Primary Care Direct Model: 'Neither Insurance Nor Health Plan'
September 6, 2012
by Mari Edlin
A new model of health care delivery -- direct primary care -- could be déjà vu for some Californians, a retreat to the past when insurance wasn't a part of the health care equation. Direct primary care emphasizes prevention and a reduction in the use of "downstream services" -- treating symptoms rather than the problems themselves.
The new approach involves monthly payments for primary care -- similar to the way insurance covers health care, but without the insurance. Instead of filing claims through an insurer, participants -- individuals and employers -- pay a monthly membership fee directly to their health care providers.
"Direct primary care is simply an atypical payment arrangement between patient and doctor for primary care services rendered," said Michael McClelland, an attorney with McClelland Advocacy in Sacramento. "It is neither health insurance nor a health plan and is not marketed as such."
McClelland, former chief prosecutor for the state Department of Managed Health Care who now is running his own law firm, said some states are skeptical about the direct primary care model because it might place too much risk on physicians. The California Legislature earlier this year rejected a bill to establish a statewide framework for the direct pay model.
McClelland also said in some states, the direct practice model might be equated to concierge medicine, a model in which patients also pay monthly or annual fees for increased access to their providers. Concierge medicine, also known as boutique or retainer-based medicine, comes in a variety of packaging -- with and without insurance, with and without per-visit payments -- just as direct primary care models do. The most significant differences, proponents say, are that direct primary care puts more emphasis on family physicians instead of specialists and generally costs less than most concierge offerings.
"Pure direct primary care skips visit-based billing altogether, which could take a huge bite out of operating costs," according to Rushika Fernandopulle, co-founder and CEO of Iora Health, a Boston-based health care company. "Our sponsors (patients and employers) pay us directly through a per-member, per-month arrangement, and patients don't have to pay anything for primary care services."
Lacking a Clear Definition
As with many innovations and changes in health care, direct primary care is not clearly defined.
Erika Bliss, president and CEO of Seattle-based Qliance and a pioneer of the direct primary care model, said the newer primary care models could come in many flavors:
- Hybrids that offer fee-for-service insurance or a flat monthly fee (not insurance);
- Access model, which charges members an annual or monthly fee for providing enhanced services and bills insurance companies; and
- Qliance's brand of care, the direct practice model, which charges a flat fee for unrestricted access to primary care services and does not bill insurance.
California does not explicitly recognize direct primary care. Only Washington state and Oregon have passed legislation establishing the new model. California state Sen. Tom Harmon (R-Orange County) proposed SB 1320 to define a direct primary care practice and specify how it would be regulated. The Senate health committee rejected the bill earlier this year.
Similar to care innovations such as minute clinics and medical homes, direct primary care has "face logic," said Arnold Milstein, director of the Stanford Clinical Excellence Research Center.
"Whether it will reduce per-capita spending and attract patients pivots on accomplishing two jobs economically and skillfully -- winning patients' confidence that the care team is concerned about them personally and will be swiftly accessible and limiting costly and dangerous health crises and patients' use of specialty care of unlikely value," Milstein said.
Direct Primary Care Enters Northern California Marketplace
Samir Qamar launched a Northern California-based direct care business, MedLion Direct Primary Care, in 2009. MedLion has clinics in Fresno, Monterey, Mountain View, Salinas, San Francisco and Watsonville, with plans to open more in Washington state and Las Vegas. Qamar founded a private physician service in Monterey, formerly known as Q Concierge Physicians, now called Dr. Q -- Personal Physician.
MedLion charges three levels of membership fees to provide primary care services to individuals and employer groups: $59/month for non-seniors, $39/month for seniors 65 and older who may have limited incomes and $19/month for children and dependents under 21. Every office visit is $10 no matter how complex.
Although MedLion provides only outpatient services, Qamar said his company tries to find discounts when referring to specialists, labs, imaging and for generic drugs. Qamar said MedLion physicians have an average of 1,500 patients. The average in California is about 2,000 patients for each primary care physician, according to the California Academy of Family Physicians.
