By Josh Duplechai, Latest Advocacy News, Louisiana Medical Society
Thursday, 28 August 2014 – Fed up with shrinking insurance reimbursements and the mounting financial and regulatory pressure to do more for patients with less money, primary care practices are looking for ways to stay viable.
Rather than join the trend of independent doctors securing their financial future through mergers with large health systems, many are adopting a new business model that eliminates the need for third-party
After legislation was passed this year making it more affordable for Louisiana practices to make the direct-pay transition, industry experts expect the trend to spread rapidly.
Greg Waddell, vice president of legal affairs for the Louisiana State Medical Society, a major advocate for the model, said the direct pay model takes the pressure off physicians to pack their offices to turn a profit. It is also a bit of a throwback to a bygone era of medicine, he said, when patients would pay their doctor directly instead of waiting for contracted insurers to reimburse them for services.
With insurance companies taken out of the picture, physicians aren’t required to staff billing and coding departments, which means the administrative savings can be passed on to patients.
Many direct primary clinics charge a monthly retainer fee which gives patients unlimited access to their doctor for one flat price, typically ranging from $40 to $100 per month, he said. Typically, the monthly fees give patients enhanced services, such as extended visits with their physician and highly personalized care administration.
Waddell said the standard model based on insurance reimbursement makes it much more difficult for family practices to be profitable because the margin is based on the volume of patients treated. Direct primary care, on the other hand, provides financial stability to a practice’s revenue cycle, he added.
“At first, it seems that’s a little counter-intuitive, but these guys using direct primary care know ‘I have this many patients and know exactly how much revenue they’ll bring in every month,’” Waddell said, “versus the other way around, which is ‘I know that mathematically a minimum number of patients must be seen every month in order for the reimbursement to satisfy overhead costs.’”
Dr. Steve Springer, a Lake Charles primary care physician with Imperial Health, is currently in the process of transitioning his practice to a direct model. He is also the national secretary of the Direct Primary Care Interest Group, a subcommittee of the American Academy of Family Physicians.
“One of the difficult parts of [direct primary care] is there’s an education that has to occur, for both patients and really for all of us,” Springer said. “I’m in a sort of an enrollment period now where I’m talking with patients about this and signing them up. …There are a lot of us now looking at the model, and asking how do you do this … without disrupting your traditional Medicare and private insurance patient. A lot are looking for those answers.”
After Louisiana passed legislation this summer to make it easier and more affordable for a primary care practice to convert to the direct model, Waddell and the Louisiana State Medical Society is expecting the alternative to gain momentum among its primary care and independently owned practices around the state.
Before the passage of Senate Bill 516, any primary care practice that wanted to bill patients directly had to obtain a license from Louisiana Department of Insurance, a costly step that stymied the model’s adoption.
“Under the existing insurance code, the definition of an HMO is an entity that receives prepayment for medical services, which lumps direct pay practices in,” Waddell said.
Louisiana, Washington, California and Utah are the first four states to pass direct pay legislation. The concept has already caught the interest of primary care doctors around the country.
According to a new study from the industry publication Physician’s Practice, 53 percent of physicians surveyed said they would consider or are already working in a direct-pay practice. The study also notes that aside from reimbursements, increasing time spent with patients — a major area the direct pay model is purported to improve — was chief among the concerns of surveyed physicians.
The potential change among Louisiana’s primary care industry also creates opportunity for health care IT startups such as New Orleans-based Get Healthy Inc.
CEO Blaine Lindsey said he found that many direct-pay practices are lacking a digital tool to help them capture data and monitor their patient population’s health, such as Get Healthy’s employee wellness platform. Springer, with Imperial Health, is a co-founder of Get Healthy and is using the software in his practice’s direct primary care transition.
“DPC doctors have not had a wellness platform to [track patient health],” said Lindsey. “The phone is ringing more and more… we have two large companies in Louisiana ready to launch with the software. With the law’s passage, we’re getting ready to work closer to home in New Orleans.”