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CMS Projects Medicare Fee Cuts in 2004
Physician Payments Could Be Reduced by 4.2%.

If a preliminary projection made by the Centers for Medicare and Medicaid Services (CMS) proves accurate, physicians will see an across-the-board 4.2% reduction in the Medicare fee schedule in 2004.

PHOTOGRAPHER: JAMES NAZZ

CMS said the projection is a result of a significant 7% increase in total Medicare payments to physicians in 2002 coupled with lower than forecast economic growth as reflected by the Gross Domestic Product (GDP). Both factors serve as "triggers" in a formula used by the CMS to determine the level of overall Medicare physician payments. Because final figures won't be available until November, CMS said overall 2004 physician payments could conceivably range from an increase of 0.6% to a reduction of 5.8%.

The CMS announcement drew an angry response from physicians' organizations. Just weeks ago, physicians were heartened when Congress passed a last-minute "fee fix" that turned an overall 4.4% cut in anticipated 2003 Medicare payments into a 1.6% increase.

However, sources within CMS tell Ophthalmology Management that physicians should expect no relief from Congress if 2004 Medicare payments are cut. According to these sources, the Bush administration now has other priorities, including tax cuts and spending for the conflict in Iraq, which will take precedence over any additional help for physicians.

If CMS and Congress take a hard line on Medicare physician payments, it will put them in direct conflict with the Medicare Payment Advisory Commission (MedPAC), which advocates a 2.5% increase in 2004 physician payments. MedPAC also favors a new formula for determining physician payments based on the inflation index and the providers' costs, replacing the current formula, which is largely based on GDP growth.

As a fact-finding arm of Congress, MedPAC's recommendations have been taken seriously by the CMS. However, CMS sources tell Ophthalmology Management that MedPAC's recent recommendations would require a level of additional spending that both Congress and the CMS consider unrealistic.

And it's not only MedPAC that's at odds with the CMS. The president of the American Medical Association, Yank D. Coble, Jr., M.D., charged that Medicare physician payments rose last year because of factors beyond doctors' control, including an aging population, new disease screening benefits, CMS coverage expansions, and development of new therapies to manage chronic illnesses commonly found in the elderly.

"Improvements in the health and life expectancy of our nation's seniors has a cost attached, and the physicians of America should not be penalized for these important achievements," said Dr. Coble. "Unless we change the physician payment formula, Medicare payments to physicians will continue to plummet, making it more difficult for the nation's seniors to get the health care they need and deserve."

IN THE NEWS

HMOs can't limit providers. In a major decision, the U.S. Supreme Court has ruled unanimously that HMOs can't limit the pool of doctors in managed care networks and must accept any willing provider. The ruling upheld a Kentucky state law and applies to any state that has a similar "any willing provider" law.

The managed care industry has vigorously opposed "any willing provider" laws, arguing that medical care costs can only be held down if the number of providers in a network can be controlled. By limiting providers, HMOs say the participating doctors can generate the patient volume to earn a reasonable profit despite receiving lower fees.

Ophthalmology Management Consulting Editor Gil Weber says the Supreme Court's decision may put in doubt the future viability of capitation in states that have "any willing provider" laws.

"The ruling might also open previously closed panels, for example Vision Service Plan, which now obligates ophthalmologists to choose between being primary vision care providers and medical-surgical providers," notes Weber. "What if an ophthalmologist practices in a state with an "any willing provider" law and wants to do both primary vision care and medical-surgical procedures?"

PureVision litigation. CIBA Vision has filed a patent infringement suit against Bausch & Lomb in Ireland, charging that B&L's 30-day and night continuous wear PureVision contact lenses infringe on an Irish patent that protects CIBA Vision's Focus Night & Day lenses. The lawsuit is significant because B&L moved all PureVision production to Ireland after a U.S. federal court ruled that PureVision lenses infringed on a CIBA Vision patent. Under the terms of that ruling, PureVision lenses can't be manufactured or sold in the United States until 2005 at the earliest.

Two New Anti-Infectives Are Approved
Both Are Fourth-Generation Fluoroquinolones.

Allergan has received FDA approval to market gatifloxacin ophthalmic solution 0.3% (Zymar), a fourth-generation fluoroquinolone anti-infective for the treatment of bacterial conjunctivitis.

Allergan recommends that Zymar eyedrops be used q.i.d. Alcon says the Vigamox drops should be dosed t.i.d.

Both drugs are expected to be available sometime this month.

