic repertoires that frequently put them in touch with other organizations with which they would not ordinarily connect. Coalition theory would suggest that the AMA should have bound together with other interest groups to further their agenda. They did this during Clinton s administration in opposition and they once again did it during Obama s administration in support. During the Obama administration, the Health Reform Dialogue was a coalition established to collaborate on ideas of health reform (Health Reform Dialogue). The coalition was made of doctors, nurses, patients,

7 insurers, drug companies, and employers. Forming coalitions was also common for the AMA during the Bush administration, when they joined with forty-eight other interest groups to create a tax-preferred health savings account. The members of this coalition included groups that the AMA traditionally did not cooperate with ideologically was an era of new alliances and coalitions in the health lobby with unlikely third parties. One important lobby that may have influenced AMA advocacy is PhRMA. The AMA has a relationship with this organization because they contribute millions of dollars in advertising revenue to the Journal of the American Medical Association. During the Clinton debate, they were adamantly opposed to the plan. The organization was prepared to spend $12 million to defeat the plan. During Obama s administration, there was a drastic change in the way the health lobby lobbied. The pharmaceutical industry aligned itself with not only business, but also Families USA, which is a progressive consumer-oriented organization that had been the primary public relations entity during the Clinton administration s plan. Although the media found this alliance puzzling, it demonstrates coalition theory as articulated by Heaney. By broadening the scope of their partnership, they appeared more credible to the public. Moreover, because the health debate has so many stakeholders, partnerships among different industries make it simpler to promote an agenda. RELATIONS WITH THE EXECUTIVE BRANCH: PRESIDENCY AND DEPARTMENT OF HEALTH AND HUMAN SERVICES While the political climate and the health economy can undoubtedly affect an interest group s advocacy, there are significant differences in presidential tactics between Clinton s administration and Obama s administration. Weiss (2007) elaborates on specific tactics that political leaders employ to attract interest group support in her discussion of the success of the mental health policy agenda in the 1960 s. She argues that the administration in power used two powerful tools to mobilize interest groups ideas and inducements. She writes that to gain the support of interest groups, the National Institute of Mental Health (a government agency within the executive branch) convinced organizations that it would be more rewarding to work with the administration than against them using ideas and inducements. Ideas concern the ability of the government to frame and measure a problem as a policy motivated by a sense of competence and purpose, making it difficult for the opposition to be heard. By portraying a particular proposal as certain to pass, Weiss argues that interest groups become more inclined to be supportive. Leaders in the executive branch framed mental health reform as the moral step in the right direction, which encouraged interest groups to listen to the arguments and join the coalition. She states that inducements can be in the form of grants or stipends that government agencies can scatter throughout the health sector to develop institutional and individual capacities in line with the agenda s priorities.

8 Essentially, Weiss emphasizes the importance of grass-roots organizations in making a particular bill successful. This grass-roots activism was lacking from Clinton s attempt. President Obama attempted to involve as many citizens as possible by hosting town-hall meetings throughout the United States. President Clinton hosted one town-hall meeting while he was promoting his bill to the public. In addition to town-hall meetings, Obama also traveled around the country to hold regional forums as well once again building on the importance of grassroots mobilization. When President Clinton stepped into office, he made it certain that he would propose an overhaul of the healthcare system. Prior to a speech that he delivered to a joint session of Congress on September 22, 1993, he embarked on an eight-month trip around the country where he spoke to members of the health profession and patients regarding the flaws of the healthcare system. Thus, when he proposed his health bill, it attracted a lot of public support. However, by July of 1994, public support for the bill had decreased significantly. Moreover, Republican leadership in both houses of Congress labeled the bill as a government takeover of health care in a time when excessive government intervention was perceived negatively. Through an analysis of the rhetoric contained in speeches and official releases, this paper examines how the President and Congress encouraged the AMA to join the healthcare coalition by comparing the Clinton to the Obama administration. Administrative tactics to promote ideas and inducements come in the form of speeches, reports, and congressional hearings. This type of correspondence provides insightful information about how AMA leadership and political leaders communicated throughout the reform process. What both administrations have in common is their firm conviction in the necessity of some kind of overhaul. They both promoted the idea that it was either a moral imperative or an economic necessity. Obama had campaigned on the idea of change and thus during his town-hall meetings, he identified health reform as integral to achieving change. He identified it as central to the long term prosperity of the United States. Also pushing the economic agenda, he warned at a town meeting that If we do nothing, within a decade we will be spending one out of every five dollars we earn on healthcare. In 30 years, one out of every three. In a time when the economy was already struggling, this was a credible threat. One significant difference is the President s attitude toward the AMA as an interest group with insightful information about health reform. President Clinton s health plan was proposed during his 1992 campaign. In order to develop his plan, President Clinton and his wife, Hillary, devised a 535 person task force composed of individuals in the healthcare industry. This task force deliberated behind closed doors. While this kind of closed deliberation is not a foreign concept in policymaking, to exclude a well-respected physician group was a politically risky move. At this point in time, the AMA s membership was near 300,000 a number much more than what its membership is today. Moreover, as an organization, they were well respected among the public as an organization that had the best interests

