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By Dave Chase, Contributor
JULY 10, 2013 – Prior to the inclusion of DPC into the Affordable Care Act, these practices were on their own to ensure they were within the bounds of existing provider regulations. The inclusion of DPC is very brief and leaves much to the states as to how to interpret and administer the law’s DPC clause.
DPC Clause Included in Affordable Care Act
A little noticed clause[i] was included in the Patient Protection and Affordable Care Act (PPACA) to require that Direct Primary Care be included in the proposed insurance exchanges, with the caveat that these practices be paired with a wraparound insurance policy covering everything outside of primary care. It is the only non-insurance offering to be authorized in the insurance exchanges slated to begin in 2014.
State Regulatory Activity
States have struggled to determine how to regulate DPC practices. So far, ironically, most have placed DPC practices under insurance regulators even though they are explicitly non-insurance offerings.
The following table is a sampling of states with DPC practices and the corresponding regulatory authority under which they fall:
|State||Department overseeing DPC|
|California||Same as any medical provider|
|North Carolina||Same as any medical provider|
|Oregon||Department of Consumer and Business Services|
|Texas||Same as any medical provider|
|Washington||Office of the insurance commissioner|
Most state legislatures have been silent on DPC to date. Only Oregon, Utah and Washington have passed DPC legislation explicitly stating DPC practices isn’t subject to insurance regulations even though they have a flat monthly payment. Maryland has looked at DPC and provided tips from regulators to medical practices on how to ensure that the practice operates properly with current regulations.
Some of the following measures were enacted in response to rulings by insurance commissioners that retainer care had to be regulated as insurance as opposed to provider practice regulations:
Oregon, 2011[ii]: Exempted retainer practices from meeting insurance code regulations if the practices are certified by the state. Certification in part requires that the practice cannot have been licensed as an insurer, must provide only primary care, and must disclose to patients that the practice is not insurance.
Utah, 2012[iii]: By far the simplest legislation, Utah provides an exclusion from insurance regulation for retainer medical practices.
Washington, 2007[iv]: Permits retainer practices, but specifies that these practices cannot submit claims or discontinue care to patients based solely on health status. Practices can turn away patients if they reach capacity and can accept payment from some third parties, such as employers. Practices can charge an additional fee to patients for supplies, medications, and vaccines that are specifically excluded under the written agreement. Patients may submit these charges to their insurer.
Washington was the first state to explicitly allow DPC. The term “Direct Primary Care” was created by the founders of Qliance as part of legislation that made monthly fee primary care legal in the state of Washington in 2007. This was necessitated by state law that could not differentiate a single primary care physician charging a monthly fee for care from a “health care service contractor” such as Group Health Cooperative or Kaiser Permanente. Attempts to update that law were aggressively opposed by the health insurance industry, although the final legislation passed with overwhelming bipartisan support and collaboration of the Insurance Commissioner of the State of Washington. It is codified in section 48.150 of Washington’s code is outlined[v] in the section entitled “Direct patient-provider primary health care”.
West Virginia, 2006: Allowed physicians to provide primary and preventive health care for a prepaid fee through a three-year pilot project that began in 2007. The pilot was extended for one year and expired on June 30, but the three existing retainer practices were allowed to continue. The pilots have since ended with Dr. Vic Wood’s Primary Care One being the only direct practice in the state allowed to continue. Dr. Woods is planning on going back into the legislature and opening the pilots back up. Officially, the way the legislation was written was that everyone left up and running after the pilot ended was allowed to continue. Every direct practice had to be approved by the state in the pilots. The qualifications were so cumbersome no one else applied.
The Maryland Insurance Administration[vi] provided guidance to retainer-based practices in 2009, stating they object to the following:
- Annual retainer fee covers unlimited office visits or a limited number of services that the physician cannot reasonably provide to each patient in his or her panel;
- No limitations on the number of patients accepted into the practice;
- Annual retainer fee does not represent the fair market value of the promised services;
- Physician has substantial financial risk for the cost of services rendered by other providers; or
- The retainer agreement is non-terminable during the contract year and/or does not provide for pro-rated refunds.
