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Continuing rise in health care costs in the United States, the Affordable Care Act (ACA), and a multitude of other regulations impact providers in 2013. Despite federal spending slowing in the past 2 years, the Board of Medicare Trustees believes that cost savings are only achievable if health care providers are able to realize productivity improvements at a quicker pace than experienced historically. Consequently, the re-engineering of U.S. health care and bridging of the divide between health and health care have been proposed beyond affordable care. Thus, the Medicare Payment Advisory Commission (MedPAC) envisions alignment of Medicare payment systems to eliminate variable rates for the same ambulatory services provided to similar patients in different settings, such as the physician’s office, hospital outpatient departments (HOPDs), and ambulatory surgery centers (ASCs). MedPAC believes that if the same service can be safely provided in different settings, a prudent purchaser should not pay more for that service in one setting than in another. MedPAC is also concerned that payment variations across settings encourage arrangements among providers that result in care being provided in high paid settings. MedPAC recommends that payment rates be based on the resources needed to treat patients in the most efficient setting, adjusting for differences in patient severity, to the extent the severity differences affect costs. MedPAC has analyzed the costs of evaluation and management (E&M) services and the differences between providing them in a HOPD setting compared to a physician office setting, echocardiography services, and multiple services provided in ASCs and HOPDs. MedPAC has shown that for an established patient office visit (CPT 99213) provided in a free-standing physician’s office, the program pays the physician 70% less than in HOPD setting with a payment for physician practice of$72.50 versus $ 123.38 for HOPD setting. Similarly, for a Level II echocardiogram, HOPD costs 141% more for the same service than a free-standing office ( $188.31 versus $ 452.89). For interventional techniques, Medicare payments vary from physician office to HOPD setting, with$211.96 in an office setting, $ 407.28 in ASC setting, and$655.62 in HOPD for procedures such as epidural injections. The MedPAC proposal for changing HOPD payment rates for services would reduce program spending and result in beneficiary cost sharing by $ 900 million in one year. On average, hospitals’ overall Medicare revenue will decline by 0.6% and HOPD revenue would fall by 2.7%. Further, MedPAC provided a specific example that aligning payment rates between HOPDs and freestanding offices only for cardiac imaging services would reduce program spending and beneficiary cost sharing by$500 million in one year. In estimating the savings that would be realized by equalizing payment rates between HOPDs and ASCs for certain ambulatory surgical procedures, MedPAC have shown potential Medicare program spending and beneficiary cost savings to be about $ 590 million per year. The impact of the proposed policies that are discussed in this manuscript would result in savings of approximately $1.5 billion per year for Medicare. MedPAC also has recommended a stop-loss policy that would limit the loss of Medicare revenue for those hospitals. Key words: Medicare, health care delivery system, Medicare Payment Advisory Commission (MedPAC), hospital outpatient departments (HOPDs), ambulatory surgery centers (ASCs), physician office practices

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

A House-passed measure to overhaul malpractice law and nix a controversial Medicare cost-cutting board faces formidable hurdles from both the Senate and the Obama administration. The bill, passed 223-181 by the House on March 22, paired two priority GOP bills that advanced separately through the chamber's committees. The first part of the bill, which had garnered wide bipartisan support, would repeal the Independent Payment Advisory Board authorized by the Patient Protection and Affordable Care Act to cut about $15 billion from Medicare within the first 10 years, according to the Congressional Budget Office. The second part of the bill was more controversial because it would create a $250,000 cap on any malpractice suit nationwide.

Medicare's congressional advisory panel issued its annual recommendations on improving the program amid the government's negotiations over ways to control historic deficits. The timing could give the group's cost-savings suggestions a greater chance of going into effect. The recommendations of the Medicare Payment Advisory Commission included requiring--for the first time--prior authorization for physicians treating Medicare patients. Specifically, physicians whose use of health imaging technology was unusually high and did not appear justified to CMS officials would need to obtain preapproval for the tests in order for Medicare to pay. That approach was intended to limit the hurdle to physicians who were using the technology more than was clinically required, according to the MedPAC report. The proposal aims to curtail double-digit growth in the use of medical imaging technology in Medicare in recent years. Although MedPAC regularly issues recommendations on which Congress takes no action, the current deficit-fighting environment in Washington has led some provider and patient groups to take this one very seriously.

Last week, the growing push by provider groups for congressional repeal of Medicare's physician payment formula ran into the harsh reality of what paying for that change could mean for the rest of the program. The steady drumbeat of provider organizations urging repeal of Medicare's sustainable growth-rate formula by the Joint Select Committee on Deficit Reduction - charged with finding $1.2 trillion worth of 10-year deficit reduction - culminated in an October 6 letter from 113 members of the House of Representatives. The House members urged the committee to include a full repeal of the SGR, to stabilize current payment rates to ensure beneficiary access in the near term, and set out a clear path toward comprehensive payment reform.