The Five-Digit Toll

Four of the five code sets we license are free. The one that bills us decides what a doctor’s time is worth.

Every medical bill in America is written in a vocabulary that a private trade association owns, and this month somebody finally sued to take the dictionary back.

I have a stake in this that shows up on our books. We built the technology, and several of the products we sell depend on CPT to function, which means there is a license agreement with the American Medical Association, a royalty calculated per end user, and a compliance portal where we report usage the way a franchisee reports sales to corporate. Every clinician who touches the software counts as a seat. Every seat carries a number. That number gets paid annually whether the clinician submits a thousand claims or none.

What makes the arrangement odd is the company it keeps. The same systems run on ICD-10-CM for diagnoses, maintained by the CDC and downloadable in full right now with no account and no signature. They run on SNOMED CT for clinical concepts, distributed free to American users by the National Library of Medicine. They run on LOINC for laboratory results and RxNorm for medications, both free, both federally supported, both maintained by people who have to eat. Four vocabularies just as mandatory and just as expensive to maintain, and four invoices that never arrive. Then there is CPT, which shows up with a contract, a rate schedule, and an audit clause.

I want to be careful with what follows, because this subject collapses into quidnuncery almost immediately, the gossipy sport of naming villains and enjoying the naming. I have no appetite for it. The people who staff the CPT Editorial Panel are doing real work, and anyone who has watched a new procedure struggle for a code knows that doing that work badly would cost the country more than the licensing fee does. The argument here is duller and narrower. A vocabulary that federal law forces you to use should not carry a private toll, and American health policy already solved that exact problem once, on the record, for a different vocabulary, at a price that would embarrass anyone who calls the fix impractical.

The compulsion is the product

Start with how compulsory CPT actually is, because the compulsion is what makes the price interesting. The AMA published the first edition in 1966. Medicare adopted it for physician services in 1983. The HIPAA transaction standards then made it the required code set for electronic claims, Medicaid requires it, and at least forty-five states write it into their own programs. Substituting HCPCS Level II for the services CPT covers is generally not permitted, so the escape hatch people assume exists does not open. Bill for medical care in this country and you will use the AMA’s words or you will not be paid.

Pricing behaves the way pricing always behaves when the customer has nowhere else to go. A physical codebook runs $137.89. One internal-use electronic model runs $82.50 up front plus $18.50 per user per year, and inside a billing department everyone is a user. Vendors pay distribution royalties on top of that, by end user, reported and reconciled. Health plans pay. Clearinghouses pay. Analytics companies pay. Price transparency nonprofits pay, or they get sued, which is roughly how this month went.

On August 13, PatientRightsAdvocate.org sued the AMA in federal court in Chicago. The group has spent years pushing hospital price transparency into existence, and this time it bought the 2026 codebook, announced it intends to scan and publish the thing free and searchable, and asked a judge to confirm it may. The legal theory is old and blunt. No one can own the law, CPT is incorporated by reference into federal and state law, and the copyright cannot survive that. The Supreme Court restated the underlying principle six years ago in the Georgia annotated-code case, holding that the edicts of government belong to the governed. The AMA has stood on this ground before. In 1997 the Ninth Circuit found it had misused the CPT copyright through an arrangement in which the government adopted CPT while agreeing not to adopt a competing code set. The exclusivity clause was eventually renounced, by which point the code set had been welded into every claims system in the country and the exclusivity had become a property of the world rather than a term in a contract.

The financial stakes explain the vigor of the defense. In the 1950s the AMA spoke for something like three of every four American physicians. Today the figure is closer to one in seven, and that count folds in students and residents who have never submitted a claim. A membership collapse of that size normally ends a trade association, and this one survived by ceasing to depend on members. Royalty revenue climbed from roughly $66 million in 2011 to about $285 million by 2023. The complaint puts 2025 revenue from books and digital content at $296.4 million with $267.5 million remaining after expenses in that category, and alleges CPT accounts for the overwhelming share. Those are ninety percent margins on a file transfer, earned by the organization that testifies to Congress about what physicians need.

What the dictionary decides before the bill exists

The price of the codebook still matters less than what the codebook does before any bill exists. CPT decides what counts as work. A procedure has a code and a value attached to it. A conversation had almost no code for decades and still carries values that lose to anything you can do with your hands. The AMA writes the vocabulary and, through the Relative Value Scale Update Committee, recommends to Medicare what each entry is worth, and Medicare has historically adopted the large majority of those recommendations. One organization holds the dictionary and drafts the price list, with the sellers seated in the room.

I watched the downstream version of that every day running clinic sites. A patient with four chronic conditions and a language barrier takes forty honest minutes, and forty minutes of talking pays worse than eight minutes and a procedure tray. Clinicians who spend the time absorb the loss quietly, one visit at a time, until they stop spending it or leave or start sending anything complicated down the hall to somebody else. That behavior gets attributed to physician culture, or defensive medicine, or generational softness. A large share of it is the fee schedule in a white coat, and the fee schedule begins with the vocabulary.

