Is a 20/20 money-back guarantee covered or noncovered by Medicare?

Take a close look at the facts of the individual case and the specific services provided.
John S. McInnes
Kevin J. Corcoran

Some ophthalmologists are interested in an enhanced cataract surgery package with a corresponding added charge and want to know how Medicare would view it.

There are a number of points that differentiate this approach from routine cataract surgery. The Medicare beneficiaries are charged an extra amount, above the usual deductible and copayment, for a money-back guarantee that the patient will achieve 20/20 uncorrected distance vision after cataract surgery. The surgery is standard cataract surgery with a conventional monofocal IOL. The patient would still require reading glasses for near vision. The ophthalmologist performs multiple biometry measurements to ensure IOL power accuracy and postoperative distance vision emmetropia. Additional diagnostic tests that are not a part of the standard cataract surgery preoperative assessment, such as corneal topography and OCT of the macula, may also be furnished. No refractive surgery is performed on the patient at the time of cataract surgery. However, if the patient needs refractive surgery later (eg, LASIK to correct residual myopia, hyperopia or astigmatism), then there is no additional charge because the refractive surgery is included as a part of the money-back 20/20 distance vision guarantee. If the patient does not achieve 20/20 distance vision without glasses, then the extra amount charged for the guarantee would be refunded to the patient.

Discussion

When an ophthalmologist performs cataract surgery along with other services that are not covered by Medicare, he or she can charge the patient an extra amount for the noncovered services. “Extra amount” in this context refers to an amount above and beyond the usual deductible and copayments for Medicare-covered services. Any extra amount for noncovered services is negotiated between the physician and the patient. Medicare rules do not limit the amount charged for noncovered services, although charges in excess of a reasonable fee may violate state consumer protection laws.

In the context of cataract surgery, there are several circumstances in which Medicare beneficiaries can be charged for noncovered services.

1. Items and services attributable to the noncovered functionality of a presbyopia-correcting IOL, consistent with CMS Ruling No. 05-01, established May 3, 2005.

2. Items and services attributable to the noncovered functionality of an astigmatism-correcting IOL, consistent with CMS-1536-R, established Jan. 22, 2007.

3. Refractive surgery consistent with the National Coverage Determination for Refractive Keratoplasty (NCD § 80.7).

4. Services deemed not medically necessary for conventional cataract surgery by the Medicare program, but which are deemed clinically appropriate by the surgeon.

The question regarding a money-back 20/20 distance vision guarantee is whether the ophthalmologist is providing non-covered services for which he or she can legally charge the beneficiary an additional amount, or is the proposed arrangement standard cataract surgery with some additional attention paid by the surgeon to the accuracy of the IOL power and the goal of postoperative distance emmetropia, for which an additional charge would not be permitted?

Legal principles

Charging Medicare beneficiaries extra amounts for covered services above the deductible and copayments may be prohibited “balance billing,” which refers to the practice of charging patients for the difference between the physician’s fee for medical services and Medicare’s allowed fee amount for those services. Balance billing is not permitted for participating providers and is limited for nonparticipating providers.

The vast majority of physicians — about 90% — are participating providers and accept assignment, which means they agree to accept Medicare’s approved payment amounts as full payment for the Medicare-covered services they provide for all Medicare patients. Patients may be billed for any Medicare cost sharing such as deductibles, copayments and co-insurance that applies, but may not be balance billed additional charges for covered services.

A small proportion of physicians — about 4% — accept Medicare but are nonparticipating providers. These providers are allowed to balance bill patients, but by law the amount they balance bill may not exceed 15% of the Medicare-approved payment amount for nonparticipating physicians for each service. This is called the limiting charge. The Medicare-approved payment rates for nonparticipating physicians are 95% of the rates for participating physicians. The Medicare beneficiary is responsible, up to the limiting charge, for deductibles, copayments and co-insurance.

Both participating and nonparticipating physicians are subject to civil money penalties and exclusion from Medicare and other federal health care programs for overcharging beneficiaries for covered services.

A cogent description of the relevant legal principles and some examples were provided in a 2004 OIG Alert titled “OIG alerts physicians about added charges for covered services: Extra contractual charges beyond Medicare’s deductible, coinsurance: A potential assignment violation,” which is available at https://oig.hhs.gov/fraud/docs/alertsandbulletins/2004/fa033104assignviolationI.pdf. This OIG Alert focused on concierge services and includes the following example and pertinent statements:

“For example, the OIG recently alleged that a physician violated his assignment agreement when he presented to his patients — including Medicare beneficiaries — a ‘Personal Health Care Medical Care Contract’ asking patients to pay an annual fee of $600.

