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Opting out of the payer hamster wheel can provide greater independence but requires careful planning
Internist ben fisher, MD, made a dramatic move recently: he opened his own direct primary care practice. Fischer treated patients for eight years as part of a 30-physician group practice in Raleigh, North Carolina. He had no disagreements with his group, but he was tired of the fee-for-service model. It forced him to spend time on cost containment for insurance companies that would be better invested in caring for patients.
“I felt a very clear sense that the work I was doing was not the work of my calling,” says Fischer, who completed his residency in 2003. “It was the work of the insurers.”
Fischer continues to work at his original practice while opening the new one, and with his wife Liz, an MBA, helping him navigate the details of setting up a practice, he feels off to a good start. “This is very much a leap of faith,” he says
Fischer is among a growing number of physicians nationwide to transition from fee-for-service medicine, or open a new practice based on what was once considered an “alternative” practice model. In direct primary care, physicians don’t take insurance but instead charge patients a flat monthly fee-usually in the range of about $25 to $80 a month-that covers primary care services.
One reason for the mounting interest in direct primary care among physicians is the growing complexity of managing a practice. Many physicians say keeping up with the paperwork involved in value-based care, meaningful use of electronic health records, and other initiatives tied to the Affordable Care Act leaves little time to actually practice medicine.
“What is motivating physicians to convert is primarily a desire to be able to spend more time with patients,” says Mason Reiner, cofounder and CEO of R-Health, a network of more than 50 direct primary care practices in the Philadelphia area. “In the traditional hamster wheel of fee-for-service medicine, it’s all about volume and not about relationships. Almost every primary care physician I’ve ever met went into primary care because of the desire to build meaningful relationships with their patients. If you don’t build relationships you can’t deliver great care. That takes time.”
That said, the percentage of physicians involved in direct primary care remains very small. A major reason is lingering regulatory uncertainty.
One unresolved question is whether consumers with high deductible plans will be able to use money in medical savings accounts to cover the retainer fees. Senator Bill Cassidy, MD (R-Louisiana) introduced a bill (S.1989) in August 2015 that would make direct primary care services qualified health expenses under the federal tax code.
If the legislation passes, it would establish direct primary care as a medical service and not a health plan. People with high deductible health plans would be able to pay for direct primary care services using funds from a health savings account-a potential boon to clinics trying to attract new members, according to the Direct Primary Care Coalition. In addition, the bill would enable a demonstration project that would create a pathway to direct primary care payments for people who receive Medicare.
As the Heritage Foundation pointed out in a 2014 report, the U.S. Department of Health and Human Services (HHS), which is responsible for determining which direct primary care plans qualify for the healthcare insurance exchanges, has yet to establish criteria for doing so. That creates a potential obstacle for insurance companies seeking to create wraparound high deductible plans that work well with direct primary care. But because the Affordable Care Act says direct primary care medical homes are not insurance arrangements, HHS says they do not fall under its purview.
United Healthcare’s Harken Health is offering a direct primary care-based plan in Chicago and surrounding suburbs and is opening clinics in Atlanta, notes Jay Keese, a lobbyist who runs Capitol Advocates in Washington, D.C., and executive director of the Direct Primary Care Coalition. In August, direct primary care provider MedLion Management, Inc., and Pan-American Life Insurance Group, announced they would provide a suite of insurance products that will be combined with MedLion’s Direct Primary Care programs for employers. The companies said Pan-American Life’s U.S. benefits division will run a supplemental “wrap” insurance program exclusively for MedLion Direct Primary Care clients.
Humana and direct primary care provider Iora Health also are partnering to open seven new primary care practices in Arizona, Colorado and Washington state. The practices will exclusively treat patients who are members of Humana’s Medicare Advantage plan. Last year, Humana and Iora partnered to open two clinics in Seattle and two in Phoenix.
According to the California Health Foundation, two other insurance carriers-Cigna and Associated Mutual-have created insurance plans tailored to users of direct primary care. Cigna’s is available only for self-insured employers who use Qliance. The first wraparound high deductible plan paired with direct primary care went live in January 2015 in the Washington state exchange.
