It’s easy to grasp the emotional and political satisfaction of running a cash-based practice. No more managed care! More cash!

What’s more challenging is coming by hard numbers or concrete strategies: What are the possible models? How much should you charge? How many of your current, commercially insured patients will follow you to the new practice?

Here are the facts we’ve been able to gather. They’ll help you with research and planning if you are considering such a change.

Ways to structure

There are two main economic models lumped under the headings “concierge” and “cash-based” when they refer to medical practices:

The annual fee model. In this model, also called a retainer practice, physicians charge patients a substantial annual fee to pay for a list of special services not usually covered by managed-care plans. Such services may include 24-hour physician access, comprehensive preventive services and wellness planning, house calls, and accompanied visits to specialists. A 2005 study by the Government Accountability Office (GAO) revealed that the average annual fee charged by such practices ranges between $1,500 and $1,999 (see www.gao.gov/new.items/d05929.pdf). All care covered by insurance is billed as usual. The patient pays the annual fee upfront regardless of the services he actually uses.

GAO’s research revealed that three-fourths of concierge practices still bill insurance and Medicare for covered services. Of course, the government may have found what it was looking for. Payers, including the federal government, are somewhat concerned that payers and physicians may disagree over what constitutes a covered service and what is extra. For example, say a patient calls at 2 a.m. with a question or concern. Is the conversation part of the 99213 you billed that afternoon or is it a special service?

Medicare would hate to see you get paid twice — once through a concierge fee and once by Medicare — for covered Medicare services. You need to be careful with this model because of such legal gray areas, but you needn’t give up on the concept. The Centers for Medicare and Medicaid Services has officially stated that physicians may enter retainer agreements with Medicare patients as long as they don’t violate any Medicare requirements.

The all-cash model. In this case, a patient either pays the physician one big fee upfront — and the physician takes the risk that the fee will cover the patients’ needs, much like capitation — or the patient pays the physician directly for each service received. The practice does not bill or contract with insurance companies at all. It opts out of Medicare. However, if patients want to seek reimbursement from their commercial payer for cash they put out initially, they can.

Some practices combine these models in various ways, too.

What are cash-only practices like?

In January 2006, the Journal of General Internal Medicine published results of a survey of 144 retainer-based practices, providing an interesting snapshot. (To review the abstract and read the article online, visit JGIM online.)

Primarily, patient panel size in retainer practices is typically less than half that of traditional practices (a mean of 898, versus 2,303). The GAO study results indicated an average of 491 patients, including 326 concierge patients (physicians may decide to let some patients remain traditional to ensure continuity of care). You can’t handle more patients than that when you’re in concierge practice because the idea is to spend more time with each one. And you should be making more money per patient too, so you shouldn’t need a larger panel.

In fact, concierge physicians see only about 10 patients a day, according to the GAO.

Eighty-five percent of the practices surveyed switched from an established payer-dependent practice style, but only 12 percent of their patients typically stuck with the practice through the change, according to the Journal of General Internal Medicine. In other words, don’t hold out hope that you’ll be retaining all those longtime patients you know and love.