Research & Commentary: Direct Primary Care is Not Concierge Medicine
Matthew Glans – April 18, 2016
Current primary care doctors face myriad regulations and a reimbursement system that is both slow and costly, creating overhead that can eat up to 60 percent of a typical primary care practice’s revenue. For this reason, many new doctors have chosen to avoid primary care altogether, a phenomenon that has helped to create a shortage of family doctors across the United States. Direct primary care (DPC), also known as “retainer medicine,” is one health care provider model that has become increasingly popular for doctors and patients alike and could serve to revitalize the U.S. primary care system.
Hawaii currently defines direct primary care providers as “risk bearing entities,” which places these doctors under the same regulatory and licensing system as insurers. This is the primary barrier blocking a wider expansion of direct primary care providers in the state. Fourteen states have passed legislation that specifies direct primary agreements do not constitute insurance, a major change that would free doctors and patients from many expensive regulations imposed under the state’s insurance code. This would help open up the state’s health care market to more DPC programs and improve health care freedom across Hawaii.
Unfortunately, Hawaii has taken a different approach to direct primary care that may hinder the nascent industry. The Hawaii Senate is now considering legislation that asks the insurance division of the Department of Commerce and Consumer Affairs to survey how health care services such as direct primary care, concierge medicine, and accountable care organizations work and how they have addressed the primary care shortage in the state.
This legislation may appear innocuous on the surface, but the bill harms direct primary care providers in the state by equating them to concierge medicine. Direct primary care and concierge medicine are completely different services. Direct primary care does not deal with third-party payers, such as insurance companies, but concierge medicine providers, while offering additional services both in and out of a traditional office setting, still bill a patient’s insurance carrier.
Under a direct primary care program, patients pay a monthly membership fee, typically ranging from around $50 to $80. As part of the membership, patients receive a more generous allocation of appointments than they would under most traditional plans, even when taking into account some same-day appointments and house calls. The guarantee of a set monthly fee removes the layers of regulation and bureaucracy created by the traditional insurance system and allows physicians to see fewer patients and focus more on each patient. Routine tests and procedures are also included in most DPC plans, and lower membership fees are often charged for programs that do not provide these additional services. According to the Docs4Patient Care Foundation, under a DPC model, medical practice overhead can be reduced by as much as 40 percent.
Opponents of DPCs argue they give a false sense of security when purchased as standalone health coverage. Proponents of DPC programs agree these services are best used in conjunction with a high-deductible health care insurance plan or another form of catastrophic coverage to handle in-patient health care services. The American Academy of Family Physicians has endorsed the DPC model.
Direct primary care empowers patients and doctors, giving them more freedom to establish and participate in health-care-provider models which work best for all patients. Hawaii’s misguided regulation should serves as a lesson for other states, legislation needs to be carefully crafted to ensure it Tennessee should remove unnecessary regulatory barriers to direct primary care to help revitalize the state’s primary health care system.
The following documents examine direct primary care in greater detail.
Beacon Explains: Direct Primary Care
Justin Owen of the Beacon Center of Tennessee examines direct primary care and how it could break down the current inefficient third-party payment system, which, according to much research, dramatically increases the cost of providing health care services.
Direct Primary Care: An Innovative Alternative to Conventional Health Insurance
Insurance-based primary care has grown increasingly complex, inefficient, and restrictive, driving frustrated physicians and patients to seek alternatives. Direct primary care is a rapidly growing form of health care which alleviates such frustrations and offers increased access and improved care at an affordable cost. State and federal policymakers can improve access to direct primary care by removing prohibitive laws and enacting laws encouraging this innovative model to flourish. As restrictions are lifted and awareness expands, direct primary care will likely continue to proliferate as a valuable and viable component of the health care system.
Where Obamacare Leaves Questions, Direct Primary Care May Offer Answers
Proponents of the Affordable Care Act (ACA) set out to remake American health care with the law’s passage in 2010, but in many respects the ACA didn’t change the health care paradigm at all; it simply doubled-down on a broken, decades-old status quo making health “coverage” a national priority, rather than focusing on limiting health care costs and enhancing health care access. Patrick Ishmael of the Show-Me Institute explores in this essay a promising medical practice model, direct primary care, which he says could deliver on the promises made by proponents of the ACA to lower costs and improve access to quality health care.
Direct Primary Care: Practice Distribution and Cost Across the Nation
Philip M. Eskew and Kathleen Klink describe the direct primary care (DPC) model; identify DPC practices across the United States; distinguish it from other practice arrangements, such as the “concierge” practice; and evaluate data compiled from existing DPC practices across the United States to determine the cost advantages associated with this model. Eskew and Klink confirmed DPC practices’ lower price points and broad distribution, but data about quality are lacking.
Direct Primary Care: A Legal and Regulatory Review of an Emerging Practice Model
Philip M. Eskew examines concerns related to the “business of insurance” (BOI) encountered by DPC physicians. He analyzes recommended contractual provisions used to minimize BOI risk; compares state laws written chiefly to address risks related to BOI; considers the DPC provisions in the Affordable Care Act; and briefly considers the tax and scope-of-practice policy implications of the DPC model.
Ten Principles of Health Care Policy
This pamphlet in The Heartland Institute’s Legislative Principles series describes the proper role of government in financing and delivering health care and provides reform suggestions to remedy current health care policy problems.
Direct Primary Care: Restoring The Doctor-Patient Relationship
Katherine Restrepo writes about direct primary care and how it could lower costs and improve the relationship between doctors and patients in this article in Forbes. “The beauty of practices like Doctor Direct is the traditional doctor-patient relationship is restored. By cutting 40 percent of overhead which is normally spent on getting paid by insurance companies, primary care providers can devote hour-long appointments to their patients and deliver care at a fraction of the cost.”
The Obamacare Evaluation Project: Access to Care and the Physician Shortage
Paul Howard and Yevgeniy Feyman of the Manhattan Institute find population growth, demographic changes, and an expansion of insurance spurred by Obamacare will contribute to a significant shortage in primary care physicians over the coming decade.
Obamacare’s Impact on Doctors—An Update
In this Heritage Foundation Issue Brief, Alyene Senger outlines several effects of Obamacare on doctors: “Specifically, physicians will be subject to more government regulation and oversight, and will be increasingly dependent on unreliable government reimbursement for medical services. Doctors, already under tremendous pressure, will only see their jobs become more difficult.”
Studies Show: Medicaid Patients Have Worse Access and Outcomes than the Privately Insured
In this Heritage Foundation Backgrounder, Kevin Dayaratna states it is becoming increasingly difficult for Medicaid patients to find access to primary and specialty care physicians. As a result, when Medicaid patients are admitted to hospitals, they often arrive with more serious conditions than those with private insurance. By expanding this broken program, Obamacare will only exacerbate the problem. Policymakers should reform Medicaid to allow recipients access to private insurance in a consumer-driven market, Dayaratna writes.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News at http://news.heartland.org/health, The Heartland Institute’s website at http://heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org.
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