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Cover Stories | Jun 2005

Details on the CMS Ruling

What does it mean? What's next?

The recent Medicare rule change concerning presbyopia-correcting IOLs is a huge win for cataract surgery patients, industry, and ophthalmologists alike. Before this ruling, Medicare patients who needed cataract surgery were denied access to the Crystalens (Eyeonics, Inc., Aliso Viejo, CA) and recently approved multifocal IOLs such as the Acrysof Restor (Alcon Laboratories, Inc., Fort Worth, TX) and Rezoom (Advanced Medical Optics, Inc., Santa Ana, CA). The size of the market for the aforementioned lenses increased fivefold with the recent ruling. The sale of such lenses will fuel companies' research and development efforts for more high-tech accommodating lenses. Furthermore, because there is no Medicare benefit for the correction of presbyopia, Medicare does not cover the presbyopia-correcting function of an IOL. If patients choose to have a presbyopia-correcting IOL inserted after cataract surgery, Medicare will not pay for any additional costs related to the noncovered function of the IOL. To the extent that Medicare patients are willing to pay the extra costs for a presbyopia-correcting IOL, facilities and physicians may receive a higher payment than that allowed by Medicare for insertion of a conventional IOL following cataract removal.


Before Tuesday, May 3, 2005, Medicare only reimbursed an ambulatory surgery center (ASC) $150 for a conventional IOL. New-technology IOLs are reimbursed at $200. The price for the Crystalens is $825, and Alcon Laboratories, Inc., and Advanced Medical Optics, Inc., will each charge $895 for their lenses. Because of this new ruling, Medicare beneficiaries now will be able to achieve good postoperative vision and reduce or eliminate their need for glasses if they pay out of pocket for a presbyopia-correcting IOL.

“It became clear that this [presbyopia-correcting IOL] is a technology that patients are interested in receiving, and that our rules were getting in the way,” said Leslie Norwalk, Deputy Administrator at the Centers for Medicare & Medicaid Services (CMS). “Rather than helping Medicare beneficiaries by protecting them via our balance billing requirements, the regulations were preventing beneficiaries from receiving what they needed or wanted.” Ms. Norwalk, who has served in her current position since July 2004, said that the decision seemed simple, but, with the requirement of the Medicare statute coupled with the CMS' regulations, she and her colleagues were required to do significant legal work in order to get the ruling passed. “It is not that we did not want Medicare beneficiaries to have access to this technology,” Ms. Norwalk said. “We wanted them to have access if they so desired and were willing to pay for the technology. What we did not want to do is create a precedent that could be applied in other situations where less-than-fair providers could bill beneficiaries above and beyond what the Medicare program intended.” As long as providers and patients have an honest discussion about the pros and cons of the lenses and the cost and coverage differences between conventional and presbyopia-correcting IOLs, she sees no potential downfall's resulting from this ruling.


Eyeonics, Inc., was instrumental in this new Medicare ruling. Andy Corley, Cofounder, Chairman, and CEO at Eyeonics, Inc., explained that the company approached Medicare 5 years ago with its new-technology accommodating IOL (the Crystalens), which can provide cataract patients with an noncovered treatment of presbyopia. “Eyeonics' position from the start was that we do not want any more money from CMS or taxpayers for this benefit, but we would like for patients to have a choice,” Mr. Corley told Cataract & Refractive Surgery Today. He said the government should not pay for elective benefits, but, at the same time, patients should not be denied the right to choose noncovered services that they desire. Mr. Corley explained that this situation was a classic case of reimbursement policy not keeping up with technology. “This effort was a bold new idea, and it took the bureaucracy at CMS an incredibly long time to get comfortable with it,” he said. “But the new administration at CMS, specifically Leslie Norwalk, demonstrated great efficacy and leadership in getting this ruling passed.”

Also, US Rep. Christopher Cox assisted Eyeonics, Inc., in letting the CMS know about the seriousness of the presbyopia-correcting–IOL issue. “Federal policy should not discourage technological advance,” Rep. Cox said. “It should enable it. Technology is our best hope for relieving patient suffering and enhancing the quality of treatment. This decision represents an important new beginning for Medicare policy, moving us in the direction of technological advance, individual choice, and patient supremacy over bureaucracy.”

In addition to Ms. Norwalk and Rep. Cox, Mr. Corley also expressed gratitude toward Jim Largent, Industry Consultant, Jim Denning, CEO of Discover Vision Centers, and Grant Bagley, Partner at Arnold & Porter LLP, for their help and support in getting the CMS ruling passed. Alcon Laboratories, Inc., and Advanced Medical Optics, Inc., also backed the position of Eyeonics, Inc., and helped in the advocacy movement.

