HOT TOPIC A new look at old problems

Looking For Gold

A systematic process for picking managed care plans

By Allan Barker, OD, and Greg Stockbridge, OD, MBA
Illustrations by Jon Krause

Every day, optometrists make decisions about which insurance plans they accept. Often, they base these decisions solely on the eye exam benefit, thus making one of their practice's most important economic decisions on only one factor. Let's look at not just one, but 12, factors that will lead you to the gold—that is, both the patient satisfaction and the monetary rewards that managed care can bring to your practice.

I PATIENT COMPREHENSION OF BENEFITS

We have had patients screaming in the middle of an office full of people because they were misinformed by an insurer about their benefits. Often we see managed care companies sell a plan and then do a poor job of follow-up communication. The patient can be clueless of what their benefit package entails, and usually thinks their benefits are more than they actually are. Often these patients become angry, not at the insurance company, but at your staff.

A plan that does a good job with follow-up after the sale and communicates benefits clearly and honestly to the patient is preferable to a plan that keeps their benefits a mystery. We have even had managed care help desks wrongly inform patients that the provider was at fault, thus exacerbating the problem.

II STAFF'S EASE IN INTERPRETING BENEFITS

Nothing is more daunting for staff than a patient checking in with insurance that is as easy to understand as hieroglyphics. Ideally, the plan will have a user-friendly website that adequately explains the benefits. If a live person is available at the insurance provider's help desk, hopefully they will be well-trained, friendly, quick, businesslike, and informative.

Pre-certification can be valuable. The time to try and decipher benefits is prior to when the patient is impatiently waiting. Also, this is a compelling reason to limit the number of plans accepted.

Generally, 90 to 95 percent of your insurance revenue will come from your top 10 plans—so why confuse your staff and bottleneck your practice with a myriad of other plans, each with its own specific administrative peculiarities that produce small increments of revenue?

III EASE OF DETERMINING ELIGIBILITY

You may be wasting valuable time—theirs and yours—seeing ineligible patients. As with benefits, the best time to determine eligibility is before the patient arrives. Also, the determination process should be simple. When a patient makes an appointment, find out what insurance plan they intend to utilize, and precertify eligibility. Don't wait until check-in. If you were the patient, wouldn't you appreciate a call several days before your appointment telling you of your ineligibility and potential options?

IV ABILITY TO UTILIZE EDI

HIPPA requires managed care companies to accept claims electronically, but are they all compliant? No! Most are, but some are not. The inability to utilize EDI claim filing, especially in regard to the important ability to batch file claims, is a negative. If we can avoid using paper, envelopes, stamps, and fax machines to submit claims, we can reduce our costs.

Manual claim filing, sometimes referred to as "fat fingers" filing, costs the doctor's staff time— and lost time results in lost income. Also, payment turnaround time will be considerably slower.

V INCREASING TRANSACTION VALUE

The average patient transaction value per plan—and the ability to upsell—go hand-in-hand in a direct relationship. The greater a plan's ability to create upsales, the higher the average transaction value.

We were able to analyze 21 high-volume North Carolina offices and found that the average patient transaction value for their top 10 insurance plans had a $52 spread from high to low plans. That is quite significant. A plan with a low average patient transaction value may be a plan you want to discontinue in favor of one with high transaction value.

A plan with no ability to provide patient benefits such as better optics, less glare, and increased impact resistance may be short-changing your patients' lives and your office's bottom line.

Another thing to keep in mind is the amount the insurance company makes you "write off." Here, there is an inverse relationship with the average transaction value: that is, the more you "write off " for a particular plan, the lower the average transaction value.

We analyzed our data and found that offices we tracked were "writing off " 25 to 47 percent of claims, depending on the company. The average "write-off " was 38 percent. Certainly, all insurance plans are not created equal, and it pays to "discriminate."

VI PAY CYCLES PER MONTH

Prompt payment to providers is very important. Abuses by insurance companies have led many states to prevent insurance companies from holding money for extended periods. Even with such laws, insurance companies do run different pay cycles.

Here's an example: Let's say there are two insurance companies—A and B—and we receive a total of $250,000 per year in reimbursements from each of them. Company A disperses payment the next day, and company B holds its claims for 45 days prior to releasing payment. Because company B holds claims for 45 days, this delays your ability to pay down your company debt by that number of days.