"We remove the tremendous overhead associated with insurance billing, claims and collections -- an estimated 35% for a private practice -- eliminate the need for numerous exam rooms and utilize electronic records to maximize efficiency," Qamar said.
Another cost saver, he said, is putting doctors on salary to prevent unnecessary use of services. Qamar said his company has reduced costs by 40% compared with practices funded by traditional insurance.
Some direct primary practices admit that their offering might attract healthier patients, skewing the equation toward adverse selection. Qamar said MedLion does not screen its patients before they join the practice.
Getting on the Exchange
Although Section 1301 (a)(3) of the Accountable Care Act enables a qualified health plan to provide coverage with a direct primary care medical home plan, there is a caveat. A pure direct primary care model is not insurance, thus omitting it from the California Health Benefit Exchange unless it can be bundled with a lower cost, wrap-around insurance plan.
In a letter to the California Health Benefit Exchange, the Healthcare Exchange Advocacy & Responsibility Team, a statewide alliance of California health care stakeholders, indicated its support of several models of primary care delivery -- including the patient-centered medical home and the direct primary care medical home -- as team-approach options that meet standards of affordable, high-quality care.
Both kinds of medical homes, when configured with a wrap-around insurance plan, would fit into ACA's description of an appropriate offering on the exchange.
Consumer Uptake May Be Slow Going
Patrick Johnston, president and CEO of the California Association of Health Plans, a statewide organization representing 40 full-service health plans, said he prefers integrating all health care services under one umbrella.
"Insurance is necessary for paying the high cost of health care services, and decoupling it from primary care probably will not be too attractive to many in California," Johnston said.
Anthony Wright, executive director of Health Access, a statewide consumer advocacy coalition, agrees with Johnston. "The model is the opposite of the direction in which health care is going -- the team-based approach -- and places primary care into a separate silo," he said. "If primary care is not integrated into the entire spectrum of care, consumers may find themselves falling through the cracks."
Wright is concerned that a direct primary care model may prey upon consumers' lack of understanding of their future health care needs and pitch itself as a replacement for insurance.
Looking through the lens of his California employer group clients, James Bush, principal with Deloitte Consulting in San Francisco, said employers tend to be cost-sensitive and value-conscious and would likely direct employees to use flexible spending account funds or high-deductible plans to fund extras like direct primary care.
He also suggested that if the model is to be successful, there needs to be a regional or national network of providers with a standardized, direct primary care product offering.
However, Mark Blum, a member of the steering committee of the Healthcare Exchange Advocacy & Responsibility Team, believes that the advanced direct primary care medical home is a highly scalable model conducive to developing clusters of primary care networks near where patients live and work. He anticipates that the direct primary care medical home will provide more choice for patients and reduce health care costs.
The National Scene
Neither direct care nor concierge medicine has gained much of a foothold so far nationally. According to the American Academy of Family Physicians' 2010 Practice Profile survey, only 3% of respondents were practicing in a cash-only, direct care, concierge, boutique or medical practice in 2010.
One action on the national front is the Direct M.D. Care Act (HR 3315), introduced in 2011 by Reps. Bill Cassidy (R-La.) and Jay Inslee (D-Wash.). It was assigned to a congressional committee for consideration last fall. The bill, which has not yet moved to the full Senate or House, would establish a direct payment demonstration project for dual eligibles -- those qualifying for both Medicaid and Medicare -- as well as other Medicare beneficiaries.
According to a spokesperson for the Direct Primary Care Coalition, the model proposed under HR 3315 is a potential pathway for a transition from traditional fee-for-service Medicare, which pays for volume, to ones like direct primary care that reward physicians for improved health outcomes and other quality measurements.
Groups Join Alliance to Monitor Development of Health Benefit Exchange
August 29, 2012
by Kathy Robertson
The California Medical Association and the Food & Drug Council have joined a statewide alliance of business and labor leaders, health plans, providers and patient advocates monitoring developments in the California Health Benefit Exchange.
