Continuing Education

Your Managed Care Plan

Proactively planning for managing managed care now and in the future so your practice will benefit from time saving and profit generation for years to come

"The term managed care is used to describe a variety of techniques intended to reduce the cost of health benefits and improve the quality of care," according to Wikipedia, which adds, "It is also used to describe organizations that use these techniques."

Managed care falls under private health care via Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), or medical underwriting rather than government health care, which includes Medicare, Medicaid, Federal Employees Health Benefit Plan, and some others.

Managed care programs typically rely on a network or panel of contracted health care providers. These providers offer health care services under a formal system that sets standards, reviews programs, and negotiates fees. Emphasis is on preventative care and practicing efficiently, with incentives to do so.

Managed care today is different than managed care in the past. Today, managed care is an integral part of society. In other words, it's a given that the public knows about it and will use it, and that your practice will have to be involved with it.

Since there's no choice, you can grin and bear it, grit your teeth and tolerate it, or better yet, learn to take charge of managed care and leverage it to your practice's benefit.

Think managed care doesn't impact your bottom line or that you have control of how it affects your practice? According to Maria Todd, MHA, PhD, of ProHealth Consulting, Inc., "Every five percent of underpaid claims value is equal to about a day's earnings each month." And that's just underpaid claims.

Think about all the steps that go into obtaining and submitting that claim, and how tweaking the process a little bit may increase monthly profits by five percent. Then consider how a managed care revamp could save your practice in the double digits each month.

MANAGED CARE TERMINOLOGY

Some managed care terms to know are:

America's Health Insurance Plans (AHIP): The current national HMO trade organization, AHIP represents nearly 1,300 member companies and provides health care coverage to more than 200 million Americans. AHIP is the unified voice for the health care financing industry, with the goal of expanding access to high quality, cost effective health care with a robust insurance market.

National Association of Vision Care Plans (NAVCP): An organization of 16 primary member companies managing vision care providers' networks, and those marketing, administering, credentialing, or processing claims. The organization also includes 17 allied members. The NAVCP offers a forum for improving the quality of managed care based on creating unity among vision care companies.

Health Maintenance Organization (HMO): An HMO is a managed care organization that provides health coverage via contract providers. The HMO Act of 1973 requires employers with 25 or more employees to offer federally certified HMO options. HMO network providers operate under guidelines set by the HMO.

Managed care: Managed care controls health care costs, typically requiring that a third party or gatekeeper authorizes care.

Closed network: In this format, enrollees are covered only if they go to a network provider. Limited services such as emergency care may be provided out of network. Exclusive provider organizations (EPOs) are closed network.

Open network: In this format, enrollees may use a non-network provider, but usually at a lower benefit level than if they use a network provider. Most preferred provider organizations (PPOs) and point of service (POS) plans are open network.

Closed panel: These health care providers are employees of an HMO or employees of large group practices under contract with an HMO.

Open panel: Open panel health care providers are contracted independently, with participation in the network open to any provider that meets and accepts the plan requirements.

Health Savings Accounts (HSA), Medical Savings Accounts (MSA), Flexible Spending Arrangements (FSA), and Health Reimbursement Accounts (HRA): These options are used as part of an employee health benefit program, allowing employees to bank non-taxable funds for future health care expenditures.

Independent Practice Association (IPA): A contract between an HMO and a medical group to provide services to HMO members, typically on a capitation basis with a set amount for each person treated. The contract isn't binding, allowing individuals or groups to sign with multiple HMOs and see fee-for-service patients. This model is common in the optical industry.

MANAGED CARE IN THE OPTICAL INDUSTRY

Eye health is gaining increasing attention with consumers and action with managed care executives and management. Several HMOs have created vision networks as part of their plans, such as United Health Group's OptumHealth Vision Network.

As a business, eye health offers potential for consumer interaction and education, plus a value for consumers as part of their overall health care plan. An initiative is underway to encourage human resource professionals and consumers to change their perceptions of vision care plans, to make sure the link between eye health and overall health is understood.

A recent NAVCP round table found that consumers value their eyesight, but don't associate vision care and vision wear with overall health and well-being. Round table participants discussed practical strategies to help increase consumer awareness, including having eyecare professionals becoming more involved in educating patients on the health-related aspects of vision care.

Suggested steps include:

1. Taking a blood pressure measurement. This demonstrates the link between hypertension and eye disease.
2. Changing descriptive eyecare language to affirm the connection to overall health. Instead of "eye exam," switch verbiage to "eye health exam," and instead of "eyecare professionals," change to "eye health professionals."
3. Use simple, straightforward messages to instill standards of preventative care. For example, the dental industry emphasizes preventative care and seeing a professional on a regular basis, plus ingrains health habits like flossing and brushing teeth.
4. Reinforce mass media—for example, information on photochromic or progressive addition lenses, or a "see your doctor" message on macular degeneration or retinal disease—so that what consumers hear in their daily lives becomes a natural part of what they hear in the practice.
5. Invest not only in testing equipment, but also in staff training. Staff members should be experts at what to say when administering tests as to why they are testing and what they're looking for. This reinforces the eye health connection.
6. If time for one-on-one patient education is limited, utilize various media, such as in-office audio/video and print materials.

