State law requires direct practices to submit annual statements to the OIC by October 1 of each year. The Legislature did not give the OIC rulemaking authority over direct practices. However, the OIC does have the authority to tell direct practice clinics how to submit the statements, what format to follow in submitting statements, and what data to include. Under state law, direct practices cannot bill insurers for primary care services. As a result, if direct practice enrollees have private insurance, it makes sense for them to buy a high-deductible health plan, also called catastrophic plans.
Direct practices in Washington state: Annual report to the Legislature | December 1, 2017
DECEMBER 4, 2017 – 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.”
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.”
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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.
The 2017 annual report on direct patient-provider primary care practices analyzes two fiscal years of annual statements:
• Fiscal year 2016: July 1, 2015 through June 30, 2016.
• Fiscal year 2017: July 1, 2016 through June 30, 2017.
Participation trends in fiscal year 2017
• There were approximately 14,790 direct practice patients out of 6.7 million Washington state residents1, 0.22 percent of the population.
• Overall patient participation increased 31%., from the fiscal year 2016 total of 11, 272 participants to 14,790 (an increase of 3,518 participants)
• The number of practices registered with the Office of the Insurance Commissioner increased from 30 in 2016 to 40 in 2017, although one–Affordable Access in Snoqualmie–did not respond to the annual survey.
• With the direct practice clinics that filled out the OIC survey in 2016 and 2017, fees changed in the following ways:
o Five direct practices did not change their fees.
o Six direct practices decreased fees.
o Eleven direct practices increased fees.
The Exchange bill
In 2013, 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.”
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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, 2015.
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 practices
These provisions raise questions about the direct practice model of care in the following areas:
How do 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.
How does the ACA affect consumers who have existing direct practice agreements?
The individual mandate responsibility provision of the ACA requires consumers to purchase health insurance no later than March 31, 2015. 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 2014 and began selling policies that were effective as early as January 1, 2015. 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 2016 than in 2014.
Consumers who purchase health plans through the Exchange receive numerous 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 (“EHBs”), 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 EHBs, 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 copayments 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.