Article Date: 1/1/2006

SUBSPECIALTY NEWS
ASC Payment Reform Would Benefit Retina Surgeons
Proposed Legislation Would Mean Sharply Higher Reimbursement.
STEPHEN C. SHEPPARD, CPA, COE

Recent legislation introduced into the US House and Senate would establish a new payment system for ambulatory surgical centers (ASCs) and reform the process that CMS uses to determine Medicare ASC reimbursement rates.

The bills, S. 1884, introduced by Sen. Michael Crapo (R-Idaho) and H.R. 4042, introduced by Rep. Wally Herger (R-Calif), if enacted in their entirety, would substantially enhance the profitability of the most commonly performed posterior-segment procedures when performed in an ASC.

The proposed legislation would modify the current reimbursement system to require that, by Jan. 1, 2008:

►ASCs would be permitted to receive Medicare facility payment for any surgical services, except those considered to pose a significant risk to patient safety or that would require an overnight stay. Commonly performed retinal laser procedures would be among those newly included.

►ASCs would be paid 75% of the Hospital Outpatient Department (HOPD) fee schedule amount for each covered service.

►ASCs would be eligible to receive pass-through payments currently made to HOPDs for the cost of certain drugs and medical devices.

►Annual payment updates and other relevant adjustments made for HOPDs would henceforth also apply to ASCs.

ANALYSIS OF COMMONLY PERFORMED RETINA PROCEDURES
Medicare Facility Rates - Calendar Year 2006

Description CPT APC ASC
Group
ASC Rate ($) HOPD
Rate ($)
75% ($) Increase
(Decrease)
Vitrectomy, Pars Plana 67036 0672 4 630 2,191 1,644 1,014 161%
Vitrectomy, membrane strip 67038 0672 5 717 2,191 1,644 927   129%
Victrectomy, focal photocoagulation 67039 0672 7 995 2,191 1,644 649    65%
Victrectomy, panretinal photcoagulation 67040 0672 7 995 2,191 1,644 649    65%
Repair detachment, scleral buckling 67107 0672 5 717 2,191 1,644 927   129%
Repair detachment, vitrectomy 67108 0672 7 995 2,191 1,644 649   65%
Source, 2006 Medicare Fee Schedules, National Average Rates

While the passage of this legislation is not likely in the current session, the basic structure of the bills represent several years of negotiations between the agency, industry representatives, and other stakeholders in the process. Many industry observers believe that reforms closely reflective of this structure will ultimately be enacted to comply with the Jan. 1, 2008 timeline mandated by Congress.

If enacted, the impact on reimbursement rates for the most frequently performed retinal procedures would be dramatic. For example, the ASC facility fee for Pars Plana Vitrectomy, CPT 67036, would increase from $630 to $1,644, a percentage increase of more than 160%. Other commonly performed retinal procedures would enjoy percentage increases in facility reimbursements of approximately 65% to 129%.

For many years, posterior segment surgeons have been discouraged or excluded from participation in ASC ownership by the perception that retina surgery is not profitable in the ASC setting. The legislation currently being considered could more than level the playing field and elevate posterior-segment surgeons to a prominent position in the development of new ASCs.

Stephen C. Sheppard, CPA, COE, is a managing principal with Medical Consulting Group, LLC, an ophthalmic consulting firm with offices in Springfield, Mo and Fayetteville, Ark.

Genentech: Avastin Not Intended for AMD
Company Cautions on Off-Label use of Cancer Drug.

In an effort to help their patients who have wet AMD and are not responding to other therapies, some retina specialists are turning to off-label use of Avastin, Genentech's systemic anti-VEGF drug for colorectal cancer, and are injecting small amounts of it intravitreally to treat AMD. Genentech's AMD drug Lucentis, which is not yet FDA-approved, is a related VEGF-inhibitor, and some retina specialists see Avastin as a useful proxy for Lucentis, at least until Lucentis
is approved.