Ophthalmologists and administrators realized the necessity of acquiring another refractive revenue stream outside the insurance-reimbursement environment, according to Mr. Denning. For the last 5 years, he has devoted much of his time as an advocate for Medicare beneficiaries' right and choice of access to the Crystalens. Mr. Denning and Eyeonics, Inc., several years ago chose to bring the Crystalens to market as a refractive lens and to re-establish true value to the surgeon's skill and to the technology of the lens. In addition, they strived to simultaneously keep the ruling outside of the insurance realm in order to keep the lens' value and the physicians' refractive services at true fair market rates, according to Mr. Denning.

“Overall, cataract surgery fees to physicians have been reduced by about 40%, not due to cheaper technology, but because the Medicare system is running out of money,” Mr. Denning explained. “Medicare simply cannot pay any more than it is currently paying.”

“Eyeonics, Inc., deserves a lot of praise for fighting this battle solo for 5 years,” Mr. Denning told CRSToday. “Most gave them a zero chance of being successful, but they just kept coming back to Medicare and to congressmen and got patients involved in the advocacy.”

“All of our meetings with CMS career staff, CMS political appointees, members of Congress, and congressional staffers were very productive and cooperative,” said Brette McClellan, Director, Health Policy Government Relations at Alcon Laboratories, Inc. “They are intelligent folks who deserve a lot of credit for wading through the issues and creating a solution.”


According to Steven J. Dell, MD, who gave a powerful presentation to the CMS staff in Baltimore on September 7, 2004, this ruling will have an enormous impact on ophthalmology. “Economic incentive is what drives new product development,” Dr. Dell told CRSToday. “When IOL manufacturers recognize that a vast new market was created today, they will devote resources to serve it. The net result will be an explosion of IOL technology at a pace we have not seen for many years. Our patients will be the ultimate beneficiaries of this process.” Mr. Corley agrees and believes that, with this new ruling, the market for presbyopia-correcting IOLs will increase to five times its current size.

As Ms. McClellan explains, however, “The real impact is not just for the industry players, but on the ophthalmic community as a whole. Physicians, their staff, facilities, researchers, and industry personnel go to work each day to help as many patients as possible experience the joy of excellent vision. Now, we all can achieve an even greater level of job satisfaction and be fairly compensated for our efforts.”


Currently, the ruling concludes that the presbyopia-correcting function of an IOL does not fall under the Medicare benefit that allows payment for eyeglasses or contact lenses only when needed following cataract surgery. Therefore, because there is no Medicare benefit for the presbyopia-correcting function of an IOL, Medicare does not cover that function. Any additional costs associated with that function would be the responsibility of the beneficiary choosing to have a presbyopia-correcting IOL following cataract surgery. “The office of the Inspector General, in my opinion, is going to be watching this situation really closely to ensure that physicians are not billing ludicrous amounts of money to patients in an attempt to offset past years' decreased cataract fees,” said Ann Rose, President of Rose & Associates, a healthcare consulting firm that works specifically with medical reimbursement and coding issues for ophthalmology.

Others in the industry have expressed concern regarding the number of surgeons recently credentialed to implant presbyopia-correcting IOLs who have no guidance or information on how to bill for and deal with refractive presbyopic surgery. “The entire industry, especially the new surgeons that are pouring into the system, they need knowledge and guidance,” Mr. Denning said. “CMS has asked industry leaders, like the ASCRS and AAO, to provide input for guidance for the profession.”

Which CPT Code?
The code for standard cataract surgery fees is CPT 66984, and Mr. Denning recommends that physicians' offices use this code when billing Medicare or commercial insurance when a patient elects a presbyopia-correcting IOL. He clarified that the CPT code 66984 is for the covered portion of the surgery and IOL. That part of the process should be billed in standard fashion. For the noncovered upgrade, an internal code should be developed. This internal code is necessary for the billing department in order to post the out-of-pocket receipt (Table 1).

Mr. Denning advises against surgeons' using CPT 66982 (complex cataract) when implanting presbyopia-correcting IOLs, unless the requirements of code 66982, as defined in the CPT, are also met or physicians receive specific instructions from the CMS that state that this is acceptable. Mrs. Rose agreed.

What to Charge the Patient
Physician charges: The beneficiary is responsible for paying for the portion of the physician's charge for the presbyopia-correcting IOL that exceeds the physician's charge for a conventional IOL. According to Mr. Denning, there are a lot of noncovered technical work expenses associated with the preoperative process of presbyopic cataract surgery and many additional noncovered work expenditures associated with the postoperative care, which is necessary in order for patients to achieve satisfactory near, intermediate, and distance vision (Table 2). “You correct residual refractive error after conventional cataract surgery with a pair of glasses,” he explained. “With presbyopic cataract surgery, you avoid residual refractive error with all the additional noncovered testing and analysis in the preoperative period. In addition, if your patient ends up with residual refractive error after presbyopic cataract surgery, you will correct this error with additional surgery (eg, conductive keratoplasty [CK; Refractec, Inc., Irvine, CA]), LASIK, astigmatism surgery, phakic IOL, etc.), not glasses. All of these noncovered procedures need to be figured into the cost.” Mr. Denning said that is how he arrived at the $1,400 out-of-pocket patient charge. “Almost every surgeon is experiencing the same expenses,” he said. “This is refractive surgery, not just cataract surgery.”

