AOA, state affiliate tracking California lawsuit alleging VSP monopolistic practices

The AOA is following a California-based lawsuit, brought by Total Vision, which supports a group of independent optometric practices there, that accuses the country’s largest vision benefits manager, VSP (Vision Service Plan), of using its huge leverage to “strong arm” and bully it into accepting business conditions that threaten its very survival.

The allegations mirror alarms raised by the AOA regarding VSP and other vision benefit managers’ (VBMs) anticompetitive practices in the insurance marketplace. And in fact, the lawsuit, which alleges “monopolistic tactics” by VSP, cites AOA sources three times.

The lawsuit was filed Sept. 26 in the U.S. District Court in the Central District of California.

“This case concerns a vision insurance company that seeks to wield its monopoly power to drive an innovative competitor out of business to the detriment of competition and patients,” says Total Vision's lawsuit, which lays out VSP’s related business interests (vertical integration) including its own independent optometry services, glasses frames and lenses, and optometric software.

The suit adds: “The problem this has created is that VSP uses the power it derives from its vision insurance business mercilessly to force optometry practices to purchase glasses frames and lenses from its subsidiaries at supra-competitive prices for lower-quality products, purchase its back-office software regardless of whether they want it or not, and, perhaps most insidiously, prevent independent optometry practice groups from growing because VSP wants to dominate those services just as it does vision insurance.”

In response to an inquiry from the AOA, a VSP spokesperson issued a short statement:

“Total Vision served as a regional retail provider on the VSP network under a three-year contract that stipulated the network relationship would end in 2023. Among other claims, Total Vision is disputing the contract and is pursuing the matter in court. We believe these claims are unfounded.”

The suit seeks damages and an injunction barring VSP from limiting Total Vision’s growth by refusing to deal with it, for instance, by removing it from VSP’s network or “to force tying and other harmful anticompetitive arrangements on Total Vision.”

Lawsuit on the radar of optometry

The AOA is monitoring the case, says its General Counsel Mike Stokes, J.D.

“We are glad that the issues we have been calling attention to with regard to plans are getting attention,” Stokes says. “The vertically integrated vision benefits managers are in a position to abuse their position to force all kinds of policies and practices that restrict choices for both doctors and patients, for the benefit of the VBMs.

“The AOA will be following the case closely,” he adds. “The allegations in the complaint call out many practices that are detrimental to doctors and their patients. This could lead to those practices being challenged elsewhere and, hopefully, ultimately to change.”

The AOA isn’t alone in its interest in the Total Vision versus VSP case. Says Candi Kimura, O.D., president of the California Optometric Association (COA): "I'm concerned about the allegations in the lawsuit, and the COA is watching this case closely."

The AOA Third Party Center (TPC) also is keeping an eye on the lawsuit.

“Our committee is aware of the case and, of course, we are watching what develops,” TPC Chair Steven Eiss, O.D., says. “I can’t really comment on that case specifically, but our committee is very aware and concerned with the vertical integration that has been occurring in the vision care industry.

“When payers are able to use their power for credentialing or access to panels as a tool to limit provider and patient access to care, we definitely feel that is to the detriment of our patients,” Dr. Eiss says. “We will continue to advocate for fair practices and level competition fields for all of our providers. We definitely want to hear from our members when they run into a policy or practice that is in conflict to fair business practices, or denies their patients access to the care they need.”

AOA, affiliates fix attention on vision plans abuses

Curbing vision plans’ abuses has long been a priority of the AOA—and the subject of its criticism.

Plans’ stagnant pay scales and anticompetitive policies have put doctors of optometry in a bind, as optometrists grapple with increased costs and challenges to delivering care. The AOA argues that plans’ requirements to purchase their materials and to use their labs undermine doctor and patient choice. It also has been critical of VSP’s retail outlets competing with doctors on its own provider panels.

An Avalon Health Economics report concluded such mandates result in higher costs, less convenience and worse health outcomes.

The AOA and its affiliates have been advocating with success for an equitable system that fairly values optometric care.

Toward that end, the AOA reintroduced the Dental and Optometric Care (DOC) Access Act. Championed by the AOA and American Dental Association, the bipartisan act complements state-level vision and dental plan laws by disallowing detrimental policies by ERISA and other federally regulated vision, dental and health plans. The DOC Access Act would prohibit plans from limiting patients’ and doctors’ choice of labs, as well as price-fixing noncovered services and materials. Further, a congressional panel is investigating the highly concentrated vision plan market and its effect on U.S. consumers.

