If insurance plans are removed from the billing cycle for primary care, it’s not clear how clinical laboratories will be reimbursed for their services
Direct Primary Care (DPC) is gaining popularity in the United States. This emerging movement enables primary care providers to bill patients directly for services rendered, bypassing traditional health plans. On a large scale, employers can contract with primary care practices directly for their employees’ primary care coverage. The idea is to lower healthcare costs. But what exactly is DPC and how are clinical laboratories affected by it?
In operation, direct primary care is similar to concierge medicine, where a patient pays an annual retainer for direct access to a specific healthcare provider. DPC practices offer members unlimited, on-demand visits to primary care physicians for a flat, monthly fee.
The DPC movement has its own lobbying group—the Direct Primary Care Coalition—which supports physicians who opt to practice direct primary care. According to the group’s website, there are currently about 1,000 DPC practices in 48 states which serve over 300,000 patients.
DPC has gained Senatorial support. In December, Senators Bill Cassidy, MD (R-LA), Doug Jones (D-AL), Jerry Moran (R-KS) and Jeanne Shaheen (D-NH) introduced legislation to “lower the cost of healthcare and expand patients’ access to their primary care providers.”
Their bill (H.R. 3708), titled the “Primary Care Enhancement Act of 2019,” would amend the Internal Revenue Code of 1986 to “allow individuals with direct primary care service arrangements to remain eligible individuals for purposes of health savings accounts, and for other purposes.”
A press release announcing the Senate version of the bill (S. 2999), described DPC as a model that “encourages patients to develop personal relationships with their primary care physician, including extending access to care beyond office visits and business hours and through telemedicine. It focuses on prevention and primary care, relying less on specialist and hospital referrals. It is a growing model used by more than 1,000 practices across 48 states and the District of Columbia.”
The press release also states, “DPC models replace copays and deductibles with flat, affordable monthly fees. Current law makes DPC incompatible with health savings accounts (HSAs) paired with high-deductible health plans (HDHPs).”
Direct Primary Care in Practice
Physicians seem to like the DPC model. It frees them, they
say, from the unnecessary interference of insurance providers, the burdens of excessive
paperwork, and ever-increasing administration costs, while allowing them to
have a better patient-doctor relationship.
“I know all my patients by name. I have time for them,” Matthew Abinante, DO, told The DO, a journal of the American Osteopathic Association (AOA). “I probably interact with about 20 patients a day when you factor in the electronic communication.”
Abinante is a board-certified family physician. He practices at Elevated Health, a direct primary care practice in Huntington Beach, CA. Patients pay an average of $75 per month for membership. This fee includes unlimited same day/next day appointments and the ability to talk to a doctor via telephone, e-mail, text, or video chat—24/7.
Matthew Abinante, DO, is shown above treating a patient at Elevated Health, a DPC practice in California. “Our goal is to keep you as healthy as possible, while saving you time and money. We remove the barriers of traditional insurance and provide you with a modern take on the personal, old-fashioned care missing in today’s healthcare industry,” he said. (Photo copyright: Elevated Health.)
At Elevated Health, some minor clinical laboratory tests and
procedures are included in the monthly fee. They include:
Other medical laboratory testing, imaging, and medications
are available to patients at contracted wholesale prices, which are quoted up
front. This is consistent with the trend for price transparency in healthcare.
“What everyone really needs to know is that patients do get better care when their doctor is more satisfied with what they’re doing. And that takes time. What the [fee-for-service] system cannot provide us is time with the patient,” Tiffanny Blythe, DO, told The DO. Blythe runs Blue Lotus Family Medicine, a DPC practice in Kansas City, MO.
When Direct Primary Care Does Not Work
The DPC model has been tried before. In 2010, a DPC provider called Qliance was formed primarily on investment capital from Jeff Bezos of Amazon. The goal was to free doctors and patients from the constraints of traditional health insurance.
Qliance opened several clinics in the Seattle area and by
2014 had nearly 50,000 DPC patients—including employees of Expedia and Comcast. It also had a contract to
provide primary care services with a state Medicaid insurer. Nevertheless, Qliance
closed in 2017.
