DECEMBER 2015 | By Wash. State OIC Annual Report to the Legislature ~Wash. OIC
In 2007, the Washington State Legislature enacted Engrossed Second Substitute Senate Bill 5958, which is codified as RCW 48.150. This bill created an innovative primary health care delivery option called “direct practices.”
While all of the registered practices responded to the mandatory questions, fewer than half of the direct practices chose to report voluntary information. Some said they do not collect this information, and others simply did not respond to the supplementary questions.
The bill requires the Office of the Insurance Commissioner (OIC) to report annually to the Legislature on direct health care practices. Under RCW 48.150.100(3), this includes but is not limited to “participation trends, complaints received, voluntary data reported by the direct practices and any necessary modifications to this chapter.”
In a direct health care practice, a health care provider charges a patient a set monthly fee for all primary care services provided in the office, regardless of the number of visits. No insurance plan is involved, although patients may have separate insurance coverage for more costly medical services. Direct practices are sometimes called “retainer” or “concierge” practices.
HIGHLIGHTS INCLUDE: Two clinics experienced a particularly dramatic increase, Paladina Health grew from 183 patients in 2014 to 2410 patients in 2015, and Quick Clinic grew from 62 patients in 2014 to 800 in 2015; Eighteen clinics reported a total decrease of 667 direct practice patients; Twenty-two of the direct practices currently participate as in-network providers in a health carrier’s network. This is a significant change since 2007, when all direct practices said they performed direct-patient provider primary care exclusively; and more …
2015 Direct Practice Information
Direct practices originally began filing annual statements with the OIC in October 2007. For the current year’s report, the OIC sent the survey to direct practices on July 16, 2015. The survey collects the mandatory information that state law requires, and asks several voluntary questions.
This report compares data from two fiscal years of annual statements:
- July 1, 2013 – June 30, 2014.
- July 1, 2014 – June 30, 2015.
The following chart summarizes data the OIC collected in fiscal year 2015. The direct practices that have reported annual information to the OIC since 2007 are in bold.
Information for prior years is available in previous years’ reports, which are posted at http://insurance.wa.gov/about-oic/commissioner-reports.
The 2015 annual report on direct practices analyzes two fiscal years of annual statements:
- July 1, 2013 through June 30, 2014.
- July 1, 2014 through June 30, 2015.
- In fiscal year 2015, there were approximately 11,504 direct practice patients of6.7 million Washington state residents, as reported by the U.S. Census Bureau.
- Overall patient participation increased from 8,658 participants in 2014 to 11,504in 2015; this is a 32 percent increase, a total of 2,846 patients.
- The number of practices increased from 29 to 33. Four new practices opened in:
- Seattle (two).
- East Wenatchee.
- Fees changed in the following ways:
- 13 of the direct practices remained the same as in 2014.
- Seven direct practices decreased fees.
- Nine direct practices increased fees.
For fiscal year 2015, only one direct practice, Qliance, reported that it participates as a network provider with a health insurance issuer inside the Washington Health Benefit Exchange (Exchange).
Complaints received: The OIC did not receive formal or informal complaints regarding direct patient practices in the past year.
Voluntary data reported by direct practices: While all of the registered practices responded to the mandatory questions, fewer than half of the direct practices chose to report voluntary information. Some said they do not collect this information, and others simply did not respond to the supplementary questions.
Necessary modification to chapter: The OIC does not recommend modifications to chapter RCW 48.150 at this time.
Impact on the uninsured
The OIC survey asks direct practice clinics if they collect information about patients’ other health plans when patients enroll in direct practices. For 2015, 16 of the 33 direct practices said they collect this information. According to these clinics, the number of direct practice patients who are uninsured are:
- Fiscal year 2015: 962 patients, or 8 percent
- Fiscal year 2014: 1,315 patients, or 15 percent
Under state law, direct practices cannot bill carriers for primary care services. As a result, if enrollees have private insurance, it makes sense for patients to have a high-deductible plan in addition to using a direct practice for primary care. For this reason, direct practices often encourage their patients to enrollee in high-deductible insurance plans, also called catastrophic plans.
- Fiscal year 2015: 15 direct practices reported 3,385 enrollees who had private(non-Medicare, non-Medicaid) insurance
- Fiscal year 2014: 16 direct practices reported 3,657 enrollees who had private insurance
For fiscal year 2015, 29 percent of direct practice enrollees had private insurance.
On March 23, 2010, President Obama signed The Patient Protection and Affordable Care Act (PPACA), commonly referred to as the Affordable Care Act (ACA). It required the development of health benefit exchanges, beginning in 2014, to help individuals and small businesses purchase health insurance and qualify for subsidies that are available only for plans that are sold through an exchange.