“While the physician characterized the services to be provided under the contract as ‘not covered’ by Medicare, the OIG alleged that at least some of these contracted services were already covered and reimbursable by Medicare. Among other services offered under this contract were the ‘coordination of care with other providers,’ ‘a comprehensive assessment and plan for optimum health,’ and ‘extra time’ spent on patient care. OIG alleged that based on the specific facts and circumstances of this case, at least some of these contracted services were already covered and reimbursable by Medicare.

“Therefore, OIG alleged that each contract presented to this physician’s Medicare patients constituted a request for payment for already covered services, other than the coinsurance and deductible, and was therefore a violation of the physician’s assignment agreement.

“In order to resolve these allegations, the physician agreed to pay a settlement amount to OIG, and to stop offering these contracts to his patients.”

This OIG Alert describes covered services misrepresented as noncovered services in order to justify an additional charge. The central question whenever beneficiaries are charged extra amounts is: What are the additional noncovered services being provided that permit the extra charges?

In the case of the 20/20 money-back guarantee described above, there is no presbyopia-correcting or astigmatism-correcting IOL implanted. The implant is a conventional monofocal IOL that is part of standard cataract surgery, which is a covered Medicare benefit for a medically necessary procedure. Furthermore, biometry and IOL calculations to achieve the desired postoperative vision are an established part of standard cataract surgery. A few additional clinically appropriate diagnostic tests are covered in some cases: specular microscopy (NCD § 80.8) and B-scan (NCD § 10.1). There is no refractive surgery performed at the time of cataract surgery, although refractive surgery could be provided in the future if necessary to achieve 20/20 distance vision. If, however, no additional noncovered services are provided and the probability of future refractive surgery is very low, then there may not be a sufficient basis for extra charges to the beneficiary.

Alternatively, if additional diagnostic services that are not covered by the Medicare program are performed, and there is the potential that postoperative refractive surgery will be needed to achieve the desired result, the money-back 20/20 distance vision guarantee could be viewed as a discounted prepayment for future refractive surgery. Whether or not this is the case depends on several considerations. First, what is the likelihood that refractive surgery will be required to achieve the result of the guarantee? If very few patients actually require refractive surgery to achieve the outcome promised with the guarantee, is the extra amount actually a payment for a noncovered service? For example, a credible argument might be made for an additional charge of $250 for possible future refractive surgery if 10% of cataract patients subsequently require it to achieve 20/20 distance vision, and the regular charge for refractive surgery is $2,500. If postoperative refractive surgery was almost never necessary, then the 20/20 guarantee begins to look like some of the covered services that were billed as noncovered as discussed in the OIG Alert. For example, would the distance vision guarantee be similar to the “plan for optimum health” that was determined to be part of the covered services provided to beneficiaries and therefore not subject to extra charges for noncovered services? Yet, if refractive surgery occurred in some patients (even if just a relatively small but definite percentage of patients), then the ophthalmologist could point to it as the noncovered service that warranted the extra charge, even if not every cataract surgery patient required refractive surgery. Also, if medically appropriate but noncovered preoperative diagnostic tests were furnished, such as corneal topography to assess regular astigmatism, then those tests could be the basis for extra charges at a fee consistent with the usual and customary charge.

Conclusion

Medicare covers many but not all items and services provided by physicians and other health care professionals. Exclusions from Medicare benefits are stipulated in the Medicare law and regulations. Beneficiaries may be financially responsible for noncovered services if properly informed and agreed upon before receiving the services. Charges to beneficiaries for covered services are constrained by the assignment agreement for participating providers and to the limiting charge for nonparticipating providers. Charges for noncovered services are not so limited or constrained. However, the extra charges for noncovered services must be reasonable, and those additional noncovered services should be clinically appropriate for the patient. In summary, is a 20/20 money-back guarantee covered or noncovered by Medicare? The answer to this question depends on the facts of the case and the specific services provided, and the reader should appreciate the constraints described in our analysis.

