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 By Neil B. Gailmard, OD, MBA, FAAO, Editor March 23, 2005 - Tip #166 
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Dropping Managed Care Plans, Part 3
Evaluating vision plans and medical plans


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Additional Information

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, let's 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, it's 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 it's possible to even change that niche if so desired. So, decide on your practice philosophy first, and then look at which plans to accept.

We also discussed the empty exam chair syndrome as it relates to accepting managed care plans. It's 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
  1. 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.
  2. Any caps placed on non-covered options, like ophthalmic lens add-ons.
  3. Ease of fee calculation and plan coverage amounts.
  4. Ability to do optical lab work in-office or to use the lab of your choice.
  5. Ease of verification of benefits in advance.
  6. Ease of claim filing and time required.
  7. Ease of claim troubleshooting if rejected and availability of human claim support.
  8. Accuracy and timeless of payments.
  9. Intrusiveness of requirements, policies and programs.
  10. Benefit frequency.
  11. Volume of patients actually seen under the plan or likelihood of high volume for new plans. What employers in the area use the plan?
  12. Ask your staff for their opinions about working with each plan.
Applying the analysis to your practice

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 don't 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 plan.


Best wishes for continued success,

Read Past Tips Neil B. Gailmard, OD, MBA, FAAO
Editor, Optometric Management Tip of the Week


A Proud Supporter of

Send questions and comments to neil@gailmard.com.

Dr. Gailmard offers consulting services to eye care professionals through Prima Eye Group; information is available at www.primaeyegroup.com.

Please Note: The views expressed in Management Tip of the Week do not necessarily reflect those of the sponsor.

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