Optometric Management Tip # 285   -   Wednesday, July 11, 2007
Why should NP and EP exam fees be different?

I realize that my exam fee structure is different than that used by most of my colleagues; maybe that's why I analyze it so much. I try to be objective and open-minded, but I still find that many of the conventional approaches about fees in use today don't make much sense to me. Let's take new patient and established patient exam fees for example. I charge the same exam fee to both groups.

Medicare and major medical plans

We all know that Medicare and private medical insurance plans authorize and pay a higher exam fee for new patients than for established patients. Indeed, there are different CPT codes to facilitate billing for the two patient groups. The theory, of course, is that a new patient exam would take longer and be more complex than an established patient. That could indeed be the case, but many eye care professionals perform exactly the same tests and procedures in an annual eye exam regardless of whether the patient is new or established. Regardless of the time factor, I submit that there are more important considerations when setting your exam fees.

It should be noted that Medicare does not require practitioners to set a higher fee for new patients. They allow it and will pay it, but doctors can charge whatever they wish. A natural counterpoint to my philosophy might be: if Medicare allows you to charge a higher fee, why wouldn't you want to do it? My answer is that the emphasis is relative... a higher new patient fee is the same thing as a lower established patient fee. From a marketing standpoint, why should I charge a lower fee to patients who are returning to my practice for ongoing eye care?

Market factors

Here's how I look at the new vs. established issue. If I were to have different fees, I'd probably make the new patient exam fee less than the established exam fee! This makes perfect sense from a marketing standpoint, because new patients have not yet had a chance to experience my practice. I'm fairly confident that we'll win the patient's loyalty once he receives our excellent service, but before that the market is fairly competitive. There may be more shopping around and price is always a factor. I don't find that price is the main factor for the market segment I wish to attract, but it's still a factor.

Why care about marketing? Like most optometrists, I still have some private pay patients and I still have many patients who receive routine eye care with a refractive diagnosis. I provide eye care to many people who pay for my services directly and then file their own claim with their insurance plan. In spite of the huge movement to have third parties pay for eye care services, we still charge and collect fees from patients. While I work hard to provide good value, I'm also interested in finding the maximum fee level for my services that is accepted in the marketplace. With my overhead expenses rising all the time, I must be a good businessperson and try to improve profitability.

Here is a great question to ask yourself: why should you lower the exam fee for a patient who is returning in year two after he has already shown you that he is willing to pay a higher fee? Remember, you aren't charging new patients more; you're charging established patients less! Established patients who saw you for the first time last year, paid your exam fees and call to schedule another appointment are saying they were perfectly happy with you. They aren't expecting to pay a lower fee for subsequent exams; they naturally reason that an eye exam is an eye exam. I agree with that thinking.

Seems simple enough

What happens if you raise your established patient exam fee to the same as your new patient exam fee? If you are billing the fee to a third party and you exceed their approved amount, you may have to write off the excess. No harm done. If you bill the fee to a third party and you don't exceed the plan maximum, you'll make more money. If you charge the patient directly for the exam, he'll happily pay it and you'll make more money. I don't see the down side.

Best wishes for continued success,

Neil B. Gailmard, OD, MBA, FAAO
Chief Optometric Editor, Optometric Management