Optometric Management Tip # 166 - Wednesday, March 23, 2005
Dropping Managed Care Plans, Part 3
Evaluating vision plans and medical plans
In parts one and two of this series on managed care, I wrote about the philosophy of the high
fee practice and how to evaluate your practice costs. This week, letís focus on how to decide
if you should participate with any given managed vision care or health care plan. This exercise
does not just apply to new plans that become available to you, but also to all the plans you
currently accept. Periodically, itís smart to review the plans you work with and decide if
they are still meeting the goals of your practice.
Your practice goals
Your practice business and marketing plan should have considerable impact on your managed care
decisions. Some practices are designed to fill a low price niche, or they are located in
economic areas that dictate low fees. On the other hand, most ODs have the freedom to decide
on the market niche they wish to serve, and itís possible to even change that niche if so
desired. So, decide on your practice philosophy first, and then look at which plans to
We also discussed the empty exam chair syndrome as it relates to accepting managed care plans.
Itís best to achieve a balance of private pay and managed care. If your appointment book is
very full, you may be able to drop some plans. If you have many openings, you may want to look
for additional plans to work with. Some appointment availability is a good thing if you use
the time to grow the private side of the practice.
The first step I would take in this analysis is to gather data about the percentage of your
practice that is made up of each plan that you currently accept. This should be done in two
ways: the percentage of total gross revenue and the percentage of all patients seen in the
past year. Armed with this list of plans and percentages, evaluate the factors listed below
with a number scale with 1 being the worst and 10 being the best. Some factors are not
applicable to all plans, like optical fees on a medical plan.
Managed care checklist
Applying the analysis to your practice
- Fees allowed under the plan. This encompasses exam fees and optical fees and the freedom
to balance bill the patient. A rating of 10 would be a plan that pays your usual and customary
fees or allows you to balance bill.
- Any caps placed on non-covered options, like ophthalmic lens add-ons.
- Ease of fee calculation and plan coverage amounts.
- Ability to do optical lab work in-office or to use the lab of your choice.
- Ease of verification of benefits in advance.
- Ease of claim filing and time required.
- Ease of claim troubleshooting if rejected and availability of human claim support.
- Accuracy and timeless of payments.
- Intrusiveness of requirements, policies and programs.
- Benefit frequency.
- Volume of patients actually seen under the plan or likelihood of high volume for new plans.
What employers in the area use the plan?
- Ask your staff for their opinions about working with each plan.
The next step is to consider your practice goals and make a decision. If you are starting a new
practice and need patients very badly, you can benefit from joining some managed care panels.
Consider joining the largest and best vision plan in your area and Medicare right away. By the
way, I really donít see any reason any OD would not participate with Medicare, unless the
practice is limited to pediatrics. Medicare pays well, does not discriminate against
optometrists in the medical arena, and does not require advance verification of benefits.
If you have a medically oriented practice, or want to build this aspect, join the major health
care plans in your area and study billing and coding. But be cautious not to allow your medical
focus to weaken your optical dispensary. Fees for office visits and diagnostic procedures
alone are not enough to grow your practice into the top income levels. Optical fees are
significant and this revenue stream exists without the doctor.
If you already work with many managed care plans and would like to reduce your dependence on
them, perform the analysis above and drop the worst of the plans. It should be easy to figure
out which one that is. Study the affect this change has on your practice gross, net and hours
worked. This can be a valuable lesson on what will happen if you drop another plan, without
being much risk to the financial health of your practice.
Weeks ahead: Time of service discounts and how to communicate with your patients if you drop a
Best wishes for continued success,
Neil B. Gailmard, OD, MBA, FAAO
Chief Optometric Editor, Optometric Management