ASC charges: Are ophthalmologists limited to charging the difference between the price of the presbyopia-correcting IOL and standard IOLs, or the maximum IOL allowance that Medicare has used as a benchmark? “No, the ruling is very specific in stating that surgeons can charge for the IOL and all resources involved in implanting the lens,” Mr. Denning said. “Other resources include postage expenses, inventory management, etc. The presbyopia-correcting IOLs are not consigned, meaning a large inventory of these lenses does not exist at the ASC. Additionally, surgeons need to buy two presbyopia-correcting lenses for one patient in case one lens gets torn or destroyed, so the surgeon can proceed as scheduled with an implantation. This all adds cost.”

Mr. Denning said that the actual reasonable price of the IOL should be determined based upon the facility's expense, and he believes ASCs will additionally charge a range of 10% to 20% of the price of the presbyopia-correcting IOL. For example, if the ASC's standard price for a presbyopic IOL is $1,200, then the ASC would charge a Medicare patient $1,050 for the noncovered portion of the presbyopic IOL (ie, $1,200 – $150 = $1,050). The standard price is what the facility would normally charge a non-Medicare, cash-paying patient for the presbyopic IOL.

“We don't want an ASC charging $5,000 for the IOL,” Mr. Denning said. “The policy on this, until we get guidance, kind of leaves the price open. But I would like to think that surgeons would take the high road and not abuse this policy. What CMS did for the industry is enormous, and we do not want any abuse, because CMS could take its ruling away probably a lot faster than they gave it to us. At the end of the day, the free-market forces will determine the price. That is the beauty of the competitive marketplace. Better surgeons with better staff and outcomes will charge more.”

Advance Beneficiary Notice
An Advance Beneficiary Notice should not be used for the noncovered services. However, practices should have a patient sign a waiver and keep it with his chart. Both Mr. Denning and Mrs. Rose agree that all the specifics of the elective part of the procedure need to be detailed in a waiver to be given to and signed by the patient. The waiver should clearly define what Medicare pays for and for what the patient is financially responsible. This form is not to be sent to Medicare; its purpose is for documentation only. The CMS document called the Notice of Exclusions from Medicare Benefits form, or a similar waiver should be used (Figure 1).

Toric IOLs
No additional fee may be collected from patients who receive a toric IOL, as the new ruling does not include these types of lenses. Although toric IOLs correct for astigmatism, these lenses are not labeled as presbyopic-correcting IOLs for near, intermediate, and distance, and they therefore do not fall under the CMS' recent ruling.


Industry executives agree that the recent CMS ruling has tremendous implications for ophthalmology and for the new technologies that patients (not insurance) will buy. As a result, ophthalmologists will become less dependent on Medicare for revenue.

“For the ophthalmic industry, this ruling gives us the opportunity to continue to invest in research and development for these new technology lenses,” said Ron Bache, Vice President of Worldwide Marketing of the Advanced Medical Optics, Inc., Refractive Group. “This ruling is a watershed event that really opens up the door to the enhanced practice of ophthalmology and properly compensates surgeons for their time and effort, and allows patients the opportunity to access the technology.” 

Ron Bache is Vice President of Worldwide Marketing at Advanced Medical Optics, Inc., Refractive Group in Santa Clara, California. He holds a financial interest in the company and its products. Mr. Bache may be reached at (714) 247-8300; ron.bache@amo-inc.com.
Andy Corley is Cofounder, Chairman, and CEO at Eyeonics, Inc. He states that he holds a financial interest in the company and its products. Mr. Corley may be reached at (949) 916-9352;
Christopher Cox is a US Representative from California. He states that he holds no financial interest in any company or product mentioned herein. Mr. Cox may be reached at (949) 756-2244.
Steven J. Dell, MD, is Director of Refractive and Corneal Surgery at Texan Eye Care in Austin. He is a consultant to Eyeonics, Inc. Dr. Dell may be reached at (512) 327-7000; sdell@austin.rr.com.
Jim Denning is CEO of Discover Vision Centers in Kansas City, Missouri. He is on the Speakers' Bureau for Eyeonics, Inc. Mr. Denning may be reached at (816) 350-4529;
Brette McClellan is Director, Health Policy Government Relations at Alcon Laboratories, Inc. She states that she holds a financial interest in the company and its products. Ms. McClellan may be reached at (817) 568-6349;
Leslie Norwalk is Deputy Administrator of the CMS in Washington, DC. She states that she holds no financial interest in any company or product mentioned herein. Ms. Norwalk may be reached at (410) 786-3151; leslie.norwalk@cms.gov.
Ann Rose is President of Rose & Associates. She states that she holds no financial interest in any company or product mentioned herein. Mrs. Rose may be reached at (800) 720-9667; results@roseandassociates.com.
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