“We would open up a clinic and add a bunch of docs before we had enough patients to pay for it,” Nick Hanauer, a Seattle venture capitalist and investor in Qliance, told STAT.
“It’s just hard to get the customers because you had to
break the paradigm that was in everyone’s heads about how healthcare had to
work, and you had to disrupt the relationships people had with their insurance
companies,” Hanauer explained.
“Somebody with more economic power than we had could do
this—and should,” he added.
Not All Physicians Support Direct Primary Care
Since the DPC model is so new, there is little research or statistics to confirm it will have a positive effect on healthcare outcomes or lower healthcare costs. Some healthcare professionals have reservations about direct primary care. Their concerns include the potential for less oversight of practitioners and the possibility that patients will slight themselves regarding insurance coverage.
“What we don’t hear about are the people who need more than can cover and what happens to them when they fall into that gap,” Carolyn Engelhard, a health policy analyst and Assistant Professor at the University of Virginia School of Medicine. “We don’t know if they just don’t get care or then enter the traditional healthcare system and start over.”
There are also concerns that DPC plans could draw a large
percentage of healthier patients, which could raise costs for those in
traditional insurance plans, and that it may be more difficult for DPC patients
to gain access to needed specialists and other services.
“Healthcare is fragmented, and if we continue to have little
carve-outs so some [doctors] can practice medicine the way they want, it is not
helping to make the system more responsive and integrated,” Engelhard added.
Nonetheless, both Direct Primary Care and Concierge Medicine
are growing in popularity in the US. And because it’s unclear how clinical
laboratories would interact with or bill DPC practices, clinical laboratory
leaders should keep a close eye on this trend.
As more patients opt for these models of care, healthcare
organizations, pathology groups, and clinical laboratories will have to create
ways to adapt. Since DPC practices are out of most networks, clinical labs may
have to bill patients directly for their services. Not all clinical labs are
prepared to do that, and those that are could experience a slowdown in the
payment process. Labs may also have to contract with physicians to provide
testing services on a pre-determined wholesale cost basis.
Medical laboratories prepared to receive direct payments for services rendered will have an advantage as more physicians’ practices convert to concierge medicine and stop taking insurance or Medicare
Now, a new payment program called Direct Primary Care (DPC), which is emerging as an alternative to traditional health insurance plans, could further help patients in HDHPs—and the uninsured—afford quality healthcare.
The main difference between DPC and concierge medicine lies in how doctors get compensated. Monthly membership fees are usually the only source of revenue for DPC practices and they do not accept any type of insurance. Concierge practices, on the other hand, bill insurance companies and Medicare for covered medical services and collect membership fees for services that are not covered.
In general, if a third-party payer is not involved, the practice is considered Direct Primary Care.
DPC versus Concierge Medicine: How Do They Compare?
Direct Primary Care is an offshoot of concierge medicine and the two terms are often used interchangeably. Although similar, there are distinct differences between the two models of care.
Concierge medicine was created in the mid 1990’s and was originally used by wealthy patients who were willing to pay a high subscription fee for access to select physicians. However, this model has changed over the years, making concierge medicine economically available to lower income individuals as well.
According to Concierge Medicine Today, the majority of concierge medicine plans cost between $51 and $225 per month in 2017. Eleven percent of concierge plans charge less than $50, and 35% cost more than $226 per month. There are some high-end concierge plans that can cost upwards of $30,000 per year.
Direct Primary Care was started in the mid 2000’s as an insurance-free plan mainly for the uninsured. In 2015, the Journal of the American Board of Family Medicine reported that the average monthly cost for patients on a DPC plan was $93.26 among the 116 practices they surveyed. The range in costs at that time was $26.67 to $562.50 per month. They also found that practices that identified themselves as “Direct Primary Care” charged a lower fee on average than concierge practices.
