DPC and Self-Insured Employers: A New Paradigm for Primary Care
Imagine you’ve just been named Healthcare Czar of the United States. Your mandate is to achieve highly effective primary care. The roadmap to effective primary care includes eliminating barriers between physicians and patients, including bureaucratic inefficiencies, while simultaneously decreasing the over-all cost of primary care.
As an active participant in the U.S. healthcare system for several decades, you are acutely aware of the moral hazards of our insurance-based Fee-for-service payment system, in which financial incentives for physicians are tied to volume rather than quality. Moreover, the coding and billing of patient encounters is essentially the only way to generate revenue. This insurance billing process has been referred to as “Fee-for-coding”, which turns out to be a more descriptive term than Fee-for-service as it pertains to medical billing.
After a thorough study of the issue, you’re convinced that the insurance-based payment model creates misaligned incentives, often leading to misplaced priorities. This “Fee-for-coding” system fosters a natural inclination for “patients to chase the benefits and for doctors to chase the codes.”
On the provider side, the emphasis is on the documentation which is necessary for coding, which in turn, is necessary for the billing. And around and around it goes, with the emphasis on the volume of patients, as opposed to the outcomes! The focus tends to be on the coding, not the caring; not to mention the huge time drag spent documenting for the sake of justifying the coding level.
With the obvious shortcomings of our current system in mind, you put together a list of “must-have” characteristics that the new primary care model must possess.
Fundamentally, the new care model should be attractive to both patients and physicians, for the right reasons. The incentives for the providers should be aligned such that the natural motivation is to provide the right care, at the right time, in the right setting – not an emphasis on billing, thus patient volume, to drive revenue. Next, the person or entity paying for the service should be able to discern the economic value by benefit of knowing prices in advance of care. Finally, the patient-physician relationship, and the collaborative therapeutic dynamic that emerges from that relationship, should always be at the forefront, while insulating that relationship from outside interference as much as possible.
Pragmatically, the new model for primary care should be simple to implement, with no steep learning curves or expensive start-up costs. It should be scalable, working just as well on a large platform as in an isolated situation. Additionally, it should be self-sustaining, attracting participants and capital because of its high value proposition. For sustainability, price transparency is a must. And finally, phase-in should be rapid, eventually accessible to everyone as it expands and scales.
The model is starting to take shape in your mind, but how should we pay for it?
On the cost side, you recall a fundamental insurance principle your first financial advisor drilled into your head repeatedly. Every time you met he would say, “Never insure what you expect to lose and what you can afford to pay for.” To insure these routine items, he emphasized, is an inefficient use of resources and a very expensive way to finance lesser expenditures.
This principle is aptly demonstrated by considering how we handle routine car service and maintenance issues such as gasoline, oil changes, wipers, batteries, air filters, tires and brakes. There is no getting around the fact that we must replace these items at regular intervals. If we attempted to insure all of those under our auto insurance policy, just imagine how much more expensive, complex and restrictive our auto insurance would be!
Certainly, routine illnesses and minor injuries, including periodic check-ups, medications and physicals would fall under this “fundamental principle of insurance”; and therefore would be less expensive if we can find a way to access them without a middleman taking a slice of the pie.
As healthcare Czar, you have access to data on prices from various non-insurance practices around the country which demonstrate that these same services, when provided outside the insurance realm, are ofttimes less expensive than the out-of-pocket residuals that some people face when they use their insurance! Not to mention, the prices are transparent and known in advance – a paramount “must-have” quality of the new primary care system you seek.
The new model for primary care should be simple to implement, with no steep learning curves or expensive start-up costs. It should be scalable, working just as well on a large platform as in an isolated situation.
Fortunately, having your finger on the pulse of healthcare reform, you attended the 4th annual Free Market Medical Association Conference in Oklahoma City – the epicenter of free-market reforms – where you learned about Direct Primary Care at the DPC pre-conference workshop. You listened to an overview from DPC physicians, Dr. Lee Gross of Epiphany Health and Dr. Kimberly Legg Corba of Green Hills Direct Family Care. During the 2-day event, you had the opportunity to speak to a dozen other Direct Primary Care physicians, most of whom had the same message: They love the DPC model and they wouldn’t ever want to go back to an insurance-billing practice!
You also got up to speed on Self-funded health plans which pay “claims” out of revenue rather than buying expensive fully insured health plans. You learned that nearly 65% of 160 million employees who have insurance in the workplace are covered under a self-funded plan, representing over 100 million lives. These plans are not governed by states’ insurance commissions, and as such, are not regulated in the same way as fully insured plans. Therefore, they have the option to design their plans for utmost creativity and flexibility under ERISA law. This can include offering DPC as an option for primary care, either alone or as a choice between traditional co-pay based access or DPC.
Armed with this useful information and ideas, you are confident you’ve found the components of an effective primary care model. So, you’re now ready to put together the details of your plan…
On the supply side, Direct Primary Care (DPC) meets the criteria in which to foster “effective primary care” – without the hassle, conflicting priorities and expense of insurance-based access models – while maintaining patient sovereignty and physician independence!
On the demand side, Self-funded Employer plans can be designed to carve out primary care from under the insurance edifice, thus fulfilling a fundamental principle of insurance, which is to not insure what you expect to spend and what you can afford!
It looks like a perfect fit. Scalable synergy has thus been achieved!
DPC and Self-insured Employers sounds like a marriage made in healthcare heaven… and you might just get re-appointed to another term as healthcare Czar!