BLOG: LipiFlow on the brink, part 1: How it happened
This is how I imagine things must work in the bowels of the companies charged with administering Medicare benefits, the so-called MACs:*
Lou: Heeeey Abboooooot!
Bud: Well, hello Lou! What are you working on?
Lou: I keep getting requests to cover this dry eye procedure called LipiFlow.
Bud: Never heard of it. What’s it do?
Lou: It looks like a thing that opens up the oil in your eyelids and then squishes it out so new oil can replace it.
Bud: Huh. Like an oil change for your car then.
Bud: And we don’t pay for it?
Lou: Naaaah. Why would we? We just tell everyone we don’t cover it and then they go away.
Bud: That sounds about right. Why the big deal now?
Lou: The gobbersnoppers over on the Hill were asleep again and left a few random words in a new law saying we can’t just say no to every request. Now we gotta pay.
Bud: Well, that’s silly. Typical, but silly. What’re ya gonna pay then?
Lou: I was thinking about changing the oil in my car, like you said. You know, like at Jiffy Lube. What’d ya pay last time you got an oil change?
Bud: I dunno. Like 38 bucks, I think.
Lou: Sounds good. Thirty-eight bucks for each eye. Glad ya stopped by.
Bud: My pleasure. Glad I could help. Hey, since you’re about done here, I picked up a couple tickets for today’s baseball game if you’re free.
Lou: That’d be great! I don’t know too much about the visitors, though. Who’s on first?
How else are we to explain the ludicrous payment decision made by Medicare Administrative Contractors (MACs) that cover approximately 40% of the U.S.? This group of MACs has declared that LipiFlow (Johnson & Johnson Vision) is a covered procedure with a payment of $38 per eye. That is not a typo. They interpret a clause in the most recent pandemic relief bill as disallowing the blanket rejection of coverage for any procedure with a treatment code. Thirty-eight dollars is less than half of the cost of the disposables used in every case. You lose actual money on each eye even before you take into account paying for the unit, your tech, rent, utilities, etc. Oh, yeah, before you pay the doc who actually does it.
I’m sure that you’re wondering how this could possibly have happened. Like so many things, this is a case of “no good deed goes unpunished” and what can most charitably be described as corporate inattention. In order to placate antsy investors, TearScience applied for and received a treatment code for LipiFlow. Neither it, nor J&J, ever applied for payment on that code. This was good strategy as long as everyone in practice used a “cash only” model. It worked until a) Congress got sloppy and b) practitioners naively billed for the procedure (the “good deed”).
The dry eye disease community became aware of this in January 2021. There were individuals at J&J who were aware of this in October 2020 (an earlier date is possible, but I cannot confirm it to my satisfaction). Meaningful engagement between J&J and the DED community did not begin until March. Outreach to the MACs by J&J and influential DED doctors was initiated shortly thereafter. If the MACs move at the fastest possible pace, the earliest we might see something more reasonable than $38 per eye is August, 4.5 months after initial outreach.
My bet? Double that. Nine months from March if we are lucky.
This is not how LipiFlow should have transitioned from cash pay to reimbursement by third-party payers such as Medicare. The existence of a code was not a secret at the time J&J purchased TearScience. There are people who spend their entire careers at J&J doing nothing but parsing the minutiae of health care-related government dictums. This entire imbroglio could have been foreseen and forestalled. Once it surfaced, whether in January, October or earlier, action could have been initiated sooner. No one even had to formulate a new playbook; we can look to cross-linking. This didn’t have to be the ambush it’s become.
In part 2, I will outline how we, DED doctors and J&J, can move forward.
*Apologies to Bud Abbott and Lou Costello.