Under the ACA, an exchange cannot offer any health plan that is not a qualified health plan, and each qualified health plan must meet requirement standards and provide an essential benefit package as described in the ACA. Essential health benefits include:
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including dental and vision care
Since September 23, 2010, the ACA has required new health plans to eliminate cost-sharing requirements for evidence-based items or services that have an A or B rating from the United States Preventive Services Task Force.
The Exchange bill
In 2012, the Washington Legislature passed E2SHB 2319, “An act relating to furthering state implementation of the health benefit exchange and related provisions of the affordable care act.” This is called “The Exchange bill.”
- Section 8(3) of the bill, now codified as RCW 43.71.065(3), allows the Exchange Board to permit direct primary care medical home plans, consistent with section 1301 of the ACA, to be offered in the Exchange beginning on January 1, 2014.
- Section 1301(a)(3) TREATMENT OF QUALIFIED DIRECT PRIMARY CARE MEDICAL HOME PLANS.
The Secretary of Health and Human Services shall permit a qualified health plan to provide coverage through a qualified direct primary care medical home plan that meets criteria established by the Secretary, so long as the qualified health plan meets all requirements that are otherwise applicable and the services covered by the medical home plan are coordinated with the entity offering the qualified health plan.
The future of direct practice
These provisions raise questions about the direct practice model of care in the following areas:
- How will direct practices operate under the ACA?
Direct practices are not insurers and are authorized to offer only primary care services to their direct practice patients and not comprehensive health care. Under the ACA, they are not qualified health plans eligible for sale through the Exchange.
The ACA does specify that a “qualified health plan” may provide coverage “through a qualified direct primary care medical home plan.” As a result, a direct practice may contract with a carrier to provide primary care services in a carrier’s qualified health plans.
For fiscal year 2015, only one direct practice, Q’liance, reported that it participates as a network provider for a health insurance plan (Coordinated Care) sold on the Exchange. This is a significant change for this direct practice, which has been in operation since 2007 and is one of the original direct practices as well as one of the largest.
2. How does the ACA affect consumers who have existing direct practice agreements?
The individual mandate responsibility provision of the ACA required consumers to purchase health insurance no later than March 31, 2014. Direct practice agreements only provide primary care services. As such, they do not qualify as health insurance, so they do not meet the individual mandate requirement.
The Washington Health Benefit Exchange (Exchange) opened in late 2013 and began selling policies that were effective as early as January 1, 2014. Enrollment both inside and outside of the Exchange for the individual market showed a dramatic increase, with approximately 51,000 more health insurance enrollees in 2015 than in 2013.
Consumers who purchase health plans through the Exchange receive the following benefits:
- If they meet income requirements, they’re eligible for subsidies or premium tax credits, which are not available outside of the Exchange. It’s possible that consumers who receive these financial incentives might cancel their direct practice agreements.
- Exchange health plans must include coverage for the Essential Health Benefits (“EHRs”), including but not limited to preventive services and chronic disease management. If a consumer enters into a direct practice agreement instead of going on a health plan that provides EHRs, the consumer could pay twice as much but only receive from the direct practice provider some primary care, preventive services and chronic disease management services that are also covered by their insurance plan.
- Limitations on maximum out-of-pocket expenses. A maximum out-of-pocket expense is the total amount of the plan’s annual deductible and other annual out-of-pocket expenses other than premiums that the insured is required to pay, such as co-payments and coinsurance for a high-deductible health plan (HDHP). Consumers’ costs associated with a direct practice outside of the Exchange may not count as cost-sharing expenses for the HDHP. For example, a direct practice provider is not a network provider and cannot bill health carriers regulated under chapter 48 RCW for health care services. The consumer would not benefit from direct practice monthly fees counting toward annual maximum out-of-pocket expense limits.
3. Nothing in federal health care reform bars direct practice arrangements from operating outside the Exchange.
There appears to still be a market for exclusive direct practices that cater to wealthier consumers and offer more of a concierge model, as well as for consumers who can’t buy health care coverage on the Exchange, such as undocumented immigrants. In addition, some consumers simply join direct practices because they like the personal service, so these consumers will likely continue to use direct practices. It is worth noting that the greatest direct practice enrollment decline since 2013 has been in plans that cost $76-$100 per month while the greatest enrollment increase has been in plans that cost less than $50 per month (see Table 2 on page 13).
Recommendations for legislative modifications
Washington is at the forefront of national regulation of direct primary care practices. Although direct primary care practices have not gained significant market share, they have expanded into 12 counties in the state.
The OIC does not have any recommendation for the Legislature to consider other than continuing to monitor direct practices using annual statements and consumer complaints.