Disclosures: Corcoran reports he is president of Corcoran Consulting Group. McInnes reports no relevant financial disclosures.

John S. McInnes
Kevin J. Corcoran

Some ophthalmologists are interested in an enhanced cataract surgery package with a corresponding added charge and want to know how Medicare would view it.

There are a number of points that differentiate this approach from routine cataract surgery. The Medicare beneficiaries are charged an extra amount, above the usual deductible and copayment, for a money-back guarantee that the patient will achieve 20/20 uncorrected distance vision after cataract surgery. The surgery is standard cataract surgery with a conventional monofocal IOL. The patient would still require reading glasses for near vision. The ophthalmologist performs multiple biometry measurements to ensure IOL power accuracy and postoperative distance vision emmetropia. Additional diagnostic tests that are not a part of the standard cataract surgery preoperative assessment, such as corneal topography and OCT of the macula, may also be furnished. No refractive surgery is performed on the patient at the time of cataract surgery. However, if the patient needs refractive surgery later (eg, LASIK to correct residual myopia, hyperopia or astigmatism), then there is no additional charge because the refractive surgery is included as a part of the money-back 20/20 distance vision guarantee. If the patient does not achieve 20/20 distance vision without glasses, then the extra amount charged for the guarantee would be refunded to the patient.

Discussion

When an ophthalmologist performs cataract surgery along with other services that are not covered by Medicare, he or she can charge the patient an extra amount for the noncovered services. “Extra amount” in this context refers to an amount above and beyond the usual deductible and copayments for Medicare-covered services. Any extra amount for noncovered services is negotiated between the physician and the patient. Medicare rules do not limit the amount charged for noncovered services, although charges in excess of a reasonable fee may violate state consumer protection laws.

In the context of cataract surgery, there are several circumstances in which Medicare beneficiaries can be charged for noncovered services.

1. Items and services attributable to the noncovered functionality of a presbyopia-correcting IOL, consistent with CMS Ruling No. 05-01, established May 3, 2005.

2. Items and services attributable to the noncovered functionality of an astigmatism-correcting IOL, consistent with CMS-1536-R, established Jan. 22, 2007.

3. Refractive surgery consistent with the National Coverage Determination for Refractive Keratoplasty (NCD § 80.7).

4. Services deemed not medically necessary for conventional cataract surgery by the Medicare program, but which are deemed clinically appropriate by the surgeon.

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The question regarding a money-back 20/20 distance vision guarantee is whether the ophthalmologist is providing non-covered services for which he or she can legally charge the beneficiary an additional amount, or is the proposed arrangement standard cataract surgery with some additional attention paid by the surgeon to the accuracy of the IOL power and the goal of postoperative distance emmetropia, for which an additional charge would not be permitted?

Legal principles

Charging Medicare beneficiaries extra amounts for covered services above the deductible and copayments may be prohibited “balance billing,” which refers to the practice of charging patients for the difference between the physician’s fee for medical services and Medicare’s allowed fee amount for those services. Balance billing is not permitted for participating providers and is limited for nonparticipating providers.

The vast majority of physicians — about 90% — are participating providers and accept assignment, which means they agree to accept Medicare’s approved payment amounts as full payment for the Medicare-covered services they provide for all Medicare patients. Patients may be billed for any Medicare cost sharing such as deductibles, copayments and co-insurance that applies, but may not be balance billed additional charges for covered services.

A small proportion of physicians — about 4% — accept Medicare but are nonparticipating providers. These providers are allowed to balance bill patients, but by law the amount they balance bill may not exceed 15% of the Medicare-approved payment amount for nonparticipating physicians for each service. This is called the limiting charge. The Medicare-approved payment rates for nonparticipating physicians are 95% of the rates for participating physicians. The Medicare beneficiary is responsible, up to the limiting charge, for deductibles, copayments and co-insurance.

Both participating and nonparticipating physicians are subject to civil money penalties and exclusion from Medicare and other federal health care programs for overcharging beneficiaries for covered services.

A cogent description of the relevant legal principles and some examples were provided in a 2004 OIG Alert titled “OIG alerts physicians about added charges for covered services: Extra contractual charges beyond Medicare’s deductible, coinsurance: A potential assignment violation,” which is available at https://oig.hhs.gov/fraud/docs/alertsandbulletins/2004/fa033104assignviolationI.pdf. This OIG Alert focused on concierge services and includes the following example and pertinent statements:

“For example, the OIG recently alleged that a physician violated his assignment agreement when he presented to his patients — including Medicare beneficiaries — a ‘Personal Health Care Medical Care Contract’ asking patients to pay an annual fee of $600.

