Maximize profits with managed vision care

July 1, 2014

We often hear that we get out of life what we put into it. How can we change our outcome or results unless we utilize a new approach and vary our vision? I often say that instead of being stressed, we should accept the things we cannot change and find a way to reach a win-win outcome by embracing what we can control. Knowing that managed vision care is a part of our lives let us explore ways to make it more profitable for our practices.

We often hear that we get out of life what we put into it. How can we change our outcome or results unless we utilize a new approach and vary our vision? I often say that instead of being stressed, we should accept the things we cannot change and find a way to reach a win-win outcome by embracing what we can control. Knowing that managed vision care is a part of our lives let us explore ways to make it more profitable for our practices.

Think about insurance in general for a moment. With our medical or dental insurance, we expect the plans to help defray some of costs when we need medical or dental care. We do not expect them to cover all of the costs. The same approach is realized when we apply it to vision care. We can relay to our patients the wonderful benefits they reap from their particular plan. 

When a patient books an appointment, information is gathered about his vision plan prior to arriving for the visit. When a patient walks into our practice-from the front desk staff at check-in to the technicians during pretesting and from the mouth of the doctors who hand off the patient to optical for a thorough explanation of coverage options and benefits as presented by the opticians, to the staff at the check-out-our patients are told that they have a great vision plan. Any coverage for vision correlates to lower costs to our patients and is presented as such to the patient.

What perception does a patient have of your staff when she presents her vision benefit plan? Do you treat every patient the same? Are the patients all offered the latest technologies and designer eyewear options? Do you still offer screenings that may not be covered by insurance, such as digital retinal imaging? Managed vision care plans make vision care more affordable, but they should never restrict treatment options, frame and lens options, or stop us from recommending multiple purchases of eyewear that is necessary to solve a visual need.

Don’t let the plan dictate the services offered

From discussions among practices, some staff members want to limit what a patient is offered based off of the particular plan the patient has. This is clearly not in the best interest of our patient and can certainly limit sales and profits. Every patient should be offered the latest technology and should understand his plan does not limit him to a particular price category on frames. Having said that, just as if you are treating a guest in your home, the best should be offered first. If a patient has a specific budget, once presented explanations of technology and options, he is better informed to choose what he feels comfortable with. 

The first and most important step in being prepared to reap a greater return when applying a certain vision plan is by fully understanding the specifics of each particular plan. We must do our due diligence to gather complete information and have it on hand prior to presenting or explaining the coverage to our patient. In preparation, most often, as we gather documentation that shows whether a patient is eligible and obtain an authorization, we should also print out the fee schedules as well as reimbursement schedules for the plans. This gives us the complete picture of how much we should charge the patient as well as what is covered and what is not.

Let’s talk for a moment about how a vision plan may work. If your practice is a provider for a particular vision plan, when obtaining an authorization, simply also print a copy of the patient options sheet. You should also be able to have on hand a copy of your provider-assigned benefit fee schedule if applicable to the plan to know what the plan will pay your office. This can be found on the vision provider website along with a manual that explains step-by-step instructions for most plans. By studying the various upgrade options and comparing the upgrade fees, less the charge back amounts, we can determine quickly which options offer a greater yield. The better the technology, the higher the retail-meaning the more premium the category of option, the more profitable the margin. 

On some of the vision plans, it is easily spelled out in black and white exactly what the charge back and dispensing fees are for each option. When studying various frame allowances, if a patient needs to stay in a budget, choose to dispense value frames from vendors that offer you wholesale costs that are much lower than frame data list pricing. 

An interesting observation of specific examples of a possible scenario of a frame benefit follows, all assuming a plan with a wholesale frame allowance price of $50 with a retail frame allowance price of $135 with a 20 percent additional discount on the difference.

• Example One: A budget frame with a wholesale list price of  $49 you retail for $147. Although your retail is greater than the retail allowance, the wholesale list price is less, meaning the frame is covered to the patient. You will receive $49 for the wholesale list price in addition to your assigned frame-dispensing fee for your office. If you actually purchased this frame at $29 after discount, then you net the $20 difference plus your dispensing fee.

• Example Two: A frame with a list price of $50 retails for $150. It would also be covered with no out-of-pocket on the frame to the patient, but after discount you paid $45, meaning your net is $5 in addition to the assigned dispensing fee for your office.

• Example Three: A frame with a list price of $89 retails for $267. Because both the wholesale and the retail prices are above the allowance, you must follow the guideline in determining how much the patient would pay. $267 less $150 = $117 less an additional 20 percent means the patient responsibility is $93.60. Let's say after discount, you paid $71.20. With a patient responsibility of $93.60, minus $71.20, that means you will have a profit of $22.40, plus your assigned frame-dispensing fee.

