Seven Steps To Freeing Primary Care Of Insurance

By Dave Chase, CEO of Avado

Read Part 1: Direct Primary Care: RIP Marcus Welby

The federal health reform bill included a little-noticed clause allowing for Direct Primary Care (DPC) models to be a part of the state health exchanges.

I believe this will fundamentally alter the health insurance market and is leading to what I call a “Do it Yourself Health Reform” movement. That little-noticed clause (item #3 in 1301(a) of HR 3590) should have the effect of massively spreading the DPC model throughout the country.

Despite the fact that half of primary care doctors say they’d leave medicine if they had an alternative and the New York Times reports on a family physician who can’t give away his practice, primary care physicians are understandably concerned about making the move to a different practice model. As Dr. Samir Qamar of MedLion stated, “Many doctors today are wondering how DPC practices work, how they are profitable, and most of all, how they could do it. After Vic Wood’s practice in West Virginia and AMG in New York were slapped by their states’ insurance commissions, many are afraid to move forward – and doctors are already risk-averse.”

As an entrepreneur, I have had to become a buyer of healthcare. From my years in patient accounting, I knew there was at least a 40% “insurance bureaucracy tax” on day-to-day medicine so I was excited to learn about the DPC model so I could cut out the middleman and use health insurance for the purpose intended (i.e., catastrophic coverage). However, I was frustrated that such a model didn’t exist where I lived. Having spent a lot of time with physicians operating in DPC models (special thanks to physicians such as Samir Qamar, Brian Forrest, and Garrison Bliss who have been generous with their time), I better understand that while the DPC model is very appealing to me, there’s a number of considerations to making the switch from a physician’s perspective. Fortunately, now that the issues have been worked out on how to transition to a DPC practice, their growth will accelerate particularly as we'll be approaching half the workforce not having employer provided health insurance. It is already a strong trend as a third of the workforce will be permanent freelancers, contractors, etc.

Before listing the items to navigate, it’s worth noting the benefits to a physician of moving to a DPC model that make the switch worthy of consideration such as the following:

Less time (zero if fully transitioned away from insurance-centric primary care) spent dealing with insurance headaches. This is the top frustration cited for why primary care physicians state they want to leave medicine. This also lowers administrative overhead costs. Some DPC practices have less than one administrative FTE per physician in comparison to a 5:1 ratio common in many practices.

More time spent with patients delivering what DPC-based physicians believe is better care. The average patient load is 3000 patients per PCP whereas DPC-based practices typically have 800-1500. As an example of quality, Dr. Forrest shared that 91% of his patients have reached their target blood pressure within 6 months and that he’s been named one of only four Cardiovascular Centers of Excellence in his state.

Lower malpractice costs. Dr. Forrest has shared that his malpractice premiums have been cut in half. It’s logical given that he’s able to spend much more time with patients. Increased income. In MedLion’s model, physicians take home pay is at parity with specialists which is often double an average PCP.

There are 7 significant items to navigate:

1. Legal concerns. Because paying a monthly fee in return for health benefits can be construed as health insurance or a health plan, doctors converting should have a sound legal team that is comprised of experts in health care, managed care, Medicare, corporate law, and even intellectual property. The legal team not only should help the practice start, but needs to stay with the practice providing constant legal support due to the ever-changing rules in this still relatively unregulated industry. Medicare-accepting physicians face unique challenges that must be negotiated in order to avoid getting in hot water with the government. Patients not wishing to convert must also be taken care of, or else allegations of abandonment can arise. MedLion shared that they spent over 150K in the first year alone on “getting it right.” As a practice based in California, there’s a thicket of regulation that they needed to navigate to get to where they are today.
2. Practice structure. Even though there are a low number of DPC practices in existence, efforts have to be made to determine the membership pricing structure, the number of patients per provider, whether or not to use mid-level providers, type and number of staff, whether to start a pure DPC vs. DPC/insurance (hybrid practice), and the physical location. Each of these variables could independently sink a start-up DPC practice if not thought out in advance. For instance, one misconception of inexpensive care is that it is “cheap” or low in quality. This myth is averted by ensuring high-quality care, staff, decor, and service. When I asked MedLion’s Dr. Qamar about how he arrived at his price, he stated “We changed the price point five times before arriving at a system that worked and we continuously research the best cost for services for implementation.” Low-cost medical services. All of the DPC practices I have spoken with have gone the extra mile to negotiate cash-based charges for non primary care services. For instance, Tanya Griffin helps PCPs convert to a DPC model and has also helped negotiate steep discounts. For example, the best local imaging center charges her clients’ patients $350 for an MRI in contrast to the $2800-3500 charge that is common in her area. Medications have to be continuously researched to locate where the lowest-priced ones are, from retail pharmacies, online pharmacies, to establishing relationships with pharmaceutical companies. Qliance offers a free first-fill formulary that covers most common prescriptions. Because DPC practices don’t include specialist care, efforts must regularly be made to locate quality specialists who will offer discounted care without breaking Medicare rules.
3. Major medical coverage. To effectively attract patients, efforts are made to locate the most beneficial insurance plans that will cover hospital and advanced specialist care. Plans change every year, and the practice should always be informed on the latest to inform its patients.
4. Marketing. Once the practice is started, it doesn’t survive unless patients enroll. Because DPC is a new way of practicing, many consumers and employers don’t understand it right away. Depending on the practice’s financial resources, effective PR, marketing, and advertising must continuously be on-going to make the practice financially sustainable and even profitable. Depending on the demographics of the practice location, efforts have to be made to capture patients from hospitals, the community, and companies. MedLion, for instance, has an outside marketing firm, as well as inside representatives to help each location reach capacity. They do a demographic analysis of the practice and the geographic region to ensure success.
5. Health IT. To keep overhead low and prevent over-utilization of services (now that care is more affordable), selecting an effective software/hardware system is crucial to the practice’s long-term success. Most EMR systems today are insurance-centric, and not designed to be used with DPC practices. Qliance evaluated over 200 U.S.-based EMRs before going abroad to find their system and then have done their own software development. An effective Health IT system will enhance patient experience, reduce physician workload, decrease unnecessary patient visits, and decrease physician overhead.
6. Billing. The beauty of DPC is the absence of insurance dependency. How do you bill? Automated or invoice? Do you accept credit cards? Check? What about patients who wish to pay cash only? Though overhead from insurance-billing is absent, there is billing overhead to manage. Because profit margins are low, it is essential to collect every penny. Dr. Qamar stated “Our billing was changed 9 times to get it perfect.”