Meanwhile, Genentech is cautioning that Avastin was developed as a systemic cancer therapy and is not intended as a locally delivered ophthalmic drug. For example, Genentech notes that Avastin has a half-life that is 100 times longer than Lucentis, meaning that Avastin can stay in the body for weeks with the potential for unwanted side effects. Also, Avastin is produced under different manufacturing standards than those required for an ophthalmic drug. As a systemic drug, it is allowed to contain more particulate matter than an ophthalmic drug.

"We understand that the doctors using Avastin for AMD are doing it with noble intent, which is to help patients who are going blind as we speak," Charles Johnson, MB, ChB, Genentech's vice president of biotherapeutics, told Retinal Physician. "However, there have been no safety and toxicity studies conducted on Avastin as an ophthalmic drug. We are well aware of the unmet need and are beginning a new phase 3 Lucentis dosing study (SAILOR) which will enroll 5,000 patients. This study is an avenue for more patients to have access to Lucentis now."

Dr. Johnson notes that the off-label intravitreal use of Avastin has increased "because of advice generated by the retinal community." He cites Philip Rosenfeld, MD, of Bascom Palmer in Miami as the first to use Avastin off-label to treat AMD.

"The retinal community is a close-knit, well-informed group that has excellent communication and is motivated to do the best they can for their patients," says Dr. Johnson.

When a retina specialist asks Genentech about using Avastin for AMD, the company responds with a package of relevant published data.

"We make educational material available to the doctors but we don't take a position," says Dr. Johnson.

Dr. Johnson says physicians should report any adverse events they encounter while using Avastin for AMD. Thus far, he is not aware of any adverse events being reported.

While the use of Avastin by retina specialists has been a thorny issue for Genentech, Dr. Johnson says he believes that "current use of Avastin is driven by the extent and immediacy of the unmet need and hopefully Lucentis will go some way to addressing that need." FDA approval for Lucentis could come sometime in 2006.

IN BRIEF

B & L in new partnerships. Bausch & Lomb has entered into two new partnerships that put the company squarely in the widely watched race to develop better treatments for wet AMD.

B & L has signed a definitive agreement for an exclusive worldwide license from Cephalon, Inc. of Frazer, Pa. to develop, market, and sell ophthalmic products containing compounds that inhibit angiogenesis.

"We are interested in evaluating the therapeutic potential of small-molecule angiogenesis inhibitors for the treatment of a variety of blinding conditions that either cause or result from the abnormal growth of blood vessels within the eye. These diseases include the wet form of age-related macular degeneration and diabetic macular edema.," said Praveen Tyle, PhD, Bausch & Lomb chief scientific officer and senior vice president, Global Research & Development.

"What is exciting is that preclinical data suggest these compounds may demonstrate a novel method of action by both stopping the abnormal growth of new blood vessels and by shrinking existing abnormal vessels. In addition, the small molecular size of these compounds makes them candidates for sustained release using our patented drug-delivery technology," Dr. Tyle said.

In another new partnership, Bausch & Lomb and PTC Therapeutics, Inc., a privately held biopharmaceutical company, announced an exclusive option agreement for B & L to license selected PTC compounds as development candidates for therapeutic use in ophthalmology. PTC's antiangiogenesis program was developed through PTC's proprietary GEMS (Gene Expression Modulation by Small Molecules) technology.

"Our research collaboration with PTC Therapeutics provides Bausch & Lomb with access to a broad range of compounds from PTC's antiangiogenesis program that are potential candidates for development," said Dr. Tyle. "PTC has identified a number of promising small-molecule compounds that show antiangiogenic activity. The goal of our collaboration is to apply our research expertise to develop these compounds as unique therapies for diseases of ocular neovascularization including macular degeneration."

Retaane trial. Alcon, Inc. said 24-month data from its comparative study of Retaane 15 mg vs. Visudyne photodynamic therapy (PDT) in the treatment of wet AMD confirm the long-term safety of Retaane suspension. Safety information from this study showed that no clinically relevant safety issues were observed due to the drug or the posterior juxtascleral depot procedure during entire course of the study.