Which brings the licensing problem back around, because the people best positioned to audit whether the codes and their values make sense are precisely the people charged for the privilege of looking. A researcher studying coding patterns pays. A benefits consultant building reference-based pricing pays. A nonprofit publishing hospital price files pays or receives a cease and desist. A patient trying to learn what 99214 means finds an approximation on some content farm, because the authoritative definition sits behind a license they have never heard of and would not qualify for. Auditing a bill written in a language you are not licensed to read is not a thing a person can do.

Science ran this experiment for thirty years and lost. The taxpayer funds the study, the scientist writes the paper for free, other scientists review it for free, and the publisher walls off the result and charges the same taxpayer’s university six figures a year for access. When I was doing microbiology work at UIC, a meaningful fraction of any literature review was determining which papers I could actually open, and everyone I knew had a workaround they did not put in writing. Aaron Swartz pulled a large pile of those articles through a network closet at MIT in 2011, faced felony charges carrying decades of exposure, and was dead at twenty-six. The most heavily used medical library on earth is a pirate site built by a graduate student in Kazakhstan. That is the honest record of how seriously the arrangement treated publicly funded knowledge.

Procurement broke the arrangement, well after litigation had failed to. The White House science office directed federal funders in 2022 to end publication embargoes, and since July 1, 2025, NIH-funded manuscripts must appear in PubMed Central free on the day of publication with no twelve-month wait. Science continued. The publishers relocated the booth, converting the reader fee into an author fee, so researchers now pay thousands of dollars in article processing charges to reach the same result. Keep that in view as CPT heads toward a courtroom. If the codebook goes free, the revenue will look for a home in the assistant publications, the advanced coding packs, the mapping files, and the data products, because a lawsuit aimed at a book leaves the surrounding catalog untouched.

The fix already happened once, in 2003

The precedent that actually fits CPT is one the informatics world executed quietly and almost nobody outside it remembers. SNOMED CT was proprietary intellectual property of the College of American Pathologists, and before 2003 you paid the College for it. In July of that year the National Library of Medicine, acting for HHS, purchased a perpetual national license for $32.4 million over five years, funded jointly by NIH, CDC, CMS, FDA and several other agencies, and began distributing SNOMED CT to American users through the UMLS with no per-user fee. When ownership moved to SNOMED International in 2007, the United States joined as a member country, paid the national membership cost, and preserved the no-fee model. A few years later, when SNOMED became a requirement for certified EHRs, nobody had to buy a seat to comply with the mandate. The people who built it got paid for building it, and the country stopped renting the words. That $32.4 million is less than the AMA’s codebook business clears in six weeks.

The CPT version writes itself. If the federal government mandates CPT as essential national health information infrastructure, which is what mandating it means, then HHS can acquire nationwide usage rights and distribute CPT through the NLM and UMLS exactly as it distributes SNOMED CT today. The AMA gets compensated for maintaining it, on a contract with deliverables, the way Regenstrief is supported for LOINC. The editorial panel keeps meeting, the annual release keeps shipping, the codes keep getting revised. What disappears is the toll charged to EHR vendors, analytics platforms, providers, researchers, and the patient-facing applications that federal law requires to speak this language in the first place. Anyone who wants to argue the maintenance deserves serious money will get no argument from me. Maintenance deserves a contract. A checkpoint is a different thing.

Three forces are converging on that outcome simultaneously, which happens almost never in health policy. Senator Bill Cassidy, a physician who chairs the Senate committee overseeing HHS, wrote to the AMA in October 2025 accusing it of abusing a government-backed monopoly through exorbitant fees. CMS then used the proposed 2027 physician payment rule to formally request public comment on the harms of AMA control over CPT licensing and on alternatives to CPT as the national standard, which in the grammar of federal rulemaking is a warning shot. And a well-funded nonprofit has now put the copyright itself before a judge in the AMA’s home district.

There is a parallel conversation running through my industry about who ends up owning American healthcare, prompted by a venture firm closing on a health system in Akron last fall and becoming the first hospital operator owned by a VC. The thesis is that owning the operating asset lets you build the technology around it and control distribution too, and founders get advised to identify their layer of the stack and figure out who has a reason to own it. Sensible advice. The AMA answered that question in 1966, found the layer underneath every other layer, the one every claim crosses on its way to becoming money, and has collected at the crossing ever since while everyone else buys buildings.

So the license keeps getting signed, because the alternative is not shipping, and I would rather have CPT maintained well than maintained by nobody. What stays with me is the arithmetic. Five vocabularies hold up the products we built, four of them cost nothing, and the one that bills us is the one that decides what a physician’s time is worth. The government made that dictionary mandatory sixty years ago. Buying the last one outright cost $32.4 million.