CONTINUING EDUCATION, 1 CE Credit � $9.99, 1 Hour, General Knowledge, Level 1, Release date: October 2007, Expiration date: October 31, 2012

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Are You Thriving 
With Managed Care?

In the late 1980�s and early 1990�s managed care appeared as a modern-day Sword of Damocles, hanging over the eye care industry. 

Since little was known about it back then, rumors abounded, and there were all sorts of theories on how to prepare for it. Basically, managed care seeks to lower the costs and improve the effectiveness of healthcare under a formal system that sets standards, reviews programs, and negotiates fees. Emphasis is on preventive care and practicing efficiently, with incentives to do so. It became apparent early on that managed care would have vastly different effects on the three O�s of eye care (opticians, optometrists, and ophthalmologists).

Since one of the methods of reducing costs and improving efficiency was the concept of providing all eye care services under one roof, the free-standing opticians bore the brunt of the impact managed care had on the eye care industry. In fact, since they could provide only one of the three components of eye care (primary care, surgery, and vision correction); opticians were not allowed to participate in many plans. For the optometrists and ophthalmologists managed care was a double-edged sword. Yes, it lowered the profit per patient providers had grown accustomed to, but it also increased the patient volume of ODs and MDs alike.

It appeared ophthalmologists held the upper hand since by adding a dispensary they could provide patients with all three components of eye care. Since virtually everyone was unsure of the exact effects managed care would have, many ODs affiliated with MDs so they would not be left out of provider panels. However, the business-savvy optometrists realized that they could function perfectly well in a managed care environment without paying outrageous fees to join a specific MD group. They simply found local ophthalmologists they were comfortable working with and retained patients for primary care and most vision correction.

Managed care is a given in today�s marketplace, and in 2013 the largest managed care problems facing independents are maximizing managed care and determining which plans to participate in. Let�s analyze how to do just that, always keeping in mind that the real power in any plan lies with the end users � the patients and the doctors. Go into this process knowing that you are not required to accept any plans, and choose the ones that work for your practice. Here are some tips to help you decide which plans to keep or adopt and how to work with them on an everyday basis:

1. Is The Plan Profitable?
The easiest method to determine this is to find the average patient transaction value for a given plan. This is relatively easy to determine from your financial statements. Take the total dollar volume from a plan for the previous year and divide it by the number of patients seen who are covered by the plan. If you have no history with the plan, determine your chair cost. You can do this by taking your annual overhead costs and dividing that number by the number of hours you are open per year.

2. Can You Profit From Selling UP?
One of the most important factors to consider is whether the plan allows you to profit from selling premium products. If so, you and your staff need to be trained to sell today�s premium products. So much of this depends upon how information given to the patient is phrased; for example, which dispenser would you prefer working with your patients?

Dispenser 1 - �Well, your insurance covers frames up to $X, and scratch-coated plastic lenses.�

Dispenser 2 - �These lightweight and thin polycarbonate anti-reflective lenses, which allow more light to reach your eyes, reduces eye strain, and improve your vision, would cost you $X without your insurance, but for you, they would only cost you $X minus Y.�

The first dispenser takes a very negative point of view and obviously has a low opinion of the patients� vision insurance. The second dispenser begins with the fact that her or his patients should have the opportunity to acquire the product best for their vision, and that it is not the dispensers� place to calculate what the patient might want to spend. Dispenser 1 stresses the low amount covered by insurance, while Dispenser 2 stresses how much more affordable the optimal product is for the patient.

3. Patient Communication
I have seen far too many offices where patients arrive not having a clue as to what their insurance covers. This leads to upset and disillusioned patients who often blame the dispensers. Vision insurance companies are notorious for not communicating the plan details to the employees covered. When at all possible, pre-certify patients coming in as to their eligibility, and when setting appointments urge patients to check with the plan administrator in their company to explain their benefits BEFORE coming into your practice. Most vision plans are made available to companies for little or no cost to the business. There is nothing wrong with telling patients that pay $X per month into the plan to re-evaluate whether their plan is worth what they pay. This leads us to:

4. Offer Your Own Vision Plan
Sooner or later you will have to drop an unprofitable plan, and in this situation it is best to offer an alternative. Many practices, especially is small communities, have offered their own plan to local area businesses free of charge. They do not have to be complicated and the easiest method is to offer a percentage discount off of goods and services. Spend a few dollars and have vision plan cards printed up and get out into your community.

5. Designate an Insurance Contact Person
You need to have one person in your practice who serves as your in-house expert on the plans you accept. It could be an office manager, head optician, or front desk person. This person would also be responsible for any ongoing training concerning any plan changes affecting your practice.

6. Outsource Your Coding and Billing
If you�re a small practice, it�s usually not economically feasible to have one person on staff that will do billing, claim filing, claim follow-up, and coding for maximum reimbursement effectively. Competent coding and insurance employees can easily cost you $50,000-$60,000 per year, and that person is one less employee focusing on making money for you.

7. Should You Drop (or Not Join) a Plan?
Usually 80% of your income is derived from 20% of your patients, and this should be kept in mind when deciding whether to keep or enroll in a plan. That said, there a quite a few factors to take into consideration when you make this decision (hey, they call it managed care, not easy care!)

a. Profitability � obviously, the most important factor in this decision. Does the plan meet or exceed your chair cost per hour? If not, is it close enough that the volume of patients makes it worthwhile?

b. Ease of Use � does the plan make your employees jump through hoops to get each patient pre-certified? Does the plan make you wait and wait for re-imbursement? Do your patients hate the plan? Might they be happier if offered a straight discount plan through your practice vision plan?

c. Patient Volume � this is where things can get tricky. If you are in a small town with 2 or 3 main employers, and 2 of them have a certain plan, then you almost have to accept the plan. Along with this, however, is your patient volume. How far out are you booked? If your next appointment is a month from now, it�s pretty safe to drop an underperforming vision plan.

d. If you drop a plan, notify the affected patients with a mailing, offering them either a cash discount on goods and services on their next visit or membership in the free vision plan offered by your practice. Communication is the key to retaining these patients and some providers actually see an increase in the average patient transaction with these patients.

8. The Devil is in the Details
Fewer and fewer practices have the luxury of not accepting managed care. So, instead of whining about it, embrace it! One indisputable effect of managed care is that it magnifies the strong and weak areas of your practice. If your staff is weak in marketing premium products, the effect on your bottom line will be larger with managed care patients than with cash patients. If communication of benefits is weak, patients will spend more time in the dispensary, disrupting patient flow. I hear many doctors say that managed care is killing their practice, when in fact; it is their practice that can�t handle managed care.

Cliff Capriola, Practice Management Consultant

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