By Aaron Lech, OD, FAAO
The majority of most optometrists’ patients are covered by managed care vision and medical insurance. Many of these patients do not fully understand what their vision benefits and medical insurance entitles them to, and some only want exactly what their insurance will cover.
At my practice, we recognize the impact that patient insurance providers play in driving their decision-making in our office. Accordingly, we have developed strategies for satisfying their needs while remaining profitable.
Use Net Profitability Score System to Determine Whether to Accept Insurance
Be selective in choosing plans. Evaluate if they are profitable to your practice. You can do this by understanding a plan’s “Net Profitability Score”: It is based on the fundamental perspective that every company’s customers can be divided into three categories: Promoters, Passives and Detractors. A plan’s Net Profitability Score can be divided into three categories as well: Profitability Producers, Maintainers and Reducers.
However, unlike a company’s NPS, each plan’s Net Profitability Score is affected by elements of the plan and each practice’s strategic design. To best determine the NPS value of a plan for your practice, you must first clearly define your strategy as it pertains to price and quality. For example, if a practice’s competitive strategy is low price, the NPS of a low-ball vision plan may fall into the Producer category and be an excellent fit. While this is an oversimplification of the profitability evaluation process, this gives you an idea of how you can use the NPS in your practice to evaluate insurance providers.
The good part about using the NPS to evaluate insurance plans is the score takes into account factors such as whether a plan is offered by a large employer in your city ensuring that a plan that may not otherwise be a strong plan for your practice will not be ruled out leaving many patients with no coverage.
Private-Pay Patients On the Decline
According to a recent article by Angel Alvarez, CEO of ABB OPTICAL GROUP, published in the ABB OPTICAL GROUP Profit Advisor, private-pay patients are on a steep decline: “Over the past 20 years, the percentage of total practice revenue that eyecare practitioners (ECPs) receive from private-pay patients has declined steadily.
In fact, American Optometric Association surveys show that 80 percent of optometric patients are covered by managed care plans. Half of US adults are enrolled in vision benefit plans, and millions more are covered by government programs or have vision benefits as part of a medical insurance plan. This means that third-party payers exert an uncomfortably powerful influence on the financial performance of ECPs.”
Click HERE to download a copy of the ABB Profit Advisor featuring Dr. Alvarez’s full article.
It is clear that if you haven’t done so already, it is time to focus on strategies for profitably prescribing eyewear for managed care patients.
Identify the Few or Several Strongest Performing Insurance Providers
My practice currently accepts three of the major vision plans. In addition, we have a couple medical insurance HMOs we participate in and a handful of PPOs. There are probably six major medical plans in our geographic area, two of which comprise the bulk of our patient base.Each plan provides a slightly different value proposition for both the patient and the practice.When these align, it’s a fit. We evaluate each patient’s plan to ensure it fits with our practice model rather than molding our model to fit the plan.
Managing the “I Only Want What My Insurance Covers” Patient
The premise is simple, commit to training patients. Offer a patient experience that effectively molds them to the quality of care your office has committed to providing. In essence recognize that the doctor-patient or even office-patient relationship is a social contract based on expertise and shared needs/desires. Far too many times offices practice by looking over their shoulder concerned about what they may be losing.
Instead, we must set our sights on who we are and what we will become. The culture of each practice must be something the doctor and staff believe in completely so they don’t die the death of being everything to everyone.
To be effective at this, I find doctors must practice medical dispensing. A patient’s Rx is the product of the patient’s input and the doctor’s expertise. I make sure that I’m never just handing the patient a refraction Rx and sending them out the door to the optical dispensary. I always discuss a one or two specific findings from my examination with the patient and link those directly to a specific product(s) I prescribe as their doctor. When communicating this information, one must be careful to refrain from industry jargon and terminology. The most effective strategy is to prescribe eyewear packages.
Create a Few Major Eyewear Packages for Patients; Avoid Selling Lens Features A La Carte
To streamline the decision making process for patients and ensure they leave with high-value products that meet their needs, my practice developed three major eyewear packages: Performance, Precision and Vibrance. Each package offers a standard set of attributes that benefit all patients. These include mid or hi-index lenses, free-form progressives, scratch resistance, non-glare coating and a two-year warranty. Presentation is based on a patient’s medical and visual needs, not up-selling. Performance lenses function well for the bulk of patient Rx’s; Vibrance provides enhanced visual experience for the high astigmat or aniso patient via aspheric design; and Precision lenses minimize thickness and distortion for complex Rx’s utilizing 1.67 and 1.70 series lenses. There is room for a modest amount of room for customization including elements such as transition technology, tints and occupational design.
Avoiding selling each lens feature separately, it lessens the chances of a patient telling you they don’t want certain features because they are not covered by their insurance, and also allows you to prescribe eyewear based on the end benefit to the patient–what the patient will get when wearing the glasses versus the benefit of lens treatments most don’t understand. When you make patient options easily understandable, insurance coverage becomes much less important to the patient than walking out with eyewear that was specifically prescribed to meet all of their needs.
Create a Few Major Contact Lens & Service Packages for Patients
We find packaging contact lens supplies with services to be equally effective. Presenting the benefits of an annual supply of contact lenses is easy to do when you factor in insurance benefits. Instead of offering what the “insurance covers,” show the patient the cost savings and value of an annual supply when utilizing annual supply price discounts, manufacturer’s rebates and insurance benefits. ABB OPTICAL GROUP has a great tool called the Contact Lens Savings Plan Tear Sheet that can help your office staff easily explain the total savings a patient can receive when ordering an annual supply. Your office could also take this one step further by simplifying the patient decision process.
Staff generally knows all of the rebates, insurance benefits, and price per box adjustments. Our office delivers a simplified option to patients. We take the time to calculate the mean profitability to the practice ahead of time and set our service/product package fees accordingly. From the patient’s perspective, they see our package fee, let’s say $300 for an annual supply of monthly lenses, less their $150 plan benefit and can easily calculate $150 out-of-pocket. Lenses are drop shipped to the patient and rebates are included in the shipment (patients are thrilled!) By doing this, we are able to offer outstanding products and service in a streamlined manner for the majority of patients.