The patient base also varies between the two types of practices. According to Cypress Concierge Medicine in Nashville, Tenn., DPC physicians usually treat younger patients with an annual household income of less than $50,000, while concierge medicine doctors typically treat patients over the age of 45 who have an annual household income of $75,000 or more.
Physicians in both plans try to limit the number of patients they serve to a few hundred to ensure they can provide the best possible care to their clients.
Physicians Like Direct Primary Care Programs
DPC physicians charge a monthly membership fee for their services based on the patient’s age, the type of practice, and the number of individual family members on the DPC plan. The monthly fee includes routine office visits—usually with no co-pays—and almost constant access to a physician through telemedicine technology.
DPC plans also provide same or next-day appointments for members and offer lower costs for pharmaceuticals and lab tests.
Direct Primary Care programs are attractive to physicians who often feel overworked by too many patients, too much tedious paperwork, too much time dealing with insurance companies and too little time to provide quality care.
“There are thousands of physicians in career crisis who are investigating new ways to practice medicine and in essence, love going to work again,” noted Michael Tetreault, Editor-in-Chief of The DPC Journal.
“I can understand why [direct primary care] would be appealing to some family physicians,” Dennis M. Dimitri, MD (above), Professor and Vice Chair of Family Medicine and Community Health at UMass Memorial Medical Centerand President of the Massachusetts Medical Society, told the Boston Globe. “Many doctors feel terribly burdened by the administrative issues of dealing with insurers, referrals,” he stated. “They are unhappy that all of that gets in the way of them having sufficient time to help their patients the way they want to.” (Photo copyright: Massachusetts Medical Society.)
Jeffrey Gold, MD, a Family Practice specialist in Marblehead, Mass., left his position with a successful physicians group to launch his own DPC practice.
“It’s really blue-collar concierge medicine,” Gold told the Boston Globe. He added that his former practice model “was all about volume and coding and how many people a day you can see.”
“I couldn’t do it anymore,” he admitted. “It was not aligned with how I grew up thinking about medicine.”
DPC/Concierge Practices Expected to Increase in Numbers
With a growing number of patients in high-deductible health plans, concierge medicine and DPC practices are expected to increase in number. According to Direct Primary Care Frontier, an online resource that supports DPC, in 2014 there were only 125 DPC practices in the US. However, by April of 2017, that number had jumped to 620, and as of March 2018, the estimated number of DPC practices was 790.
Similarly, in 2010, there were between 2,400 and 5,000 concierge medical practices in the US, and by 2014, that number had increased to 12,000, according to the American Journal of Medicine.
Like concierge medicine, Direct Primary Care clients present a relatively new method for clinical laboratories to succeed and be profitable. Because there is no need to be in insurance networks—and patients pay cash for lab tests—DPC patients may prove to be an excellent source of business for medical laboratories that can adapt to DPC practices.
Critics are quick to note that this creates a disparity in how patients access healthcare services
Independent concierge care (AKA concierge medicine) is available to anyone willing to pay the additional costs, which are over and above any health insurance. In a concierge care medical practice, patients pay an annual retainer fee to gain increased access to doctors, specialists, and services, such as faster TATs on clinical laboratory testing.
Depending on the program, concierge care also can offer patients a range of “improved” healthcare benefits, including same-day appointments, extended appointment times, around-the-clock telehealth services, and the experience of receiving care from a physician with a smaller patient roster and in a more personalized manner.
Clinical laboratories and anatomic pathology groups might also find benefit from the concierge care model. Though some concierge providers bill insurance, most work on a cash basis with payment due upfront for services. This ensures prompt payment for any medical laboratory testing provided, reduces administrative overhead, and eliminates the need to deal with payers.
Concierge Medicine Is Not Just for the Wealthy Anymore
Since its inception, concierge care has been considered a luxury available to only financially well-off patients. However, that may soon change. Several major health systems and hospitals are piloting scaled-back versions of concierge care aimed at both middle- and upper-class consumers. However, the programs are not without critics and have elicited both positive and negative responses from healthcare providers.
