Physician Payment Outlook for 2012: Déjà Vu
Authors: Manchikanti Laxmaiah 
Published: March 2021

Physician spending is complex related to national health care spending, government
regulations, health care reform, private insurers, physician practice, and patient utilization
patterns.
In determining payment rates for each service on the fee schedule, the Centers for
Medicare and Medicaid Services (CMS) considers the amount of work required to provide
a service, expenses related to maintaining a practice, and liability insurance costs. The value
of 3 types of resources are adjusted on a yearly basis of the combined total multiplied by
a standard dollar amount, called the fee schedules conversion factor, which was $33.98
in 2011, to arrive at the payment amount. This factor will stay almost the same ($34.03)
unless a 27.4% cut in the sustainable growth rate (SGR) takes place or CMS enacts further
reductions. With a 27.4% cut, the conversion factor will be $24.67 in 2012 after the first
2 months if Congress fails to act.
Since the inception of Medicare programs in 1965, several methods have been used to
determine the amounts paid to physicians for each covered service. The SGR was enacted
in 1997 to determine physician payment updates under Medicare Part B with intent
to reduce Medicare physician payment updates to offset the growth and utilization of
physician services that exceed gross domestic product (GDP) growth. This is achieved by
setting an overall target amount of spending for physicians’ services and adjusting payment
rates annually to reflect differences between actual spending and the spending target.
Since 2002, the SGR has annually recommended reductions in Medicare reimbursements.
Payments were cut in 2002 by 4.8%. Since then, Congress has intervened on 13 separate
occasions to prevent additional cuts from being imposed.
The Medicare physician payment rule of 2012, which is still undergoing revisions -- but
considered as the final rule-- is a 1,235 page document, released in November 2011. In
this manuscript, we will describe important aspects of the 2012 physician fee schedule
which include potentially disvalued services under the physician fee schedule, expansion
of the multiple procedure payment reduction (MPPR) policy, establishment of the valuebased payment modifier, changes to direct practice expenses (PEs), electronic prescribing,
the Physician Quality Reporting System (PQRS), and lab testing signatures, along with
their implications. Additionally, the impact of multiple changes on interventional pain
management will be described.
In conclusion, interventional pain management is facing widespread challenges in the U.S.
health care system. A historic reform, which has been passed by Congress and signed into
law, whose survivability is not quite known yet, is affecting medicine drastically in the United
States. Interventional pain management, like other evolving specialties, will probably most
likely suffer under the new affordable health care law and regulatory burden.
Key words: Health policy, physician payment policy, physician fee schedule, Medicare,
sustained growth rate formula, interventional pain management, regulatory reform