Meanwhile, New Jersey is piloting a plan that will give 800,000 state workers access to a direct primary care plan. The plan will be run by Aetna and Horizon and give them access to specialists in these companies’ networks.
Beyond the uncertainty, some physicians are leery of direct primary care because they fear that charging subscription fees will price out some patients or spark a negative reaction among their patients.
“Physicians are a conservative bunch,” says Stephen Schimpff, MD, a retired internist who is author of Fixing the Primary Care Crisis.“They have to be pretty convinced that by making this type of change, they are not going to get themselves into a financial pickle or an emotional pickle with their patients.”
But with companies of 50 to 99 employees required to start providing healthcare this year under the Affordable Care Act, direct primary care is getting a boost, with employers increasingly interested in providing it to their employees as a way of reducing healthcare costs. Typically, most employers will match this with an insurance product, says Reiner, whose firm has been focusing primarily on partnering with employers.
Meanwhile, some physicians, frustrated by what they see as the paperwork and regulatory burdens that come with practicing medicine today, see direct primary care as their only attractive career option. Chris Larson, DO, says it’s the only way to provide “affordable care, accessible care, and care both patients and doctors are happy with.”
Larson began his practice, Austin Osteopathic Family Medicine, about two years ago and now has about 200 patients. Direct primary care appealed to him because he saw it as a way to know his patients by name and truly feel he is helping them.
“If I don’t stick with this, I am not going to be in medicine,” Larson says. “I’ll go buy and sell real estate. I refuse to be a fee-for-service provider.”
One of the biggest benefits of direct primary care, physicians say, is the ability it provides to control their schedule. When family physician Brian Forrest, MD, decided to try direct primary care 15 years ago, it was after doing his residency and some locum tenens work and realizing he didn’t want to work in a fee-for-service practice. He was distressed by how little time physicians had with patients.
In his residency, he says, “The expectation was to see a patient every 15 minutes,” he says. When he did locum tenens work in medical clinics, the pace was even quicker. At one clinic in Cary, North Carolina, he saw 63 patients in one day.
“In some cases, they double booked us every 15 minutes,” he says. “It was a pace of productivity required to pay for the increasing overhead. The overhead seemed to be greatly in part due to all of the bureaucracy associated with the insurance.”
Today Access Healthcare, his practice in Apex, North Carolina, a suburb of Raleigh, is thriving. His panel of 1,200 patients is full, and he employs two other physicians. As CEO and founder of AccessHealthcareDirect, a loosely affiliated network of direct primary care physicians, Forrest frequently shares his knowledge of direct primary care with other physicians who visit his office.
“I opened with the idea I probably would make less money and probably see mostly uninsured patients,” says Forrest. “Financially, the office did fine. The uninsured people that could afford to come to our practice told their insured friends about us.”
Although his practice is full, he says he is able to allot 45 minutes for each patient visit, leaving the last 15 minutes of every hour open for patients who need to book same-day appointments.
“The busiest day is about 14 patients, but normally I’ll see 11,” Forrest says. “That gives us plenty of time with patients.” When new patients want to join the practice, he refers them to his two colleagues.
Goodbye to bean counters
Another significant benefit of direct primary care, physicians say, is its lack of bureaucracy. Without insurance paperwork to fill out, there is far less need for office staff, and therefore less overhead for payroll.
“You can run a direct primary care practice with 450 to 500 patients with one and a half or two full time equivalents as support staff-a fraction of what you need to run a full, insurance-based practice,” says Reiner.
So far Larson, for example, has needed to hire only one employee-a medical assistant-for his practice. He knows direct primary care doctors who have hired no office staff and handled all of the administrative work themselves.
When a practice doesn’t take insurance, Larson says, “You don’t have to house the people you used to pay to nag the insurance company.”
Even in larger practices, the payroll tends to be lean. In Augusta, Georgia, internist/pediatrician Robert Lamberts, MD, who has practiced for 18 years and went into direct primary care three years ago, employs two nurses and two full-time medical assistants, as well as his daughter to answer the phones at the practice. He has 670 patients.
With no need to bill insurance companies, he has no office manager. The paperwork his team does mostly is for issues, such as getting authorizations, handicapped parking, and referrals, or disability papers, he says. His staff also works to get patients free medications when possible from drug companies, if the patient is unable to afford it. One of his medical assistants does much of the accounting, keeping track of patient monthly payments and the status of accounts.
