Friday, September 6, 2013

Guest Post: Why the Direct Primary Care Model would benefit poor patients (1 of 2)

Dr. Marguerite Duane is the past medical director at Spanish Catholic Center of Catholic Charities of Washington, DC; a member of the Folsom Group; and co-founder of the Fertility Appreciation Collaborative to Teach the Systems (FACTS). She will attend the Direct Primary Care National Summit in October. This is the first of two guest posts. Part 2 is posted here.

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When most people hear the term Direct Pay Primary Care, they presume that it refers to a high cost, “concierge” care model for the wealthy and is not a realistic option for poor people. That presumption couldn't be farther from the truth. Here’s why.

Five years ago, I became medical director of two community health centers that serve an almost exclusively poor and uninsured population. More than 90% of our patients earn less than 200% of the federal poverty level (about $47,000 for a family of 4 in 2013). So if our patients have so little money to spend, how could direct primary care work for them? With direct pay models, actual health care costs can be kept much lower and made much more affordable. Also, since direct pay models typically care for smaller patient panels, patients have more time with their primary care team to address the myriad of life issues that affect their health.

Some direct pay models charge patients a monthly or yearly membership fee that covers all primary care office visits and even some basic or in-house lab tests. For example, at Qliance in Seattle, depending on the patients’ age, members pay a fee that ranges between $54 and $94 per month, which includes:

• 7-day a week access to the Qliance health care team
• Same or next-day appointments for urgent care
• 30 to 60 minute office visits
• Phone appointments and electronic visits
• After hour phone access to a physician for urgent medical needs
• Basic x-rays onsite at no additional charge

This care would cost my family of five $3,780 annually, less than a quarter of the $16,000 our employer-sponsored health insurance actually costs. Patients can then purchase a separate catastrophic health insurance policy for significantly less than a traditional insurance plan that also requires co-payments for primary care. Monthly membership models work particularly well for patients with chronic conditions, eliminating the potential financial disincentive of paying a fee for each office visit.

But how will poor patients pay for labs or specialty visits? It may surprise you to learn how inexpensive most basic lab tests are when they aren’t paid for by insurance middlemen. Here is an example of tests at my community health center for a patient with diabetes:

Lab Test                        Actual Cost to Us           Patient Paid

Hemoglobin A1C                 $8.72                             $10
Lipid panel                        $3.47                             $5
Metabolic profile                $4.21                             $5

This patient would pay $20 for lab tests that actually cost $16.40. While a profit margin of $3.60 may seem small, it worked for us because neither the clinic nor the lab had to pay anyone to process insurance claims or send follow-up reminders for un-paid bills months later.

6 comments:

  1. My Direct Primary Care practice has a patient population much closer to a safety net clinic than a suburban insurance-based practice. Our low price point ($30-40/mo per individual) has lead to the majority of our patients being uninsured and incomes <$30k. We provide the vast majority of our care (including visits and most routine labs) without any additional fees. If we do charge fees outside the membership, they are upfront and at-cost (i.e. laceration repair = $10 for supplies). We often joke that we are a concierge safety net clinic!

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  2. Dr. Duane,
    You answered one of two questions - how would labs be paid, but did not answer the second - how would specialty care be paid? Additionally how would imaging and medications cost be paid. in chronic disease management medication cost can be extremely high. Although I beleive imaging in the US is extrodinarily overused, routine mammography, injury xray, acute chest xray, or abdominal/pelvic imaging would not be solved.

    With capitated modelsdirect pay or otherwise procedures that may require more time or equipment such as colopscopy, derm procedures, joint injection might be referred out as no (financial)incentive to keep in house and then more cost to the patient.

    to make $200k/year (current avg PCP salary is about $185K) and assuming overhead of $220 (big assumtion I know could range from $100K-$300 k depenidng on rent, staffing etc but i am assuming the avg us salary of $185K and 55% overhead ) you would need to bring in revenue of about $420K

    Using $50/member/month or $600/member/ year, you would need a patient panel of only 700 patients, many fewer that the current 1500-2500 pcps currently carry , everything above is gravy.

    No question direct pay is good for docs. I am still not convinced it is good for patients as it may affect descision making to avoid needed care for all the extras which are not small.

    The diabetic on metformin, and a second non generic drug, ACE-I, Statin Generic, Aspirin, Opthalmology visit, labs, dietician, podiatrist Vaccines. it an't cheap. add a little CAD in there and the costs go way up.