9 of public health with regards to health reform (Pew). In spite of this public appeal and in spite of their influence in the health lobby, President Clinton made it a point to decline their request to join the Task Force. Leadership in the AMA was eager to join the process because they understood that the status quo must go. In response to the AMA s request to be involved, he called them a special interest group. This antagonism was not limited to the presidency. In fact, Congressman Stark, who was the chairman of the House Ways and Means Committee (D-CA) publicly accused the AMA of attempting to take over the health reform effort, stating that they are attempting to be the big muckety-muck. That isn t going to happen (USA Today, 1993). President Obama s behavior presented a departure from this attitude. From the very beginning, he sought to involve physicians in the process of drafting the bill. On October 5, 2009, he invited physician interest groups (including the AMA) to an event at the Rose Garden. This speech directly addressed the primary concerns of the AMA The sanctity of the doctor-patient relationship The prevention of bureaucrats governing medical decisions Flawed sustainable growth rate formula by which doctors are reimbursed under Medicare (DCPD 2009) Rather than addressing this group of physicians as an interest group, President Obama gave them credit for their medical expertise. You are the people who know this system best. You are the experts. Nobody has more credibility with the American people on this issue than you do (DCPD 2009). This speech set a tone of collaboration, which characterized the rest of the reform effort with the AMA. It was only the beginning of correspondence that the President and the Congress had with leaders in the AMA. Once President Obama had the AMA s endorsement, he used it to propel the healthcare agenda. In a speech to the House, he states I urge Congress to listen to AARP, listen to the AMA, and pass this reform for hundreds of millions of Americans who will benefit from it. At a later speech, he once again reiterated that the AMA endorses it on behalf of doctors who know firsthand what s broken in our current system (DCPD 2009). Although the PPACA did not incorporate reform of the sustainable growth formula, President Obama s rhetoric throughout the reform process assured AMA leadership that the issue would be addressed. In March of 2009, the health reform debate had been receiving widespread criticism from both political parties. To respond to this uncertainty and political pressure, the Obama administration held a White House Summit on Health Care. To this Summit, he invited leaders of health policy interest groups to collaborate and provide insight on what shape they desired the pending bill to take. President Obama invited Nancy Nielson, the President of the AMA, to participate in this roundtable discussion. It was this spirit of collaboration between the physician lobby and the presidency that was lacking during the initial stages of Clinton s reform effort. Remembering the Clinton administration s refusal to invite the AMA