The DOC Access Act remains a key priority for the AOA’s vision plan advocacy, as the association also:

• Initiated direct dialogue with plans’ CEOs.
• Supported passage of laws aimed at curbing vision plans in Texas, Nevada, Illinois and Georgia with more affiliates to follow suit.
• Built alliances with physician and patient organizations including the Patients Rising advocacy organizationto help bolster calls for Congress to cease increasingly harmful VBM abuses. Advocates found support late in the 117th Congress among a bipartisan coalition, including the Hispanic Leadership Fund and the Southern Christian Leadership Global Policy Initiative.
• Countered model language proposed by NAVCP introduced at National Council of Insurance Legislators earlier this year.
• Reviews and monitors plan mandates, including creation of the AOA’s Health and Vision Plan Action Report.

In February, AOA President Ronald L. Benner, O.D., said that vision plans have a “stranglehold” on practices by forcing discounts on noncovered services, restricting lab choice, steering patients’ choices, and hostile contracting processes.

“Far from valuing us and the care we provide, [vision plan] policies devalue our profession, our knowledge, our skills, our training, our relationship with our patients and our essential role in safeguarding the health of tens of millions of Americans—and it’s against these giant forces we’re fighting back,” Dr. Benner said.

Allegations of a pressure campaign by VSP

In the lawsuit, Total Vision describes itself as providing the 59 independent practices affiliated with it with centralized nonclinical, back-office and administrative support, allowing doctors to focus on patient care and their practices and Total Vision to “achieve economies of scale.” According to the suit, VSP is the largest vision insurer in the country. That ubiquity not only gives VSP “enormous leverage” over independent practices, but also makes it a “must have” for those in-network practices that want to compete for patients in the marketplace, the suit says.

Total Vision alleges that when it balked at VSP’s practices, their relationship turned tense under the terms of the 2019 agreement, which the suit says required Total Vision to purchase a “substantial number” of glasses frames and lenses made and sold by VSP using the VBM’s practice management software. Without those restrictions, Total Vision might have negotiated better prices on materials or for labs to the benefit of its patients.

“…as became clear later on, VSP’s overall goal was to limit Total Vision’s growth (or destroy it entirely)—just as VSP had done and continues to do with numerous other independent optometry practice networks,” the lawsuit alleges.

“VSP was able to foist these anticompetitive terms on Total Vision because it controls so much of the vision insurance market that companies like Total Vision have no choice but to acquiesce to its demands, lest they risk thousands of their patients losing access to vision insurance,” the lawsuit reads. “In fact, for years, VSP has threatened to do exactly that—remove Total Vision’s ability to bill within VSP’s insurance network—in order to extract increasingly painful and anticompetitive concessions from Total Vision.”

And the repercussions from being dropped from VSP’s insurance network? According to Total Vision, it would create a situation so difficult or even “impossible” for its patients and prevent Total Vision from “acquiring or investing in new optometric practices” in the VSP physician network.

In fact, it happened.

“Chaos ensued,” the suit says.

Total Vision relates in its lawsuit that on a Friday in August 2020, it was informed by phone that VSP was removing Total Vision and its optometric practices from its network. And on the following Monday, VSP is alleged to have reached out directly to Total Vision optometrists and patients informing them that Total Vision was no longer in-network. Meanwhile, Total Vision says it was being pressured to make concessions in a new agreement (capping their growth, Total Vision says) or consider selling to VSP at a “fire-sale price.”

Patients are alleged to have left the practices in droves because their insurance was no longer being accepted through Total Vision. Under pressure, Total Vision eventually succumbed and signed a new—anticompetitive, they say—agreement in 2020. The pressure campaign has not abated, though, according to Total Vision. VSP allegedly offered to buy Total Vision in February 2023, but the offer was “substantially below” its valuation and from other bidders. Total Vision declined the offer and VSP allegedly has threatened again to remove Total Vision from its network in September.

“The antitrust laws do not countenance such flagrantly anticompetitive conduct,” the suit says.

Resources for holding vision plans accountable

Interested in learning more about payer advocacy efforts or aware of discrimination or other harmful actions by policies or insurers? Help the AOA hold insurers accountable by taking the following steps:

• Report plan abuses to the AOA at stopplanabuses@aoa.org.
• Visit the AOA’s Action Centerto learn more about federal legislation that could curb common and egregious plan abuses.
• Consider investing in AOA-PAC, the only federal political action committee dedicated to fighting and winning for optometry.

Have questions? Contact the AOA’s Third Party Center by email.