    So would HSA dollars go to the direct pay? do you suggest the insurors pay pcp direct pay?

    Costs will not go down unless the cost of services go down, or people use fewer services. I agree good primary care does that. and direct pay or capitation may be a solution - if the patient beleives they have already paid the membership they may use the primary care doc first and go to the specialists as needed and perhaps use less service.

    It is an idea that warrents further investigation.

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    1. Dr. Schwartz,

      Thank you for your response and thoughtful questions. Direct Pay practices have different ways in which they help their patients access and pay for specialty care and radiology services. For example, Qliance provides "on-site or near-site x-rays available at no additional cost" to the patient. Access Health Care in North Carolina has negotiated lower fees for their patients to receive exams, such as screening mammograms, e.g. by arranging for their patients to pay in cash at the time of service. Specialists, including radiologists, can also benefit from direct pay models again by eliminating the insurance middleman. Direct Pay practice physicians will often develop collaborative relationships with local specialists who will accept referrals of their direct pay patients. These specialists will charge lower fees for their services and in return patients pay at the time of service. Again, this eliminates administrative costs associated with billing insurance companies and the need to follow-up for non-payment. More importantly, since direct pay primary care physicians are able to spend more time with their patients their specialty referral rates are much lower. In reality well-trained family physicians can manage the overwhelming majority of patients' medical problems; thus reducing the need and expense of specialty care.

      As for medications, there are generics available in almost every medication class and most are as effective as the latest brand name drugs. However, due to the strong influence of pharmaceutical companies, many physicians are more likely to prescribe a brand name drug before first trying a generic in the same class. In fact, just yesterday my son was prescribed a brand name drug, but when I asked if there was any reason he could not first try the generic in the same class, the physician said no and then willingly wrote the prescription for the generic. As physicians, we have to do our part to help minimize unnecessary costs. Of course, sometimes a generic is not available or effective and we must prescribe a brand name drug. In these instances, poor patients can often qualify for medication assistance programs to receive these brand name medications for a minimal fee.

      The key to Direct Pay practices is that the patient pays directly for their care. So, if physicians do not provide high quality care or frequently refer patients elsewhere for services they would expect to receive there, patients will choose to stop paying their membership fees and seek care elsewhere. Therefore, direct pay practice physicians do their best to manage most if not all of the problems for which they are trained to care for effectively. THis includes procedures in such as joint injections, derm procedures, etc. Certainly, procedures take more time, but direct pay practices already allocate more time for patient visits, typically 30-60 minutes on average, so physicians do not feel time pressure to refer those procedures elsewhere.

      I agree that costs will not go down until the cost of services go down. However, the cost of services will not go down unless there is transparency in pricing and the payor of services is the same person receiving the services. To make it easier for the individual to pay for direct primary care, they should certainly be allowed to pay for these services using HSAs or pre-tax dollars.

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  3. Dr. Duane,
    Thank you for a clear and concise description of how DPC can help provide much needed primary health care for all levels of population. Our clinic, St. Luke's Family Practice in Modesto, CA, has operated since 2004 as a charitable, self-sustaining DPC business model. We only engage 300 membership patients per provider at an average cost of $120/month and use the balance of time to provide free outpatient care at our walk-in clinic for those who are uninsured and do not qualify for government programs. Non contracting with insurance has provided the overhead clearance for this model to work. Additionally we are a 5001(c)(3) so the difference between the DPC members annual financial commitment and the value of actual services received is potentially tax deductible as a charitable contribution. We assure that >50% of our resources and visits are dedicated to the charitable mission.
    Our current challenge is to grow the practice and now that the ACA and DPC are part of the national conversation we hope to 1) encourage others to consider this model, and 2) recruit an additional provider to our office.
    Would you comment on a better way to convince physicians that DPC is a sustainable alternative to a third party payer system? thank you Karin Hennings

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  4. While this is all is great, for the average family in my area, there is no way people could afford it. Actually even those of us with insurance are starting to back off on doctor visits because I'm still paying out of pocket for a $400 bill. Good luck on finding patients, because in this area, it will be the few rich who can afford it.

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  5. Even if it was $30 a month, that is an extra copay most aren't willing to pay. The problem is that is out of pocket with no tax benefit. You get a tax benefit for your health insurance and a flexible spending benefits card.

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