"We consider Zymar to be an evolution in therapy," says Vincent Perrotta, R.Ph., senior product manager for Allergan. "First, it represents a breakthrough in the treatment of pathogens that have mutated to become resistant to third-generation fluoroquinolones. Second, it offers broader coverage against gram-positive bacteria. And third, Zymar's dual mechanism has proven effective against Topoisomerase II and Topoisomerase IV, the two enzymes that enable the bacteria to replicate. The dual mechanism makes it very difficult for the bacteria to develop a resistance to Zymar."

Calvin W. Roberts, M.D., clinical professor of ophthalmology at Weill Medical College of Cornell University, says he has already been able to use Zymar successfully on several patients who showed no response to third-generation fluoroquinolones.

"About 40% of gram-positive bacteria and 31% of gram-negative bacteria have developed resistance to third-generation fluoroquinolones," says Dr. Roberts.

Alcon says the high solubility of Vigamox allows it to be formulated at a higher concentration than other fourth-generation fluoroquinolones. The company says Vigamox shows enhanced coverage of gram-positive bacteria, including staphylococcus and streptococcus, and is also effective against chlamydia.

Alcon also notes that Vigamox has a near-neutral pH, resulting in a low incidence of stinging when applied to the eye. The company says this is an especially important consideration in treating children.

Both drugs are also expected to be widely used as prophylaxis to prevent infections that can follow cataract and refractive surgery.

Medicare Will Cover More ASC Procedures
Changes Were First Proposed in 1998.

The Centers for Medicare and Medicaid Services (CMS) has approved additional ophthalmic procedures that will be eligible to be reimbursed by Medicare when performed in ambulatory surgery centers (ASCs). However, several ophthalmic laser procedures that the Outpatient Ophthalmic Surgery Society (OOSS) had asked to be included on the list weren't considered for approval.

Approval of the ophthalmic procedures was part of an overall decision by CMS to make Medicare reimbursement available for 288 additional medical procedures when performed in ASCs.

The action came as no surprise, as the CMS had announced its intention to add to the list of approved ASC procedures as part of its 1998 proposal. However, the changes were delayed when the entire 1998 proposal, which included cuts in Medicare reimbursement, was blocked by Congress.

Effective July 1, Medicare reimbursement will be available when billed under the appropriate CPT codes for the following ophthalmic procedures performed in ASCs:

• 15820, 15821, 15822, 15823: revision of lower and upper eyelid
• 65772 and 65775: correction of astigmatism
• 66825: repositioning intraocular lens.

The OOSS said it had also urged CMS to add such laser procedures as trabeculoplasty, iridotomy by photocoagulation, laser prophylaxis of detached retina, destruction of retinal lesions, and destruction of retinopathy to the approved list but these procedures weren't considered. The OOSS said it will continue to push for additional approvals.

'The action by CMS is a major accomplishment for OOSS and the ASC community," said OOSS President Jerome H. Levy, M.D.

IN THE NEWS

Capsular tension rings. Advanced Medical Optics (AMO) will distribute and market Ophtec's capsular tension ring, which is currently awaiting FDA approval. Once approved, the product will be known as StabilEyes and will be primarily used to stabilize the capsular bag in cataract surgeries involving patients with weakened or broken zonules. Ophtec is responsible for obtaining FDA approval for its capsular tension ring.

AMO President and CEO James V. Mazzo said the product is "much-needed."

Retisert side effects. As a treatment for diabetic macular edema, Bausch & Lomb's drug delivery implant, Retisert, showed significantly higher rates of adverse side effects than standard laser therapy. Twelve-month data from a clinical trial indicate that 24.4% of the patients receiving Retisert developed cataracts and 12.2% of the Retisert patients developed complications involving increased IOP, including some cases of glaucoma. Only 3.5% of patients receiving laser therapy developed cataracts and none had IOP increases.

A Bausch & Lomb spokesperson said adverse side effects had been expected because Retisert treatment involves a steroid.

Retisert is currently being tested as a treatment for diabetic macular edema, posterior uveitis and AMD.

Vitrase ruling. The FDA has issued an "approvable" letter for Ista Pharmaceuticals' Vitrase, a treatment for vitreous hemorrhage. However, final approval is conditional on Ista supplying an analysis of additional efficacy data from two pivotal Phase III clinical trials and conducting an additional confirmatory study. The company said it will continue its dialogue with the FDA to discuss the comments contained in the approvable letter and determine the next appropriate steps in the review and approval process.

In other news, ISTA has named Lauren P. Silvernail as its chief financial officer and vice president of corporate development. Silvernail previously served as vice president of business development for Allergan.

Phakic IOLs Excel in 3-Year Studies
STAAR's ICL and AMO's Verisyse Show Good Results.

The first 3-year follow-up data for patients who received STAAR Surgical's Implantable Contact Lens (ICL) and Advanced Medical Optics' (AMO) Verisyse phakic IOL show excellent results in vision correction. The results were reported at the recent American Society of Cataract and Refractive Surgery Symposium in San Francisco.

