Government decides Medicare can reimburse certain diagnostics: how will it impact optical diagnostics?

Oregon Medical Laser Center News, Jan. 1998. by Steven L. Jacques

The recent decision by the Department of Health and Human Services (HHS) to allow Medicare reimbursement of certain medical diagnostics is a public acknowledgement that early detection can save lives and is a cost-effective health care measure. This may be good news for the biomedical optics community which is developing new diagnostic procedures using optical technologies such as optical biopsies based on fluorescence and light scattering, photon migration imaging, photoacoustic imaging, etc.

Under the Balanced Budget Act of 1997, signed into law on August 5, improvements in Medicare reimbursement of diagnostic procedures for colorectal cancer and breast cancer are now approved. The approved procedures are not optical in nature, but rather are traditional diagnostics which have been long championed by various groups for improved reimbursement status.

Two commentaries on the government action cited that the new law allows for reimbursement of new diagnostics which the Secretary (Secretary Donna E. Shalala, Department of Health and Human Services) finds appropriate. In particular, after 2001 new diagnostics for prostate cancer will be considered. Hopefully, this flexibility will be expanded to include new optical diagnostics which prove equivalence and advantage over approved diagnostics. (One commentary is by Michael J. Werner, JD , Amer. College of Physicians, in the ACP Observer. The other commentary is by Damaris Christensen, in the Medical Tribune News Service. See article links below. By the way, I myself have not yet found any such wording in the Federal Register.)

Is there perhaps a crack in the door for new optical diagnostics to prove their case and achieve acceptance for health insurance reimbursement?

An illustrative example of an optical diagnostic that may eventually benefit from this HHS action is the Optical Biopsy system for assessing colonic polyps based on fluorescence spectroscopy. The work of Michael Feld's laboratory at MIT and the work of Tom Deutsch's group at the Wellman Labs at Massachusett's General Hospital were pioneering efforts in establishing the feasibility of optical fiber-based fluorescence spectroscopy to distinguish benign from pre-cancerous polyps, and other groups have also contributed to this project. The MIT patent was licensed to SpectraScience Inc. which is now conducting clinical trials at Massachusetts General Hospital, the MAYO Clinic, and a local Minneapolis hospital.

The following is a listing of links to pertinent text, articles, and various press releases on the government action:

  • Government announcement in Federal Register
    You can find the rules and regulations in the Federal Register, 3rd item under notices of October 31 1997 (Friday), Federal Register Notices Dealing with FDA.
    Medicare Program; Revisions to Payment Policies and Adjustments to the Relative Value Units Under the Physician Fee Schedule, Other Part B Payment Policies, and Establishment of the Clinical Psychologist Fee Schedule for Calendar Year 1998
    1997 Federal Register; file: fr31oc97R; size: 408708 bytes, October 31, 1997; Rules and Regulations
    AGENCY: Health Care Financing Administration (HCFA), HHS.
    ACTION: Final rule with comment period.
    SUMMARY: This final rule makes several policy changes affecting Medicare Part B payment. The changes relate to physician services, including geographic practice cost index changes, clinical psychologist services, physician supervision of diagnostic tests, establishment of independent diagnostic testing facilities, the methodology used to develop reasonable compensation equivalent limits, payment to participating and nonparticipating suppliers, global surgical services, caloric vestibular testing, and clinical consultations.
    This rule also implements provisions in the Balanced Budget Act of 1997 relating to practice expense relative value units, screening mammography, colorectal cancer screening, screening pelvic examinations, and EKG transportation. In addition, we are finalizing the 1997 interim work relative value units and are issuing interim work relative value units for new and revised codes for 1998.
    The full text can be located via one of the gateways to the Government Printing Office, such as the gateway at the Univ. of California,, where you can search the 1997 Federal Register for "Balanced Budget Act 1997" AND "Medicare" to locate the publication.
    Alternatively the full text (399K) is available at
    For simplicity, however, I have exerpted just the portion (38K) of the full text which pertains to the changes in reimbursement for medical diagnostics:

  • regarding Colorectal Cancer
    From the AMERICAN GASTROENTEROLOGICAL ASSOCIATION and American Society Gastrointestinal Endoscopy
    Under the newly enacted law, beginning Jan 1, 1998, Medicare will cover:

  • regarding Preventitive Benefits
    By Michael J. Werner, JD , Amer. College of Physicians, in the ACP Observer October 1997.
    "More preventive benefits:
    Medicare beneficiaries will have greater access to mammography, Pap smears and colorectal screening. Also consistent with ACP's recommendations, the law expands the current outreach program to increase pneumonia and influenza vaccination rates. (However, contrary to ACP guidelines, the new law authorizes an annual prostate screening test for men over age 50, consisting of any or all of the following: a digital rectal exam; a prostate-specific antigen blood test; and, after 2001, other procedures the Secretary finds appropriate.)"

  • regarding Prostate Cancer
    Prostate Cancer Is Termed `Male Epidemic' (9/24) BY DAMARIS CHRISTENSEN, c.1997 Medical Tribune News Service WASHINGTON
    "The balanced budget act passed by Congress earlier this year directs Medicare, beginning in 2000, to pay for yearly screening tests for prostate cancer for all men ages 50 and older. "

  • regarding Mammography
    from the Health Care Financing Administration (HCFA).
    An explanation of mammogram reimbursement under the prior law vs under the new law.

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