The result? By consistently delaying your payments by 45 days, at an interest rate of seven percent, you would be paying $3,150 per year—or $15,750 over five years—in unnecessary interest, all thanks to Company B's slow-pay cycle.

VII REIMBURSEMENT FOR REFRACTION

Plans that reimburse separately for refractions are quite important. Being able to separate out refractions from other technical parts of the examination speaks volumes as to what we do as eye doctors. A refraction is just one small part of the delivery of a comprehensive eye examination. Optometrists are eye doctors, not refractionists.

Billing separately for a refraction allows optometrists to maximize reimbursement for services that they are highly trained to perform. Note that in some states, a few government plans don't allow and/or financially penalize doctors for separating out refractions.

VIII APPEALS AND DENIAL PROCESS

Some insurers have a mazelike appeals process on denied claims. For years, rumors have circulated that insurance companies will deny every so many claims for no reason other than to hold onto your money and hope that you do not get around to refiling them. In 2008 the "OLR Research Report" looked for evidence of health insurance companies providing compensation to their employees for denied claims. Although there have been a great number of lawsuits brought against insurance companies in regard to unfair claims denial, the report was unable to link any of these cases to a monetary denial incentive.

This area of denied claims and inconsistency in refiling was an important factor that led us to establish our own insurance department for centralized claims filing, along with utilizing an outside claims filing company to augment the process. Denied claims must be followed up on by the provider, and the process must be fairly easy to navigate.

IX MEMBER SATISFACTION STUDY

J.D. Power and Associates did a patient satisfaction report in 2006 that ranks managed vision care companies on five key performance factors. They are, in order of importance: coverage and communication, cost, eye doctor network and clinical service, eyewear purchase experience, and customer service. J.D. Power's survey ranked companies on a 1,000-point scale. VSP, with a score of 694, ranked highest in patient satisfaction.

X MEDICAL REIMBURSEMENT POLICY

Each year, medical eyecare becomes more significant for optometrists. Optometry has made major advances in this area. Yet some insurance companies continue to reimburse for refractive care only, though medical care now accounts for 20 percent of revenue in progressive states. To stress further the importance of this issue, the AOA predicts that the growth of diabetic retinopathy, cataracts, AMD, and glaucoma will increase by approximately 50 percent from 2000 to 2020.

XI DOLLAR VOLUME

Your practice's dollar volume with various insurance companies is an important consideration. If your number-one volume insurance plan is lacking in some previously discussed areas, that may not be a reason to decide to discontinue being a provider. However, if the same lacking criteria applies to a plan that constitutes only a few patients a year, it may be time to exit that plan. The high volume plan probably is handled well by your staff, as, thanks to repetition, they are familiar with its administrative aspects.

Another thing to consider is the number of beneficiaries on the insurance plan relative to the number of providers. Just looking at the number of insured people in your area with a particular plan is not enough. You want to know how many providers in the area accept this plan.

Also, does it have a high barrier to entry? Remember that a plan with two providers and only 1,000 people is sometimes better than a plan with 100 providers and 10,000 people. Whatever the philosophy you use, you need to know which plans are your top income producers, top patient producers, and top revenueper-transaction producers—and you need to make your decisions with that in mind.

XII EYE EXAM REIMBURSEMENT

Last of all is the eye exam reimbursement. It is mentioned as the last item not because it is least important, but to demonstrate that it is not as all-important as some doctors deem it to be. No doctor wants to be insulted by a low eye examination fee. However, no doctor should want to be insulted either by an acceptable eye examination fee from a provider who scores low in the other 11 areas discussed above.

Optometrists today are faced with a never-ending decision process regarding which insurance plans to participate with as providers. We must resist the urge to take the easy way out and base decisions exclusively on eye exam reimbursement. Instead, consider the myriad of factors addressed here, and make the most of economic data relative to your own individual practice when it comes to plan participation.

One optometrist from western North Carolina says, "We are in a game called Hide the Money. The system can seem to hide it, and our job is to find it."

Map your path using these 12 criteria for plan evaluation, and you'll get that much closer to finding the treasure. EB

Greg Stockbridge, OD, MBA, graduated from New England College of Optometry in 2000 and received his MBA from Duke University in 2007. Allan Barker, OD, is president of Eyecarecenter, OD, PA, and serves as president-elect of the North Carolina State Optometric Society. Both are practicing optometrists.