Some physicians have found they can streamline the administrative side even further with the right technology. Forrest, for instance, uses software from the company Twin Oaks to automate the billing of patients’ monthly $45 retainer fee at his
“We spend zero time getting paid,” says Forrest. “We use the same software platform that Gold’s Gym and all the gyms use to get membership payments.”
Lamberts also has streamlined communications with patients by using a HIPAA-compliant app called Twistle. “Everyone can have it on a smartphone,” he says. He also monitors blood sugar levels for about 30 diabetes patients daily online, using Twine. “If their numbers are up, we can adjust them right away,” he says.
Nonetheless, for many physicians, there are tricky logistical issues to work out. One is to make sure their panel fills up, so the practice can generate enough revenue to cover overhead. It can take a while for a practice to hit the 500 to 600 patients that many say is necessary for it thrive and the physician to make a living without having to moonlight. Lamberts did not take a salary his first year. “My salary is about half the peak at my old practice,” he says, three years into his direct primary care practice. He had an estimated 3,000 to 4,000 patients at his previous practice, he says.
Patient communication also is vital. Consumers in some markets may be more open to direct primary care than others, some physicians have found, affecting how fast a physician can attract them.
Qliance, a network of clinics that provide primary care for a flat fee, is in Washington State, which Larson notes has both unions and technology companies that are very forward thinking about direct primary care. “They are in particular situations that I’ve tried to reproduce but I can’t,” he says.
Some physicians find that their current patients balk at a move to direct primary care. He knows two physicians who made the transition who sent a letter to their patients without getting outside advice first. “There were letters to the editor to the community newspaper saying doctors are greedy and not caring anymore,” he says.
Experts recommend that physicians get professional advice on handling the communications process, including notifying patients of plans to convert to a direct primary care practice, before embarking on it, because patients may react positively to the change.
Beyond these issues, physicians who go into direct primary care also have some tough decisions to make. One is to figure out how much to charge patients as a retainer fee. Many are leery of charging fees so high that patients with average incomes won’t be able to afford them, but they must balance that concern with the need to create a self-sustaining practice. The majority of families who use direct primary care have household incomes of $95,000 or less, according to a survey published in The Direct Primary Care Journal in July 2015. The data were gathered from December 2012 through June 2015.
Forrest decided to charge a flat fee of $45 for his patients, up from $25 when he started 15 years ago. Liberty Direct, a medical sharing co-op that qualifies as insurance under the Affordable Care Act, is now paying him $60 per month per patient in a plan it recently rolled out. It is available for employers but all of his patients who have the plan bought it as individuals.
Lamberts decided it made sense to charge a range of fees-from $30 a month for the youngest patients to $60 for the oldest. About 15% to 20% of his patients are covered by Medicare, which he has opted out of so he can charge them only on a monthly basis. “I never bill insurance for anything, so I am ‘allowed’ to handle problems in any way I want,” Lamberts said in an email. “This is why patients have been loyal and have stayed with us.”
Another challenge is how to handle referrals to specialists. About 60% of patients at Forrest’s North Carolina practice have insurance, so when he needs to refer to a specialist, he does so the same way he would in any other practice.
To help patients who have to pay out of pocket, either because they have no insurance or who have high deductible plans and have not yet met their deductible, he has formed relationships with specialists, such as a radiologist, who have agreed to see such patients at discounted rates. He says these arrangements can result in savings of 80% to 90%, and that sometimes copays for insured patients are actually higher than the negotiated discount his practice can get for them.
“A colonoscopy that would normally cost $2,000, they would get for $400,” he says. Patients get a membership card that tells specialists they are entitled to the price cut.
Direct primary care practitioners often find themselves tackling tasks they might not at a fee-for-service practice, in part to save patients money. Larson, for example, helped put a patient with an injured toe in a walking boot, instead of sending her to the emergency department-charging her only for the boot on top of his monthly retainer. At his moonlighting job at an urgent care practice, that visit would have cost $350.
Says Lamberts, “If they don’t have insurance, I have to be very cost-aware. The big difference here is that patients really feel I am on their side.”