Iridex: 10K on local coverage determination

 

Item 8.01

Other Events.

On October 26, 2023, WPS Government Health Administrators, (“WPS”), a Medicare Administrative Contractor (“MAC”) published “Local Coverage Determination L39620 Micro-Invasive Glaucoma Surgery (MIGS)” (the “LCD”), with a future effective date of December 24, 2023. WPS administers Part B Medicare benefits in Kansas, Nebraska, Missouri, Iowa, Indiana, and Michigan.

Four other MACs, including Palmetto GBA, Celerian Group Company, National Government Services and Noridian Healthcare Solutions participated in a Contractor Advisory Committee Meeting on Micro-Invasive Glaucoma Surgery that was held on January 5, 2023, which meeting is believed to have served as a precursor for the WPS LCD. The Company cannot predict whether or when these additional MACs may issue their own local coverage determinations or the scope, outcome, or impact on Iridex’s business of such decisions.

The family of Iridex Laser Systems includes various laser instruments, including the Cyclo G6 Laser System, which have been authorized by the U.S. Food and Drug Administration (“FDA”) to deliver laser energy to soft and fibrous tissue, including osseous tissue incision, excision, coagulation, vaporization, ablation and vessel hemostasis in the medical specialties of, dermatology, ear, nose and throat (ENT)/otolaryngology, and ophthalmology. With respect to Cyclo G6 Laser System and Probe Delivery Devices for use in ophthalmology, such devices have been cleared by FDA for the intended use of transscleral cyclophotocoagulation of the ciliary processes and for the treatment of glaucoma, including primary open-angle, closed-angle, and refractory.

While Iridex (the “Company”) cannot predict how the WPS LCD will be ultimately interpreted and implemented by Medicare and its contractors, on October 30, 2023, Company consulted with expert external reimbursement advisors in an effort to evaluate the potential impact of the LCD on the Company’s business. Although the LCD does not deny coverage, it imposes additional requirements for reimbursement. Among the issues examined are (i) the intent of the LCD; (ii) the use and application of definitions within the LCD (e.g., how a determination expressly defined as relating to incisional surgical techniques pulled within its scope non-incisional transscleral cyclophotocoagulation); and (iii) the LCD’s failure to recognize any distinctions among (a) endo cyclophotocoagulation and (b) transscleral cyclophotocoagulation, or (x) continuous wave cyclophotocoagulation and (y) micropulse cyclophotocoagulation.

As a result of its consultation with expert external advisors, Iridex currently believes that the LCD will likely be interpreted to materially limit the patient types for which WPS will reimburse cyclophotocoagulation procedures after December 24, 2023 – that is, based the following criteria set forth in the LCD:

“ 4. Cyclophotocoagulation will be considered medically reasonable and necessary for patients with refractory glaucoma when:

 

1.

Have failed trabeculectomy or tube shunt procedures AND

 

2.

Minimal useful vision and elevated intraocular pressure AND

 

3.

Have no visual potential and need pain relief”

Refractory Glaucoma is defined within the LCD as “glaucoma that is difficult to treat and poorly controlled on maximally tolerated medical therapy or failed surgical therapy regardless of stage of disease.”

Prior to the development and release of Iridex’s MicroPulse transscleral laser therapy, the Company marketed and sold its G-Probe Delivery Device, used for continuous-wave transscleral cyclophotocoagulation procedures primarily on refractory glaucoma patients suffering from late-stage symptoms of that disease, including lost vision and pain. Updated versions of the G-Probe are still sold in domestic and international markets and comprise up to 50% of current glaucoma probe sales. In the United States, the updated version of the G-Probe is integrated within the Cyclo G6 Glaucoma Laser System.

Iridex has already been contacted by a number of physicians who communicated concern over the potential limitation in the range of their patients covered for transscleral cyclophotocoagulation laser therapy (“TLT”) treatment, particularly with respect to populations that would have difficulty tolerating more invasive and tissue-damaging surgical procedures. Iridex intends to appeal the scope of the WPS LCD and attempt to engage with the MACs to distinguish between non-incisional transscleral cyclophotocoagulation procedures and the alternative incisional surgical MIGS procedures. Among other unintended consequences, Iridex believes that by limiting application of TLT, the LCD has the potential to direct more patients into higher-risk surgical procedures that both increase the potential of complications for patients and increase the total cost of care. Thus, Iridex believes the LCD is likely to increase overall treatment costs while potentially decreasing overall patient welfare.

At this time, Iridex cannot estimate what impact the WPS LCD or any future local coverage determinations by other MACs will have on its glaucoma business. We and other stakeholders plan to challenge the LCD. According to the American Glaucoma Society approximately 60% of U.S glaucoma patients are covered by Medicare. While the states included in WPS’s MAC jurisdiction comprise approximately 8% of Iridex’s U.S. glaucoma probe sales, if the other MACs adopt similar determinations, this could impact a majority of Iridex’s glaucoma revenue in the U.S. In such a scenario, Iridex would expect physicians to continue to use Iridex’s probes where there is coverage for the devices and related procedures. Additionally, patients that continue to be covered by medicare advantage or private health insurance and those willing to self-pay may continue to utilize the full range of TLT treatment options where available, particularly when such treatment modalities are preferred by physicians and their patients as a superior option to invasive surgery.

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