Primary Care Direct Model – Neither Insurance Nor Health Plan

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.

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By Mari Edlin