Fee survey shows continued variability of OD charges

However, the average conversion factor for optometrists’ fees has remained level over the past 6 years.

Charles B. Brownlow

Some of you may recall that I have done two previous surveys of optometrists’ fees, published in Primary Care Optometry News in 2005 and again in 2008. In each case, the data were drawn from the collection of fee analyses that I had done during the previous year. This was an attempt to glean useful information regarding eye doctors’ patterns of billing and to provide useful information for doctors contemplating changes in their own fee schedules.

Analyses help docs establish fees

My company, PMI, has been doing fee analyses since the mid-1990s to assist eye doctors and clinics in establishing appropriate fees for their services. The analysis is provided as a spreadsheet, accompanied by a cover letter to explain the findings.

Among the columns that appear in the analysis are the CPT codes for 54 services commonly provided by eye doctors, along with the Medicare relative value for each, from the current and previous year. Additional columns provide data for the same services drawn from the 50th percentile values of a national survey of MDs’ fees from the previous year and from national average Medicare fees for the year the survey was done.

The layout of the spreadsheet permits a doctor to enter her or his current fees for the services and to then compare the fees for each service with the numbers from the MD fee survey and the current Medicare fees. When considering their fees, many doctors will supplement the information from the fee analysis with local telephone inquiries of other eye care providers or data drawn from computerized programs such as AccuFee (www.AccuFee.com), Reimbursement Plus (www.reimbursementplus.com) or other web- or software-based programs.

The 2011 survey

To create the survey that is reported here, I compiled data from 75 randomly selected PMI fee analyses performed for offices during 2010 in an attempt to provide an interesting comparison with the data from the 2008 survey. As always, the information is presented directly, with no attempt on my part to interpret it, draw conclusions from it or make suggestions relative to it. The numbers are as they are. Review them and use them as you see fit.

The process for choosing which analyses to include is random, with the fee schedules for the offices originally compiled on a large, horizontal spreadsheet. This permits calculations of “highest,” “lowest,” “average” and “median” for each of the services, as well as for the totals of the fees and for the conversion factors for all of the schedules.

The conversion factors are calculated by dividing each doctor’s total fees for the services by the total of the Medicare relative values for those services. Once the calculations are made, the individual schedules are purged, leaving only the summary data on the spreadsheet. The final spreadsheet includes the same information from the 2008 survey (of 2007 fees) and 2005 survey (of 2004 fees) for comparison.

Broad range of charges

One of the characteristics that stands out in the 2011 survey is the broad range of 2010 optometrists’ charges for many of the services. For example, for 92070 (fitting and dispensing a therapeutic contact lens), the highest reported fee in the 2007 survey was $180, the lowest was $6, the average about $83 and the median $70. In the 2005 survey the range was even larger, with $700 as the highest, $15 as the lowest, $95 as the mean and $75 as the median. For the 2011 survey, the highest fee reported for 92070 was $325, the lowest was $20 and the average was $100. The 50th percentile fee for 92070 from the survey of 2010 MDs’ fees is $133, and the national average Medicare allowed amount is about $67.

The great range of fees is healthy, of course, indicating no collusion or fee setting among doctors, but it may also indicate a wide range of sophistication and understanding with respect to the definitions of the codes. It probably also indicates that doctors are using this code to report everything from supply of a single replacement contact lens to a relatively complex fitting of a contact lens. The intended use of the code is for the provision of a bandage contact lens as for recurrent corneal erosion, an acute corneal abrasion or following foreign body removal.

CF, RBRVS

To provide more information for comparison, we also include the conversion factors for each fee analysis we conduct and calculate their highest, lowest, average and median conversion factors during the survey process.

The conversion factor (CF) is derived from Medicare’s formula for creating its fees, where the fee for each service is the product of the relative value unit for that service (RVU, set by Medicare) multiplied by Medicare’s current CF, set by Congress (fee = RVU x CF). This formula is the basis of the Resource-Based Relative Value Scale (RBRVS), which has been used by Medicare for establishing its fees since 1992.

A little math permits us to rework the basic formula, fee = RVU x CF, and solve for the conversion factor, CF = fee / RVU. We simply total all the fees in each doctor’s schedule and divide the sum by the total value of RVUs for those services.

As you can see from the table, doctors’ conversion factors swing as wildly as the contents of the schedules, with the highest in the 2011 survey being $80, the lowest $28 and the average $44. These compare to the national average Medicare conversion factor for 2011 of $34. Thus, the average conversion factor from the 2011 survey of optometrists’ fees was 29.3% higher than Medicare’s 2011 conversion factor.

Comparing this information to a 2011 fee survey of MDs for these services, we see that the conversion factor resulting from the 50th percentile fees from that survey is $67, which is 97% above Medicare’s 2011 conversion factor. It is also interesting to note that the average conversion factor across the sample for optometrists’ 2010 fees is $44, nearly identical to the average conversion factor for optometrists in 2007 ($45.45) and the average conversion factor for optometrists in the 2005 survey ($41).

Little change over 6 years

The average conversion factor for optometrists’ fees has remained level over the past 6 years, even as Medicare has implemented steady increases in the relative values for eye care services over the same period. This is supported by the fact that actual fees reported by optometrists have remained largely unchanged during the same period, not reflecting Medicare’s upward changes in relative values.

In closing, it is interesting to note the very wide differences in individual fees for each of the services, through the highest, lowest, average and median, across the 2005, 2007 and 2010 data. The significant differences run through the entire list of services: the general ophthalmological services, the evaluation and management services, the special ophthalmological services and even through the surgical services.

These wide disparities among fees and fee schedules are not regional, in that we find similar ranges in the fee analyses we conduct every year, regardless from which part of the country individual fee schedules are drawn. As we have come to expect, doctors of optometry demonstrate their independence in setting their own fees, just as they do in choosing diagnostic tests and the treatment/management modalities for their patients.

Based on the data across these 6 years, one would expect the wide range to continue into the future, unless dramatic changes in optometrists’ understanding of the value of their eye care services occur or new payment mechanisms in the health care system are developed and instituted.

References:

• Brownlow CB. Survey results show wide spread in ODs’ fees. Primary Care Optometry News. 2005;10(10):14-15.
• Brownlow CB. Dramatic spread in optometric fees continues. Primary Care Optometry News. 2008;13(4):13-14.

• Charles B. Brownlow, OD, FAAO, is a member of the Primary Care Optometry News Editorial Board and a health care consultant. He can be reached at PMI, LLC, 321 W. Fulton St., P.O. Box 608, Waupaca, WI 54981; Brownlowod@aol.com; www.PMI-eyes.com.
• Disclosure: Dr. Brownlow has no direct financial interest in the products mentioned in this article, nor is he a paid consultant for any companies mentioned.