“While the physician characterized the services to be provided under the contract as ‘not covered’ by Medicare, the OIG alleged that at least some of these contracted services were already covered and reimbursable by Medicare. Among other services offered under this contract were the ‘coordination of care with other providers,’ ‘a comprehensive assessment and plan for optimum health,’ and ‘extra time’ spent on patient care. OIG alleged that based on the specific facts and circumstances of this case, at least some of these contracted services were already covered and reimbursable by Medicare.

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“Therefore, OIG alleged that each contract presented to this physician’s Medicare patients constituted a request for payment for already covered services, other than the coinsurance and deductible, and was therefore a violation of the physician’s assignment agreement.

“In order to resolve these allegations, the physician agreed to pay a settlement amount to OIG, and to stop offering these contracts to his patients.”

This OIG Alert describes covered services misrepresented as noncovered services in order to justify an additional charge. The central question whenever beneficiaries are charged extra amounts is: What are the additional noncovered services being provided that permit the extra charges?

In the case of the 20/20 money-back guarantee described above, there is no presbyopia-correcting or astigmatism-correcting IOL implanted. The implant is a conventional monofocal IOL that is part of standard cataract surgery, which is a covered Medicare benefit for a medically necessary procedure. Furthermore, biometry and IOL calculations to achieve the desired postoperative vision are an established part of standard cataract surgery. A few additional clinically appropriate diagnostic tests are covered in some cases: specular microscopy (NCD § 80.8) and B-scan (NCD § 10.1). There is no refractive surgery performed at the time of cataract surgery, although refractive surgery could be provided in the future if necessary to achieve 20/20 distance vision. If, however, no additional noncovered services are provided and the probability of future refractive surgery is very low, then there may not be a sufficient basis for extra charges to the beneficiary.

Alternatively, if additional diagnostic services that are not covered by the Medicare program are performed, and there is the potential that postoperative refractive surgery will be needed to achieve the desired result, the money-back 20/20 distance vision guarantee could be viewed as a discounted prepayment for future refractive surgery. Whether or not this is the case depends on several considerations. First, what is the likelihood that refractive surgery will be required to achieve the result of the guarantee? If very few patients actually require refractive surgery to achieve the outcome promised with the guarantee, is the extra amount actually a payment for a noncovered service? For example, a credible argument might be made for an additional charge of $250 for possible future refractive surgery if 10% of cataract patients subsequently require it to achieve 20/20 distance vision, and the regular charge for refractive surgery is $2,500. If postoperative refractive surgery was almost never necessary, then the 20/20 guarantee begins to look like some of the covered services that were billed as noncovered as discussed in the OIG Alert. For example, would the distance vision guarantee be similar to the “plan for optimum health” that was determined to be part of the covered services provided to beneficiaries and therefore not subject to extra charges for noncovered services? Yet, if refractive surgery occurred in some patients (even if just a relatively small but definite percentage of patients), then the ophthalmologist could point to it as the noncovered service that warranted the extra charge, even if not every cataract surgery patient required refractive surgery. Also, if medically appropriate but noncovered preoperative diagnostic tests were furnished, such as corneal topography to assess regular astigmatism, then those tests could be the basis for extra charges at a fee consistent with the usual and customary charge.

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Conclusion

Medicare covers many but not all items and services provided by physicians and other health care professionals. Exclusions from Medicare benefits are stipulated in the Medicare law and regulations. Beneficiaries may be financially responsible for noncovered services if properly informed and agreed upon before receiving the services. Charges to beneficiaries for covered services are constrained by the assignment agreement for participating providers and to the limiting charge for nonparticipating providers. Charges for noncovered services are not so limited or constrained. However, the extra charges for noncovered services must be reasonable, and those additional noncovered services should be clinically appropriate for the patient. In summary, is a 20/20 money-back guarantee covered or noncovered by Medicare? The answer to this question depends on the facts of the case and the specific services provided, and the reader should appreciate the constraints described in our analysis.

Disclosures: Corcoran reports he is president of Corcoran Consulting Group. McInnes reports no relevant financial disclosures.