Posts Tagged ‘direct primary care’

Direct primary care finding potential market among employers, Medicaid managed care plans

January 13th, 2016 1 comment

Direct primary care is much less pricey. Patients pay $100 a month or less directly to the physician for comprehensive primary care, including basic medication, lab tests and follow-up visits in person, over email and by phone. The idea is that doctors can focus on treating patients, since they no longer have to wade through heaps of insurance paperwork. They spend less on overhead, driving costs down. And physicians say they can give care that’s more personal and convenient than in traditional practices.It’s legal under the Affordable Care Act, which identifies direct primary care as an acceptable option. But since it doesn’t cover specialists or emergencies, consumers still need a high-deductible health plan. Still, the combined cost of the monthly fee and that plan is often still cheaper than traditional insurance.

Source: Concierge Medical Care Comes To the Middle Class : Shots – Health News : NPR

This is an interesting trend that could at least in theory coincide with the shift back to the “major medical” model common in the 1950s and 1960s where people paid out of pocket for primary care, using health insurance for high cost, major medical care events.

But whether pre-paid primary care bundled with a high deductible plan ends up costing less than, say, a gold or platinum rated Obamacare individual plan designed for the frequent user of primary care (such as families with young children) looking to minimize out of pocket costs is an open question. Unless perhaps monthly cost of pre-paid medical care falls to $40 as discussed in this analysis, which sees that as unlikely to pencil out for direct primary care practices. And as a practical matter as suggested in the analysis, not many people visit primary care docs frequently enough to make the arrangement worthwhile.

Where direct primary care makes better sense financially and where it has gained traction is among employers who offer it as part of their health benefit package. These employer groups can bring more belly buttons to the table in negotiating rates with direct primary care providers. Even larger economies of scale can be had with Medicaid managed care plans, where direct primary care practices offer Medicaid beneficiaries who typically bounce among various providers and emergency rooms much needed medical homes. From the NPR article:

In Seattle, a company called Qliance, which operates a network of primary care doctors, has been testing how to blend direct primary care with the state’s Medicaid program. They started taking Medicaid patients in 2014. So far, about 15,000 have signed up. They get a Qliance doctor and the unlimited visits and virtual access that are hallmarks of the model.

“Medicaid patients are made to feel like they’re a burden on the system,” said Dr. Erika Bliss, Qliance’s CEO. “For them, it was a breath of fresh air to be able to get such personalized care – to be able to talk to doctors over phone and email.”

The article goes on to report that Qliance contracts with Medicaid managed care provider Centene. Other states including North Carolina, Idaho and Texas are keeping an eye on the Washington arrangement and considering similar programs, according to the article.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Health insurance returning to traditional role of covering unexpected, high cost care

February 19th, 2015 1 comment

A basic insurance principle is returning to health coverage: mitigating the financial risk of a major, unexpected or accidental need for medical care. That’s how it worked in the period immediately following World War II, when health insurance was termed “major medical” and designed to cover high cost care such as injuries resulting from accidents or a medical crisis such as a heart attack or stroke.

The big driver of the change: sharply rising premium rates over the past decade. Costly premiums are driving people to choose plans with more cost sharing and the lower premiums that come with greater cost sharing such as deductibles, co-pays and co-insurance. Even when premium rates are subsidized, 85 percent of those purchasing individual plans sold on state health benefit exchanges in 2014 chose bronze and silver rated plans over higher priced gold and platinum rated plans that have less cost sharing. Bronze and silver rated plans cover 60 and 70 percent, respectively, of expected annual health care costs while gold and platinum, 80 and 90 percent.

The upshot of these less generous plans is people will become less inclined to view health plans as pre-paid medical care and more as insurance for medical financial emergencies. It’s back to the future of major medical plans of the 1950s and 1960s – a reversal of the all-inclusive managed care plan trend that began in the 1970s and 1980s.