For the Bundled FFS Model retainer practice (Maryland’s term for DPC), the Maryland Insurance Administration recommends the following to avoid running afoul of the law:
- Limiting the services provided in the year for an annual fee to an annual physical exam, a follow-up office visit and a limited number of other office visits;
- Establishing the annual fee by reviewing the market value of the annual physical exam and a follow-up office visit as well as each office visit, with the annual fee equal to sum of the market value for each specified service;
- Defining the services to be provided in a written agreement;
- Allowing a consumer or the physician to terminate the retainer agreement for any reason and provide for the pro rata reimbursement of the retainer fee if the written agreement is terminated; and
- Placing a cap on the number of patients based on the physician’s ability to provide all the services specified in the written agreement to each patient on the panel.
In the relatively early days of DPC, a handful of unions such as the casinos workers union in Atlantic City, the freelancers unions in Brooklyn, United Food and Commercial Workers in Seattle and culinary workers union in Las Vegas have been the early adopters. Teacher’s unions are one of the areas that are particularly ripe according to Chris Shoffner of Physician Care Direct who has worked with unions on benefits design. Healthcare costs have devastated education budgets so they are desperately looking for solutions that can save money. As outlined in the DPC and the Healthcare Delivery System section, the casino workers union cared for by Iora Health lowered overall spending 12.3% while costs continued to escalate elsewhere.
Michael McClelland, of McClelland Advocacy, Ltd. a health care law and lobbying firm, was previously the Chief of Enforcement for the Department of Managed Care for California’s Department of Managed Care. He is an expert in California Managed Care law and Direct Primary Care. The following is his assessment of the California situation:
In California, existing law gives the California Medical Board exclusive jurisdiction over the practice of medicine including licensure, care, billing and financial arrangements. They should be re-affirming their jurisdiction but have yet to. Thus the question of should the DMHC (the Department of Managed Health Care) regulate DPC is not the question; DMHC should regulate DPC only if DPC is a health plan or HMO. DPC in most of its forms is explicitly not insurance. Further, federal law likely prevents the State from impeding the practice of DPC. The Medical Board and not DMHC handle concerns about the practice of medicine.
Consider that Washington state created a consumer line to receive complaints regarding DPC and have yet to receive one complaint. Furthermore, DPC is precisely a self-regulating consumer protection model. Because patients actually pay for their care, they can and will vote with their feet should a DPC physician not deliver as promised.
The Senate Health Committee chaired by Senator Ed Hernandez, O.D., had policy questions and concerns as recorded in the California Senate Committee on Health analysis[vii]. They primarily focused on whether there was, in fact, a need for the bill and if there was, whether there would be adequate consumer protection. DPC practices have been lawfully operating in California, however there is ambiguity regarding whether legislation is required for DPC practices to operate in the insurance exchanges. The ACA didn’t explicitly address this point.
At the close of the hearing, the committee chair stated a desire to work with Senator Harmon who introduced SB 1320 to address DPC. No specific next steps were defined. Governor Brown and legislative leaders have stated an intent to call a special session to address ACA compliance. Whether SB 1320 will be a part of this session is unknown.
California Insurance Exchange
At the time of this writing, it’s unclear to what extent ACA Section 1301(a)(3) Qualified Health Plans (QHPs) will be “listed” on the Exchange. The Exchange has recently issued a draft solicitation that will be used to invite health plans to bid for listing on the Exchange. There is no reference to Section 1301(a)(3) QHPs in the solicitation. There has been some effort to make the California Exchange aware of 1301(a)(3) QHPs by a NGO called the Healthcare Exchange Advocacy and Responsibility Team (HEART). On July 17, 2012 HEART submitted a document[viii] to Exchange staff referencing DPC.
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.
[ii] Sections 1 through 6, chapter 499, Oregon Laws 2011 (Enrolled Senate Bill 86)
[v] It is the public policy of Washington to promote access to medical care for all citizens and to encourage innovative arrangements between patients and providers that will help provide all citizens with a medical home. Washington needs a multipronged approach to provide adequate health care to many citizens who lack adequate access to it. Direct patient-provider practices, in which patients enter into a direct relationship with medical practitioners and pay a fixed amount directly to the health care provider for primary care services, represent an innovative, affordable option which could improve access to medical care, reduce the number of people who now lack such access, and cut down on emergency room use for primary care purposes, thereby freeing up emergency room facilities to treat true emergencies.