As simple as the DPC concept is (membership fee for low-cost services akin to the Marcus Welby model), there is an extraordinary amount of research and work that must be done behind the scenes, before implementation, during transition, and after launching the practice. MedLion and DirectPayHealth have built businesses around assisting physicians making a smooth transition to a DPC practice (MedLion also supports a hybrid insurance/DPC model). Their approach has been to do the trial-and-error themselves to minimize to issues that could hurt the practice and lose patient confidence.

While the economy and federal health reform have created an unprecedented level of uncertainty, it has also created opportunity. As Dr. Qamar stated, “It’s been both gratifying and exciting to help my colleagues through the transition to a practice model that is sustainable for me while being a breath of fresh air for our patients. I can’t think of a more interesting time to be a physician.”

About: Dave Chase (http://www.linkedin.com/in/chasedave) is a Huffington Post/Washington Post contributor and CEO of Avado.com, a Patient Relationship Management software company, previously founded Microsoft’s Health business and was a consultant with Accenture’s Healthcare Practice.

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Direct Primary Care: RIP Marcus Welby

By Dave Chase, CEO of Avado

Insurance bureaucracy has taken a toll on the family doctor. New practice models plan to change that. Physicians in North Carolina, Seattle, Northern California and elsewhere are proving what the rest of the world already knows. Highly functioning primary care results in less money spent and better health outcomes.

Before House, M.D., there was Marcus Welby, M.D. who epitomized the glory days of healthcare. Dr. Welby knew every one of his patients. If you got sick, he took care of you right away, spending whatever time necessary.

Unfortunately, there’s a radically differently model today that can only be described as a Gordian Knot designed by Rube Goldberg.

It can take a patient days to get in for an appointment, they arrive for an appointment, wait 45 minutes in the crowded waiting room, wait again in the exam room, being charitable they get 10 minutes with their doctor, 15 if they’re lucky. Of course, it’s difficult for him to remember much except for those few notes he scribbled last time. How much can anyone remember about 3,000-4,000 people? If a doctor doesn’t see 30 patients over the course of the day, he’s likely going to be penalized for not hitting his insurance-driven productivity goals. In a typical 10 minute appointment, there’s often no time to go beyond the presenting symptoms and then give the patient a prescription as a way of closing the appointment. Sound familiar?

What happened to the old family doctor represented by Marcus Welby? Insurance killed him.

Today’s insurance reimbursement process severely impedes the delivery of affordable, patient-centered primary care. Whether a doctor is using a paper-based or electronic medical record, much of their time is spent ensuring they properly code billing forms. In many cases, those claims will be denied and the process starts all over again. That doesn’t address a patient needing tests or prescriptions. As reported on CNN, more than 50% of primary care physicians say they would leave practice if they could.

