December 2018


Chief medical editor’s corner of the world
Just passing through

by Eric Donnenfeld, MD, EyeWorld Chief Medical Editor

Eric Donnenfeld, MD

“Supporting innovation is in
everyone’s best interest, and
pass-through is one of the prime examples where the government and specifically CMS got it right.”


One of the great opportunities for patients and misconceptions among ophthalmologists surrounding new medications used in the operating room is pass-through. New medications and technology often require a jumpstart to have a chance to succeed in a difficult environment. In 2000, pass-through was initiated as part of the Outpatient Prospective Payment System (OPPS), which was part of the Balanced Budget Act of 1999 authorized by Congress. At the time Congress mandated that the costs of surgery be bundled together with a set facility fee, which included all the surgery costs and did not allow for additional fees to be added in to the cost of a procedure. This forced ambulatory surgery centers (ASCs) to become more efficient. However, without pass-through there would be no ability to bring a new drug and added expense through the lengthy, risky, and costly process that leads to FDA approval and use by patients. Drugs used in the operating room would be bundled into the procedure and there would be no mechanism to pay for them without pass-through.
In 2014, the Center for Medicare and Medicaid Services (CMS) created the OPPS/ASC Drug Packaging Policy called “Drugs and Biologicals that Function as Surgical Supplies,” which is why these drugs are bundled into the facility payment after they come off pass-through.
We have had several successful pass-through medications that have been used in the ophthalmic operating room: Mitosol (ophthalmic mitomycin, Mobius Therapeutics, St. Louis) and Omidria (phenylephrine and ketorolac injection, Omeros, Seattle). These drugs have had separate reimbursement under the Medicare OPPS and ASC Payment System transitional pass-through provision. In 2016, Mitosol went off of pass-through and is no longer being paid separately.
Under CMS pass-through regulation, outpatient hospitals (HOPDs) and ASCs are separately paid at the Average Sales Price (ASP) +6% for pass-through drugs, and the cost of the drug must be “not insignificant” relative to the procedure in which the drug is used. For cataract surgery this means that the drug price must not be less than $450 to $500. Copayments do apply to ASCs but not to HOPDs, although I cannot understand the rationale behind this decision. We should all agree—and encourage CMS to officially agree—that no copayment should apply in both settings. Pass-through applies for a minimum of 2 years and a maximum of 3 years, although through regulation CMS has recently set the pass-through period to a uniform 3-year period. Omidria’s pass-through expired December 31, 2017, however, due to recent legislation they received a 2-year extension of their pass-through that began October 1, 2018 and will continue until October 1, 2020. Hopefully by then there will be new legislation or regulation that extends pass-through or more likely allows for billing of new medications that were not included in the standard cataract surgery facility services payment bundle.
The future of ophthalmic medications used in cataract and other intraocular surgery is clearly going to be drug delivery. I predict that topical medications as we now know them will change dramatically in the next several years. EyePoint Pharmaceuticals (Watertown, Massachusetts) has recently obtained FDA approval of Dexycu, an intraocular drug delivery of dexamethasone that will eliminate the need for topical corticosteroids following cataract surgery in most patients. They have also received pass-through status, which means that when Dexycu launches, there will be separate payment from Medicare for the drug, which will allow surgeon and patient access to this alternative to postoperative steroid eye drops. Most likely Ocular Therapeutix (Bedford, Massachusetts) will receive FDA approval and pass-through for a punctal plug drug delivery of dexamethasone in the near future.
It is important for us to have a voice in the discussions leading up to what I hope will be new regulations. This is why I’m glad that ASCRS is leading the Ophthalmic Pharmaceutical Coalition, which includes the companies I mentioned. The Coalition’s aim is to not package but instead have separate payment under Part B FDA approved drugs used in the ASC that have a postoperative indication. In addition, the Coalition has argued in comments to CMS that 3 years for pass-through status is simply not enough time and it should be extended to 5 years. That is consistent with the fact that Omidria will have a total of 5 years on pass-through as a result of the recent legislation extending its status.
Innovation is indeed the key to success in our specialty, and we look forward to numerous new medications being developed and approved in the coming years. Supporting innovation is in everyone’s best interest, and pass-through is one of the prime examples where the government and specifically CMS got it right.

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