Who's to Pay for "Deluxe" IOLs?
Results of recent efforts to change Medicare reimbursement policy may be known soon.
BY ROCHELLE NATALONI, CONTRIBUTING EDITOR

Intraocular lens (IOL) research and development is paying off with lenses designed to provide cataract patients with vision benefits that were mere inklings in the recent past. Already available are multifocal lenses, blue-light blocking lenses and wavefront-designed lenses. The FDA recently approved the accommodative crystalens, and it's only a matter of time before the pipeline will produce other simultaneous-vision lenses and further innovations.

ILLUSTRATION: JOEL & SHARON HARRIS/DEBORAH WOLFE, LTD.

While interest in these IOLs is high among ophthalmic surgeons and their increasingly savvy patients, a major roadblock exists to their applicability within a significant patient pool. That roadblock is current Centers for Medicare & Medicaid Services (CMS) regulations governing medical device reimbursement, and the patient pool is Medicare beneficiaries who have cataracts.

High-technology IOLs come with a hefty price tag based on the hundreds of millions of dollars manufacturers spend on R&D to create a unique design. In the case of the eyeonics crystalens, that price tag is approximately $800 -- far above the $150 CMS appropriates for an IOL. Surgeons who are enjoying success with this lens off-label in their refractive patients are eager to share this and future advanced IOLs with their cataract patients, for whom they are, or will be, indicated.

Representatives of eyeonics and other IOL makers have been discussing with CMS ways to make that possible. Some news, perhaps good, perhaps bad, could come soon.

Medicare Patients Are Missing Out

Keeping with the crystalens as an example, currently, a Medicare beneficiary who does not have visually significant cataract may have clear lens extraction and implantation of a crystalens if he pays for the elective procedure and the IOL out of pocket. A person who does not yet qualify for Medicare and who has visually significant cataract, also may opt for crystalens. This patient could, for example, have a portion of the procedure and IOL paid for by his private insurance and be responsible for paying the remainder. That leaves only Medicare beneficiaries who have cataracts missing out on this new technology.

Medicare policy prohibits physicians from charging beneficiaries for the balance of a product or service that exceeds coverage, so Medicare patients who have cataracts do not have the option of paying for the additional cost of the crystalens as an out-of-pocket expense and still having the basic costs covered by Medicare.

A spokesperson for eyeonics explained further: "Surgeons may implant the crystalens in Medicare patients, as long as they don't bill the patient for the balance of the procedure fee." However, because surgeons would have to absorb about 85% of the cost of the lens, its economic unfeasibility effectively makes it off limits for Medicare cataract patients.

Eyeonics' Chairman and CEO Andy Corley met with CMS representatives in September to discuss the current policy as it relates to accommodative IOL reimbursement. Shortly after the meeting, eyeonics' Vice President of Marketing Mike Judy said, "Ideally, we'd love to have Medicare decide to allow surgeons and facilities to implant the crystalens and then bill the patient for the non-Medicare covered portion of the procedure. We've had meetings with CMS, and we're continuing discussions to reach that objective."

In April, U.S. Rep. Christopher Cox, (R-CA), chairman of the House Policy Committee, sent a letter to Health and Human Services Secretary Tommy G. Thompson and CMS Administrator Mark McClellan, M.D., Ph.D., in an attempt to initiate a dialogue about this patient-access issue. Congressman Cox has not introduced legislation aimed at overturning the CMS billing prohibition; however, he is reportedly considering introducing broader legislation that might provide a regulatory fix.

Charging beneficiaries for the portion of the cost of a product or service that exceeds coverage is usually referred to as "balance-billing." Critics of balance billing say if this practice were allowed in Medicare, it would engender a two-tiered Medicare system: one for those who have the means to opt for more expensive, newer technology, and one for those who must settle for standard fare.

On the other hand, patient-access proponents such as ophthalmic surgeon I. Howard Fine, M.D., say that by attempting to avoid a double-standard within Medicare, CMS has actually created a distinct double standard between Medicare beneficiaries and private payers. "There are senior citizens on Medicare who can afford the technology and want it and are prohibited from purchasing it. It's a fundamental right that is being denied them," says Dr. Fine.

Issues Go Beyond Patient Access

Denial of patient access isn't the only problem here. There's also a concern that if changes in CMS reimbursement regulations are not forthcoming, IOL R&D could dry up -- or find a more inviting environment abroad. "The only way it's going to make sense for a Medicare beneficiary to get a truly accommodating IOL is going to be if there's some sort of balance billing amendment to the regulations so that people can pay a differential out of their own pocket," says Blake Michaels, director of marketing, cataract, for Bausch & Lomb. "Otherwise industry is going to be forced into some price compression and we're going to have to sell this technology for just a few dollars more than what we sell regular IOLs for, which is going to ultimately stagnate the industry. It becomes financially unattractive for industry to invest a lot of money in a technology that they're not going to recoup their costs on. It becomes equally discouraging for ophthalmologists to perform a surgical procedure unless they can at least break even on their costs, which includes the acquisition of the implant."