As you can see, the way to maximize your profitability is with lower-end frame lines geared to higher wholesale list pricing but discounted pricing costs to you or better-quality frame products that are well above allowances. Although this specific example was based on a how one particular plan would format, other plans work the same way when it comes to comparing fees and costs. While all plans vary in allowances and formulas, the same principal concepts apply in using wisdom to choose frames, lenses, and lens options that give your patient value and your practice a better margin of profit

While we are in no way trying to sell someone a product that may be beyond a set budget, it is in the best interest of our patient-as well as our practice-to be knowledgeable and to present all options. By asking open-ended questions we can determine which options offer solutions to best suit our patients. We are never to judge a book by a cover, just as we are not to prejudge what a patient may consider as a must-have when it comes to her visual needs. I consistently offer the very latest technology to our patients because I want them to enjoy the benefits of better vision utilizing good quality frames and lens technologies. In most vision benefit plans, better technology usually costs more, sells for a higher retail, and yields greater profit margins.

In any industry, there are varying degrees of quality. The old adage “you get what you pay for” is true. The key to a win-win situation is educating the patient. The better the quality, the better the value. Without vision coverage, perhaps technology would be out of budget; however, when showing savings and value, now premium has become affordable. We have been afforded great advances in digital technology that can improve visual performance for our patients. We always want them to experience the best vision possible. When we take care of every patient, offering him quality, but with vision plan savings, we get satisfied results from all concerned.

Next: Lens choice and profit margins

 

Lens choice and profit margins

Let us explore some ways to understand how our lens choices correlate to margins. For example, let us assume a patient is single vision, with a $20 copay and allowance for basic uncoated CR39 plastic lenses. Basic polycarbonate would be an additional $40; however, other premium upgrades and lens options would be retail less a discount of 20%.

• Example One: A patient purchases basic polycarbonate lenses. CR39 SV is $65, and basic poly upgrade normally retails for $83. The patient would owe $20 copay, plus $40 for basic poly. Subtract your costs from any payment from the plan provider and the $60 from the patient, and you will have your profit.

• Example Two: A patient purchases aspheric poly. Aspheric poly upgrade retails for $123, minus 20 percent is S98.40. You collect $20 copy and the $98.40 from the patient. Take that amount, add any payment from the provider, subtract your cost, and that will be your profit.

• Example Three: Patient chooses digital polycarbonate. The digital upgrade is $161, and subtracting 20 percent will give you a collected amount of $128.80. You get the picture; the $128 amount, add a $20 copay and any payment from the provider, subtract your cost, and that will be your profit.

As you can clearly see, premium products convert to higher sales and profits and truly provide your patients a great service. They benefit from technological advances that afford them clearer vision and better quality, and establishes your office as being a savvy vision provider. Periodically evaluate the plans you participate in to weigh the costs and profits. With the market often being saturated with optical providers and with the introduction to a larger number of online vendors, it pays to be in-network for more vision plans. If you make only $20, this is still profit. If you take care of each patient with her best interests at heart, everything else falls into place.

Examine your plans

I would be remiss if I failed to discuss is progressive lens options and how to maximize profitability. Some of the plans are easy, simple plans with, as you know, the higher the category or technology, the better the profitability. Eyewear plans can be very different for those offices that pay outside private labs to manufacture the lenses. In the case of some particular plans, the program has in place exact fees according to specific progressive lens brands and specific anti- reflective coating brands. I have discovered that unless you use a lab which contracts with a plan for controlled costs, you must carefully study charges less costs to make certain at least some profit is made. I ran across several plans that unless I went with premium progressives or private label premium lenses or house brands, we actually lost money. Our costs were higher than what we collected. Needless to say, we have to make a decision about whether to stay opted in on these plans.   

In the decision process, you want to check out particular vision plans by ZIP codes to determine how many patients you see in your area who may have this plan. If a large base has a particular plan, then you benefit from participating in that network. Some plan websites have a tool for determining which plans have employers in your ZIP code region. Remember that as you pull up insurance to obtain authorizations, you can see all family members with coverage. Offer to schedule the other family members to check their ocular health because they too have a benefit.

Take the time to study and analyze charges, costs, and profits and educate your staff to become experts at accurately utilizing the available information when presenting benefits and options to your patients. You can be profitable and maximize those profits by doing what we do best. Identify the visual needs of your patients, offer them solutions to those needs at a great value with their plan, and know the impact your choices have on your bottom line with each plan.ODT