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Progressive Focus© Newsletter

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Volume 4, Number 3 Fall, 2003
Helping You Manage the Expectations of Managed Vision Care

In This Issue:

Any Willing Provider Laws, Private Practice Optometry, Retail Chains, and VSP

Will a recent Supreme Court decision favorably change the managed care landscape for ODs? And will the "last bastion" of private practice optometry be forced to open its panels to retail chains?

Last April the Supreme Court issued an important ruling that could impact many private practice optometrists – at least in those states with certain types of Any Willing Provider (AWP) laws. The ruling upheld two Kentucky AWP laws challenged by that state's HMOs.

With affirmation of the Kentucky statutes (arguably the most OD-friendly in the nation), HMOs there and in six other states must open their provider panels to any physician willing to accept a plan's payment rates and program terms. But, as always, the devil is in the details.

Each state's laws will define who is included under the umbrella term "physician." And each state will determine whether the open panel requirement applies only to health plans or also to their sub-contractors (e.g., carve-out networks, IPAs, credentialing organizations, etc.).

While about half of all states have AWP laws, most apply only to non-physician entities such as pharmacies. So to date most AWP laws have provided little or no protection to practitioners including ODs. Kentucky specifically names optometrists as a provider category guaranteed protection under its AWP law. Other states are not as inclusive.

States with Any Willing Provider
laws applying to physician

Georgia, Idaho, Illinois, Indiana,
Kentucky, Minnesota, Wyoming

How AWP laws could impact private practice ODs

In a number of states optometrists are routinely denied admission to HMO medical eye care panels simply because they are optometrists. ODs are denied access to these patients and turned away without having an opportunity to demonstrate their qualifications.

In some cases an HMO will reject the OD's application. That's always been the most common and direct means to deny participation. But in some states HMOs have tried to insulate themselves from the political heat by "downstreaming" – delegating duties and then pointing to other, sub-contracted entities as the decision-makers.

For example, in Idaho and Indiana HMOs can point to sub-contracted IPAs and say "It's the IPAs; it's not we who are making this decision," because in those states downstream IPAs are not considered insurers and, therefore, are not bound by the AWP laws. Or, for example, a downstream credentialing organization might bar the door -- precluding optometric participation by refusing to credential non-physicians. Fortunately for ODs in Kentucky that state's AWP law limits "downstreaming" ploys.

While the AWP laws won't fix all the system's ills, the Supreme Court ruling should affirm that at least in the seven states certain of these tactics will end or be reduced. Direct-contracting health plans in the affected states no longer will be able to deny admission to an eye care practitioner simply for failure to have MD or DO appended to one's name. Nor will covered health plans be able to say "The panel is closed; we have all the eye care providers we need."

This change should prove helpful to new optometrists – those first entering practice or first going out on their own – and to established ODs looking to build their patient bases by participating in previously closed third party programs.

How AWP laws might impact on VSP

Quotables...

The wave of the future is coming and there is no fighting it.

Anne Morrow Lindbergh
The Wave of the Future

Depending upon how AWP laws are interpreted in each of the seven states, at least two of VSP's core policies could be affected. Changes to either or both of these would be particularly meaningful to private practice optometrists since such changes could dramatically increase the competition for managed care patients.

The first policy is VSP's controversial requirement that ophthalmologists must choose between being participants on the VSP primary care panel (routine vision exams and eyewear) or on the medical eye care (med/surg) panel. They can't be on both. When forced to choose most ophthalmologists have opted for the med/surg panel.

But particularly in a state where VSP operates as a single-service HMO it is conceivable that AWP could be interpreted to mean that physicians can't be forced into an either/or decision – they would have the right to be on both panels. And for ODs that certainly would mean additional competition for the vision care patient base served by a suddenly larger VSP panel.

The second interesting policy that might be subject to change under AWP is VSP's exclusion of retail optical chain stores. Several possible scenarios could unfold, but here are some to consider.

1) In those instances where both the exam and dispensary sides of a chain store (e.g., Pearle Vision) are owned by a franchisee that ownership status seemingly would satisfy the VSP participation requirements. As such it seems at least reasonably likely that AWP would guarantee such willing and qualified franchisee admission to any covered health plan's provider panel including, VSP's.

If VSP then opened its panel to such OD-owned retail opticals there surely would be some backlash from private practitioners who would question VSP's mantra: "By private practice optometry, for private practice optometry." But VSP likely would counter with "It wasn't our choice. They made us do it. And, besides, that OD really is a private practitioner who's simply sought the business expertise of the franchise."

Quotables...

To every action there is always opposed an equal reaction...

Sir Isaac Newton
Laws of Motion

Would that answer fly with VSP's core constituency? Would some or many ODs choose to bail out of VSP upon such a radical turn of events? Only time and individual circumstances will tell, but the franchisee scenario is one that's likely to play out at some point in several states. And it could create a few headaches at the Sacramento headquarters.

2) In those instances where state law requires side-by-side entrances and the OD owns only the exam side of the business there's a real question as to how AWP would apply. Might the independent optometrist be guaranteed admission to provide exam services even though he/she does not own the optical side of the business (a VSP requirement that reportedly has been ignored in some instances where VSP needed the provider location)? Would ownership of both sides be interpreted as a reasonable participation requirement under AWP?

Or would one or more state's laws instead deem that such requirement unfairly locks out otherwise qualified ODs who must be admitted regardless of dispensary ownership? And assuming the answer to this last question is yes, what then happens to the retail chain's dispensary? Is it also guaranteed admission? (Is it "grandfathered"?)