Michaels, Advanced Medical Optics' (AMO) Andy Stapars, and Alcon's Brette McClellan are collectively lobbying on these issues as the Industry Coalition for the Advancement of Restorative Eyecare (ICARE).

Stapars, AMO's director, government operations, says the root of the balance-billing prohibition is that Medicare is an entitlement program and has been built on the notion that the same benefit is applicable to all. "It's a one-size-fits-all approach, and balance-billing goes against the grain of that approach," he notes. "But if we don't come up with a system to allow for the integration of new technology, we may start to see a slowdown in development, which could lead to a slowdown in the progression of enhancing patient outcomes."

Stapars says it's unrealistic to expect that Medicare will be able to continue to pay for every future medical technology advance. Balance billing, he adds, may be a practical solution to an ever increasing problem. "At the very least we would like to fully explore this as a viable option for the future."

Reimbursement Options May Exist

Balance billing is not the only avenue for increased CMS IOL reimbursement. The designation of New Technology IOL (NTIOL) status, which had previously been obtained for the AMO multifocal Array lens and the STAAR Toric lens, results in an additional $50 reimbursement from CMS. While $200 is not adequate reimbursement for surgeons who will pay hundreds for accommodative IOLs, Alcon's McClellan suggests the ultimate solution for Medicare patients probably lies closer to this scenario than to a waiver on the prohibition of balance billing, which she believes is unlikely. "The balance-billing prohibition is deeply rooted in politics and staunchly defended by statute," she says. "Many have tried and failed to get it overcome for their particular [healthcare] area. It's based on the belief that no one should have greater access to something that's medically important just because they have more money. That's why the prohibition against balance billing exists."

McClellan says appropriate Medicare reimbursement for higher-cost simultaneous-vision IOLs, such as Alcon's investigational AcrySof ReStor, may be achieved by getting the $50 cap for NTIOLs raised or eliminated, or by getting ambulatory surgery center (ASC) medical device reimbursement to resemble device reimbursement in hospitals, which have the advantage of the Hospital Pass Through Program. The Pass Through program designates that medical devices that meet "new technology" standards are reimbursed approximately equal to the full incremental cost of the product.

"The Pass Through Program has some real similarities to NTIOL, but it also has some important differences," says McClellan. NTIOL applies to IOLs implanted in ASCs, whereas Pass Through status refers to a variety of high technology medical devices, including IOLs, and therefore has broader applicability for the entire healthcare field. "The spirit of the two programs is the same in that if the clinical study data convince CMS that a more expensive new technology delivers a substantial clinical benefit to patients, and that without adequate reimbursement beneficiaries would be denied access to it, than CMS will consider that technology for higher payment," McClellan explains.

When multifocal and toric technologies received hospital Pass Through categories in 2001-2003, hospitals received enough extra payment to cover those lenses' extra costs, even when that amount was greater than $50. The extra $50 for ASCs was usually adequate for the two IOLs that got NTIOL status back in 2000, and because they also both got Pass Through, both settings were adequately reimbursed for the extra cost of the lens. "Current simultaneous- vision lenses, on the other hand, are several hundred dollars more, so $50 extra in the ASC setting is inadequate," says McClellan. Which is why ICARE is lobbying for ASCs to be reimbursed more similarly to hospitals.

Healthcare attorney and ASC reimbursement specialist Mike Romansky, Esq., says any strategy for getting adequate CMS reimbursement for high technology IOLS will be a challenge, "but at least the NTIOL and Pass Through mechanisms already exist and they recognize that some technologies do things that other technologies do not. The fact that these processes are already in place provide an opportunity for the regulation to be modified to allow different reimbursement rates for different new tech IOLs."

Some say that because there is no current CMS provision for balance billing, legislation directing CMS to implement balance billing would need to be introduced, passed and implemented -- a notoriously slow process. Others suggest a solution might lie in either a modification of the Balanced Budget Act of 1997, which makes allowance for private contracting between physicians and Medicare beneficiaries, or utilization of Advance Beneficiary Notices (ABN), which get patients to agree prior to a service or procedure that all or some of what is provided may not be covered by Medicare. "I think these are all uphill challenges," says Romansky, "but going after balance billing involves sweeping changes in the way Medicare has historically reimbursed for services and technology."