10 to the Task Force, Nielson appreciated this attention and stated: We are included in a way that we were not included before. Just three months later, in June of 2009, the President pled with the doctors of the AMA. He addressed them directly in a speech. At this point in time, the AMA opposed the public option that was still part of the bill. However, Obama appealed to them by stating that he was going to work toward limiting malpractice claims and addressing the doc fix. Information about AMA advocacy during the Obama administration is available on the AMA website. Overall, their press releases reveal a lot of advocacy with leaders in both houses of Congress. While during both administrations, the president of the AMA was invited to testify at hearings, the Obama administration was adamant in appealing through them. By inviting them to the White House Summit, speaking at their annual delegate meeting, and promising them a reform of the SGR, Obama successfully engaged the AMA in the health reform debate. They even met with the Secretary of Health and Human Services to discuss their plans. This was a stark contrast to Secretary Shalala s behavior during the Clinton administration. Although she initially contacted James Todd, the president of the AMA at the time, to ask for his input on healthcare reform, she did not follow up with him at all. In response to not being invited to the President s Task Force on National Health Care Reform, Todd stated: You have an entire profession of physicians who are anxious, uncertain, hassled, worrying about whether they will have any clinical autonomy left. Shalala also issued some statements to the AMA that lessened her credibility as a leader in health policy. In addition to acknowledging that she was not an expert in health care, at a speech she indicated that alcohol abuse was a fixable medical problem a statement that many physicians disagreed with at the time. Moreover, she stated that the healthcare bill would be consumer-oriented, which was controversial in light of the fact that physician members of the AMA are providers and having their interests representative was one of their vested interests. Rather than being involved with the Task Force, its members confronted AMA leadership with pressure to voluntarily control their costs. While the AMA was supportive of the managed competition proposal, they saw cost control as a form of global budgeting, which they adamantly opposed because it would infringe on a physician s autonomy to prescribe treatments without being concerned about conforming to a budget. Vice President Al Gore confirmed the AMA s status as a special interest organization in a speech that the days when one association, no matter how prestigious, can dominate the health-reform debate, are over. And they should be. For years, the AMA had been the leading organization in advocating for and against national health reform proposals. Gore acknowledged this and made it clear that the AMA s input would not be given the same about of weight as that of other health interest groups. After nearly 1000 stormed to the Capitol in late March of 1993, when the Task Force had already been deliberating behind closed doors, the Clinton administration agreed to hearing their suggestions at a closed meeting. They also scheduled a public session to which they invited organizations to present an answer

11 to the following question : "Why do some hospitals charge $ 5 for an aspirin and $ 35 for a towel, and what can we do about this problem?" Although this can be perceived as an outreach effort, by this time, the task force had already deliberated on the major provisions of the healthcare legislation. At this hearing, the chairman of the AMA once again reiterated that the organization was firmly against price controls. It came as no surprise when by September of 1993, the AMA was firmly against the proposal that the Task Force had drafted. They sent out a letter to 670,000 doctors and 40,000 medical students urging them to press their congressional representatives to reform Clinton s plan. AMA CORPORATE INTERESTS A study conducted by the New England Journal of Medicine following the passage of the health bill demonstrates that of the members of the AMA, just 12.5% supported the coverage expansions that the AMA demonstrated support for prior to the passage of the bill (Keyhani 2010). This begs the question of whether the leadership of the AMA perceived endorsement of the bill as more advantageous to their organizational interests than a consensus among their constituent members. The theory of institutionalism, proposed by Salisbury, necessitates looking into corporate interests of the AMA. His theory (1984) states that when interest groups become more powerful, they can behave more like institutions and advocate policies that are not necessarily representative of their constituent s interest. This is because the interest groups can develop corporate-like interests and they begin advocating on behalf of those interests. He writes, it is not the member interests as such that are crucial, but the judgments of organizational leaders about the needs of an institution as a continuing organization. Retaining power as a continuing organization includes influence with particular congressional leaders and representatives of the executive branch. The clearest indication of corporate interests that the AMA may have has to do with their copyright over Current Procedural Technology Codes (CPT Codes). These codes were developed by the AMA to code for certain procedures that physicians perform in order to determine reimbursement rates under federal healthcare programs like Medicare and Medicaid. The Department of Health and Human Services (HHS) and physicians around the country to determine Medicare reimbursement rates use CPT codes. The existence of these CPT codes in and of themselves cannot account for a change in AMA advocacy, as these codes have been in existence within the HHS since However, through focusing on their development between the Clinton and Obama administrations and tracing how their value has changed to the AMA and within the healthcare system, it could explain why the AMA would have an incentive to support a healthcare bill that affects Medicare and reimbursement. There are countless references of this relationship in the Federal Register. The following is an excerpt from the final rule of the Claims

