Abuse Charged in Operations for Cataracts : Kickbacks to Doctors Alleged; Medicare Billed Up to $750 for $50 Lens

Cataract surgery in the United States is riddled with “flagrant and inescapable” fraud and abuse, and 50 cents of every dollar paid for the procedure by Medicare may be wasted, congressional investigators say in a report to be released today.

After a two-year investigation, House subcommittee investigators conclude that “there is reason to question the necessity or validity” of half of the $3.5 billion spent annually on cataract surgery, the major surgical procedure most frequently reimbursed by Medicare.

Rep. Claude Pepper (D-Fla.), chairman of the subcommittee that conducted the study, called the findings “an unmitigated disaster” for taxpayers. He is urging “immediate reform measures” to alleviate the problem and has scheduled a hearing for today before the House Select Committee on Aging’s subcommittee on health and long-term care.

Artificial Lens Implants

The subcommittee report, a copy of which was provided to The Times, cites “evidence of kickbacks and other improper inducements” associated with the dramatically increasing number of cataract surgeries in which a patient’s clouded lens is removed by an ophthalmologist and an artificial lens is implanted in the eye.

Among the alleged abuses are the provision of free surgical equipment and cash payments to physicians in exchange for purchasing artificial lenses from a manufacturer. Some manufacturers who “buy off” the physicians “are trying to stave off competition,” the report states.

It says that manufacturers have showered doctors with keys to resort condominiums and trips to Europe--even the use of yachts, cars and houses--in exchange for the purchase of their products.

The cost of manufacturing the rigid plastic lenses ranges from about $35 to $50, but, according to investigators, Medicare is charged as much as $750 for lenses implanted outside of hospitals.

‘Greed Is a Big Factor’

Investigators quote one physician as saying: “The whole system is corrupt and is corrupting physicians, mostly, I feel, out of ignorance--but, of course, greed is a big factor.”

In San Francisco, the American Academy of Ophthalmologists, whose representatives will testify at the hearing, acknowledged that a problem exists. But a spokesman said that the group is taking steps to “nip it in the bud.”

The spokesman, Lisa Tietjen, said that the academy--which represents 95% of the nation’s 13,500 ophthalmologists--has started a campaign to urge its members “not to step over the line” ethically or legally.

The report contains a transcript of a taped conversation between three salesmen and an ophthalmologist, in which the salesmen offer to set up a “reimbursement scheme” involving the overcharging of Medicare for artificial lenses.

“They don’t look at that,” one salesman says of the proposed overcharges, according to the study.

Surgery Involves Elderly

Indeed, the opportunity for such schemes is expanding dramatically as more people live longer and develop cataracts. About 90% of the surgery involves the elderly; more than half of those aged 65 to 74 develop cataracts, the report found.

Investigators said that the rate of cataract surgery has doubled since 1980, when 415,000 operations were performed. Two million a year are expected by 1989. In addition, the implantation of artificial lenses has increased sharply, from 32% of surgeries in 1980 to the current 85%, replacing eyeglasses and contact lenses as a remedy.

Taking advantage of the increasing popularity of this form of treatment of cataracts, 30 companies worldwide manufacture the artificial lenses in about 400 models, according to investigators. In 1985, the industry is expected to sell $325-million worth of lenses.