Opening of the ‘premium channel’: History of billing for presbyopic lenses

In this report from the OSN IOL Economic Summit, J. Andy Corley discusses the history behind the May 2005 CMS ruling.

Issue: September 15, 2006

ByMary E. Archer, ELS

According to industry experts, the value of cataract surgery over the past 20 to 25 years had shifted from patient-doctor relationships’ control by third-party payers, insurance companies and Medicare. IOL industry leaders had called it the “Roaring ’80s.”

J. Andy Corley

According to J. Andy Corley, president and CEO of eyeonics inc., in this time period, there were 20 IOL companies, no market discipline and little differentiation between product lines. “The same, favorable price was sustained across all companies and technologies. Unfortunately, that led to some questionable marketing practices and invited the scrutiny of the Office of the Inspector General (OIG),” Mr. Corley said.

The Centers for Medicare and Medicaid Services responded to the OIG investigation by cutting the price of all lenses. In 1988, the price of IOLs was cut to $200, followed in 1993 to $150. Twenty IOL companies were reduced to five, and innovation basically began to stop, according to Mr. Corley. “The pendulum had swung too far in the other direction, and CMS realized this. They tried the new technology IOL policy, which reimbursed an additional $50, but that was insufficient to drive innovation. As a result, a long drought of true innovation for the IOL industry began.”

Furthermore, ophthalmologists were seeing declining reimbursement. At that time, there was much discussion about a Patient Bill of Rights. These were patient advocacy groups, which said they actually needed protection from their physicians, Mr. Corley said. “It was a dark period in many ways. Industry leaders felt that if patients needed a ‘Bill of Rights,’ then they also needed a ‘Declaration of Independence.’ That is what eyeonics sought to do,” he said.

One company’s approach

Mr. Corley gave a brief history of how these changes began to take place. “When eyeonics was started as a company, there were three goals, the first of which was to gain approval of an accommodating lens, the crystalens. Because the new technologies are both a covered device (cataracts) and a non-covered service (presbyopia), the second goal was to privatize the non-covered component of cataract surgery. It was important to preserve the patient’s right to choose which IOL and which type of treatment they received in this new market. If this was accomplished, then eyeonics would re-value cataract surgery and bring value to ophthalmology. Eyeonics was asking CMS to approve patients’ freedom of choice, not a change in coverage. Finally, eyeonics tried to prove that cataract/refractive procedure gain value year over year; they should not decline,” he said.

Mr. Corley then said that eyeonics contacted CMS policy makers at the highest levels. At the same time, they gained the political support of former Rep. Christopher Cox, R-Calif., who is now chairman of the Securities and Exchange Commission. “This is a gentleman who has been a true friend to ophthalmologists,” Mr. Corley said. “He was eyeonics’ biggest champion. Many individuals supported eyeonics’ efforts to gain patients’ freedom of choice. Among them were Jim Largent; Grant Bagley, MD, JD; Jim Denning; and, of course, Congressman Cox and his staff. Eyeonics and its supporters approached decision makers at CMS to change the policy to allow patients to choose a premium channel IOL, while retaining Medicare coverage for the cataract portion of the procedure.”

He said eyeonics contacted Leslie Norwalk, the deputy administrator for CMS. “The culture at CMS was not accustomed to allowing many choices regarding covered services within the Medicare program. Therefore, eyeonics had to work diligently with Ms. Norwalk to persuade her that the concept of shared billing had merit,” he said.

A timeline of events

Mr. Corley explained that eyeonics’ efforts began in 1999 in a meeting with Nancy-Ann Min Deparle, the administrator for the Health Care Financing Administration during the Clinton Administration. He explained, “Two objectives for that meeting were to build her trust and to show her that technology was coming that would cover two different conditions, but would be carried in a single device. This would present new opportunities and challenges for regulators at CMS.”

However, he added that her initial response was one of skepticism. “She also feared that Medicare patients would be mistreated and oversold. Eyeonics had to ensure her comfort level,” he said.