The goal is to ensure the new health insurance program for individuals and small employers will lower costs, improve quality and expand access to health care for all Californians.
The Healthcare Exchange Advocacy and Responsibility Team — known as HEART — supports a state exchange that harnesses competition between insurance plans to cut costs, enables informed consumer decisions and choice between plans that offer coordinated, team-based care.
Member organizations run the gamut from United Food and Commercial Workers Local 8, a union local in Sacramento that represents workers in major grocery chains, to Safeway Inc., the Sacramento Central Labor Council, Dignity Health, Kaiser Permanente, Blue Shield of California and the California Association of Physician Groups.
HEART was founded by Mark Blum, executive director of America’s Agenda, a Washington, D.C.-based group of national labor unions, businesses, health care providers and governmental leaders who share commitment to health care for all Americans.
“We are united by real concerns about the rising cost of health care,” Blum said. “If the (California) exchange succeeds in providing better care and lowering costs, it will transform the industry.”
Members put up funds or offer services in kind, Blum said.
CMA was urged to joined HEART by family physicians in the trade group who support the concept of medical homes as a model to maximize use of a variety of health care professionals and way to “bend the cost curve,” said Lisa Folberg, CMA vice president for medical and regulatory policy.
Two Groups Join Effort to Monitor California Health Benefit Exchange
August 30, 2012
by Staff Writer
The California Medical Association and the Food & Drug Council have joined a statewide alliance that seeks to monitor developments in the California Health Benefit Exchange, the Sacramento Business Journal reports (Robertson, Sacramento Business Journal, 8/29).
The federal health reform law requires states to launch online insurance marketplaces by 2014.
The California Health Benefit Exchange primarily will serve individuals and small businesses.
Supporters hope that the exchange will function similar to websites like Amazon.com and Expedia.com so that users will be able to choose between various health plans through an easily navigable online store.
An estimated 4.4 million Californians are expected to use the exchange by the end of 2016.
Officials plan to open registration for the exchange in October 2013 (California Healthline, 8/27).
The alliance -- called the Healthcare Exchange Advocacy and Responsibility Team -- seeks to ensure that the exchange will lower costs, improve quality and expand health care access for residents.
HEART supports health plans that offer coordinated, team-based care.
The alliance has provided testimony as officials prepare to make decisions regarding health plan participation and network design issues.
Members of the alliance include:
- Businesses and unions;
- Health care providers, such as Dignity Health;
- Health insurers, such as Kaiser Permanente and Blue Shield of California; and
- Patient advocates.
Lisa Folberg, CMA vice president for medical and regulatory policy, said that family physicians belonging to CMA who support the concept of medical homes as a way to maximize the use of various health care workers and "bend the cost curve" encouraged the group to join HEART (Sacramento Business Journal, 8/29).
May 21, 2012
by Bruce Japen
On the road 50 hours a week, the drivers who work for Becker Trucking, headquartered in Seattle, have little trouble finding cheap eats at the all-night diners lining the interstates of the Pacific Northwest.
But many drivers were struggling with chronic poor health, and the company’s health costs were rising fast. What his employees really needed, the company president realized, was better access to doctors.
So he turned to a novel solution. Becker pays $54 per employee per month to a primary care provider called Qliance. Employees get unlimited doctor visits, 24-hour e-mail access to the medical staff, and same-day or next-day appointments. There is no insurance involved in their primary care: no expensive premiums, no complicated claims, no mysterious denials.
“Drivers are notorious for not being the best in using health care,” said Frank Riordan, president of Becker Trucking. “But now they can go into the clinic as many times as they want, and participation is high.” Two drivers no longer need blood pressure medication, Mr. Riordan added.
This type of health care model is called direct primary care, and it is getting a closer look not just from businessmen like Mr. Riordan, but also from researchers and government officials who see it as an effective way to lower costs.
“It is a very promising and good model,” said Dr. Arnold Milstein, a professor of medicine at Stanford University and head of the Stanford Clinical Excellence Research Center. “It is speedy and economical, and these practices are making themselves available to working people.”