Reimbursement expert Kevin J. Corcoran, C.O.E., C.P.C., F.N.A.O., says Medicare has no problem letting beneficiaries pay for noncovered items. Under the concept known as "deluxe" items, Medicare could declare that one part of the IOL is covered and the deluxe portion is not covered. Then the beneficiary could choose to pay for the deluxe portion if desired. According to Corcoran, eyeonics wants accommodative IOLs to be treated in the same way as other deluxe products such as hearing aids, eyeglass frames and wheelchairs. This idea is far from new, he says, and has broad applicability for a wide variety of new technologies.

Thomas Gustafson, deputy director of the Center for Medicare Management, confirmed that CMS does permit exactly that sort of approach with respect to durable medical equipment coverage in some portions of the program already. "For instance, in the provision of wheelchairs, we will provide for payment for the basic device where that's medically necessary, and if the beneficiary wants features added to the wheelchair that we conclude are beyond what is medically necessary than we would permit them to pay for those items separately," he explains.

So why is there an exception in the case of deluxe IOLs? "The Congress has made a provision for New Technology Intraocular Lenses, so they appear to have contemplated the situation where lenses might be special in some particular feature, and if so that would be the payment method that we would need to be using in those situations. There's no provision that would allow us to debundle -- to pay our portion and have the beneficiary pay the other portion -- because they want [something extra]," he says. Eyeonics is not pursuing NTIOL status for the crystalens.

According to Gustafson, "The manufacturer of the [accommodative IOL] has approached us with an argument to the effect that its product is really two devices in one -- one of which is covered under our program -- the IOL portion of the device, and the other is the [mechanism that provides the additional vision benefit] -- which is supposedly noncovered according to that argument," says Gustafson. "If we were to accept that argument, than the durable medical equipment precedent would apply. We are considering that. We have that under active review at the moment." At press time, Gustafson said a decision could be made in as soon as 4 to 6 weeks.

Is Change Inevitable -- Or Impossible?

Ophthalmic surgeon Robert J. Cionni, M.D., sees some type of change in the current Medicare system as necessary and inevitable. "I am planning to use Alcon's ReStor IOL extensively when it becomes available. I believe that balance billing for commercial and Medicare patients is essential for continued technological improvements to occur. NTIOL status does not increase reimbursement enough to cover the cost of these IOLs, and ASCs cannot 'eat' the cost. Additionally, I would not expect that IOL manufacturers would sell the IOLs for $200 or less considering the years of research and expense it takes to bring such IOLs to market in the U.S.," says Dr. Cionni. "All patients will have access to good IOLs within the [current] reimbursement amounts, but we should not deny more expensive IOLs to those who can afford them and want them. Since when do we tell our patients that even though something better is available, they can't have it because not everyone can have it? If we follow that kind of irrational thinking we should all be driving Yugos being as not everyone can afford a BMW. Imagine having to refer our patients to another country for better technology."

Dr. Fine has implanted the crystalens in middle-aged presbyopes with great success, and when elderly parents of these patients have come in for cataract surgery and requested the same IOL he's had to tell them that it isn't an option. He says change might come if a large enough group of senior citizens complain. "They are a very affluent and influential sector of society," he notes.

Conversely, Mike Romansky suggests that notwithstanding the great benefits that seniors might realize from these lenses, their lobbying organizations have uniformly fought against any policies that might result in a greater out-of-pocket expense. "Groups that represent the Medicare population, such as AARP and others, have always viewed minimizing beneficiary cost-sharing as a primary goal, the concern being that if cost-sharing increases for one particular device or procedure -- indeed, cost-sharing that the beneficiary wishes to make to enable him to avail himself of a new technology -- it could ultimately set the stage for higher copayments and deductibles for a much wider range of services," says Romansky. "Unfortunately, the result can be that in some instances the Medicare population ends up not getting new technology. That's certainly the claim that those who are seeking balance billing will advocate."

Can CMS Afford to Set a Precedent?

Medicare's Gustafson says CMS does not want to be an impediment to technological progress. "We want our beneficiaries to receive the best care possible, but the question that's raised in this circumstance certainly has some significant precedential issues. In so far as we are able to understand the situation as the company has presented it to us, it may appear appropriate in this case. But we have to consider how that line of argument would apply in other cases that might emerge," he reasons. "The Medicare system is based in large measure on a system of averages. We put stuff in payment bundles, and we pay for those payment bundles. We have to be a little wary of folks coming along and saying, 'I want you to segment out this portion of my product and allow me to charge the beneficiary extra money for it'."