In addition to the safety data, the company said 2-year data continued to show that Retaane suspension is clinically equivalent to PDT with Visudyne. Moreover, the mean visual acuity for both treatment groups was clinically stable from month 12 to month 24.

"We believe this data indicates that Retaane suspension has the potential to play a unique role in the chronic treatment of wet AMD," said Stella Robertson, PhD, vice president, ophthalmic development. "We continue to have discussions with the FDA and other regulatory agencies around the world to gain approval of this drug."

Cataract after vitrectomy. Othera Pharmaceuticals, Inc., said it has initiated a phase 2 clinical trial of its lead compound, a topically administered eye drop, OT-551. The 12-month, double-masked, randomized study is designed to evaluate the ability of OT-551 to prevent or arrest the progression of cataracts in patients who have undergone vitrectomy. Othera says OT-551 has been shown to be a potent catalytic antioxidant, and recently completed a phase 1 safety and comfort study in healthy volunteers.

"It is generally accepted in the ophthalmology community that a link exists between vitrectomy surgery and subsequent cataract formation," said Leonard Parver, MD, Othera's medical director and a practicing retinal surgeon. "Removal of the vitreous from the back of the eye exposes the lens to oxygen-free radicals, and in the great majority of the cases where the patients have their natural lenses, vision-impairing opacities will form within 9 to 12 months."

Neurotech drug in trials. Neurotech, a biotechnology company that is developing therapeutics for chronic retinal diseases, says that its lead product, NT-501, is now in clinical development for the treatment of retinal degeneration, including retinitis pigmentosa (RP) and geographic atrophy, a serious condition associated with atrophic (dry) macular degeneration.

Neurotech provides not only the therapeutic (NT-501), but the technology for its utilization as well. The NT-501 therapy employs Neurotech's unique Encapsulated Cell Technology (ECT) that allows for the sustained, long-term delivery of ciliary neurotrophic factor to the back of the eye. By using the tiny ECT implant, this approach avoids injecting therapeutic agents directly into the eye, particularly if regular administration is required. The surgical procedure is performed as an outpatient procedure in only 25 minutes.

Neurotech will soon begin phase 2 clinical trials of NT-501 with the National Eye Institute in Maryland. Positive results from an open-label phase 1 clinical trial involving 10 RP patients were announced in May. Results from the trial confirmed that CNTF can be safely delivered into the vitreous of patients with RP and that the ECT device was well tolerated by all patients. In addition, some patients achieved more than 1 line of improvement in visual acuity.

In related news, Neurotech recently named Ted Danse as its president and CEO. Danse, a veteran of more than 20 years in the ophthalmic industry, previously held senior management positions at major eyecare companies, including Allergan and ISTA Pharmaceuticals. Danse is based at Neurotech's headquarters in Lincoln, RI. The company also has a European office in Paris.

Early treatment with Macugen. A team of researchers led by Christine P. Gonzales, MD, of the Jules Stein Eye Institute at UCLA, conducted a retrospective analysis of the pivotal phase 3 VISION study that led to the approval of Macugen for wet AMD and found that early treatment with the drug resulted in superior vision outcomes.

The team found that 2 groups of patients with early signs of the disease who were given Macugen demonstrated better visual acuity and had less chance of sustaining severe vision loss than patients in the study who were given Macugen at a later stage of the disease. Patients given sham injections on average fared significantly worse than those given Macugen at any stage of the disease.

The findings were published in the October 2005 issue of Retina.

AMD partnership. Sirna Therapeutics, Inc., said it has entered into a multi-year alliance with Allergan, Inc. to develop Sirna-027, a novel RNAi-based therapeutic currently in phase 1 for AMD, and to discover and develop other novel RNAi-based therapeutics against select gene targets in ophthalmic diseases.

Sirna will receive an initial payment of $5 million from Allergan and be eligible for development milestones of up to $245 million in addition to research funding and royalties on the worldwide sales of products resulting from the alliance. Sirna also will receive contract manufacturing revenues.



Retinal Physician, Issue: January 2006