While it's legal for a surgeon to buy premium IOLs and resell them to a facility, it's a poor idea. The practice runs afoul of Medicare regulations and skirts federal kickback laws. It's better for the facility to buy the IOLs and the surgeon to sidestep that transaction altogether.

It's a premium IOL problem
Premium IOLs cost about 10 times as much as conventional IOLs and are only partially covered by third-party payors. Medicare regulations make the beneficiary responsible for the non-covered, upgrade portion of premium IOLs, which correct presbyopia or astigmatism. However, a basic, covered portion of the IOL, for cataract, is handled in an identical fashion to a conventional lens. This dichotomy is the source of some confusion.

Longstanding CMS regulations prohibit surgeons from being reimbursed for supplying a conventional, covered IOL to a Medicare beneficiary. The Medicare Benefit Policy Manual (Ch 15, ?120A) states, "???Medicare does not cover a prosthetic device dispensed to a patient prior to the time at which the patient undergoes the procedure that makes necessary the use of the device. For example, do not make a separate Part B payment for an IOL that a physician, during an office visit prior to the actual surgery, dispenses to the patient for his/her use."

Further, when cataract surgery that is covered by Medicare is performed in an ASC, CMS regulations oblige the facility to provide the conventional IOL. The Medicare Claims Processing Manual ( ?40.3) states, "Do not pay physicians or suppliers for an IOL furnished to a beneficiary in an ASC after July 1, 1988. Deny separate claims for IOLs furnished to ASC patients beginning March 12, 1990. Also, effective March 12, 1990, procedures 66983 and 66984 are treated as single procedures for payment purposes."

Payment for a single procedure includes the conventional IOL, so you can't break it out or segregate it, as another part of the MCPM ?40.3 makes clear: "Payment for facility services furnished by an ASC for IOL insertion during or subsequent to cataract surgery includes an allowance for the lens." It is noteworthy that an ASC's claim for reimbursement seeks payment for an IOL. If not supplied by the ASC, the claim would be fraudulent.

Appearance of a kickback
Let's consider the case of a hospital that refuses to buy premium IOLs for 1 of its cataract surgeons. Not to be deterred, Dr. Emdee proceeds with his plans to offer refractive cataract surgery to his patients. An enterprising sales representative for one of the IOL manufacturers agrees to sell the premium IOLs directly to Dr. Emdee, who instructs his office manager to collect from Medicare beneficiaries the cost of the IOL plus a small handling charge. Dr. Emdee carries the necessary IOLs to surgery with him when he has cases that require them. There are a couple of problems with this approach.

First, premium IOLs consist of 2 elements: a covered portion and a non-covered portion. Medicare's regulations make it clear that only the facility can be reimbursed for the covered portion of the premium IOL, not the physician. The beneficiary is only responsible for the non-covered portion of the premium IOL, yet was asked to pay out-of-pocket for the entire IOL. The beneficiary was overcharged.

Second, Medicare's payment of the hospital's facility fee for cataracts includes the IOL, yet the hospital did not provide it. It was reimbursed for something it did not provide, which could be construed as a false claim.

Dr. Emdee is better off performing surgeries that involve premium IOLs at another facility that is more hospitable, rather than buying IOLs from the manufacturer. A potential allegation of kickback arises when the surgeon purchases an IOL and re-sells it to the ambulatory surgery center or hospital outpatient department rather than to the beneficiary. Since the surgeon is referring the patient to the ASC or HOPD, and money is paid to the surgeon by the facility for the IOL, there is the appearance of payment for a referral.

On the books since 1972, the federal anti-kickback law's main purpose is to protect patients and federal healthcare programs from fraud and abuse by curtailing the corrupting influence of money on healthcare decisions. Direct but broad, the law states that anyone who knowingly and willfully receives or pays anything of value to influence the referral of federal healthcare program business, including Medicare and Medicaid, can be held accountable for a felony. Violations of the law are punishable by up to 5 years in prison, criminal fines up to $25,000, administrative civil money penalties up to $50,000, and exclusion from participation in federal healthcare programs. To avoid this serious legal allegation, payments from facilities to surgeons or vice versa are discouraged.

If a surgeon must buy an IOL
In the extraordinary situation where the surgeon is forced to act as a middleman in order to gain access to a premium IOL, the facility should agree to buy the IOL for the manufacturer's price on the invoice, including any shipping cost and applicable taxes. This transaction is neutral — neither party gains or loses money, so there is no implied inducement for the referral.

Some surgeons take the responsibility for educating patients about patient shared billing (covered and non-covered items, for example) and simultaneously collect payment for the non-covered items and services. Best practices indicate that the patient pays the surgeon and the facility with 2 discrete payments. Commingling funds is another potential legal minefield that you can easily avoid.