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From the Townsend Letter
February/March 2007


Exposing the Department of Health and Human Services/American Medical Association Health Care Monopoly
by Jennifer Bolen

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Curing US Health Care
Health care in the US is in dire straits. Although it is by far the costliest system in the world, it barely passes muster with an overall grade of "D" when it comes to quality of care.1 Too many Americans are uninsured and lack access to preventive care and treatment options. From an alarming lack of affordable coverage to an unacceptable level of medical errors and drug deaths, the list of problems is long and tragic.2

Our system is sick, but how do we fix it? We start with increasing access to preventive care and reducing our reliance on drugs and surgery. To do so, we must first understand the qualifications of over three million health care practitioners who are not allopathic physicians and address a statutory billing code monopoly created by the government that limits our ability to measure the effectiveness of and the demand for other types of care.

The Department of Health and Human Services (HHS) is charged with safeguarding our health but is actually restricting our access to effective and affordable treatment options that lie outside of conventional MD intervention. Our mandated billing code system, which is used to process the delivery of health care services and measure the cost of treatment options, is only available to measure allopathic medicine. Allopathic physicians make up fewer than 20% of all licensed US health caregivers, and allopathic medicine is commonly the most costly option. As of 2005, over 46 million people in the US were uninsured.3 While there are a multitude of reasons for the high cost of providing health care, overcoming a government-sanctioned billing code monopoly would provide the necessary information to maximize access to less expensive and less invasive care options provided by several million non-physician practitioners, as well as integrative MDs and DOs.

HHS's Role in Establishing a Medical Monopoly
To understand the power of this government-sponsored code monopoly, we first need to understand how it came to be. In 1983, the Department of Health and Human Services (HHS) signed an agreement with the American Medical Association (AMA), an MD trade organization, to develop codes that are used by health care practitioners to submit bills for reimbursement by insurers, government agencies (like Medicare, Medicaid, and TRICARE) and other payors. Next, in 1996, Congress authorized HHS to select the code sets the health care industry must use for processing electronic health care claims. HHS mandated use of the codes it jointly develops with the AMA. While the mandated codes do an excellent job of supporting physician billing, they do not support billing from the three million licensed practitioners who are not allopathic physicians.

Consequences of the Medical Code Monopoly
This mandate has resulted in three major national health care policies that reduce access to care and increase costs:
1. The entire health care industry relies on codes to describe covered health care benefits and process payments.
2. The AMA and the government jointly establish the value of each code that results in reimbursement for all health care services.
3. The insurance industry, like all other industries, is moving away from paper-based billing to electronic billing. Thus, mandated codes end up becoming the only codes the industry uses.

The upside of this "code monopoly" is that there aren't duplicate code sets to document the same service. Eliminating duplicate codes streamlines the billing process, allows for effective electronic communication, and generates data that lets the health care industry financially manage benefits. The downside is that the HHS contract with the AMA has resulted in a conservative MD trade organization having undue influence over all health care delivery through codes.

Medical Care Versus Health Care
Merriam-Webster defines health as: "the condition of being sound in body, mind, or spirit; especially: freedom from physical disease or pain b: the general condition of the body." Medical is defined as "1: of, relating to, or concerned with physicians or the practice of medicine 2: requiring or devoted to medical treatment."

"Medical care" and "Health care" are not synonymous. Yet our US health care system is based on allopathic medical care rather than health care. Health care should include access to conventional as well as preventive and alternative treatments. Health care coding should be available to describe care provided by nurses, physical and occupational therapists, mental health practitioners, pharmacists, nutritionists, and complementary and alternative medicine (CAM) practitioners. Unfortunately, in most cases, allopathic physicians determine how care is accessed and delivered, and these decisions are based on data generated by fewer than 20% of caregivers. In fact, of the more than six million health care professionals practicing in the US, fewer than 800,000 are licensed MDs and only about 300,000 of those MDs actually belong to the AMA. While allopathic medical care in the US is certainly advanced in treating complex diseases and injuries, most of the health-related issues in the US are not complex and could be effectively treated by less expensive and less invasive methods.

Coding Monopoly Drives Up Health Care Costs
The coding monopoly is grave enough that Senator Trent Lott, in a letter to former Health and Human Services Secretary Tommy Thompson, stated the following:

It is my understanding that HCFA4 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. As a result of HCFA's and the federal government's endorsement of the AMA's copyrighted outpatient code – to the exclusion of all competitors – private insurance companies and others were also forced to adopt the CPT as their billing standard as well. The CPT code has thus become a fixture in doctor offices around the country. This predictably led to a financial windfall for the AMA in the form of CPT-related book sales and royalties approaching $71 million a year according to a report by the Wall Street Journal.

Currently, the cost of health insurance is so prohibitive that record numbers of employers are refusing to offer health insurance as an employee benefit – many employers simply can't afford it.5 This has resulted in a record number of uninsured US citizens. Meanwhile, government reductions in payments are causing more physicians to avoid Medicare and Medicaid patients. One result of these two phenomena is that millions of Americans are being pushed into using emergency services when preventive care could have kept them out of the hospital.6 Obviously, emergency care is expensive. Recently, rather than recognize any additional code set that could supplement the AMA/HHS codes and help expand public access to quality care at less cost, HHS seems bent on blocking use of any codes that aren't jointly developed with the AMA.