AMO's Verisyse	STAAR Surgical's ICL

The results are good news for both STAAR and AMO, which expect to submit their respective phakic IOLs for FDA approval sometime this year. Though no phakic IOLs have as yet been approved by the FDA, many in the ophthalmology community believe phakic IOLs will be a treatment of choice, particularly in correcting the vision of high myopes. Studies have shown that phakic IOLs are best suited for myopes between the ages of 21 to 45 with up to 2D of astigmatism and refractive errors from approximately -8D to -20D.

Results released by Stephen G. Slade, M.D., an ICL investigator, encompassed 369 eyes with a mean level of myopia of -10.12D. Dr. Slade reported that 95% of the patients achieved uncorrected visual acuity of 20/40 or better with the ICL, and 57% achieved uncorrected visual acuity better than their best corrected visual acuity preoperatively. Stability of the procedure was also demonstrated, with less than 0.1D change in acuity from 1 week post-op to 36 months post-op.

The results indicated that 99.4% of the patients were satisfied with their ICLs 3 years after implantation. The complication rate for cataracts and significant anterior subcapsular opacities totaled 1%. The low complication rate for cataracts and opacities is considered highly significant, as clinical studies using earlier versions of the ICL resulted in cataract/opacity complications above 9%.

Less complete Verisyse data, presented by Elizabeth Davis, M.D., involved a 3-year study of 800 eyes. Results showed that 99.5% of patients followed achieved uncorrected visual acuity of 20/40, while 84% achieved 20/20 vision.

VISX and Nidek End Patent Battle
Hundreds of Surgeons had been Subpoenaed.

VISX Inc. and Nidek Co. Ltd. have reached a final settlement that ends the companies' bitter 5-year dispute over excimer laser patents.

The settlement resolves all litigation between the two companies, allows for the worldwide cross-licensing of certain patents, and includes a $9 million payment to Nidek from VISX. Other terms of the comprehensive agreement remain confidential.

The leaders of both companies expressed satisfaction with the agreement. In similar statements, Liz Davila, chairman and CEO of VISX, and Hideo Ozawa, president and founder of Nidek, said that the settlement enables their companies to avoid additional legal expenses while allowing them to focus their resources on growing the market for laser vision correction worldwide.

The patent battle has attracted a great deal of attention in the ophthalmology community in recent months. The companies were strongly criticized by physicians' organizations, including the American Academy of Ophthalmology and the American Society of Cataract and Refractive Surgery, for subpoenaing the records of hundreds of refractive surgeons. Nidek late last year issued subpoenas to 608 VISX laser users in an effort to determine procedure volume and related information.

The companies said they were reluctant to involve refractive surgeons in their legal battle, but contended that certain information was necessary to accurately determine the extent of any damages. With the announcement of a settlement, physicians won't have to respond to subpoenas they've received.

VISX will record the $9 million payment to Nidek as an expense in its fourth quarter 2002 financial results.

REFRACTIVE SURGERY UPDATE

Misleading LASIK ads. The Federal Trade Commission (FTC) recently took action against two large providers of laser vision correction services and got them to agree to stop what the FTC considers misleading advertising. This is the first time that the FTC has moved against LASIK providers for making allegedly false and unsubstantiated claims.

In complaints filed against The Laser Vision Institute (LVI) and LCA-Vision, Inc., the FTC said the companies' ads claimed that LASIK surgery would eliminate the need for glasses or contact lenses for life.

In addition, the FTC cited LVI for allegedly making a false claim offering supposedly "free" LASIK consultations that actually required a nonrefundable deposit. LCA-Vision was cited for failing to substantiate its claims that LASIK poses less risk to a patient's eye health than wearing contact lenses or glasses, and that its LASIK procedure eliminates the risk of glare and haloing.

Both LVI and LCA-Vision have signed consent orders that prohibit the companies from making the claims cited in the complaints in any future advertising of their LASIK services.

"The FTC actions against these companies underscores the importance of ensuring that all advertising is appropriate and compliant," says William Sarraille, a healthcare partner with the Washington, D.C., office of Sidley, Austin, Brown & Wood LLP. "We can now expect to see increasing scrutiny of the representations of financial terms offered by vision correction companies."

Oasis microkeratome patent. Oasis Medical, Inc. said it has received a U.S. patent for its microkeratome blade assembly, including a triangular blade and a blade holder. Oasis said issuance of the patent puts the company in a strong position to successfully defend against Bausch & Lomb's allegations that the Oasis microkeratome blade assembly infringes on patents relating to B&L's Hansatome microkeratome blade.