12 for Medical Benefits Under the Federal Employees Compensation Act that details it: Under the fee schedule and billing system individual procedures are assigned a descriptor code using the Physicians' Current Procedural Terminology (CPT) scheme developed by the American MedicalAssociation. Each code is then assigned a relative value unit (RVU) reflecting the relative skill, effort, risk, and time required to perform the procedure. The maximum allowable amount payable for a given service is calculated by multiplying the RVU by a conversion factor (CF). This product is in turn multiplied by a geographic index (GI) which allows for regional variations in medical costs. (Federal Register) Prior to the adoption of CPT codes in 1992, Medicare reimbursement was done under a reasonable charge system. Local Medicare carriers would set fees depending on local patterns. It was arbitrary and left a lot of room for manipulation of the system. Between the Clinton and the Obama administration, CPT coding has undergone several significant change, which have all been influenced by the AMA. It is the sole interest group that sits on the CPT panel that convenes every five years to review the codes, make changes to them, and adjust the RVUs. At a hearing in October of 1993 where the AMA provided input on Clinton s health bill, they explicitly mentioned the importance of CPT-4 technology in the healthcare system. Through the development and maintenance of the AMA s CPT coding system, the medical profession has demonstrated its ability to create and administer an efficient procedure coding system in partnership with the government. CPT is already widely used and accepted by Medicare, Medicaid, and all third-party payers. The national board should recognize the profession s contribution and be careful not to create new administrative burdens in the course of trying to simplify information systems. The existence of the CPT Codes within HHS is advantageous to AMA interests. Exclusive use of CPT codes for reimbursement ensures that the AMA can derive revenues from their publications. In order to ensure that CPT codes are accurate, there is a panel that convenes annually to assess the codes. Moreover, every 5 years CMS reviews the fee schedule s Relative Value Units (RVUs). This is because for a given service, the amount of physician work required could change because of factors such as learning by doing, improvements in technology, personnel substitution, reengineering, changes in patient severity, and documentation requirements. In 2007, Health Affairs reported that the RVUs do not do a good job of identifying services that may be overvalued (Hayes). This kind of conclusion is not beneficial for the AMA s interests because as a physician lobby, their priority is to maximize physician profits. CMS reserves the right to set the relative values for these units. i Criticism of the CPT system began as early as 1995, when the US General Accounting Office published a report titled Medicare Claims: Technology Could Save Billions. In this report, they provide a description of the coding system and

13 then state that it is complicated and difficult for physicians to understand. It goes on to state that these complexities can inadvertently lead providers to submit improperly coded claims. They also make insurers vulnerable to abuse (GAO). In spite of this criticism as early as 1995, the AMA has only retained its influence in the CMS as the sole entity responsible for revision of the coding system. The exclusivity of the CPT coding system has provoked some controversy in the media and within Congress as well. Competing physician interest group, the Association of American Physicians and Surgeons, issued an article in 2001 titled Doctors Expose AMA s Secret Pact with Federal Government. ii In this article, they reference the agreement as a crime with a motive for money. Although this agreement is far from a secret, given that there is extensive literature on its existence in the Code of Federal Regulations, there is a sense from this physician s organization that the AMA has monopolized influence in the CMS. Discussion of the CPT coding system in the Congress has typically referenced its implementation and use by physicians. However, in September of 2009, when the Senate was in session discussing Medicare fraud in context of President Obama s healthcare reform bill, Senator Coburn referenced this relationship in a negative light on the Senate floor. We should make structural changes and with that get better and lower cost care, like paying for outcomes rather than paying the American Medical Association to use their CPT code. (Congressional Record, S9762) I found no evidence that the federal government pays the American Medical Association for use of their codes, however Coburn references the code s domination of the healthcare financing industry. Coburn s statements were followed up by a number of proposals discussing how the CPT codes do little to curb costs. Senator Coburn and Senator Barrasso were the only senators with medical degrees during Obama s debate. They regularly hosted the Senate Doctors Show, where they discussed their views on Obama s proposal and offered their suggestions for reform. Given how embedded the CPT codes were in the healthcare system by 2009 and 2010, it is unlikely that AMA leadership felt threatened by these statements. However, the timing of these statements so close to their endorsement of the PPACA demonstrates a shift in the Republican party s allegiance to the AMA s interests. Government contracting is not a unique phenomenon, however when evaluating the corporate interests of a lobbying organization, it is important to consider all deals that the lobby has with the government. As a business, the widespread use of the CPT-4 code is beneficial to the AMA. In 1996, the existent coding system added 87,000 new coding combinations. In 1999, the AMA began seeing some trouble for what people called a monopoly. Although the contract does not grant the AMA direct royalties from the HCFA, the exclusivity agreement prevented the HCFA from using any other coding system. This would protect the AMA s annual revenue from the coding system. AMA annual revenue, according to their annual reports, amounts to over $260 million a year. The bulk of this