A consequence is likely to be less wasteful utilization of primary care for issues that typically clear up on their own such seeking an antibiotic prescription for a minor cough. That’s a highly beneficial development amid widespread concern of a looming shortfall of primary care physicians at the same time more people gain medical coverage under the Affordable Care Act.

Related trends are the rise of cash paid primary care options including prepaid direct primary care physicians and clinics, retail and drugstore clinics and companies offering quickly accessible online telehealth consultations. These services provide consumers convenient care within and outside of normal business hours without the need for an appointment plus reduce the uncertainly of whether a particular primary care visit will be covered by their health plan. Also, tax advantaged health savings accounts that allow money to be set aside to pay for minor care.

All of this fits nicely into the growing ethos that wellness is a personal responsibility that for the vast majority of people is secured with healthful lifestyles rather than frequent engagement with medical providers.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Idaho mulling reforming Medicaid to use blend of DPC and “Arkansas plan”

November 26th, 2014 Comments off

Idaho is considering restructuring its Medicaid program to use state funds to directly cover primary care (DPC) for Medicaid eligibles earning less than 100 percent of federal poverty levels while using federal Medicaid funding to cover their major medical costs. Those with household incomes between 100 and 138 percent of federal poverty under the Patient Protection and Affordable Care Act’s Medicaid expansion would be eligible to purchase commercial health plans through the state’s health benefit exchange marketplace. That strategy is referred to as the “Arkansas Plan” in recognition of that state’s obtaining a waiver from the U.S. Department of Health and Human Services last year approving of the use of Medicaid dollars to help those new Medicaid eligibles buy exchange plans. The state’s Medicaid Redesign Workgroup estimates implementing both would save $1 billion over 10 years.

(H/T to Liz Osius of Manatt Phelps & Phillips LLP for the heads up in her weekly health care reform roundup)



Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

If Halbig becomes law of the land, flight to bronze and cat plans could result

August 2nd, 2014 Comments off

One potential outcome should the federal courts ultimately determine that advance income tax credit premium subsidies are available only to eligible households purchasing individual coverage in state-based health benefit exchanges and not in states that have opted to have the federal government run their exchanges is a flight to bronze. Bronze as in the metallic value of qualified health plans that have around a 60 percent actuarial value (AV), meaning they cover on average 60 percent of expected costs in a plan year. (Click here for more background the Halbig ruling)

Individuals may find the only way to comply with the requirement they have some form of health coverage or pay a tax penalty is to buy a bronze-rated plan since these plans offer the lowest premiums compared to richer plans with silver (70 percent AV), gold (80 percent AV) and platinum plans (90 percent AV). For many individuals and families not covered by employer-sponsored or government health plans, bronze plans may be the only ones they can afford without the offsetting effect of the premium subsidies — particularly older people in the top one third of the age rating bands who pay the highest premiums.

In addition to bronze plans, there could also be a growth market in catastrophic plans that are rated below 60 percent AV. These plans are available to those aged 30 and under and households that would have to spend more than eight percent of their income to buy the lowest cost bronze plan offered. The Patient Protection and Affordable Care Act also provides an exemption from the tax penalty for these households, which could result in some requesting the exemption and going without coverage, undermining the law’s policy goal to reduce the number of medically uninsured Americans.

A flight to bronze plans could also give a boost to direct primary care (DPC) where patients pay advance monthly or annual fees for primary care since bronze and catastrophic plans aren’t designed for those who are frequent users of primary care services.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Data illustrate growth in insurance coverage of primary care over 50-year period

September 28th, 2013 Comments off

The California HealthCare Foundation (CHCF) has produced an interactive graphic showing the sources of health care payments in the United States from 1960 to 2011. Particularly striking is the shift in physician and clinical services that comprise much of primary care. In the 1960s, most of these costs were paid directly out of pocket by patients. Beginning in the late 1970s, commercial insurance plans began picking up a larger proportion, reaching a peak of 49 percent in 2005 before declining slightly to 46 percent for 2011, according the CHCF compilation.