Does one really need insurance for routine primary and preventive care? No. But somehow health care has become synonymous with health insurance. “Insuring primary care is like insuring lunch,” says Nick Hanauer of Second Avenue Partners, a Seattle venture-capital fund that backs one of the new “Direct Primary Care” (DPC) models. “You know you’re going to need it. You know you can afford it. Why on earth would you pay a third party to pay the restaurant on your behalf, adding overhead and taking a big chunk out of the money you pay—and because of the process, have to wait a week to get a table and then have only 10 minutes to eat?”

From my time spent in Patient Accounting departments, it was easy to see why there’s a 40% “insurance bureaucracy tax.” That is money that isn't making anyone healthier. It also doesn’t take into account time and frustration by the patient who is ultimately responsible for care as they have to wade through Explanation of Benefits (that doing anything but explain) and other forms mere mortals have difficulty interpreting (perhaps by design).

Organizations such as MedLion, Qliance and Organic Medicine are demonstrating that they can cut out the fat that insurance reimbursement adds at the same time primary-care doctors can spend more time with fewer patients and still charge low fees. Doctors operating in these models universally state that they are back to practicing medicine the way they were trained. It’s not hard to imagine that more medical students would choose to enter primary care, reversing a disturbing 10-year decline. They have moved beyond the theoretical by setting up these models. Qliance, for example, has shown they are dramatically reducing the most expensive facets of healthcare (Emergency Department, Specialist & Surgical visits) by 40-80% with a panel that mirrors the population as a whole.

How it works

As in the days before insurance, by forming a direct financial and professional relationship with each patient, direct primary care models takes the 40 cents of each dollar that would have otherwise gone into insurance reimbursement processes and puts it into more medical providers, lower fees, longer office hours, and the latest diagnostic equipment. No insurance is required or accepted (though some run hybrid insurance/DPC practices). No complicated billing forms for the typical day-to-day stuff that comes up for your health or even for managing a chronic condition. Many DPC practice offers members same – or next – day appointments plus 24/7 access to a physician. Visits are typically scheduled for an unhurried 30 minutes so that health-care providers can spend the necessary time and conduct the necessary tests to accurately diagnose an illness or provide appropriate wellness counseling. Comprehensive physical exams, included in the monthly fee, typically last an hour or more. When I visited Qliance’s clinic, the waiting room was an oxymoron — no one was waiting most of the time. The only person waiting during the 90 minutes I was there was a person waiting while their family member was having an appointment.

Qliance members choose a personal care team of both a physician and a nurse practitioner who get to know each patient very well, since they see only one-fourth the patients that a typical insurance-based physician does. Members pay only $49 to $89 per month for as much primary and preventive care as they need. On-site digital X-rays, first fill pharmacy and many common lab tests are included in the monthly care fee. MedLion has a roughly similar model charging $59 per month regardless of age and just $10 per visit (they offer discounts for senior citizens and children). It’s so affordable it’s being extended to a farming community with many migrant workers who have difficulty obtaining insurance.

The goal of DPC practices is to make the highest quality primary and preventive care affordable and accessible to all, rich or poor, insured or uninsured. Unlike insurance, they do not prescreen members on the basis of health.

Direct Primary Care practices do recommend health insurance to its patients—but not traditional low-deductible insurance. “Insurance should be used for catastrophic illnesses, not routine care,” explains internist Dr. Garrison Bliss, a national pioneer in direct primary-care practices and Qliance’s cofounder. “A high-deductible health-insurance plan combined with Qliance can save 30 percent to 50 percent off the total cost of comprehensive care. It provides better access and service at the primary-care level while maintaining financial protection for serious illnesses.”

At Qliance’s launch event, Washington State Governor Christine Gregoire told an audience of patients and others: “I see someone like Dr. Bliss and I say many of our physicians in this country and in this state went to school because they wanted to practice medicine, not because they wanted to deal with insurance. Not because they wanted to deal with bureaucracy. In fact, they don’t want to deal with any of that; they want to deal with their patients and that’s what they are really good at. And what Qliance has as a vision and a model is to allow doctors to do what they love and what they feel passionate about, to give patients… what they so richly deserve at an affordable cost and with high quality. It is patient safety. It is driving down costs… This is exactly what we and the patients in the state of Washington need.”

Marcus Welby had it right. Primary care physicians are at their best when their primary focus is their patient. Unfortunately, immense amounts of time dealing with insurance burdens have essentially eliminated the Marcus Welby model but modern day Marcus Welbys are fighting back and having great success. It’s exciting to see the spark return to the primary care physicians I’ve met who’ve removed the insurance yoke and are practicing the way they know is best for their patients (and themselves). You might call it “Do it Yourself Health Reform” driven not by politicos but by physicians.

About: Dave Chase (http://www.linkedin.com/in/chasedave) is a Huffington Post/Washington Post contributor and CEO of Avado.com, a Patient Relationship Management software company, previously founded Microsoft’s Health business and was a consultant with Accenture’s Healthcare Practice.

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