Is DPC a viable way to MACRA-proof your practice?

December 10, 2016

A brief look at one alternative practice model to traditional, insurance-based primary care.

Is the current economic model for the delivery of primary care services sustainable?

In short: No. Today, an increasing number of primary care physicians (family practitioners, internists and pediatricians especially) who were previously thriving in private practice are considering a hospital-based practice or leaving primary care altogether.

Continuous increases in overhead, decreasing reimbursement, never-ending paperwork and ever-growing intermediation on behalf of both health insurance companies and the federal government are all contributing factors to the sense of disillusionment and the financial distress felt by many of these physicians.

 

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It is becoming readily apparent that the current model of providing healthcare, especially in the primary care setting, is not working.

If the political will existed for the single payer option, would that be a viable solution? In all likelihood, the answer to this question would also be no. There is no guarantee that costs would be contained and that a crippling tax burden would not be imposed on already overtaxed citizens that would be necessary to support a substandard healthcare delivery model.

With the most recent changes in physician reimbursement, known as MACRA (Medicare Access and CHIP Reauthorization Act of 2015), physicians are deeply concerned about the additional strain on their practice, from both a financial and clinical standpoint.

As an example of the impact on the clinical side, a 2016 American Medical Association study finds that a primary care physician currently spends two hours of administrative time for each one hour of patient time. This will no doubt increase as a result of efforts to understand and comply with the new guidelines associated with MACRA.

While estimates of MACRA’s negative financial impact on physician practices range from 10% to 87%, the actual result remains to be seen. One certainty is that the additional cost of compliance with MACRA must be considered.

 

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Access to care in the future is also of concern due to the increased pressure of intermediation.

In fact, a recent study by physician employment firm Merritt Hawkins shows that job pressures like these have 48% of physicians planning to retire, cut back on patients or hours or seek non-clinical, administrative roles.

In addition, despite having the most expensive healthcare system, the U.S. ranks last overall among 11 industrialized countries on measures of health system quality, efficiency, access to care, equity and healthy lives, according to a 2014 Commonwealth Fund report. The U.S. stands out for having the highest costs and lowest performance among the nations listed in this report.

Next: Benefits of DPC

 

Benefits of direct primary care

There is another option that will take cost out of the system and improve America’s rank from the current abysmal global levels.

Direct primary care (DPC) is a practice model that removes insurance and government intermediaries and focuses on preventive medicine. Improving overall health and wellness is the key to reducing costs and creating a truly sustainable healthcare model. DPC, when combined with a separately available catastrophic health insurance policy or health sharing ministry (faith-based, health care cost sharing organizations) for patients, meets IRS requirements for minimum essential coverage and therefore avoids the tax penalty.

 

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A pure DPC practice eliminates financial burdens physicians and patients face when interacting with insurance carriers and government-sponsored plans like Medicare and Medicaid.

Co-pays, deductibles, co-insurance, billing/coding, collections, accounts receivable and low reimbursement are a thing of the past due to the implementation of DPC.

From a financial standpoint, DPC practices return an equivalent salary to the provider because of significantly lower overhead when compared to an insurance-based practice.

Physician benefits include:

• Fees are prepaid on a per member per month basis (eliminates delays in reimbursement),

• Eliminates expenses associated with coding and billing,

• Eliminates accounts receivable/collections and speeds up the revenue cycle,

• Much smaller office space requirements due to reduced daily,

patient load (8-10 patients/day versus 35-40 patients/day) and smaller staffing requirements due to no insurance claims, billing or coding,

 

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• No intermediation from insurance companies or CMS resulting in significant “paperwork” reduction, allowing for more time with patients, and

• Reduced complexity/cost of electronic health record (EHR), due to no

intermediary involvement.

Next: Patient benefits

 

Patient benefits include:

• Low cost, convenient and total access to primary care,

• No co-pays, no co-insurance and no deductibles (patients will not delay in seeking primary care),

• Longer appointments, more quality time with their physician,

 

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• Medical care is decided by only their physician and not an intermediary,

• Significantly discounted prescription meds, lab services and imaging may also be available due to cash pricing that is not obtainable through insurance,

• Telemedicine (video, voice, text and email communication) service may also be available, and

• Coordination of specialty/hospital care as needed.

In short, adopting a DPC model has the potential to benefit all parties (physicians, patients and employers) by reducing costs, improving quality and creating a sustainable model of primary care for our country.

 

John Chamberlain, MHA, is chief executive officer of Direct Care for Me and has over 30 years of executive experience in hospital administration and physician practice management.

Matthew Taber, MS, is chief operating officer of Direct Care for Me, located in Nashville, Tennessee.