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Clinical Laboratories and Pathology Groups

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Clinical Laboratories and Pathology Groups

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Direct Primary Care is Emerging as a New Healthcare Model in the US, But Are Clinical Laboratories Prepared to Bill Patients Directly?

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.

—JP Schlingman

Related Information:

Can Amazon Cut Insurers Out of Primary Care?

A Pioneer In ‘Flat-Fee Primary Care’ Had to Close Its Clinics. What Went Wrong?

5 Things to Know About Direct Primary Care

10 Differences Between Concierge Medicine and Direct Primary Care

Concierge Medicine Is Growing

Lessons from Qliance Closing Its Doors

Direct Primary Care a New Option for Patients to Receive High-Quality Medical Care at Affordable Prices

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

A growing number of physicians are looking at new care delivery models as increasing costs and narrow networks drive patients into high-deductible health plans (HDHPs). These can include concierge medicine and direct primary care. Clinical laboratories and anatomic pathology groups will need to  adapt to these new models of healthcare.

Concierge medicine is basically an alternative medical practice model. Its main benefit is providers see far fewer patients and can provide higher-quality care to patients who can afford to pay the fees. Dark Daily reported on this growing trend as far back as 10 years ago (see, “More Doctors Consider Concierge Medicine as Healthcare Reform Looms,” June 8, 2009), and as recently as this year (see, Some Hospitals Launch Concierge Care Clinics to Raise Revenue, Generating both Controversy and Opportunity for Medical Laboratories, April 23, 2018.)

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 Center and 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.

—JP Schlingman

Related Information:

A New Kind of Doctor’s Office That Doesn’t Take Insurance and Charges a Monthly Fee is ‘Popping up Everywhere’ and That Could Change How We Think About Healthcare

Medicine vs. Direct Primary Care

Direct Primary Care and Concierge Medicine: They’re Not the Same

4 Distinguishing Differences Between Direct Primary Care and Concierge Medicine

Direct Primary Care: Practice Distribution and Cost Across the Nation

List of What Worked and Didn’t in DPC from 2016

How These Doctors Bypass Insurance Companies

Concierge Medicine is Here and Growing!!

More Doctors Consider Concierge Medicine as Healthcare Reform Looms

Some Hospitals Launch Concierge Care Clinics to Raise Revenue, Generating both Controversy and Opportunity for Medical Laboratories