14 revenue comes from what they define as business operations under which the distribution of CPT Code manuals and books falls. In 2009, of the $210 million in revenue from Publishing and business services revenue, $70.9 million came from Books and Products. The report states reimbursement products, such as CPT books, workshops and licensed data files, make up the Book and Products unit. Although the report does not indicate how much of the 70.9 million is attributable to the distribution of CPT codes, it is clear that CPT codes comprise a significant source of revenue for the AMA. In addition to these corporate interests, it is likely that the prospect of influencing future legislation would induce the AMA to endorse health reform. After the PPACA passed, representatives were back on Capitol Hill pushing forth the` doc fix and medical liability reform. Even during the debate, while they endorsed the bill, the rhetoric that they released demonstrated that these two items were at the forefront of what they were concerned about. When the President at the time of their endorsement, James Rohack, was questioned about his endorsement, he responded that the [physician reimbursement] formula s broken as a result of those cuts, access is impacted. In November of 2010, 8 months after the PPACA passed, the AMA hosted a number of briefings to pass legislation to delay the payment cuts that were set to occur in The one-year extension is just one lobby success that the AMA claims. They are still advocating for a permanent fix for this issue. The PPACA very loosely addresses the issue of liability reform. It establishes a system of providing grants to states to experiment with methods of tort reform. However, this was not perceived as satisfactory to the AMA, evidenced by their advocacy for another bill just months after its passage. Currently being debated on the floors of both houses of Congress is the HEALTH Act (AMA, Current Topics in Advocacy). Taking into consideration President Obama s promising rhetoric regarding the doc fix and collaboration with the AMA, it would seem as though supporting the PPACA put the AMA in a better position to advocate for these two bills later in the debate. Going back to Salisbury s theory of institutionalism, it is very likely that AMA leadership has shifted their political allegiance in a way to preserve their influential status within the CMS. CONCLUDING THOUGHTS Unless we can go back to the AMA House of Delegates meeting prior to their endorsement of the PPACA, we will never know what factor led them to change their advocacy. Between 1994 and 2010, the health economy changed drastically. More individuals found themselves without coverage and costs continued to skyrocket. It was clear that some kind of change to the status quo was necessary. Patients and physicians and health economists around the country agreed. The AMA had established a reputation of being an obstacle to health reform. This time around, however, President Obama had prioritized it on his

15 agenda. Recognizing the failures of the Clinton administration, he was determined to develop and propose it strategically. This paper acknowledges that the healthcare climate surrounding the passage of the PPACA necessitated a change in the status quo. It neither applauds nor frowns upon AMA advocacy. Rather, it analyzes the behavior of a powerful physician lobby as a product of various political factors. Although one might suggest that the answer to a shift in AMA advocacy has to do with the necessity of health reform, given their status as a well-respected health professional interest group, there is evidence that gives credence to a variety of other factors. Namely, their corporate interests, their history of opposition to government intervention, the treatment they received from presidential leaders, and their lobbying following the passage of the bill suggests that their advocacy shift was not entirely a result of AMA leadership coming to terms with a new reform bill. This is especially because the PPACA did not incorporate liability reform and the infamous doc fix. The necessity of health reform existed under the Clinton administration as well. What changed is that the health economy continued to worsen. Moreover, Obama administration used different tactics to garner support for the bill. It is also likely that AMA s cooperation with the federal government is related to the contract that they have with the federal government regarding the CPT Codes. Although they receive no royalties, the exclusivity that they have secured gives them a substantial influence on the US healthcare system. With official reports and statements discussing how CPT codes may not be saving the healthcare system money, AMA leadership perceived cooperation as more advantageous to their political and corporate interests. Salisbury would suggest that their corporate interests have surpassed their allegiance to their members. While their declining membership would provide support for this, there are a number of other reasons why membership in the AMA is struggling the growth of specialty societies and the changes in the health lobby. Also, it is clear that the AMA does care about their membership. With the resignation of the CEO, who had been supportive of the PPACA, they are attempting to find a replacement that will be more sensitive to the current interests of physicians in the country. Future presidents and congressional leaders can learn from this strategy of bringing powerful interest groups to the roundtable for discussion. Clinton s greatest mistake in failing to attract AMA leadership was not considering their interests in the Task Force. This was to his detriment because at that time, the AMA was a more powerful organization than it is today. The AMA has been a well-respected organization within the world of health and politics. Isolating one particular factor to account for the AMA s shift in advocacy would be difficult, as they are all qualitative influences. However, this paper demonstrates that the AMA s endorsement was beyond a genuine belief that the PPACA was the solution to the healthcare problems that faced the United States. After years of being characterized as an obstacle to reform efforts, it was forced to become a team player because it was no longer the dominant voice in the health lobby.

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