Proponents of pre-paid direct primary care contend that covering primary care in the same health plan as high cost catastrophic care such as hospitalization – covered under “major medical” policies in the 1960s — is as nonsensical as using car insurance to cover routine maintenance and oil changes.

The CHCF issued an issue brief on Direct Primary Care Medical Home Plans authored by Dave Chase noting these plans offer significant potential health care cost savings over all inclusive plans such as HMOs while providing economic incentive for primary care physicians – many of whom will be needed to care for new patients obtaining health coverage under the Patient Protection and Affordable Care Act.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Independent study of potential benefits of direct primary care needed

April 30th, 2013 Comments off

The California HealthCare Foundation has published an issue brief on pre-paid primary care plans, known as direct primary care.  Direct primary care (DPC) unbundles physician office visits and some other limited services from health insurance coverage and is directly paid out of pocket by consumers, leaving insurance to cover hospitalizations and catastrophic care events.  It has the potential to lower premiums since it eliminates the administrative burden on both payers and providers to process routine care reimbursements as well as potentially avoiding higher cost care by allowing primary care providers to offer more intensive preventative care and lifestyle coaching to ward off preventable, chronic conditions.

The issue brief notes some DPC providers have pegged overall health care cost savings in the 20 to 30 percent range.  Cost reductions of that size can go a long way toward achieving the triple aim of better care at lower cost and with better outcomes and warrant independent research to more fully investigate the potential savings.  The research should also examine how DPC might favorably affect the business model of primary care medical practice and its potential to attract more physicians to the field at the same time the number of people with insurance coverage – and the concurrent need for primary care practitioners – is expected to increase starting in 2014 under the Patient Protection and Affordable Care Act.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Proposed California measures would help create framework for direct primary care and high deductible insurance combinations

March 31st, 2013 Comments off

Starting this tax year, federal income tax law raises the existing deduction for medical expenses from 7.5 percent of adjusted gross income to 10 percent.  California income tax law generally conforms to federal law.  However, proposed California legislation, Assembly Bill 1018, would allow medical expenses to be deductible from income by a yet to be specified amount including the cost of care for elderly dependents.

Two other California bills could establish a framework for what’s known as direct primary care covered directly by consumers and not insurance.  In such a model, consumers pay their own primary care costs and buy high deductible insurance policies to cover major, catastrophic events such as hospitalizations.  Section 1301(a)(3) of the Patient Protection and Affordable Care Act explicitly recognizes direct primary care medical home plans as qualified health plans eligible to be sold on state health benefit exchanges.

Assembly Bill 1028, the Patient Centered Medical Home Act of 2013, would define “medical home” and “patient centered medical home” as a health care delivery model in which a patient establishes an ongoing relationship with a primary care physician.  As defined by the bill, a medical home would be a “physician-led practice team to provide comprehensive, accessible, and continuous evidence-based primary and preventative care, and to coordinate the patient’s health care needs across the health care system in order to improve quality and health outcomes in a cost-effective manner…”

Another bill, Assembly Bill 1129, would conform California law to federal tax law allowing deductions for contributions to health savings accounts used in combination with high deductible health insurance policies.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Little noticed ACA provision may hold key to restoring primacy to primary care to bend cost curve

February 4th, 2013 1 comment

Witnesses at a recent California legislative committee hearing bemoaned what is well known among health care policy wonks: poor access to primary care and its relationship to complex, chronic conditions that drive the 80-20 rule on health care spending: that 20 percent of patients account for 80 percent of the health care spend.

An excerpt from the California HealthCare Foundation’s California Healthline report on the hearing:

“We need to look at better management of chronic conditions,” said Assembly member Richard Pan (D-Sacramento), chair of the Committee on Health. “It’s one of the greatest cost factors in our health care system.”

How much cost?

The numbers are “astounding,” according to Sophia Chang, director of the Better Chronic Disease Care Program at the California HealthCare Foundation and one of the panelists at yesterday’s hearing. CHCF publishes California Healthline.

“We’re dealing with an epidemic,” Chang said. “Growing numbers, growing costs.”