“During the presentation I made to her on that day, I gave an example. ‘Prior to Mr. Smith’s surgery, he was diagnosed with cataracts and elected to have cataract surgery. Mr. Smith went to Dr. Jones’s office and said, ‘I would like to have a device that is going to give me more than Medicare is willing to pay for, but I am willing to pay for it. Can I do it?’ The answer was no, because it occurs intraoperatively,’ ” he said.

He continued, “ ‘After surgery, Mr. Smith returned to Dr. Jones’ office and said, ‘I really do not like these frames that Medicare provides. I would like to upgrade to the Gucci frames and pay as much as I need to pay to get them. Can I do that?’ The answer would be yes.’ ”

He explained, “You have the same relationship through the transition but different answers to the same question. CMS eventually realized the logic of the argument, and agreed on the benefit to patients by allowing them a choice.”

A note from the editors:

Ocular Surgery News held its IOL Economic Summit recently at the OSN Las Vegas: Improving Your Odds 2006 meeting. The purpose of this Summit was to bring meeting attendees information regarding how the Centers for Medicare and Medicaid Services (CMS) ruling may affect today’s ophthalmic practices.

Richard L. Lindstrom, MD, Chief Medical Editor of Ocular Surgery News, served as moderator of the Summit and helped to design a program that would be informational and beneficial to physicians. Several speakers were invited to present information regarding the history of the ruling; how these lenses can affect your bottom line; ethical practices of using these lenses; and a summary of the lobbying efforts within the device industry. OSN now brings highlights from this Summit to our readers.

On this page, in this first installment of reports from the OSN IOL Economic Summit, J. Andy Corley of eyeonics discusses the events leading up to the landmark ruling by CMS, which enabled patients to be able to pay for part of their lens-based refractive surgery.

Additionally, OSN Practice Management Section Member Elizabeth A. Davis, MD, FACS, shares her thoughts on the impact the CMS ruling has had on her practice, as well as on the number of options available to a growing patient population (see article). OSN Cataract Surgery Section Editor William F. Maloney, MD, gives a detailed look into the ethical issues that may determine the long-term success of presbyopia correction (see article).

Also, Shareef Mahdavi of SM2 Consulting relates the importance of customizing the patient experience with these presbyopic lenses and maintaining the value of a physician’s work (see article). Finally, Andy Stapars of Advanced Medical Optics discusses the collective efforts of AdvaMed’s Ophthalmic Sector regarding IOL reimbursement, specifically to advance the understanding of the value of ophthalmic technology both nationally and internationally (see article).

In keeping with this theme, a similar meeting is being held in conjunction with the OSN New York Symposium, Oct. 14-15. “Incorporating Presbyopic IOLs into Your Practice” will be held Saturday, Oct. 14, 3:40-5 p.m. See our preview article on page 51 for more information.

Final ruling

Efforts paid off, he said. “CMS agreed and issued a policy allowing patients to choose the procedure as well as the technology – especially if the patient was free to benefit by paying for the non-covered portion of the service.”

In February 2005, the American Society of Cataract and Refractive Surgery endorsed eyeonics’ initiative. Mr. Corley said, “That was a turning point for us because about a month earlier, Mr. Largent and myself had lunch with Congressman Cox and Ms. Norwalk. It was at that lunch that our position began to ring true with Ms. Norwalk.”

He continued, “In March 2005 our industry partners, led by Advanced Medical Optics Inc. and Andy Stapars, vice president of global public policy at AMO, came in. When eyeonics sat down and explained it to them, AMO was glad to endorse eyeonics’ efforts.”

In May 2005, the policy was approved. “This gave us all the ability to charge privately for patients who choose a presbyopic treatment, thus allowing those patients to enjoy the premium channel,” Mr. Corley said.

For more information:

J. Andy Corley, president and chief executive officer of eyeonics, can be reached at 26970 Aliso Viejo Parkway, Suite 100, Aliso Viejo, CA 92656; 866-393-6642; fax: 949-716-8362; Web site: www.crystalens.com; e-mail: jacorley@eyeonics.com.

Mary E. Archer, ELS, is Executive Editor of OSN U.S. Edition.