3) However, for many private practice ODs the most troubling scenario would be if a state's AWP law also required VSP to open its panel to all of the company-owned stores – to have Cole, Pearle, LensCrafters, Target, WalMart, etc. on the VSP provider list.

But AWP or not, something of the sort may already be in the works. More and more national payers are requesting that their provider panels include a mix of private practitioners and name-recognized chains. In particular the payers are demanding more evening and weekend access than is now provided by any purely private practice vision plan.

ODs also must be wondering if the admission of retail chains to previously private practice-only networks would adversely impact reimbursement. Certainly the retail chain store would love to get the higher reimbursements typically paid by VSP? If patient choice and access were significantly increased by the addition of many retail optical stores, there likely would be a collateral increase in utilization. VSP would likely need to reassess its reimbursement levels in order to maintain its profitability.

Will AWP impact the relationship between private practice ODs and corporate-owned vision plans?

It seems unlikely that AWP will have much impact on the reverse relationship. Most of the vision plans directed by the corporations, for example EyeMed, Cole Managed Vision Care, etc., have long been open to private practice ODs (and physicians and opticians). But as these corporate entities capture additional contracts and control more patients in the 7 states the need for an individual OD to participate may change with the evolving market dynamics.

Finally, even though the immediate impact of AWP is limited to 7 states, it's certainly reasonable to anticipate that pressure may be put on VSP to extend AWP-influenced policy changes to other states. Thus it's possible that the Supreme Court decision on AWP could eventually impact ODs across the country.

These are interesting times in managed care. Interesting indeed.

Guest Commentary: John Lahr, OD

Corporation Developed Vision Plans -- Does the Independent Professional Fit?

Why would any private practice professional want to participate in plans developed by corporations that own retail eye care and eyewear operations? Having been in private practice for over 25 years in a state dominated by managed care, I have experienced many plan offerings and variations to this third party system. I also gained additional insight into managed care by serving on the American Optometric Association's Eye Care Benefit Center for 10 years, and on my state's third party committee.

During this time I assisted in developing many regional and state integrated networks of private practice optometrists and ophthalmologists for the purpose of securing eye/vision contracts and driving these lives to the network providers. Beginning in the 90's, I began to notice that HMOs, PPOs, and employers were asking if the networks we presented contained any retail opticals or chains. Those requests have now become demands, and the finalist contenders for national contracts are almost exclusively those with a retail/chain component as well as independent optometrists, ophthalmologists, and opticians.

This truly integrated panel allows for access at all times including evenings, Saturdays, and even Sundays. It also creates name recognition for plan members. By joining this integrated panel, an independent practice opens new opportunities for added patient volume as new contracts are secured.

When considering whether to add your practice to an integrated panel that includes corporate retail/chain locations, carefully evaluate all aspects of the plan agreement.

Some considerations are:

  • Does the plan allow all professionals an opportunity to participate, or does that happen only if corporate locations do not satisfy the access needs of the employer or managed care entity?
  • Is the provider panel dominated by the retail/chain locations, or do independent offices make up the majority?
  • Does the plan portray and position their retail/chain locations in a preferential manner compared to the independent practice locations? (This could be in member materials, advertising, Internet listings, automated voice response systems, or other communication vehicles.)
  • Does the plan require use of a specific laboratory owned by the corporation, or any other contracted laboratory group that prevents an independent practice from conducting "business as usual" (e.g., using your on-site laboratory)?
  • Does the plan restrict your ability to communicate to members that you are a participating provider in the network, and to encourage members to use their benefits to detect early eye/vision problems, and to provide appropriate and timely treatment?

The bottom line decision for any plan participation is understanding the true chair cost for your office, and then performing due diligence to determine if the reimbursement structure is profitable. You also need to balance profitability with your typical appointment availability. If you are completely booked for weeks in advance with patients who pay privately (and assuming your Usual and Customary fees are above the plan offerings), it would make little sense to consider taking on plan members at lower rates. However, if you have chair time available or have a new associate, these plans may be a good partnership.

The marketplace is constantly changing, and new paradigms shape the future. Independent professionals who are flexible and open-minded may benefit from new associations and relationships that once were considered unthinkable.

There is no right or wrong answer for any practice relative to plan offerings in your geographic region. However, looking at each opportunity in a careful, detailed manner can lead to an informed decision that may benefit your bottom line.

John W. Lahr, O.D., FAAO serves as a consultant to the eye and vision care industries with corporations such as STAAR Surgical, Luxottica, Transitions Optical, and Biosyntrx. He serves as Medical Director of EyeMed Vision Care and directs the Quality Assurance Program.

Copyright © 2003-2007, Gil Weber, MBA. No part of this newsletter may be reproduced or distributed in any form whatsoever without the author’s prior written authorization.

These materials are intended to provide useful information about the subject matter covered. The author believes that the information is as authoritative and accurate as is reasonably possible and that the sources of information used in preparation of the materials are reliable, but no assurance or warranty of completeness or accuracy is intended or given, and all warranties of any type are disclaimed.

The materials are not intended as legal advice, nor is the author engaged in rendering legal services. The materials are not intended as a replacement for individual legal or professional advice. Information contained herein is presented only for illustrative purposes, and it should not be used to establish any fees or fee schedules, nor is it intended and it should not be construed as encouraging any user of the materials to take any actions that would violate any state or federal antitrust laws, tax laws, or Medicare or Medicaid laws.

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