"Eye on Managed Care:  Managed Care Bombshell"


"Eye on Managed Care: Managed Care Bombshell"

Eye doctors refuse to accept lower reimbursements from Pacificare and VSP.

by Gil Weber, MBA
Consulting Editor

Adapted with permission from Ophthalmology Management
© Copyright, 2001. All rights reserved.
May 2001

This year started out with a bombshell on the managed care landscape. The news has been mostly positive for providers, and a recent story is particularly noteworthy and merits your attention.

Eye care providers quit

The Denver Post reported on January 10 that more than 400 optometrists and ophthalmologists had resigned from Pacificare's Colorado vision and eyecare provider networks effective for the 2001 contract year. In the Metro-Denver area network, participation had dwindled by an incredible 53% -- from 246 doctors to just 96 O.D.s and 19 M.D.s.

These reductions require more than 400,000 Pacificare and Secure Horizons (Medicare) members to find new eye doctors for routine vision exams and eyewear, and for medical and surgical care.

The Post reported that Vision Service Plan (VSP) announced a 25% cut in reimbursements for 2001. A VSP spokesman said that it was cutting reimbursements from 100% of Medicare allowable to 75%. He cited increased costs and said that VSP had lost too much money on the contract in the previous year.

The reimbursement cut was more than the doctors would tolerate, and they've voted with their feet. If Pacificare weathers this storm and maintains membership, that mass provider exodus will likely put an enormous strain on the remaining providers of a much smaller network.

This is one more example of a rapidly escalating trend I first described about 2 years ago. In ever-increasing numbers, providers are saying "no" and dropping out of third-party plans when reimbursements don't make sense.

It doesn't matter if the payer is an HMO, a vision plan, or any other entity. It doesn't matter if the plan drives 5 or 55 patients through your doors each week. If it gives you some reasonably profitable patients, it might be worth holding. But no matter how hard you and your staff work, if you can't make a reasonable profit on each patient from a plan, you won't make it up on volume.

You've heard that before, of course. But too many optometrists have turned a blind eye to practice costs and looked only at whether the appointment book was filled.

Today more optometrists recognize the bottom-line realities of certain third-party programs. They realize that working harder for diminishing returns makes no sense. And no longer willing to be backed against a wall, they're fighting back in the best way -- by canceling their contracts.

What's next?

Will VSP or Pacificare restructure the program allowing reimbursement levels sufficient to reconstruct the now flagging network? Only time will tell who blinks first.

Even if nothing is reversed, my suspicion is that most of those who dropped out won't regret the decision in the long term.

Let's hope for the best. Whether you provide only primary care vision exams and eyewear or also some secondary care, you'll feel the impact of this change.

Gil Weber is an author, lecturer and practice management consultant to the managed care and ophthalmic industries. He has served as Managed Care Director for the American Academy of Ophthalmology.

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