By Vision Trends
Special to SECO University
“Do you take my insurance?” Cue the inward groan we’ve all had. Dealing with vision insurance can be a pain and most of us would rather not, but the fact is, the number of patients walking into an independent optometric practice with vision insurance continues to increase. Vision insurance is here to stay!
However, all is not lost. It is still possible for an independent optometric business owner in today’s eye care and eyewear marketplace to provide its patients with stellar service and high quality eyewear, and even increase its practice profitability with the right insurance strategy.
“Common insurance obstacles can be overcome when a practice steps back and takes a holistic look at the impact insurance has on its practice,” says Michael Toups, OD and President and co-founder of Vision Trends, the nation’s largest independently-owned optometric doctor alliance.
There are several key components practice owners need to consider when evaluating their insurance strategy:
1. Understand Your Sources of Revenue to Determine Gross Profit by Patient-type
What is the breakdown of non-insurance vs. insurance business by patient count and practice dollars? In many cases the percentage of insurance patients will be higher and the average net revenue per insurance patient will be less. The practice should always base calculations on real dollars earned, not their “retail” price.
What is the average gross profit per patient for each vision plan your practice accepts? Each insurance will have a different profitability for your office. It is important for you to know, on average, what each insurance’s per patient gross profit is so that you can evaluate the variables in which to increase that average.
Example 1: Insurance A has an average gross profit per patient of $175.00, but you could increase that profit to $215.00 if you ordered specific lenses that you get additional reimbursements for.
Example 2: Insurance B has an average gross profit per patient of $160.00, but you notice that if the patient upgrades to specific lens options then your profit increases to $185.00.
What is the Gross Profit of each of these customer segments? Typically, a practice will apply their Costs of Goods Sold equally across all customer segments. This may not be the best approach when calculating gross profit because the costs could be significantly different.
Example 1: A practice that sends their non-insurance lens jobs to a preferred lab may cost more than sending an insurance job to an insurance company’s lab. In this case, the practice is not incurring material costs for the insurance job. They simply receive a dispensing fee for sending the order to the insurance company’s lab.
Example 2: The practice has a person dedicated to managing the insurance claims and billing for the practice. Attribute the appropriate percentage of costs of the person to the insurance revenue only.
2. Evaluate Insurance Plans for Practice Fit
Insurance companies offer programs and plans with all sorts of operational and financial variables. “Insurance programs are not created equally,” says Toups. “It is very important that the practice owner understand the different types of insurance plans and how the structure of the plan will fit with the competencies of the practice.”
Can I negotiate with insurance companies to get the reimbursements I want? Unfortunately, insurance companies are not known for their willingness to negotiate. That said, large practices and practices that belong to some doctor alliances have been successful at negotiating better reimbursements or operational programs for their practices.
“Some insurance companies are willing to negotiate with an alliance,” explains Toups. “We’ve successfully negotiated better exam and eyewear reimbursements or even better operational processes for our alliance members because we partner with like-minded insurance carriers to help them improve efficiencies in the delivery of care and even lower their claims costs.”
What is the eye exam reimbursement and does it vary by plan type?
Some vision insurance companies offer multiple provider networks with different reimbursements.
Does the insurance company require the practice to use its lab network or does the practice have the freedom to choose where the lenses are manufactured? In many instances, the practice is required to use the insurance company’s lab or lab network and is paid a dispensing fee rather than incurring the costs of the lens material and labor.
What is the process to credential doctors and how long does it take? Most insurances will have a “Join the Network” page on their website, where you can fill out an online form to initiate the process. Initiating this process ASAP is especially important for new practices, since it can usually take 45 – 160 days to become a credentialed doctor.
How many insurance plan members live / work around the practice? Contact the insurance directly and ask if you can obtain the number of members/lives in your and surrounding zip codes. Knowing this information could save the practice a lot of work if there are no plan members near the practice.
3. Promote the Practice’s Participation
Once the practice is credentialed and contracted to see patients, it is now time to let the community know that the practice is a participating provider.
Does the insurance company promote my participation? Yes, sort of. Most insurance companies have online directories for their plan members to find a provider. Make sure to complete all practice information asked for on the application form. This information may be used to enhance the practice’s locator record, making the practice searchable by other criteria, like languages spoken, specialties, brands offered, weekend hours, etc.
What can the practice do to promote insurance network participation? Use online channels such as social media, website and even email blasts to promote the insurance participation. If there is a large employer or health plan in the area, it might be appropriate to promote the company as well.
Many insurance recipients also have family members on the same plan. Encourage the office staff to make a note when verifying benefits or ask the patient if they would like to set up an appointment with someone else in the family.
Accepting Insurance Can Be Profitable
Independent optometric business owners are driven to provide a high standard of care to their non-insurance and insurance patients. Their businesses depend on it. But when it comes to the financial analysis of the business, it makes sense to look at your insurance patients differently.
Building an insurance strategy takes some effort, but it may be one of the best investments of your time in order to understand the overall profitability of your business. Then, you have the information necessary to build a more profitable insurance business for your practice and the community you serve.
About Vision Trends
Vision Trends recognizes the business challenges that both preventive care and medically necessary insurance plans brings to the practice. Vision Trends’ coaches consult with its members about best practices and even offers outsourced credentialing and insurance billing service programs.
Vision Trends is an independently owned doctor alliance offering choice, independence and ongoing member engagement. We are passionate about the long-term success of independent optometry and the growth of our membership. We are open to business owners that own one or more independent optometric practice locations. Vision Trends negotiates volume discounts and rebates with optometric and business product companies to support every aspect of an independent practice. In addition, we offer subsidized practice building programs, free doctor CE, staff training and insurance solutions.
Stop by our booth at 2019 SECO to learn more about our approach and dedication to supporting the success of the independent optometric business owner.