Is Direct Primary Care the Future?
By Robert Baror, Federal Bar Assoc.
Direct primary care, also known as concierge or retainer medicine, is a model of healthcare delivery which bypasses traditional third-party insurers for primary care. Instead of traditional insurance, patients establish contractual relationships with their primary care physicians and often pay monthly or annual retainers, which can range from the hundreds of dollars to the thousands of dollars, in order to become patients of particular practices. Some retainers merely grant patients access to a practice, and they then must pay medical fees directly out of pocket, while other retainers help to cover or defray the costs of basic primary care services. Direct primary care practices ordinarily limit the number of patients they will see, so that each patient is guaranteed both ease in securing appointments and ample time with their physician. At high-end concierge boutiques, physicians often provide their patients with their cell phone numbers and email addresses, making them regularly available for patient inquiries, and they may even make house calls. However, these luxury practices can charge thousands of dollars a year in retainer fees, in addition to standard fees for services, often paid directly by patients. Therefore, they are decidedly not for the average consumer. However, the days when direct primary care, in the form of concierge medicine, was only for the rich, are passing. According to a Wall Street Journal Article citing to Concierge Medicine Today, a trade publication, by 2013 there were an estimated 4-5,000 [Membership Medicine] primary care practices nationwide. Of these, there is great growth in those targeting mid-market customers. This is evidenced by the fact that by 2013, about two thirds of these practices charged less than $135 per month on average, up from 49% in 2010. For instance, when Becker Trucking went looking for a direct primary care provider for its drivers, it found Qliance. Qliance, a direct primary care provider operating in the Pacific Northwest, offers unlimited doctor visits, 24-hour email access to medical staff, and same-day or next-day appointments to Becker employees for $54 per month.
These direct primary care practices, rather than being an expensive model that will push up the cost of healthcare, can actually be vehicles to contain costs. According to the Direct Primary Care Coalition, forty cents of every dollar spent in a practice goes to payer-related costs. Eliminating these costs, by cutting out the middleman insurer, could make the healthcare system more efficient and more affordable.
Not only are there systemic benefits and the opportunity for better care for patients with direct primary care, but there is also the chance to make medicine a rewarding and enticing profession again. When physicians transition from a traditional fee-for-service insurance-driven medical practice to a direct primary care model, they reduce their patient panel size by half or more on average. This allows physicians to simultaneously spend more time with their patients, providing enhanced care, while also reducing the hours they must work and increasing their quality of life. Improving primary care physicians’ satisfaction with the practice of medicine is of vital importance to America’s health because, without doing so, we may face a severe shortage of primary care physicians. According to a study by the Urban Institute in 2012, roughly thirty percent of all primary care physicians ages 35 to 49 expect to cease practicing within the next five years.
Interestingly, the Affordable Care Act, requiring individuals to purchase health insurance, could actually drive the growth of direct primary care, which bypasses insurance. The Affordable Care Act allows direct primary care providers to participate in the insurance exchanges with the requirement that providers must be coupled with an insurance policy covering non-primary care services. In the wake of the Affordable Care Act, when many patients are facing the perils of high-deductible policies or else the threat of an IRS penalty, the opportunity to receive personalized treatment for less than $150 per month, in addition to a wrap-around policy, may become very appealing. As of yet, however, direct primary care has not taken off through the health insurance exchanges. This may change if entrepreneurial physicians find ways to partner with insurance companies to bring patients both high-quality and low-cost out-of-pocket direct primary care, with the assurance of cost certainty in the event of the need for specialized care.
While direct primary care seems to offer significant benefits to both consumers and providers, physicians and practices must be wary of violating statutes meant to regulate the provision of insurance. To some, up-front payments in exchange for the provision of an unknown range of services based upon uncontrollable contingencies—i.e., paying your monthly retainer in exchange for whatever primary care you need, which you will not be able to perfectly predict—appears to be the sale and provision of insurance. If direct primary care providers were deemed to be health insurers, they would be subject to a whole new spate of regulations and paperwork, and they will find that they have not achieved the benefits of getting away from insurance in the first place.
The Maryland Insurance Administration has been at the forefront of state efforts to define when direct primary care crosses the line into insurance, issuing a January 2009 “Report on ‘Retainer’ or ‘Boutique’ or ‘Concierge’ Medical Practices and the Business of Insurance.” Maryland’s Insurance Administration waived the caution flag to direct primary care practices within its borders when it listed the factors which may constitute the unauthorized business of insurance in Maryland. These factors are: Annual retainer fees cover unlimited office visits or a limited number of services that the physician cannot reasonably provide to each patient in his or her panel; No limitations on the number of patients accepted into the practice; Annual retainer fees do not represent the fair market value of the promised services; The physician has substantial financial risk for the cost of services rendered by other providers; or The retainer agreement is non-terminable during the contract year and/or does not provide for pro-rated refunds. While this certainly does not sound the death knell for direct primary care in Maryland, since direct primary care practices tend to limit the size of their patient panels anyway and properly priced services will be at fair market value, it does raise concerns. And these concerns should not be limited to providers in Maryland, as every state has insurance regulators who are on the lookout for any breach of their state’s insurance laws.
While Maryland stands at one extreme, other states, such as Arizona, have gone in the opposite direction and have enacted statutes which explicitly state that direct primary care is not the provision of insurance, rather than leave direct primary care providers in limbo regarding their status as insurers. This does not mean, however, that direct primary care will be unregulated in these states. For example, when Arizona enacted its exemption for direct primary care from insurance rules and regulations, it also passed statutory requirements that were specific to direct primary care providers, getting down to the minutia of the exact wording of the disclaimer on application and guideline materials which explains that direct primary care is not insurance.
The above outlines only some of the legal challenges facing direct primary care providers. Obviously, there are problems with accepting Medicare patients while running a direct primary care practice. This is because Medicare views the retainer fees as forcing Medicare beneficiaries to pay added payments for services already covered by Medicare, which is prohibited and could result in civil monetary penalties. Moreover, there are ethical issues relating to continuity of care which physicians must be aware of and address. However, these are beyond the scope of this article.
Ultimately, the conversion to direct primary care may make sense for many of our physician and group practice clients, as it will free them from the shackles of insurance companies and give them the freedom to practice patient-focused medicine again. However, direct primary care is not for those who do not have a tolerance for entrepreneurial risk, as there is no guarantee that the market for direct primary care will continue growing, and the acceptance of traditional health insurance is still the easiest way to ensure that patients walk through the door. As counselors, we need to be aware of the opportunities and pitfalls of direct primary care medicine so that we can provide our clients with the best advice when these issues arise. While direct primary care will not be the perfect fit for every physician or practice, it does offer the dynamic opportunity to remake the healthcare system in a way that benefits physicians and patients, while containing costs and increasing quality of care.