According to Modern Healthcare, hospitals and health systems currently testing concierge care programs include:
Patients with busy schedules or chronic conditions may see the biggest gains from investing in concierge care. The added flexibility and increased access might allow them to take advantage of care options more frequently. Physicians being able to take their time during consultations and more closely focus on specific concerns is also seen as a benefit to patients.
However, Modern Healthcare points out that patients are not the only ones to see benefits from this arrangement.
“Doctors who have switched to concierge-style medicine sing its praises, claiming the smaller patient panel allows the doctor to build relationships with patients and spend more time on preventive medicine,” Modern Healthcare noted.
Paul Huang, MD, PhD (above right), a concierge doctor at Massachusetts General Hospital, told Modern Healthcare, “We are not doing this just to make more money—we are doing this to make money to put back into the mission of the hospital and to support programs that otherwise would be difficult to support.” (Photo copyright: Modern Healthcare.)
Concierge Care: Controversial Approach or Major Boon to Hospitals?
Since its debut in the 1990s, concierge care has faced scrutiny and opposition from those who feel it discriminates against those who cannot afford retainer premiums and out-of-pocket expenses.
One health system that has drawn such criticism is Michigan Medicine (MM), which is owned by the University of Michigan. As reported by the Detroit Free Press, in a letter to hospital administration, 200 of MM’s own doctors and staff expressed their feelings about the concierge care program, stating, “Victors Care purports to offer ‘better’ healthcare to those with enough money to pay a large access fee. The University of Michigan is a public institution and our commitment is to serve the public, not a private few. We do not feel this is the role of a state university and are unable to justify this to the patients and families we serve.”
Tom Cassels, a consulting partner with the Advisory Board Company, told Modern Healthcare, “It’s a cultural learning curve, because most not-for-profit health systems are geared toward providing the same level of service to everyone in their community. The fundamental model of concierge medicine is to price-discriminate.”
However, media coverage also highlights how the hospitals creating concierge care services are using the financial benefits to help offset the cost of low-margin services or provide care to low-income patients who wouldn’t otherwise have access to care.
Misty Hathaway, Senior Director of the Center for Specialized Services at Mass General, explained to Modern Healthcare that since their physicians are salaried, margins from concierge services can help support “things like our substance abuse program, or other parts of primary care where the margin is a little bit harder to achieve.”
Despite the ethical debates, use of concierge care services continues to gain momentum as middle and upper-class patients find the increased quality of care a worthy value proposition. As more options emerge at major healthcare centers, medical laboratories and other service providers might find that this trend also offers an opportunity to increase revenue with a minimal impact on administrative and billing costs.
Patients using a concierge medicine practice expect to pay cash at the time of service, but few medical laboratories are equipped to collect from patients at time of service
One big challenge for clinical laboratories and anatomic pathology groups is how to adapt to the changing role of the consumer in healthcare. It a major goal of healthcare policymakers to have patients pay more out of pocket for clinical care so as to motivate them to select hospitals, physicians, and clinical labs based on a combination of cost and quality.
One sector of healthcare that is benefiting from this consumer-first dynamic is concierge medicine. Statistics show that recent increases in the number of people seeking concierge medicine is changing the way many individuals utilize the healthcare system in the United States. (more…)
Consumer products giant acquires 100% ownership of concierge medicine company
Clinical laboratories and pathology groups may soon be serving physician practices owned by Procter & Gamble (P&G) (NYSE:PG). That’s because the consumer products giant now owns 100% of MDVIP, a nationwide concierge practice of 350 doctors in 28 states.
The deal is noteworthy because it further expands Procter & Gamble’s presence in healthcare. In 2006, P&G invested $325 million in a joint venture with Inverness Medical (NYSE:IMA). The joint venture announced its intention to develop and market diagnostic test kits for use by consumers that can be sold in retail outlets. At the time, The Dark Report wrote that, “P&G’s interest in consumer self testing is based on its belief that consumer demand for health services and healthcare products will soar in the coming decades.” (See The Dark Report, June 4, 2007, “ Inverness Buys Biosite, Has New Venture with P&G” )
