What are examples of first-party transactions in healthcare?
Guest post written by Sen. Patrick Colbeck Sen. Patrick Colbeck represents Michigan’s 7th Senate District.
One of the best examples of a first-party transaction in healthcare is direct primary care services (DPCS). Direct primary care services feature agreements between a patient and primary care doctor whereby a patient agrees to pay a monthly or annual fee in exchange for a specified set of services. The keyword in direct primary care services is “direct.” Thanks to a loophole in Section 10104 of Obamacare, enrollees in DPCS agreements avoid interference from the 159 new organizations inserted between a doctor and patient that resulted from the passage of Obamacare. A study by Qliance demonstrated that overall healthcare costs could be reduced by as much as 20% by using direct primary care services.
If you can afford to pay directly for relatively high-cost services like surgeries, the good news is that there are also first-party care options for expensive services like surgeries. Free market healthcare innovators like the Surgery Center of Oklahoma can save you up to 90% on the total cost of traditional hospital procedures. Visit surgerycenterok.com where you can get out-the-door pricing simply by clicking on the part of the body that ails you.
If you are like most people and can’t afford to pay directly for expensive services outside of the scope of primary care, you likely depend upon some form of insurance for these services. One of the best options available to control the costs of so-called “catastrophic care” is to “self-insure.” In effect, employers assume the role of insurance provider rather than insurance customer or broker. Since the employer, not a third-party insurer, manages the claims of the employees benefiting from the service, this transaction more closely resembles a second-party transaction than a third-party transaction. Employers are incentivized to reduce claims (i.e. cost) without sacrificing the quality of care.
Self-insurance plans save money not by rationing care, but rather by eliminating coverage costs specific to purchasing services from a third party. Self-insured plans are not burdened by the tax obligations, administrative costs or profits buried in the premiums paid to traditional insurance plan providers. Most self-insurance plans simply feature the cost of claims for healthcare services, a relatively inexpensive in-house third-party administrator (TPA) to receive and pay the claims, and a stop loss or re-insurance plan to limit exposure should claims exceed annual forecasts. Such plans protect employers from increased costs when claims exceed forecast, while healthier-than-expected employees result in savings that could be put to other uses like employee bonuses which encourage additional savings from healthier behaviors. Self-funding can save employers 12% or more on top of any savings that might be realized from the adoption of direct primary care services.