Labs taking insurance vs private pay

[JamesSix]

Everyone knows that an optical practice will always make more money off a patient without insurance vs the ones who have insurance. The OD/Owners will likely get $X for the exam, $X for dispensing and whatever they can make on the upsells (ARC, Provider frames, transition lenses). But how does this effect the optical lab that providers send their jobs to? If a lab has aprice list of $X for freeform lenses ($X for pair), $X for AR Coating, $X for edge and mount for a total of $X for the completed pair has does the fact that this is an insurance job effect their price points?

[ePii]

First since this is a public forum maybe take even hypothetical lens costs out. To maybe answer your question if I'm understanding correctly: If the insurance requires a specific lab or labs and they are independent (not owned by the insurance company) then the lab has agreed to fee schedule. It is similar to the hierarchies and add on's the provider sees. Also as you see the progressives are categorized such that the lenses that are more expensive to produce(click +puck) are in higher tiers, so labs can't benefit from top tier inexpensive designs.

[Uilleann]

In short, any provider, lab, or patient who uses insurance automatically agrees to pay the salaries of every employee, all the way up to the millions for their CEO et al, by way of reduced income to the practice, reduced income to the lab, and loss of choice/options/selection of lens options and sometimes frames, CLs etc. So those doctors aren't really charging more, they make far less. The patient also gets to pay more in almost every case than they otherwise need to as well.

But of course, insurance and managed care have got their smoke and mirrors about "low cost" so well down, that companies jump at the chance to offer that "benefit" to their employees...

[JamesSix]

In short, any provider, lab, or patient who uses insurance automatically agrees to pay the salaries of every employee, all the way up to the millions for their CEO et al, by way of reduced income to the practice, reduced income to the lab, and loss of choice/options/selection of lens options and sometimes frames, CLs etc. So those doctors aren't really charging more, they make far less. The patient also gets to pay more in almost every case than they otherwise need to as well.

But of course, insurance and managed care have got their smoke and mirrors about "low cost" so well down, that companies jump at the chance to offer that "benefit" to their employees...

So the insurance companies would tell my lab what lenses and coatings they are willing to cover at what price and my lab would except that just for the business of accepting their insurance? If that is the case how can a lab attract new providers with low lab costs? who is paying the lab, the provider or the insurance company?

[rbaker]

As long as the eye-care Mafia can "wet their beak" everything is cool. Just do what you are told and you can get some crumbs.

[DanLiv]

So the insurance companies would tell my lab what lenses and coatings they are willing to cover at what price and my lab would except that just for the business of accepting their insurance? If that is the case how can a lab attract new providers with low lab costs? who is paying the lab, the provider or the insurance company?

Yup labs accept lower profit in exchange for the "promise" of higher volume offered by being part of the insurance network, same trade-off providers make.

The insurance becomes the middleman. They "charge-back" providers at their contracted amounts, and then insurance company pays the lab whatever they contracted with them. And of course they pocket the difference.

A lab can't attract "providers" with their costs because they are irrelevant to managed care, the providers are paying the insurance company's fees, not the lab's. Lab pricing only affects private jobs. On the flip side since all provider pricing is the same regardless of lab, you could potentially poach other labs' business by offering better service or quality at the same price. Our practice is 80% managed care so labs pitching to me on price have at best a shot at only 20% of our business. Labs in network could potentially get all our business if they convince me they have better service or quality than my current lab

[JamesSix]

Yup labs accept lower profit in exchange for the "promise" of higher volume offered by being part of the insurance network, same trade-off providers make.

So would a lab only have one set of low prices that both providers (for non insurance jobs) and insurance companies would use?

[DanLiv]

They could if they wanted, just like a provider could if they wanted lower their retail fees to be the same as insurance fees, but they would make no money. Additionally, labs don't give a price list to insurance, the insurance tells labs what they will pay and if the lab wants to be in the network they accept it, same as providers.