The Trump administration on Tuesday asked for public suggestions on overhauling Medicare’s decades-old system for paying physicians, advancing officials’ long-running efforts to shift financial incentives toward primary care and prevention instead of costly procedures.
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Trump officials are also seeking potential alternatives to the billing-code system — the Current Procedural Terminology, or CPT — which is owned and operated by the American Medical Association, the nation’s largest physician lobbying organization. The system has long determined how much reimbursement physicians and other health care practitioners receive for certain services.
The coding system tends to reward health care providers for surgeries and other costly procedures. It has been accused of steering physicians into lucrative specialties, reinforcing a health care system that pays more to treat diseases than prevent them.
Efforts at change have met fierce resistance from lobbyists, with billions of dollars at stake from even small tweaks to the existing formula. There are also major technical challenges when designing new payment models for the U.S. health system, officials have said.
Health Secretary Robert F. Kennedy Jr. and his aides have spent about two years privately discussing plans for shifting away from the current system, a move cheered by some public health advocates and some Democrats, who agree that the existing model is flawed. Kennedy, who built his public profile by harnessing frustrations with entrenched medical interests, and other Trump officials have also sought to tout Republican efforts to combat health care frustrations ahead of this fall’s midterm elections.
In interviews, administration officials said they wanted Tuesday’s announcement to be viewed as a “strong signal” for outside experts to work with them on overhauling the system or devising a new one. Financial incentives are different in other countries, where more physicians go into primary care — and health outcomes are better.
“White House aides are interested in what alternatives we have to this monopoly,” said one White House official, speaking on the condition of anonymity to preview internal plans. “We have concerns about the AMA’s outsized influence over setting payment rates, which could be a conflict of interest.”
The administration’s request for information was issued by the Centers for Medicare and Medicaid Services, which oversees the Medicare program.
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The AMA did not immediately respond to questions about the administration’s interest in overhauling Medicare payments. The lobbying group has defended its role in the current payment system, saying that its codes are developed using “a rigorous and transparent process” and are “updated regularly to reflect current clinical practice and innovation in medicine.”
The AMA, which represents more than 250,000 physicians, oversees a panel of several dozen physicians — known as the AMA/Specialty Society RVS Update Committee, more commonly referred to as the RUC — who study the resources needed for each medical service and issue recommendations to the federal government. While those recommendations are not binding, federal officials overwhelmingly accept them and use them to set reimbursement for doctors’ duties.
The panel’s recommendations have historically been skewed by misleading estimates of how physicians spend their time, according to a 2013 Washington Post investigation. For instance, The Post found that the group repeatedly inflated the amount of time a doctor needed to perform a procedure.
The AMA also collects millions of dollars in revenue from its work to develop and recommend billing codes, with the group conducting trainings, selling books and charging royalties.
Kennedy’s defenders have said that his interest in changing physician payments reflects his willingness to take on the medical establishment. Unlike other aspects of his agenda — such as Kennedy’s efforts to reduce the number of vaccines administered to children — he has found common cause with some of his critics in Congress and across public health on this front.
“A secretive committee run by the American Medical Association has played an outsized role in recommending the relative values of physician services, and it has overwhelmingly recommended that specialty services are worth a whole lot more than primary care,” Sen. Elizabeth Warren (D-Massachusetts) said in an April 2024 hearing on Medicare payment changes.
Sen. Bill Cassidy (R-Louisiana), chairman of the Senate’s health committee, has also pressed the AMA on how the lobbying group devises codes that are used to bill for medical procedures and services, fees associated with that work and the organization’s broader agenda.
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