Direct primary care derives from an unlikely source: the so-called concierge practices that began appearing a decade ago, catering primarily to the affluent. Concierge practices generally do not accept insurance, either; instead, members are charged thousands of dollars annually for unlimited access to their doctors.
The setup often is lucrative for doctors but “less accessible to patients who cannot or choose not to pay a membership fee,” according to a federal report issued in 2005.
“The concierge model carries a lot of baggage in being health care for the wealthy,” said Dr. Erika Bliss, a family physician and Qliance’s chief executive. “We want to grow this and bring the price point down to average Americans.”
Call it concierge medicine for the masses. The idea is that routine, mundane primary care should not require expensive insurance and can be cheaper without it. Direct primary care practices charge $50 to $60 a month for adults, with lower fees for children. Depending on the practice, the monthly fee also may cover certain lab tests, basic X-rays and stitches for cuts.
But the fee does not cover anything beyond primary care. Typically employers combine direct primary care with high-deductible insurance plans, needed to cover hospitalizations and visits to specialists.
“Health insurance is supposed to protect you against risk, like car insurance does,” said Dr. Bliss. “We don’t insure our cars for tire changes and tune-ups.”
Even though Becker pays Qliance for primary care and pays half of each worker’s $5,000 annual deductible for insurance, the company’s costs dropped 11 percent in 2010. Costs had been rising about 14 percent annually, Mr. Riordan said.
Doctors who work for Qliance are salaried, Dr. Bliss said, reducing the financial incentive to order unnecessary tests. Direct primary care practices keep costs low by sidestepping the bureaucracy associated with insurance and reducing unnecessary and expensive trips to the hospital or emergency room, she said.
Direct primary practices are also less likely to refer to a specialist for something they can handle themselves, Dr. Milstein said.
Such practices already operate in 24 states, treating more than 100,000 patients, according to the Direct Primary Care Coalition. Physicians at Qliance, one of the larger practices, will care for more than 10,000 patients this year, double last year’s number. Another provider, MedLion, headquartered in Monterey, Calif., plans to open clinics in Miami, New Mexico and Oregon, according to the company’s chief executive, Dr. Samir Qamar.
Clients tend to be individuals without insurance, small businesses and unions.
Jan Mayrhofer, a 61-year-old bookkeeper at Safeway, is enrolled in Qliance through her union, United Food and Commercial Workers Local 21 in Renton, Wash. Direct primary care has been a dramatic change from traditional care. “I have never waited longer than five minutes in the waiting room,” she said. “And I don’t feel like I am being rushed.”
She may soon have more company in the waiting room. If the Supreme Court upholds the Affordable Care Act, direct primary care practices will be permitted to offer plans on state insurance exchanges by which millions of uninsured Americans can shop for coverage once subsidies are available in 2014.
At the moment, however, laws in many states make it difficult for physicians to contract directly with patients; such an arrangement is sometimes viewed as a form of insurance, subject to regulation because states view it less as a doctor practice than as a prepaid health plan.
But direct primary care may well have its biggest impact in Medicare. Officials are desperately seeking ways to rein in the rising costs for the more than 48 million beneficiaries in the program.
A bill introduced late last year in the House would create pilot programs in which direct primary care is offered to Medicare beneficiaries. Monthly fees could not exceed $100 for Medicare beneficiaries. The practices in the pilot would have to provide services that include primary care, wellness counseling and preventive services with the ability for patients to make appointments seven days a week and have 24-hour access by phone for urgent care consultations.
Without a change in federal law, doctors who contract directly with patients cannot treat Medicare patients. Direct primary care doctors tend to be those who have opted out of Medicare and can charge whatever they want, but they cannot bill Medicare for reimbursement, nor may their patients.
“Our doctors do have to drop out of the Medicare system, because there are laws that don’t allow physicians to charge rates lower than Medicare rates,” Dr. Qamar said. “We think we can save money for the Medicare program and improve quality by preventing downstream admissions.”