Setting fees at your optometry practice is never easy. There are many philosophies on how to set fees at your optometry practice, and we will examine a few in this article. Please keep in mind, I am in no way suggesting what fees you should set or attempting to get a group of optometrists to set their fees at a certain rate. I am just giving you a general insight on the philosophy of setting fees at your practice. The fees you decide to set are up to you.
To make life easier, we have attached a spreadsheet that will help you to do this! Download it here.
Fees at your optometry practice to set:
- General eye examinations
- Contact lens exams
- Other CPT codes for medical procedures and imaging
- Nutraceuticals
- Accessory products
- Frames
- Lenses
Considerations when it comes to setting fees at your optometry practice:
- Private pay patients
- Vision insurance patients
- Medical insurance patients
- Fees must be the same for every patient, you cannot have different patients pay different prices
- The percentage of each type of patient your office sees
Step 1: Determine what percentage of your patients are insured vs private pay.
First off, you need to determine what percentage of your patients are private pay vs. insured. Then, find out what your highest insurance plan is reimbursing. You can call them and get their fee schedule for a range of CPT codes.
You never want to set your fees lower than what the insurance plan is willing to reimburse to you. Why would you take less than what they are offering?
Oftentimes, most practices will base their fee schedule on Medicare, so we’ll look at that a bit more closely.
Step 2: Look at the Medicare Physician Fee Schedule
Oftentimes, Medicare will offer the highest reimbursement rates when it comes to billing and coding. You can obtain their fee schedule to set yourself up and use that as a guide to base your fees on.
Step 3: Determining How to Set Your Fees
Once you have identified the highest reimbursing insurance company and what they’ll reimburse you (oftentimes Medicare), make sure you set your fees at or above that amount. You can certainly set those fees as high as you want! Remember though, you must consider the fact that your private pay patients will have to pay those fees.
Unfortunately, you can’t just set a global discount for patients because they are private pay, there are some murky legal waters that you’ll need to navigate if you are attempting to do so.
Many offices elect to set their fees a little higher than the Medicare reimbursement rates, which typically won’t create an issue for private pay patients. Then again, if you set high fees and provide a great patient experience, and patients understand the value in coming to you, then perhaps you can set your fees well above these reimbursement rates!
Step 4: List Out Your CPT Codes and Fees For Your Staff
Creating a list that can easily be referenced with CPT code and associated fee will be critical when it comes time to billing and coding, and giving your staff the resource necessary to help patients understand fees and charges.
There’s no magic number when it comes to setting your fees an amount higher than the Medicare schedule. For example, you may choose to mark up a fundus photo at a higher rate than a visual field for example.
The important thing is to make sure you have your fees clearly listed out with corresponding CPT codes.
When it comes to establishing fees for certain procedures – look into your practice demographic.
Think about it like this…. If you have a private pay patient, what are they coming in for? Which types of CPT codes will you likely be billing? Here is an overly exaggerated example – If you are in an area where 100% of people have glaucoma and 0% of people have ARMD, you might elect to choosing a higher % markup on your visual field because people will NEED this and will pay for it. On the other hand, your retinal OCT might not be as much in high demand, and people might be pushing back if you are trying to bill it at an exorbitant amount. That is a very oversimplified example, but something important to keep in mind.
An example of high vs low paying CPT codes
Pachymetry, a low reimbursed procedure, reimburses most docs let’s just keep it simple and say $15. Fundus photos are a high reimbursing procedure at around let’s just say $70 for simplicity sake. If you used a 50% markup (for round numbers and for the sake of an example), the private pay patient might not flinch at paying $22.50 for pachs, but for a fundus photo of $105 might create some push back.
With that being the case, you can maybe get away with a higher markup on lower paying procedures and a lower markup on higher paying procedures. This is a just one general idea to consider, but not necessarily the best!
What about new patients versus established patients?
Most docs and offices would agree, you should have a different charge for new patients vs. established patients for the same level of office visits for both 9200 and 9900 codes, and as such, these codes are clearly differentiated. Why though?
The reason is that with new patients, you and your staff typically will invest more time and effort in getting a new patient processed into your system. A first visit with a new patient for a problem focused visit generally will take longer as a result. The guideline used to determine whether a patient is “new” vs. “established” is as follows. If a patient has been seen by you for care within the past 36 months, they are an “established” patient. If a patient has never been seen by you for care, they are a “new” patient.
Important Tip: If a patient has only been in your office to fill a spectacle prescription from a previous exam provided by another doctor outside of your practice, they are then a “new” patient on the occasion you provide professional care for a problem focused visit with a chief complaint.
You can not have different fees for a single particular CPT code
You can not have different fees for a particular CPT code. One code, one price, NO exceptions. Do not try to play games with cash discounts because you’ll set yourself up for trouble. Many will argue that it is less expensive to accept a cash payment since there is no waiting period to receive payment, and therefore they can discount. While this is not a bad argument and seems logical, Medicare addressed this exact issue in 2004 and clarified it in 2011 stating this: “Cash discounts are reductions granted for the settlement of debts within a stipulated period before they come due. Thus terms “2/10, net 30″ on a vendor invoice mean that a 2% discount from the price will be allowed if the payment is made within 10 days from the date of invoice.”
A philosophy to consider when it comes to setting fees at your optometry practice.
Let’s think about setting fees, perhaps philosophically, and use an example.
Some practices and optometrists are afraid of setting fees too high with fear that they might be charging too much. Is this the right philosophy?
Let’s take the example of foreign body removal. Let’s assume that you set your fee for foreign body removal at $140. Is this too much? What about that cash pay patient?
Think about it this way: Who else is going to do this procedure for cheaper? Do you find patients calling your office “shopping” around?
- Telephone: Ring, Ring
- Receptionist: Optometrist’s office, can I help you?
- Caller: Yes, thanks, how much do you charge for a foreign body removal?
- Receptionist: The office visit is $ 90.00, and the foreign body removal fee is $140, so the total is $230.
- Caller: WOW, that’s too high, I’ll shop around.
- Click!
It is unlikely that the above scenario occurs. Patients who need services, particularly something like a foreign body removal are generally willing to pay the fees associated with it. It’s not like “shopping” for glasses or contact lenses.
It is therefore important to make sure you are setting fees that reflect your knowledge and expertise.
You paid full price for four years of optometry school to be able to perform these procedures. On top of that, in doing what you were trained to do, you are also responsible for the outcome and/or any complications that may arise. In other words, you have a liability.
Setting fees appropriately that reflect the time and expertise needed is also critical because of the concept called “loss of opportunity.”
Meaning, that while you are removing a patient’s foreign body, you “lose” the opportunity to do something else during that time to generate revenue.
For these reasons, a common approach that many will advise, is to avoid falling into the trap of lowering your fees, or giving discounts, or in some cases not even charge a fee!
In many cases, it’s not about what the patient wants to pay, it’s about what the doctor thinks they are worth. Charge and get paid what you’re worth.
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