Part 2: DPC and Self-Insured Employers: A Benefits Trifecta

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A Marriage Made in Healthcare Heaven

July 4th & fireworks. Baseball & hot dogs. Birthday cake & ice cream.  Movies & popcorn. These pairings have become tangible elements within the cultural zeitgeist of our country.

The linkage between Employer-sponsored health insurance and access to medical care is no less meaningful.  The preeminence of this protected oligopoly as the only legitimate path to healthcare has become etched deeply into our collective consciousness.  So pervasive is this notion that thoughts of market-based models have rarely reached our frontal cortex; that is until the advent of the DPC movement and the price transparency flag-plant by our free-market friends at Surgery Center of Oklahoma.

 Our fear of being without employer-sponsored insurance (reasonable as it is in our current situation) is so palpable that the government created an even more expensive way to obtain it at the very time we’re without income: COBRA!  But at least the name is fitting. Never mind that the whole debacle was spawned by decades of unwise tax and regulatory policy, and the rent-seeking behavior that it propagates, leaving the once-indispensable Individual Market to wither on the financial vine.

 It’s not that employers don’t have a role in helping us buy/access healthcare.  Indeed, they do.  But although the first order purchaser of health insurance is often the employer, they do not bear the ultimate impact of the cost, employees do; and not just in form of rising deductibles and payroll contributions. Just as corporations, land or automobiles don’t feel pain, neither do they pay taxes.  Likewise, while our employers provide us with a healthcare “benefit”, the economic data showers very clearly that we all pay for these benefits with nearly a dollar-for-dollar reduction in wages and/or reduction in other voluntary benefits.

 But based on the arguments put forth in part 1 of this series, we know there is a free-market-friendly alternative to the traditional network-based, insurance-accessed medical care that has been responsible for eroding our wages and purchasing power, while lining the pockets of industry “mis-stakeholders”.

 With the help of our knowledgeable Healthcare Czar, we constructed a new model using Direct Primary Care as the clinical hub of our new healthcare Plan.  This enabled us to fulfill our “must-have” criteria which starts with highly effective primary care (think DPC) without the hassles, conflicting priorities and expense of an exclusively claims-based insurance model – while maintaining patient sovereignty and physician independence!  In addition, Self-funded plans under ERISA law can be designed to carve out primary care from under the insurance edifice, replacing it with DPC, thus fulfilling a fundamental maxim of insurance: Never insure what you expect to lose and what you can afford!  Vis-à-vis routine visits to your family doctor.

By contracting with a Direct Primary Care practice and re-routing subsequent encounters away from the more expensive insurance-based protocols, Self-insured employers can utilize creative plan designs to cut costs and improve employee satisfaction.  The savings can be substantial even after accounting for membership costs.

Mike Ferguson, President and CEO of the Self-Insurance Institute of America, Inc. (siia.org), had this to say on the topic in a 2017 IBD article:

By breaking free of the conventional coverage model, self-insured companies are finding innovative ways to improve the health of their workers, and at lower cost. Business leaders and policy-makers should take note.”

Enough with the rhetoric. Where’s the data to back up the talk?  Does this new model really translate into savings and value for the Self-insured employer, while improving health care outcomes for employees?  That prospect sounded too good to be true to Mark Watson, chief executive of Human Resources for the employees of Union County, NC.   

 Union County was the first public, self-insured employer in North Carolina to offer a DPC option for primary care, starting in April 2015, when they entered into an agreement with Paladina Health, a healthcare delivery organization providing care via a membership model. With a savings of over $1.4 million on medical claims, Mr. Watson is now a believer!

YouTube.com/john locke foundation
Mark Watson discusses direct primary care’s benefits for Union County, N.C.

 Katherine Restrepo, previously of the John Locke Foundation, had this to say in Forbes:

“Adding the DPC option has not only saved Union County on claims, but has improved health outcomes for almost 70 percent of patients. With the luxury of around-the-clock care and longer appointments, Paladina physicians enhance patient engagement and guide them to find the best value for medical decisions that fall outside a primary care setting. For anyone skeptical that the clinic attracts a healthier patient pool, the available data indicate otherwise. The total number of paid claims exceeding $50,000 is evenly divided between DPC enrollees and traditional health plan enrollees.

To summarize the Union County experience per the Forbes article:

Of Union County’s 2,000 covered lives, 40% are DPC participants, while the remaining 60% are signed up with the CDHP.

  • DPC participants incur 38% less in medical expenses than CDHP participants, yielding annual savings of $1,408,089.
  • DPC participants incur 37% less in prescription expenses compared to CDHP participants, yielding annual savings of $269,680.
  • DPC participants spend 46% less out of pocket for prescription and medical expenses than CDHP patients, a $333,639 annual savings.
  • 73 percent of DPC participants report significant improvement in their overall health since electing the DPC option.

And more DPC-Employer data from DPC Journal:

“Colorado-based DigitalGlobe, a self-insured provider of high-resolution Earth imagery products and services, partnered with Nextera Healthcare, Colorado’s first direct primary care (DPC) provider, to evaluate the effectiveness of DPC membership for employees and their dependents. The seven-month case study revealed improved health outcomes, enhanced patient satisfaction and reduced healthcare costs, including a 25.4 percent reduction in claims costs and a 4.7 percent reduction in risk scores for members who participated.”

“…DigitalGlobe enrolled 205 employees and dependents. The company covered 100 percent of participants’ fixed per-person, per-month DPC membership costs.”

