James J. Eischen, Jr., Esq.

The American Academy of Family Physicians (AAFP) hosted a successful Direct Primary-Care (DPC) Workshop in Detroit in April 2016. As a workshop faculty presenter, I collaborated with co-faculty presenter Ryan Neuhofel, a family medicine physician, to discuss DPC implementation.

By way of background, DPC medical practices essentially deliver primary care without plan reimbursement requirements or constraints. This is achieved by patients paying a monthly subscription fee for essential primary care. DPC practices aim to manage patient panels of 800-1000. Patients receive more connected primary care from a physician enabled to spend more time per patient, often with the physician directly through electronic communication..

The DPC workshop extensively evaluated whether DPC practices can or should remain in Medicare and otherwise how to manage plan interactions. DPC practices are typically “out of network” and not parties to plan contracts.

Plan Integration: The (Medicare) Fork in The Road

Federal law prohibits physicians from charging Medicare eligible patients additional fees in excess of Medicare reimbursement for covered services. Can physicians eliminate all the Medicare eligible patients from practices and engage in free enterprise? Not really. The better practice is to assume all patients are Medicare eligible, and design practice programs that fully comply with Medicare assignment.

So how can a DPC practice charge a monthly fee for primary care? There are two paths. One involves carefully crafting the services provided for the monthly fee as not covered by Medicare. While that issue is complex and there are many variations of non-covered care models in the U.S., a typical solution involves the delivery of a routine, regardless of condition or medical necessity exam.  This routine exam is not medically necessary and not covered by Medicare. This means that electronic communication arising from the non-covered exam is also not covered.

And what about “covered” medically necessary care? Practices that engage in private direct medicine without opting out of Medicare will deliver covered care, too, and bill Medicare and collect co-pays and deductibles. Patients who depend on plan-reimbursed care must: a) Wait for an appointment to open and physically see the physician, and present with medical necessity, so the physician can bill for the interaction; b) Go to the ER; or c) Depend on non-physician resources to figure out health questions and concerns.

The other path: Formally opt out of Medicare altogether and mostly avoid Medicare coverage and assignment exposure. One exception: urgent or emergency care by an opted out physician is actually covered by Medicare.  Physicians who opt out must take care to avoid marketing or charging privately for emergency or urgent care. While this solves one riddle in a more simplistic manner, there is another compliance challenge: State laws typically prohibit a business from acting like an insurance company and unlimited care for a flat monthly fee can trigger concerns. While DPC practices feel strongly they are not insurance, and can and do deliver what they market, efforts are still ongoing enact state laws enabling DPC as “not insurance” are occurring throughout the U.S. It's best to avoid promising “unlimited” care for a flat monthly fee. DPC practices that carefully describe a specific offering for monthly fees and identify when additional charges may apply usually don't constitute “insurance” nor otherwise run afoul of state consumer protection laws.

Some physicians at the workshop were unable to “opt out” of Medicare, needing part-time work compensation while opening start-up practices. Others wanted to open a DPC-style practice group within a medical group so opting out was not feasible. Other physicians were “all in” and opting out of Medicare with zero plan integration anticipated or desired. Some physicians can manage to continue plan billing with a private direct model, others are concerned that plan billing takes up too much time and administrative resources that could be reallocated to patients. Consensus? The fork in the road is a personal decision with no one right answer or path.

Post-Medicare Fork: Challenges & Solutions

DPC models can vary greatly, but they share at least one compliance challenge in common: They both deliver electronically connected care and trigger HIPAA and general privacy compliance issues under federal and state laws. Even if the physician never bills plans and opts out of Medicare, they need to comply with HIPAA and other state and federal laws. Even opted out/out-of-network physicians inevitably connect somehow with plan reimbursement such that HIPAA likely applies.

The workshop addressed the HIPAA Final Rule: The need to ensure updated privacy notices and business associate agreements are in place and do an internal “risk assessment” memo that documents a reasonable evaluation of data protection measures to protect privacy. Encryption, password protection of all electronic communication devices, and avoiding breach events through reasonable precautions and common sense were discussed. Data privacy protection is achievable with reasonable efforts that enhance rather than detract from the patient/physician connection these practice models facilitate.

Physicians want to practice better-connected care now, not later, and if possible they want to flee plan requirements in favor of focusing on actual care. DPC growth looks inevitable. Some platforms will aim at the wealthy, but in time those platforms may achieve scale and savings that lower consumer pricing to more affordable rates. Other platforms will work mostly within monthly rates designed to fit modest incomes, and aim to deliver better-connected care to large patient panels. And all will use technology to improve physician/patient interaction and efficiency. Innovators and disrupters in this space will continue to change U.S. healthcare.

About the author: James Eischen is a Partner at Higgs, Fletcher & Mack LLP with nearly 30 years of experience in corporate and healthcare matters. He is involved in numerous organizations, including the San Diego County Bar Association Law & Medicine Section and Attorney-Client Relations Committee, American Academy of Family Physicians, and American Academy of Private Physicians.

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A recent workshop extensively evaluated whether DPC practices can or should remain in Medicare and otherwise how to manage plan interactions.