Issue: May 10, 2020
Disclosures: The authors report representing Avedro at the time the article was written.
May 05, 2020
4 min read

Legal, financial issues need to be considered before implementing new technology

Part 2 of this series focuses on managing financial risk.

Issue: May 10, 2020
Disclosures: The authors report representing Avedro at the time the article was written.
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Innovative new technology has always been part of what makes ophthalmology an exciting specialty — and it has undeniably improved patient outcomes. But for surgeons who are early adopters, the flip side of being first is that one must also weather some financial uncertainties as new technologies, such as minimally invasive glaucoma surgery, corneal collagen cross-linking and sustained-release drugs, establish a solid reimbursement footing.

Products that are expected to be reimbursable, medically necessary services typically go through a three-step process: coding, coverage and payment.

1. The first step is establishment of a code identifying the service or product. Initially, this may be a temporary or miscellaneous code. Simply having a code does not guarantee payment.

John McInnes
John McInnes

2. Next, carriers begin to establish coverage policies to determine whether they will cover that service. Initially, there may be a great deal of inconsistency, with one Blue Cross Blue Shield carrier, for example, issuing a positive coverage decision, while those in other regions have no policy or a negative coverage policy. “Coverage” (in addition to coding) still does not guarantee adequate payment.

3. Finally, payers set payment for the covered service. Medicare tends to have more consistent payment policies nationwide. Commercial carriers may be all over the map, with initial amounts based on arbitrary information.

The road to reimbursement can be particularly convoluted for unique categories of products and services. Amniotic membrane grafts, for example, are sometimes bundled into a procedure code (pterygium removal with graft), sometimes not reimbursed at all (when used to repair an unplanned surgical complication), and at other times reimbursed in full as a stand-alone procedure. Glaukos’ corneal cross-linking platform is another good example, with challenges presented by a combination product that encompasses both a drug and a device. Initially, there was no J-code for the approved bioactivated drug. Practices would sometimes find that their reimbursement was not enough to cover their outlay for the Photrexa drug formulations. Now, there are more consistent payment policies, with appropriate drug (J2787) and office procedure (0402T) codes for corneal cross-linking.

It is typical for payment policies to gradually stabilize as consensus builds among carriers and as practices gain experience with claims filing for the new technology. Throughout this process, doctors play a critical role in advocating for their patients. Although industry can lay a lot of the groundwork, insurers need to hear from physicians about their treatment choices and the value of the new technology, as well as the costs to the practice in time and resources in providing the new product or service.


Understanding payment contracts

Payment by commercial insurers is governed by long-term payer contracts, which are often poorly understood by practices — especially Medicare-dominated practices — and may have been in place for years. They may state that new technology is reimbursed at a percentage of billed charges, and that percentage may be as low as 40% or as high as 70%.

Allison W. Shuren
Allison W. Shuren

Consider this example: You bill a miscellaneous T-code for $100 because you think that is a fair price for the new procedure you have just started performing. The contract states that new technology is reimbursed at 40% of billed charges, so you are paid only $40. If the procedure only makes sense financially at a reimbursement of $100, you would need to set charges at $250 (at least) to end up at the desired payment rate.

Clearly it is important to know the payers with whom you have contracts and what those contracts say. Fully understanding your payer mix can also help point to where you should spend the most effort and time educating payers about a new technology. In some cases, practices have chosen to renegotiate their payer contracts to ensure fair reimbursement for new procedures or to carve out payment for an otherwise bundled product.

Best practices

In dealing with insured patients, the following are best practices to ensure appropriate payment for new technologies:

  • Confirm the insured’s benefits.
  • Request a “predetermination” from the insurance company to determine the scope of any coverage policy.
  • If the patient’s health plan has a negative coverage policy (or no policy in place), have patients sign an Advance Beneficiary Notice for Medicare beneficiaries or a Notice of Exclusion from Health Plan Benefits for commercial insurance patients. However, encourage patients to file a claim anyway and to aggressively appeal any denial of their claim.
  • If the plan has a positive coverage policy, understand the requirements for coverage and make sure your medical records support those requirements. For cross-linking, you must typically document progression and sometimes “failure” of more conservative methods. For MIGS devices, you might have to demonstrate that the patient is on at least one IOP-lowering drug or is unresponsive to maximum tolerated medical therapy.
  • Take advantage of any educational materials available from the manufacturer to assist with reimbursement.

What if it is not enough?

Bryant M. Godfrey
Bryant M. Godfrey

If a new technology is not reimbursed or not reimbursed at the desired level, it does not necessarily follow that you can just charge the patient to make up the difference. Medicare and many commercial payers prohibit balance billing for anything that is considered either a covered service or a part of a covered service in the case of certain packaged or bundled drugs and medical devices. (As we know, there are certain major exceptions, such as refractive IOLs, in which the refractive benefit portion of the covered cataract may be billed separately to the patient.)


Many physicians would prefer to avoid third-party payment altogether and instead opt for a patient cash pay pathway. However, it is important to understand that patients who have health insurance start with the expectation that health care services will be covered.

If reimbursement is insufficient and the service is medically necessary (not refractive or cosmetic), it is time to get to work either renegotiating aspects of the payer contract or talking to contractor medical directors about why the current rates are unsustainable and will harm access to care. Along this road to reimbursement, expect some hurdles. But, with patience and perseverance, it is possible to achieve reasonable payment policies that make beneficial new technologies sustainable and profitable for your practice.

Disclosures: The authors report representing Avedro at the time the article was written.

Click here to read part 1 of the series.