“ Next-day appointments and 24-hour access to providers via phone, email and text messaging furthered the DPC commitment to providing convenient, personalized care and attention. Eighty-nine percent of employees reported via a post-study survey that they received flexible, timely appointments and follow-up visits.”

“There was also a significant reduction in spur-of-the-moment emergency room and urgent care visits.”

“Based on study results, DigitalGlobe will offer DPC through Nextera Healthcare to all of its 1,233 employees and their dependents nationwide beginning Jan. 1, 2017.”

DPC is not just for large employers who have traditionally offered benefits. The platform works for small businesses with only a handful of full-time employees; even those that fall beneath the ACA mandate cut-off have found value in establishing a DPC relationship. One such business is The Walnut River Brewing Company in Dorado, KS. They contract with AtlasMD, a DPC practice in Wichita, KS to provide primary care for their dozen full-time employees. Here is what Walnut River Brewing founder B.J. Hunt had to say about DPC and their relationship with AtlasMD.

“…it saves small businesses time by allowing staff to visit during the day and get back to work. It’s possible to have very reasonably priced healthcare for all staff. The last main point is that it’s simple, it cuts down on insurance needs for normal visits thus saving countless hours on hold and disputes. We’ll never go back to the traditional model. Ever.”

One of the most innovative and comprehensive DPC-Employer solutions available for a range of employer sizes and needs is MyMD Connect, founded by Dr. Jeremy Smith. MyMD Connect has developed a seamless connection between the normal documentation that all doctors perform during a patient encounter and the data that a self-insured plan requires for their due diligence. Their platform allows doctors maximal independence while standardizing access, fees and data reporting from MyMD Connect to their health plan clients.  Dr. Smith explains the moving parts of MyMD Connect:

“MyMD Connect is an innovative solution to bring together self-funded employer groups, third party administrators, and innovative medical management solutions, including virtual concierge and brick-and-mortar concierge medicine services, in order to increase quality of care and optimize economic use of resources for the self-funded health plan. Watch the video to learn more about the many benefits of MyMD Connect!”

This discussion would not be complete without including the landmark data provided to us by our pioneer DPC colleagues at Qliance, formerly based in Seattle.  The study data compared each company’s DPC cohort with their non-DPC (non-Qliance) enrollees. As you can see from the chart below, DPC enrollees achieved nearly 20% savings per employee compared to traditional coverage, which translated to an average savings per person per year of $679.  Of note is a huge 60% reduction in number of inpatient days and 29% reduction in specialty radiology imaging.  Both categories are sources of a large portion of medical spend for employers.

Qliance Savings Data — 2013-14

 Incidents per 1,000 Qliance patientsIncidents per 1,000 Non-Qliance patientsDifference (Qliance vs. Other)Savings per patients per year
ER Visits8194-14%($5)
Inpatient (days)100250-60%$417
Specialist Visits7,4978,674-14%$436
Advanced Radiology310434-29%$82
Primary Care Visits3,1091,965+58%($251)
Savings Per Patient---------$679
Total Savings per 1000 (after Qliance fees)$679,000
% Saved Per Patient19.6%
  • Data Sources: All claims data (except prescription claims) from carriers for selected large employers; Qliance EMR data; Employer eligibility data.
  • Claims Attribution: All claims incurred by Qliance patients prior to first Qliance visit were excluded; All employees with any interaction with Qliance included as our patients, even if the employee used another primary care provider (which is possible in some of the plan designs among clients); All claims incurred after any interaction with Qliance included, regardless of employee’s intent to use Qliance as their primary care provider; All non-primary care provider visits included under “specialist” category (such as physical therapy, acupuncture, etc.)
  • Population: Eligible members in employer-sponsored health plan; Employees only, to remove confounding factors from differences in dependent benefits structures and participation variances among clients.

In summary, and in juxtaposition to government mandated coverage for unwanted or unneeded “benefits”, which necessarily increase premiums for everyone; the determination of what services to insure should be guided by time-tested economic principles and our common-sense tenet of insurance: Never insure what you can afford and anticipate losing.

To put this into perspective, an analysis of health insurance compared to auto insurance, the latter existing within a robust direct pay market for routine maintenance/upkeep/repair, found the addition of auto insurance adds about 18% to the cost of auto ownership. While in healthcare, the way we access and bill for routine health services via insurance protocols adds at least 50% to the cost of care.

Adding DPC to a well-designed package of health benefits gets us closer to financial sanity and sustainability, comparable to the auto insurance market.

Many Self-insured companies are beginning to discover the value and savings in this approach, while breaking free of the coverage trap and the myth that health insurance equates to health care.  The corollary being the realization that access to inflated “pricing” and the phony discounts used to fleece the buyer is no longer a conversation they are willing to have.

With DPC at the hub of the benefits package, combined with proper utilization of insurance, Self-insured employers and employees are enjoying the Benefits Trifecta: Fewer Claims. Better “coverage”. Lower Costs.

Dr. Robert Nelson

About Dr. Robert Nelson

Dr. Robert Nelson received his M.D. degree at the Ohio State University College of Medicine. He is the Founder and Owner of Encompass Health Direct, in Cumming, Georgia; the publisher and editor of The Sovereign Patient blog; and a founding member and spokesperson for the Georgia chapter of the Free Market Medical Association. Dr. Nelson has spoken about healthcare economics and free market healthcare throughout the country, and has been a guest expert on multiple radio programs.

View all posts by Dr. Robert Nelson →

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