Reimbursement Update 2005
We examine the new payment schedules for general ophthalmology and subspecialties.
BY DONNA MCCUNE, CCS-P, COE

Ophthalmologists can generally expect a favorable Medicare Fee Schedule and other regulatory changes to bolster their bottom lines this year. Many of the changes put into place in 2005 affect all ophthalmologists, but others are more specific to subspecialists. For many ophthalmic subspecialists, incorporating new technologies will be a key element in advancing their practices in 2005.

This article focuses on the changes important to everyone, but also on issues of critical import to cataract surgeons and glaucoma and retina specialists.

Some Updates Affect All

In our view, significant updates for ophthalmology are being driven by the 2005 Medicare Physician Fee schedule, the increased number of Medicare beneficiaries, the new physician bonus program, and the Office of the Inspector General's (OIG) 2005 work plan.

Medicare fee schedule. The Medicare Modernization Act (MMA) instructs the Centers for Medicare and Medicaid Services (CMS) to increase the conversion factor for physician reimbursement by 1.5%, equating to $37.8975.

The Federal Register dated Nov. 15, 2004 published the 2005 Medicare Physician Fee Schedule (MPFS) utilizing this conversion factor. Adjustments were made to the practice expense relative value component of several CPT codes, creating large changes for some services from the 2004 reimbursement. Office-based services (visits and diagnostic tests) increased by small percentages. Slight adjustments were made to major surgeries; some minor procedures were reduced substantially. For example, reimbursement for punctal occlusion with plugs dropped 23%. Overall, the percentage of change from the 2004 Medicare Physician Fee Schedule is negligible for ophthalmic services.

The ambulatory surgery center (ASC) reimbursement rate changes normally occur on Oct. 1, unlike the Physician Fee Schedule that changes on a calendar year basis. CMS Transmittal 288, published Aug. 27, 2004, confirmed that reimbursement rates for ASCs remain unchanged in 2005.

The MMA required a change to ASC payments on April 1, 2004. It rolled them back to the rates prior to the increase implemented on Oct. 1, 2003. The MMA also requires a freeze on payment changes through 2009. During that time, CMS will re-evaluate the cost to provide services in an ASC compared to a hospital outpatient department (HOPD).

The chart below provides the current group reimbursement rates for all nine ASC procedure categories:

In 2005, HOPDs received an increase of approximately 8 to 11% for ophthalmic procedures (see chart on page 38). This is the second consecutive year that HOPDs received a healthy increase in reimbursement. Despite the increases, many hospitals continue to struggle under the prospective payment system implemented in 2000.

Medicare enrollment. CMS reports Medicare enrollment growth of 4% from 2000 to 2003, and the trend is likely to continue. Growth in ophthalmic services is robust. Part B News reports an increase of 6.2% in the number of ophthalmic services provided to Medicare beneficiaries from 2002 to 2003. Of the $51.6 billion paid to physicians by Medicare in 2003, 7% was paid to ophthalmologists, a 6.5% increase over 2002.

Although beneficial for physicians, the increased number of Medicare beneficiaries and the expenditures to care for them places a financial strain on an already fragile program. Some of the burden shifts to beneficiaries in 2005 through an increase in the Medicare deductible, Part B premiums and coinsurance. The MMA includes a directive to increase the patient's Medicare Part B deductible from $100 to $110 on Jan. 1, 2005. This is the first change since 1991. The Medicare Part B premium increased from $66.60 per month to $78.20 and the annual Part A deductible increased from $876 to $912.

Physician bonus program. The MMA created a new Physician Scarcity Area (PSA) bonus program effective Jan. 1, 2005. Physicians providing eligible services in the counties with the lowest 20% ratio of primary care or specialty physicians to Medicare beneficiaries are eligible for the 5% bonus payment.

Bonus payments are now being paid quarterly to providers for professional services. The technical component of diagnostic tests isn't eligible for a bonus payment. Bonus payments are based on what Medicare paid for the service, and not on the approved amount. Optometrists are not eligible for the PSA bonus.

Changes to the Health Professional Shortage Areas (HPSA) bonus include an automatic bonus payment in many locations without the need for modifiers QU and QB. The HPSA automated file will be updated on an annual basis. Individual Medicare carriers will provide quarterly updates on their Web sites for changes to HPSA designations. Modifiers QU and QB may be required on newly designated areas not posted on the automatic listing.

The Centers for Medicare and Medicaid Services Web site (www.cms.hhs.gov/providers/bonuspayment/#psa.com) contains detailed resources to determine eligibility for these bonuses and additional claim filing instructions.

OIG's 2005 work plan. Each year, the Office of Inspector General publishes a work plan for the upcoming year. It describes projects and areas of focus believed to be important for improving DHHS operations and programs. The following is an abbreviated list of areas of focus important to most ophthalmic practices. Some of these issues are new and others are a continuation of 2004 efforts:

► Billing service companies. What types of arrangements exist among billing companies and providers who use their services? What impact, if any, does the arrangement have on the physician's billings?

► Payments to VA physicians. Were reimbursements made appropriately for services rendered by physicians employed by the VA?

► Ordering physicians excluded from Medicare. Are services being ordered by physicians excluded from Federal health care programs?

► Physician services at skilled nursing facilities. Are duplicate payments being made for the same patient services?

► Coding of evaluation and management services. Are these services coded accurately?

► Use of modifiers -25 and ­59. Are these modifiers applied correctly? Was an unrelated service or a separately identifiable service performed on the same day as a procedure when the office service is filed with modifier ­25? Were the circumstances appropriate to "unbundle" two services when the claim appends modifier ­59?

► "Long Distance" physician claims. Is there a significant distance between the practice and the beneficiary's location? Were these services provided and accurately reported?