Solution on the Horizon
Ten years ago, in an attempt to fill these coding gaps and open access to better management of the entire health care system, a little-known company called ABC Coding Solutions (formerly Alternative Link) began creating codes to be used alongside Current Procedural Terminology (CPT) codes. (See Sidebar.) After eight years of meeting each government requirement, in January 2003, then-Secretary of HHS Tommy Thompson agreed to test the cost-benefits of these new codes in electronic health care transactions. While empirical data showed Alaska Medicaid saved up to 50% of the states costs for behavioral health using ABC codes, the department failed to report this finding to the Secretary and instead reported that Alaska could have used the code set jointly developed with the AMA. (Alaska Medicaid disagreed with this assessment.) Subsequently, HHS disallowed use of ABC codes for processing electronic claim transactions after October 16, 2006.7

To ensure that ABC codes could still be used to accurately document treatment options, the developers of ABC codes created a new claims-filing tool that allows practitioners to document their care using ABC codes and then bill electronically, using the jointly developed AMA and government code sets. This new system saves practitioners time and money while also collecting data that will provide financial comparisons between allopathic treatments and non-allopathic treatments. The ability to track the demand, outcomes, and costs of CAM, nursing, behavioral health, nutrition, and other care options will quickly legitimize those treatments that offer quality and cost-effective options to allopathic medicine. At the same time, the new system reduces legal exposure for practitioners and payors by identifying the codes that are allowed for each practice under state scope of practice regulations. ABC Coding Solutions plans to provide the collected outcome data to the insurance industry, Congress, and the press.

Many Congressional leaders understand the negative financial impact of the coding monopoly and are helping ensure an impartial and unbiased review of ABC codes outside of HHS. Congressional leaders also understand that ABC codes are the only fully developed code option on the horizon to identify legally authorized care provided by the over three million licensed practitioners who are not allopathic physicians.

The Future of Health Care
Who knew that codes were so essential to the delivery of health care in the US and that a billing code monopoly could actually establish the business model for an entire country? Consumers, who are demanding options in treatment and access to affordable coverage and care, should ultimately control this industry, especially in a free-market economy. The right to choose who will provide our health care should not lie within a government bureaucracy, acting at a glacial pace and unresponsive to our nation's critical need for greater access to quality care at less cost.

The public has need of and the right to quality care. Practitioners have need of and the right to correctly code their care. Until a national code set is established for meeting these needs, ABC codes can be used to properly document care, assure rational reim-bursement, and provide data that will show which care options will reduce health care costs. Since state laws vary widely on who can do what (which practitioners can provide which services), the ABC coding system can validate that the care being provided is legal and based on the core competencies of licensed practitioners. How? References to over 15 million state statutes, administrative regula-tions, case laws, and training standards are tied to each practitioner in each state for each ABC code. Thus, the ABC coding system helps prevent billing fraud and reduces practitioner and insurer risk of fines that can be as high as $10,000 per claim8 for processing payment for an illegal service.

By filling in coding gaps, ABC codes meet the public's demand for viable treatment options, the industry's need to avoid treatments by untrained practitioners and billing fraud, and the nation's need to form policy on outcomes data based on actual treatments. Without ABC codes, the industry is basing health care policy on allopathic medical interventions and fewer than 20% of actual treatments. When health care policy is defined by documenting all care and public access to care is based on quantifying safe and efficacious options in treatment, then, and only then, can we cure our ailing health care system.

Jennifer Bolen
1221 NW 11th Avenue, #313
Portland, Oregon 97209 USA

Health care practitioners are invited to submit data to HHS and Congress related to their need for additional codes by taking a short survey at
(June 2007: Survey is closed.)

For more information about ABC codes, please visit

For information about ABC Coding Solutions' web-hosted, claim-filing tool,, please visit

1. Schoen C, Davis K, How SKH, Schoenbaum SC. US health system performance: A national scorecard. The Commonwealth Fund and Health Affairs Web Exclusive. September 20, 2006.
2. Dean C.
Death by Modern Medicine. Merlin, Oregon: Walter Publishing, 2005.
3. "The Number of Uninsured Americans Is at an All-Time High." Center on Budget and Policy Priorities, August 29, 2006.
4. The Health Care Finance Administration (HCFA), a division of Health and Human Services, has since been named the Centers for Medicare and Medicaid Services, and its new acronym is CMS.
5. Hadley J. Effects of recent employment changes and premium increases on adult insurance coverage.
Urban Institute. October 20, 2006.
6. Cunningham P. The use of hospital emergency departments for nonurgent health problems: A national perspective.
Sage Journals Online. 1995; 52 (4); 453-474.
7. The Department of Health and Human Services, Centers for Medicare and Medicaid Services, Office of E-Standards and Security, was the organization responsible for reviewing ABC codes and reporting its findings to the Secretary of HHS, Michael O. Leavitt.
8. Hellerstein D. HIPAA's impact on health care – government activity.
Health Management Technology. April 1999.

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