Zip Code

Medical billing code monopoly explains American Medical Association’s support for health plan, critics say, Health Insurance


The AMA which this year reversed its long-standing opposition, holds the exclusive rights to the medical billing codes that doctors are required to use when they submit bills to insurance plans. They are equivalent of a bar code for almost every medical procedure, from transplanting hearts to tucking tummies and scoping colons. It is a monopoly that critics’ comments get in the way of making health care less expensive and potentially more effective. The arrangement is the result of a once-secret deal, struck in the early1980s, that allowed the government to streamline billing procedures for its insurance programs by setting a single code set as the standard, Under the deal, the AMA maintains and updates the codes at no cost to the government, but generates millions each year selling the code books and software licenses to doctors and insurers. The initial deal related only to Medicare and other government insurance programs. Since then, Congress has stretched the regulation to require the codes to be used in electronic billing transactions with private insurers. Some explain the agreement to be revocable at any time through a simple rule-making process. Critics’ question if the AMA can represent the interests of doctors while it relies on revenue that comes from a government-sanctioned monopoly.