This list is not exhaustive but highlights OIG target areas for scrutiny in 2005. The complete HHS/OIG Fiscal Year 2005 Work Plan can be accessed at http://oig.hhs.gov/publications/workplan.html.

Updates Affecting the Subspecialist

Depending on a practice's focus, annual updates and changes in coding and reimbursement may affect some more than others. The year 2005 is no exception. This section focuses on coding and reimbursement updates, utilization changes, and new technology benefits and challenges by subspecialties.

Cataract/IOL. The cataract surgeon faces a small number of updates in 2005. The first involves changes to the ophthalmic ultrasound CPT codes. A new code was added to the 2005 CPT book and existing codes were revised. They are:

► 76510: Ophthalmic ultrasound, diagnostic; B-scan and quantitative A-scan performed during the same patient encounter (new)

► 76511: Ophthalmic ultrasound, diagnostic; quantitative A-scan only (revised)

► 76512: Ophthalmic ultrasound, diagnostic; B-scan, with or without superimposed nonquantitative A-scan (revised).

Surgical reimbursement changes were negligible, with cataract surgery (66984) remaining constant from 2004 and YAG laser capsulotomy increasing 3% from 2004 to 2005. These two procedures remain the top two procedures (major or minor) performed by ophthalmologists.

Of primary importance to the cataract surgeon is the opportunity to improve surgical outcomes. New technologies provide benefits, but also challenges for the surgeon. The chart on this page outlines the benefits and challeneges of two new technologies available to cataract surgeons.

Glaucoma. CMS's 2003 utilization data reveals the increased volume of ophthalmic services, but also identifies specific services with sharp rises in frequency year-over-year. Two examples of a large change from 2002 to 2003 come from the testing and treatment of glaucoma.

► CPT 92135: Scanning computerized ophthalmic diagnostic imaging (SCODI) continues to grow rapidly. The volume of tests increased 41%.

► CPT 65855: Laser trabeculoplasty grew 34%.

Extraordinary changes often incite payers to more closely scrutinize services to ensure medical necessity. We advise extra attention to the documentation and coding of these services. Practices considered outliers because their utilization exceeds that of their peers are at greater risk for postpayment audit.

The 2005 CPT book contains a new CPT code and a revised CPT code for two glaucoma procedures.

► 66711: Ciliary body destruction; cyclophotocoagulation, endoscopic (new)

► 66710: Ciliary body destruction; cyclophotocoagulation, transscleral (revised).

Some glaucoma tests received an increase in their reimbursement from 2004 to 2005. Visual field tests (92083) increased 7%; SCODI (92135) increased 2%.

Retina. Though utilization statistics for glaucoma revealed services with sharp rises in utilization, retina surpasses them with the growth of intravitreal injections (67028). The utilization of this minor procedure escalated 192% from 2002 to 2003. With new drug approvals and increased interest in this procedure, we expect to see continued growth this year.

Small increases and decreases for retina procedures create a minimal overall change to procedural reimbursement. However, reimbursement for drugs is of utmost concern to the retina specialist performing ocular photodynamic therapy. A provision to the MMA revises the reimbursement methodology for drugs furnished incident-to physician's services. The calculation shifts from 85% of average wholesale price (AWP) to 106% of average sales price (ASP). A complex formula considers annual revenues divided by units sold to arrive at the ASP. Some drugs will be exempt.

Effective Jan. 1, 2005, J3395 (verteporfin, 15 mg) is replaced with HCPCS code J3396 (verteporfin, 0.1 mg). The Dec. 15, 2004 Federal Register published the payment allowance limits for Medicare Part B drugs effective Jan. 1 to March 31, 2005. These payment allowances are based on the third quarter 2004 average sales price data. The payment for J3396 is $8.99, which equates to $1,348.50 for the 150-unit vial.

If the physician doesn't utilize the entire vial of medication, Medicare will reimburse for the discarded amount as per the following Medicare Claims Processing Manual, Chapter 17 citation:

"40 - Discarded Drugs and Biologicals
(Rev. 1, 10-01-03)
AB-02-075, PRM 2711.2 B. 2

The CMS encourages physicians to schedule patients in such a way that they can use drugs most efficiently. However, if a physician must discard the remainder of a vial or other package after administering it to a Medicare patient, the program covers the amount of drug discarded along with the amount administered.

NOTE: The coverage of discarded drugs applies only to single-use vials. Multi-use vials are not subject to payment for discarded amounts of drug."

Although not published by CMS, we expect proper claim submission to list the amount utilized on one line of the CMS-1500 form and the amount discarded on a second line to total the 150 units. Physicians who opt to utilize the single-use vial on more than one patient should file only for the units injected in the patient treated.

Also of interest to retina specialists is a new diagnostic instrument from carl Zeiss Meditec, the PreView PHP, designed to detect the conversion from the intermediate "dry" stage of macular degeneration to recent-onset choroidal neovascularization before irreversible damage has occurred and before the patient is symptomatic.

The challenge here is that Medicare's National Coverage Determination doesn't currently mention perimetry as a diagnostic tool for macular degeneration.

Assessing the Outlook

We foresee a bright future for ophthalmology. New technologies offer significant advances to diagnose and treat disease, a win for patients and satisfying for physicians. The reimbursement outlook is positive for 2005, and the potential patient base continues to grow. Physicians can't neglect their efforts to stay compliant because utilization changes and other initiatives will keep ophthalmology in the forefront for scrutiny by payers. Keep yourself and your staff informed and educated. Then, enjoy the successes the field of ophthalmology offers.

Donna McCune, CCS-P, COE, is vice president of Corcoran Consulting Group. You can contact her at (800) 399-6565 or by visiting the Corcoran Group Web site at www.corcoranccg.com.