By KATHRYN NIX | July 31, 2015
This summer, Medicare announced plans to revisit a proposal that will offer physicians special payment for discussing end-of-life care with patients. While the topic is notorious for its role in the heated “death panels” debate, it is worth considering at another level. Fee-for-service payment arrangements, which are all but ubiquitous in U.S. health care, have led to the current system of paying providers piecemeal for each procedure or service. But there’s a better way.
A new model of care has quietly emerged that promises to fix these problems in a surprisingly simple way, changing primary care as we know it by, for once, perfectly aligning the priorities and best interests of doctors and patients.
Over the years, physicians have rightfully complained that fee-for-service payment discourages conversations with patients on complex issues, such as smoking cessation, household gun safety and everything in between. Though these conversations require substantial time, physicians do not receive additional pay for time spent addressing them.
The same is true of providing care by telephone, email or text; though these technologies could increase convenience for patients, every minute spent communicating with patients outside of an office visit represents money lost since doctors are not paid for them.
While lawmakers and Washington bureaucrats have grappled with how best to solve these problems by tinkering with new financial incentives or care models that generally uphold fee-for-service payment, some entrepreneurial physicians in Wisconsin and across the nation have quietly advanced a solution called “direct primary care.”
The concept is similar to its better-known predecessor, concierge medicine, but without the exorbitant annual fees. Under direct primary care, patients pay a flat monthly membership fee to join a physician’s practice. At most clinics, this fee is close to the cost of a monthly cable bill for a family and significantly less for an individual. Monthly fees generally include unlimited access to a primary care physician, including office visits, phone and email communication. At many clinics, routine labs and some prescription medications are also included.
Direct primary care operates under the idea that insurance should be reserved for unpredictable, catastrophic health care needs. As such, membership does not negate the need for insurance but complements more affordable coverage. According to Heritage Foundation graduate health policy fellow Daniel McCorry, “Frequently, the sum of the membership fees and an augmented insurance plan — called a ‘wraparound’ plan because it covers costly care beyond the scope of primary care — is lower than the cost of a comprehensive insurance plan by itself.”
But the true value of direct primary care is in its ability to realign financial incentives for doctors to more effectively meet the needs of patients. Direct primary care doctors are not financially penalized for addressing simple health issues over the phone or by email, which is convenient for patients while also freeing clinic time to focus on more complicated cases or to have difficult, time-consuming conversations with patients who need them. Thus direct primary care physicians do not need to be paid by the conversation; they are naturally incentivized to discuss healthy behavior changes or end-of-life issues as they become relevant to patients.
The results of improving access and quality of primary care are obvious. As David Von Drehle writes in Time magazine, “When people get good primary care, their maladies are diagnosed more quickly and can be managed before they grow into crises. Fewer patients wind up in expensive hospital beds. Emergency rooms treat genuine emergencies, not routine infections and minor injuries.”
Indeed, by improving ambulatory care for patients with chronic conditions such as diabetes or coronary artery disease, data from one multi-state practice published in the American Journal of Managed Care show a 79% drop in hospital utilization rates for its Medicare-participating members compared to the non-member Medicare population. Overall, its members also had fewer admissions for non-elective, emergent, urgent, avoidable and unavoidable care.
Direct primary care has begun to make its way to Wisconsin. Paladina Health operates several clinics in the state, working mainly with employers to offer direct primary care to patients through their workplace benefits. Solstice Health in Oconomowoc, which calls itself “the first independent and completely insurance-free Direct Primary Care clinic in Wisconsin,” offers tiered pricing for patients of different age groups for membership that includes unlimited physician access and wholesale pricing for routine labs, imaging and medications.
These practices could become even more prevalent in Wisconsin and throughout the nation with changes by state and federal lawmakers. In many states, insurance rules create uncertainty regarding whether or not direct primary care should be considered insurance. As McCorry explains, “The first major issue is whether direct primary care providers are acting as ‘risk bearing entities’ when providing care in exchange for a monthly fee — and should thus be licensed and regulated as insurers.”
Several states have passed legislation to clarify this issue, and the Direct Primary Care Coalition offers model legislation defining direct primary care as outside the realm of insurance and clarifying that participating providers need not become licensed to sell insurance policies.
Finally, the Affordable Care Act, or Obamacare, allows for wraparound insurance policies to be sold on the new exchanges alongside memberships to direct primary care clinics. However, the U.S. Department of Health and Human Services has yet to provide the clear definitions required to make this a reality.
One direct primary care practice in Madison already has shut its doors, according to its founding physician, because of the health reform law. William Schupp, M.D., wrote to his patients: “The Affordable Care Act marketplace presented a lot of problems for my practice … I did not foresee a broken website, a government shutdown and more expensive insurance for many of my patients.”
Direct primary care represents a sensible way to strengthen the doctor-patient relationship, improve quality of care and reduce excessive costs and waste. State and federal lawmakers should pursue the reforms needed to pave the way for success for this patient-centered, transformative model of care.
Kathryn Nix is a senior medical student at the Medical College of Wisconsin and former health policy analyst at The Heritage Foundation in Washington, D.C. She is a Racine native and a University of Wisconsin alum. This column represents her personal opinion.