The Economics of Superior Technology in the Era of Health Care Reform

A different way of looking at the cost of the care you provide.

By John Rumpakis, OD, MBA

Human behavior is interesting when it comes to pricing. Sometimes, we feel it is worth it to pay more for something based upon a feature or technology, but more often, it is due to emotion. Other times, we feel that paying less for something is the better way to go, principally when we perceive that two items are equal in quality or technology. This article examines how, with regard to amniotic membrane (AM), perception is not the same as reality, particularly in the era of health care reform.


Many practitioners may not appreciate the impact that outcomes-based care and the mandate of the Affordable Care Act for physicians to be compensated based upon their ability to provide the best outcomes in the most efficient and effective manner will have on their practices and incomes. More important, I worry that average practitioners are or, more likely, are not preparing themselves for the future of outcomes-based care and compensation based upon merit or performance.

We can see the potential impact of this fairly easily in the case of treating the corneal sequelae of moderate to severe dry eye. Practitioners are going to have to be hyper-aware not only of conventional standards of care in the diagnosis and treatment of our patients, but also of the various diagnosis- and treatment-based algorithms that are going to be imposed on us by third-party carriers. In essence, this may mean that diagnosing and treating patients by a rote or habitual method may not be approved; constant awareness and implementation of more efficient and effective diagnosis and treatment paradigms will be called for. A practitioner’s ability to create an accurate medical record, accurately perform differential diagnostic testing based upon true necessity, clearly identify the type of dry eye and associated sequelae, and then prescribe the most effective treatment will be tracked and reflected in his or her physician quality ranking and ultimately in the amount that is paid for managing an episode of care for a specific diagnosis.

The economic impact of providing care for maximum profitability rather than providing the best outcomes in the most efficient and effective manner can have far-reaching implications for you and your practice, as carriers decide who they want to have in their networks; efficiency and effectiveness using superior technology will always win in a performance-based compensation model.


This can be illustrated by looking at the economics of a clinical case recently described by Nathan Rock, OD, FAAO, in this publication (May/June 2016, “Cryopreserved Amniotic Membrane Offers Advantages”). I have no connection to Dr. Rock, nor have I ever spoken to him or discussed this case with him. However, when I read his article, the impact of outcome-based care and the resulting economics hit me right between the eyes, and this case certainly illuminates the economic benefit of superior technology.

We have many choices when choosing an AM product. Those who perceive all AMs to be the same presumably make purchase decisions based upon price and profitability. The more important question, however, is “Are they all created equal?” Do they deliver the same outcomes in the same amount of time? These are questions that we need to answer based upon the best interests of the patient, not on the reimbursement for or profitability of a specific product.

If studies of clinical efficacy have been performed, or if a carrier has identified one technology as being more effective than another, then we will have to be aware of those facts. This is happening right now. The following text (italics are mine) is taken directly from a Local Coverage Determination policy in the state of Florida:

“Amnion can be prepared for implantation a number of ways. Heat- or air-dried amniotic membrane loses some of its biologic properties and is not ideal for ocular surface rehabilitation. The tissue can be lyophilized (freeze-dried), which induces minimal change in its properties. Amnion can be preserved in cold glycerol and cryopreserved and stored frozen at -80 degrees. The cryopreservation method allows for greater retention of the membrane’s structural, physiological, and biochemical properties responsible for its dramatic healing and easier handling intraoperatively.”1

Applying my best interpretation of coding to Dr. Rock’s clinical case as written, the differences in costs to the health care system, depending on which type of AM is chosen, are staggering. The following information summarizes the office visits and procedures performed as described in his article, and Tables 1 and 2 show the approximate costs, calculated using current 2016 CMS National Average Maximum Allowable Reimbursements.

Cryopreserved Versus Dehydrated Tissue for Refractory Neurotrophic Keratopathy

• A 70-year-old diabetic patient with a long history of dry eye presented with progressive painless diminution of vision in the left eye (visual acuity 20/200)

• Examination revealed diffuse superficial punctate keratitis and paracentral corneal ulcer in the left eye (OS)

• Maximum medical treatment (artificial tears, cyclosporine, topical steroid, nonsteroidal antiinflammatory drug, antibiotic), plugs, and tarsorraphy had been tried with no help

• Repeated use of dehydrated amniotic tissue and scleral lens also failed to heal the cornea, and in addition, the patient developed stromal haze

• A cryopreserved AM (Prokera Slim biologic corneal bandage; Bio-Tissue) was then applied, and after 2 weeks the membrane dissolved, leaving behind a completely healed epithelial defect, reduced haze, as well as improved and visual acuity (20/40). The cornea remained stable at 6-month follow-up


Human nature is hard to change, particularly when it comes to how much something costs us and how it will directly affect our profit margin. In today’s era of health care reform, providing better care and outcomes will be rewarded at a higher compensation rate than simply providing more care. So, although it may be tempting to use less effective technology in order to increase profitability, in the era of outcomes-based care and merit-based compensation, that may not be the wisest choice, particularly if repeated use of a less-effective technology costs the system more in the long run.

1. Centers for Medicare and Medicaid Services. Local Coverage Determination (LCD): Amniotic Membrane- Sutureless Placement on the Ocular Surface (L36237). Accessed August 23, 2016.

John Rumpakis, OD, MBA
• Founder, president, and CEO of Practice Resource Management Inc., a consulting, appraisal, and management firm for health care professionals
• (503) 968-7595;
• Financial disclosure: reimbursement consultant to BioTissue