The article goes on to quote testimony by Kevin Grumbach, chair of family and community medicine at UC-San Francisco:

“All this talk about chronic care and the patient-centered medical home is fundamentally about the primary care foundation of a well-functioning health care [system],” Grumbach said. “Systems that are built on a solid foundation of primary care are much better able to deliver the triple aim of better care, better outcomes and lower cost, and in an equitable way.”

Unfortunately, he said, California’s primary care system “is completely topsy turvy,” he said.

A little noticed provision of the Patient Protection and Affordable Care Act could contain the means of restoring the primacy of primary care and putting health insurance into the more logical and sensible role of covering large, unexpected medical costs.  It allows state health benefit exchanges to offer qualified health plans (QHPs) that are bundled with primary care directly paid by the insured, not the QHP. These “Direct Primary Care Medical Home Plan” QHPs would logically be those offering lower actuarial value (such as the “bronze” and “silver” metal tier plans that cover 60 and 70 percent, respectively, of expected claims costs).

Such a product could offer real benefits for both individuals and small businesses purchasing coverage in the exchanges starting this fall as well as for health plan issuers.  The former would benefit from lower premiums since they would be purchasing a lower cost plan. Health plans would benefit because insureds that pay for their own primary care – likely through pre-paid primary care contracts with primary care doctors and clinics – would have access to primary care and lifestyle coaching to ward off the development or progression of chronic conditions.  And primary care providers would also benefit by pre-paid direct primary care plans since they would provide a degree of predictability to their business models and potentially attract the large number of new primary care physicians that will be needed by the many newly insured under the ACA. That sounds like a promising means to achieve Grumbach’s triple aim.

Plan issuers, however, might initially resist offering such Section 1301(a)(3) plans since they would require them to retool their plans to be more like the “major medical” plans that predominated in the United States until all inclusive managed care plan models covering primary care proliferated beginning in the 1970s. But amid relentlessly rising medical costs that threaten their current business models and the opportunity presented by the new exchange marketplaces to devise new plans, now may be the right time for them to adopt DPC-based plans. Such plans might be marketed as “DPC (Direct Primary Care) compatible” just as high deductible plans are termed “HSA compatible.”

To spur their adoption, the Internal Revenue Code should be amended to allow individuals to take an income tax deduction for pre-paid direct primary care, just as they now can for contributions to health savings accounts.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Direct primary care could revolutionize private health care finance

June 29th, 2011 Comments off

Silicon Valley is internationally noted as a technology innovator.  Now it’s home to another form of innovation, this time in medical care with something known as direct primary care. Direct primary care involves patients pre-paying for routine medical services. In the case of Silicon Valley startup primary care company MedLion, patients pay $49 per month and $10 per visit. “MedLion is able to provide high quality medicine at a price point nearly any family can afford,” notes David Chase on the TechCrunch blog.

I’ve opined that with burgeoning health care costs and their hyperinflationary effect on premiums for insurance and managed care plans, we could see a bifurcation of the market where these traditional forms of medical coverage are used only for major, unexpected expenses and not routine care such as provided by direct primary care providers. In that respect, it’s back the future when “major medical” coverage of decades past was designed to cover only what its name denotes to protect people from financial catastrophe. After all, that’s the key benefit of any form of insurance.

The direct primary care model could be embraced by both employers that have been shifting more risk to employees in the form of higher deductibles and co-pays as well as individuals seeing monthly premiums starting to rival the size of mortgage payments.  If this happens, it would represent a major realignment of the private health care finance system.  It could also lead small employers and individuals to opt for “bronze” level qualified health plans that state health benefit exchanges must offer beginning in 2014 under the Patient Protection and Affordable Care Act. Such plans must be cover 60 percent of an individual’s actuarially projected medical costs and would offer lower premiums than qualified plans covering 70, 80 and 90 percent of expected losses. With the current level of growth in premium rates, by 2014 bronze level plans may be the only ones that are affordable for many, as I’ve speculated in a previous post.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

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