VSP Execs Detail PAL Reimbursements, In-Office Finishing Programs

An Exclusive Interview with VM

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By Andrew Karp: Group Editor, Lenses and Technology

RANCHO CORDOVA, Calif.—VSP announced the launch of two major initiatives, one concerning updated reimbursements for progressive lenses, the other a program promoting in-office lens finishing and stock lens sales.

In an exclusive interview with VM, VSP executives said the company will be changing its progressive lens payment levels for eye- care professionals and optical prescription laboratories in 2011. The new rates, which will take effect Jan. 1, will improve administration and also provide higher reimbursement levels for more advanced lenses that require more time, training, and equipment to successfully fit patients, they said.

“From the doctor’s perspective, in our current reimbursement system, regardless of the type of progressive lens they prescribed, they got the same reimbursement,” Rex Bennett, vice president, ophthalmic supply chain for VSP’s Optics Group, told VM. “There was no variation, even though labs had a variable schedule of payment and so did patients. And although lens technology continues to improve with the introduction of custom lenses and higher technology, our current system doesn’t reward or encourage those doctors to move out of their current behaviors.”

Bennett said VSP has received many requests from doctors who feel they should be reimbursed at a higher level for personalized progressives because there’s more fitting and more measurements required. “It takes time for the doctor to go through the process with the patient,” he noted. The result is a better viewing experience for the patient and better retrention rates for the practice, he said.

“In the private pay world, doctors do charge more for these lenses,” Bennett said. “The new system gets us more aligned with the market.”

Bennett explained that under the new pricing system, VSP is assigning each progressive lens brand to one of six categories that are ranked according to how advanced the lens design is and the personalized measurements that may be required to fit the lens on the patient. For example, VSP’s private label Reveal Freeform lens is in a higher reimbursement category than its standard Reveal lens. The categories are based on objective criteria including market pricing from labs that VSP gathered from a survey of private pay doctors.

“We assessed the technology, the time the lab needs to process the Rx order and the time the doctor needs with the patient,” said Melody Healy, director of consumer marketing for VSP, adding that VSP wants to “reward doctors for their technical expertise.” She emphasized that VSP also took into account the consumers’ perspective, in which progressive lenses are often priced according to “standard, premium and custom, or good, better, best” performance criteria. Healy said VSP is targeting consumers with new marketing material to educate them about progressive lens options, including a new, on-line information center and an electronic newsletter-Envision-that has generated considerable traffic through VSP’s website.

VSP will add a service charge for AR lenses, Healy said. Doctors can still order progressives from any VSP lab or VSP contract lab, she noted.

Bennett also provided VM with details about VSP’s new in-office lens finishing program, which the company launched on Sept. 1. The program, which VSP plans to roll out nationwide by early 2011, is available for single vision, stock lenses purchased through VSP Optics Group’s comprehensive stock lens catalog. VSP is offering it through its Signature and Choice plans.

Bennett said the new program will help VSP practices increase patient satisfaction and compete more effectively with other doctors and retailers who already finish lenses in their offices.

“We wanted to leverage our aggregated buying power, so we ran a pilot program beginning in April,” said Bennett. “We got good feedback from our doctors, who found our pricing attractive. They can order the lenses on eBuy on eyefinity.com, so it’s a fairly efficient process.”

According to Bennett, VSP is offering a broad mix of lenses, including AR lenses, from all the major suppliers. The lenses are sourced through one of VSP’s five wholly-owned labs. Doctors are assigned to the labs closest to their practice, Bennett said.

Although the program is currently limited to stock lenses, Bennett said VSP is assigned a team to study whether it is feasabile to include uncuts lenses in the future.

Bennett said that the in-office finishing program provides “a great opportunity” for edging equipment companies, because some doctors who might not do in-office finishing may find an opportunity to do it now. He said VSP is working with equipment suppliers such as Santinelli International, AIT and Briot to put together special programs for VSP doctors.