Medicare denials can be appealed: CMS acts following lawsuit

The right to appeal is seen as essential to ensuring that Medicare allows physicians to provide the best treatments, and get reimbursed.

By Markian Hawryluk, amednews staff. Sept. 2, 2002.

Washington -- Seniors Lois Jalbert, Robert Kennell and Barbara McAuliffe decided to take on Medicare to fight for coverage of a treatment they believe is the only reason they still have vision. Their battle may have sparked government action that could have wide implications for physicians' freedom to recommend the best treatment and get paid for it.

The three patients have occult age-related macular degeneration and have been effectively treated with ocular photodynamic therapy using Visudyne. But Medicare won't pick up the $1,800 tab per treatment. What's worse is that Medicare would not even let them appeal that decision.

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So the three joined the American Assn. of People with Disabilities, the American Council for the Blind, and the Gray Panthers in a lawsuit filed in early August and seeking an injunction against the government's decision not to pay for Visudyne (verteporfin for injection). The injunction would last until the patients' appeal could be heard.

Although Congress approved legislation requiring an appeals process for national Medicare coverage decisions in 2000, the Centers for Medicare & Medicaid Services missed the October 2001 deadline for establishing it. But just weeks after the Visudyne suit was filed, CMS finally proposed regulations that would govern such appeals.

The regulations, published in the Aug. 22 Federal Register, will allow national coverage decisions, such as the Visudyne ruling, to be challenged. The right to appeal is critical for seniors and their doctors, physicians said. For treatments that benefit primarily an older population, lack of Medicare coverage virtually eliminates access to that treatment and impacts physicians' ability to practice.

"That's really what this is about -- should physicians have a voice," said Grant Bagley, plaintiff's attorney in the Visudyne case. "This is a treatment in which the Vitreous Society and the American Academy of Ophthalmology determined that this was the standard of care."

New rules will allow national decisions on Medicare coverage to be appealed.

But CMS was unswayed by those arguments, he said.

Most Medicare coverage decisions are made at the local carrier level. In the past, companies developing new technology or treatments tried to convince carriers to approve coverage based on local practice patterns.

National coverage decisions by CMS were more rare. To date, the agency has issued fewer than 200.

But in recent years, national decisions have become more common. They offer a one-shot alternative to the local approach and such rulings are binding on all carriers.

That nationwide scope makes the right to appeal even more necessary, some physicians said. A bad decision by CMS could deny patients access to potentially beneficial treatments and prevent physicians from getting Medicare pay for that care.

In the Visudyne case, there is a common view among clinicians that CMS made a mistake, said Bruce Rosenthal, MD, an ophthalmologist who chairs the AMD Alliance. Dr. Rosenthal also runs the low-vision program at the New York City-based Lighthouse International, the largest vision rehabilitation organization in the United States. Many of his patients receive treatments with Visudyne, made by Novartis Ophthalmics.

2% of people younger than 75 and 14% of people 80 and older have macular degeneration.

"A lot of [doctors] feel that because this is the only viable treatment, that they should be eligible to get reimbursement," Dr. Rosenthal said.

Because AMD tends to impact an older population, patients generally rely on Medicare coverage to pay for it. According to research by the National Eye Institute, the prevalence of macular degeneration is about 2% to 3% of the population younger than 75. By age 80, it jumps to almost 14%.

"You're talking about big numbers of people," Dr. Rosenthal said. "If Medicare doesn't provide it, and they don't get this treatment because they can't afford it, their vision can plummet. And it's irreversible damage."

Kirk Packo, MD, a Chicago retina specialist and president of the Vitreous Society, said the agency's rejection of what is considered the standard of care is disturbing.

"Within ophthalmology, this is the first time that Medicare has turned their back on a very large, well-designed, multiple-center clinical trial that shows efficacy for a [condition] that we have no other proven treatments for," Dr. Packo said.

Even if the proposed appeals process is implemented, Dr. Packo is pessimistic that an appeals board would overturn the government's decision. "That's the next uphill battle."

Policy reversal

The Visudyne decision became the test case for challenging CMS' inaction regarding the appeals process after the agency flip-flopped on its coverage decision. In October 2001, Health and Human Services Secretary Tommy Thompson announced Medicare would cover Visudyne treatments, thus "improving the quality of life for Medicare beneficiaries."

But two weeks later, officials said they were reviewing the decision. By March, they reversed their ruling.

CMS said the studies it had relied on to make its initial decision had not proven the drug's clinical effectiveness. The agency said all the study's patients treated with Visudyne experienced a benefit in terms of maintaining vision after two years. But the study had set out to prove a benefit after one year and failed to do that.

"We got caught in a semantics battle here," Dr. Packo said. "They should have at very least left it up to carrier discretion so that we could at least use it in an off-label capacity that the carriers could decide [locally]."

Under the CMS proposal, appeals of national coverage decisions would be reviewed by the HHS Departmental Appeals Board. The board's decision could be appealed in federal courts.

"Unfortunately, when Congress enacted the provisions addressing appeals, it did not provide additional funding to the Medicare program for the associated costs," CMS Administrator Tom Scully said. "Consequently, this has caused some delays in implementing this new process because CMS has had to reallocate funds from other high-priority and congressionally mandated activities to underwrite the expanded appeals process."

A CMS spokesperson declined comment, citing a policy not to comment on pending litigation.

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