Emphasizing proactive, preventative vision care, the 2007 Prevent Blindness America report, "The Economic Impact of Vision Problems," estimates that the total annual financial burden of adult vision problems on the U.S. economy is $34.5 billion dollars, including direct medical costs, nursing costs, home care, and government programs for the visually impaired, plus the indirect cost of the loss of productivity in the labor force.

The NAVCP is currently considering creating a task force to rate, prioritize, and execute ideas raised in the roundtable. Goals include a simple consumer message to communicate that eye health equals overall health, communicate the benefits of eyecare to HR and government entities, establish a standard of care message with pull through from the government, and encourage consumers to follow the standard of care by taking advantage of vision benefits offered by their health care plans.

MANAGED CARE'S IMPACT ON A PRACTICE

Following are a few typical managed care scenarios experienced in an optical practice and tips on how to manage them effectively.

Scenario A:

"We have to sign up for every managed care plan."

First, forecast how many new patients the practice may gain by taking a plan.

Next, determine if the plan's payment schedule fits with the practice overhead, and if the practice can meet the plan's terms using existing resources. For example, will the practice have to hire an insurance manager and a technician full- or part-time, and at what cost?

Third, know how much your practice must discount fees to be on the managed care panel.

And fourth, know the "true net" of your practice including depreciation and other deductions.

Jerry Hayes, OD, founder and director of Hayes Consulting, places overhead expenses in seven key areas:

1. Cost of goods
2. Staff salaries and benefits
3. Occupancy costs
4. Patient care and equipment
5. Marketing and promotion
6. General office overhead
7. Doctor's compensation.

The cost of goods, typically half of your total overhead, is figured separately when considering managed care plans.

The bottom line question to ask before taking on any managed care plan is: "If the plan brings in more patients, will it create an impossible patient load and/or increase fixed expenses?"

If the doctor and staff are overworked and if fixed expenses increase, it may make the plan unprofitable both from a peace-of-mind and dollar-wise standpoint.

Scenario B:

"We can do business without managed care."

Evaluate and estimate how many patients the practice may lose if it doesn't take particular plans.

If the volume of actual patient loss or revenue loss due to unsold goods is too great, stay with plans that are most profitable while jettisoning plans that don't bring you enough patient volume or product profits.

Dr. Hayes' rule of thumb: If the practice is less than 60 percent booked on a regular basis, accept all decent-paying plans until patient volume increases. Then, when the practice is 60 to 80 percent booked on a regular basis, accept only premier plans. If the plan requires a bigger discount percent than your net, steer clear.

Another question to ask is if the managed care program requires selection from a limited group of frames. If this is the case, does the product style and quality match the practice's persona? If not, consider skipping the plan.

Be sure the plan offers widespread regional coverage, and that it covers patients' prescriptions for recommended premium lens products.

Ideally, the plan lets you work with a wholesale laboratory that you have a longstanding relationship with, or, if not, that the contracted laboratory has a good reputation, is easy to work with, and outputs quality work on time.

Scenario C:

"Let's balance our managed care involvement."

Practices that depend too much on managed care plans to fill appointment books may get discounted to death, or at least suffer from cost-cutting measures and a change in practice identity.

Consider out-of-the-box solutions to stay profitable, like merging with another practice or practices. In particular, a three-O (optician, optometrist, and ophthalmologist) merge can help develop an integrated eye network that's attractive to premier managed care plans.

Calculate chair cost as well as material cost to ensure that plan exam fees are balanced well with material fees. For example, one plan may offer an exam fee of $65, but a set dispensing fee of only $25. A more profitable plan may have a lesser $45 exam fee with a materials program at 85 percent of the usual practice fees.

Ask colleagues who take a plan for their opinion of it, but avoid questions related to fees and reimbursement and other questions that may be construed as violating anti-trust laws.

Acceptable questions include:

1. How easy is it to work with plan administration regarding verification of eligibility, covered and non-covered services and materials, and claims submission?
2. Are the forms easy to understand?
3. How responsive is the provider to questions or problems?
4. How quickly are services paid from the date of claim submission?

Administrative systems must be easy to understand for both patients and providers. If the plan is too difficult for your practice to get their minds around, it will likely be difficult for patients to understand. This may create stress in the practice-patient relationship, with the practice in the front line position, taking the brunt of the patient's displeasure.

Consider nixing plans that are too administratively complicated.