Anxious days for opticians

Contract: A CareFirst contract with a New York eyeglass provider has independent opticians worried.

July 14, 2004|By M. William Salganik | M. William Salganik,SUN STAFF

Michael Toner's optical shops aren't a mom and pop business. More precisely, they're a pop, grandpop and brother business.

The third-generation optician runs an optical shop in Parkville. His brother, also an optician, runs the family's second location in Bel Air. His grandfather started the business, now called Toner-Parsons Opticians, in 1928. In more than three decades of making eyeglasses, he's faced challenges from quick-service vision chains springing up in shopping malls and, more recently, from the popularity of laser eye surgery that could reduce the market for glasses.

Now, he's got a new worry: CareFirst BlueCross BlueShield, the state's largest health insurer, is contracting with a New York company to fill many of the eyeglass orders for its 1-million-plus members with vision benefits.

CareFirst said its change in practice, which takes effect in the fall, will improve service and cut costs. But independent opticians say they'll be hurt by the change, especially since the large eyeglass chains will be allowed to continue making eyeglasses covered by CareFirst.

"If they would cut me that deal, I'd be happy with it," said Toner, who is also president of the Opticians Association of Maryland. "Just let me keep grinding my lenses."

CareFirst says its decision to contract with Davis Vision of Long Island, N.Y., to be phased in over a year starting in October as employers renew contracts, will give subscribers better discounts, wider choices of frames and a national network of eye doctors and opticians, at roughly the same premiums as currently.

Rita Costello, CareFirst senior vice president of strategic marketing, said under the new plan, some members will receive glasses with no out-of-pocket costs only if they use the out-of-state lab. All members will be free to choose their eye doctors and opticians and receive discounted rates.

"It's a real win-win for our members," she said.

Davis is able to offer better discounts because of its volume, said Dr. Carl Moroff, executive vice president and chief operating officer of Davis Vision. It covers vision benefits for 24 million members nationally, and will make nearly 2 million pairs of glasses in its four labs, located from Philadelphia to Las Vegas. Owned since 1996 by Highmark Inc., a Pittsburgh-based Blue Cross plan, Davis Vision contracts with about two dozen Blues plans, as well as with private insurers and employers.

But local optometrists, who do eye exams and generally order glasses from local wholesalers, and opticians, who make eyeglasses at wholesale labs or at retail outlets like Toner's, say the switch will move the production of tens of thousands of pairs of glasses a year away from local shops. That will cost local jobs and potentially mean poorer service for their patients, they contend.

Thomas Shaner, executive director of the Maryland Optometric Association, said his group is likely to pursue a challenge in federal court on grounds that the deal for chains is anti-competitive, and is also considering a complaint under Maryland insurance regulations. A study done for the optometric and optician associations by RESI Research and Consulting at Towson University estimated the shift will cost 241 optical jobs in Maryland.

David Funk, a Baltimore attorney who has represents both CareFirst and Davis, said the deal complies with "all applicable law."

Moroff, the Davis executive, said Davis' has two national contracts which allow eyeglasses to be made by large retailers - Wal-Mart Stores Inc. and Cole National Corp., which operates the free-standing Pearle Vision chain as well as hundreds of optical shops in Sears and Target stores. It's not practical, he said, to administer contracts to make glasses with individual eye practices and optical shops.

The dispute occurs as more employers are offering vision benefits to their workers, making the terms of membership in insurer networks crucial to the business of those who prescribe, sell and manufacture glasses and contact lenses. It also represents a continuing tension - seen in industries from pharmaceuticals to booksellers - between independent local providers, national chains and mail-order services.

Even as employers raise concerns about rising health coverage costs, increasing numbers of companies have been offering vision coverage, said Tracy Watts, a senior health-care consultant for Mercer Human Resource Consulting, a company that advises employers on benefits.

"Employers see it as a way to give something extra, at time when they're having to shift big costs in other areas," such as increasing health co-payments and deductibles, Watts said. And more often than not, she said, vision coverage is at little or no cost to the employer: The employer simply gets a group rate, and the employee pays the premiums.

Vision benefits, covering eye exams and glasses (eye diseases and surgery are part of general medical insurance) typically cost $5 to $6 a month for individuals and $10 to $12 a month for families, she said.

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