Direct Primary Care: What Physicians Need to Know

April 30, 2015

With the increased buzz around the direct primary care model, here's what you need to know about the private healthcare transition.

Direct Primary Care (DPC) triggers enthusiasm among healthcare service providers, primary-care physicians, and employers looking for better managed primary care. Basically, DPC typically involves patients paying a monthly fee to primary-care physician practices for basic primary care plus expanded physician/patient time and connection. Patients more easily visit their primary care physician, and can often e-mail or call the practice 24/7. Health plans are actively evaluating DPC-style patient engagement as plans shift reimbursement away from "fee-for-service" and toward care coordinating value and outcome compensation.

For a U.S. primary care practice to generate adequate plan revenue, they must visit face-to-face with too many patients each day. There is far too little time for each visit, and the practice has too large of a patient panel for the physician to develop strong patient recognition and interaction. Primary-care reimbursement has dropped as practice expenses have increased for many years. This is discouraging primary-care physicians financially, and in how they really want to practice medicine: They are "people" who want to connect and know the patients well enough to make solid front-line medical decisions. And for patients, plan-reimbursed primary care often means inconvenient office visits with long waits scheduled weeks in advance that are brief and trigger copays or deductibles. Patients tend to avoid the long waits and inconveniences, and the copays or deductibles, by avoiding the physician as long as possible. That leads to deferring primary-care visits until there is really a problem, and then the opportunity to delay or defer more expensive medical intervention is gone. The financial aspects of plan-reimbursed primary care fail to induce desired behaviors from patients and physicians. Patients are passive investors in "all-in" health plans, expecting robust healthcare intervention when needed. Physicians are paid for quick numerous office visits, but receive no compensation after a very busy day of office visits to further connect with patients. In sum, existing fee-for-service plan reimbursement misaligns financial incentive with desired outcomes, leading to excessive plan costs.

'VALUE' OF HEALTHCARE

With high-deductible U.S. health plans requiring more out-of-pocket payments, and with the obvious downside of developing chronic conditions that could have been avoided, the U.S. population should be willing to engage in healthier behavior modification for financial and personal reasons. But this healthcare economic investment upside is opaque, not transparent. Patients lack clear-cut financial value propositions sufficient to promote wellness investment. Plan-dependent primary-care physicians are largely on the outside of the wellness economy. The U.S. system is amazingly effective at high-cost intervention, but invests little in creating wellness incentives to reduce or avoid costly plan interventions. We plainly need to shift reimbursement to trigger desired outcomes, and that means shifting to incentivize desired behaviors from key stakeholders.

Plans really are shifting toward "value" and "outcome" reimbursement, but without clarity on: a) how to better compensate primary-care physicians to encourage direct early patient connection; and b) how to create direct patient engagement and investment in wellness. Private direct or DPC medicine tackles both issues. Direct patient subscription investment in primary care compensates physicians for direct patient connection.

If a simple all-in monthly fee for care works, why have HMOs not solved the U.S. healthcare problems? While HMO models internally coordinate care for a monthly premium, they lack a tangible engaged direct patient investment in preventative wellness. They lack primary-care physician compensation for direct patient connection. We need both to turn the corner on U.S. healthcare outcomes. Rather than trying to legislate small-business model outcomes (accountability, incentives, etc.), why not simply allow small businesses to deliver accountable and incentivized solutions?

DPC models involve free market direct patient subscription investments paid to physician practices as direct compensation to connect and coordinate care. DPC models enable improved opportunities to engage in badly needed patient behavior modification that cannot be accomplished in annual six minute office visits. DPC physicians like any small business owner are accountable for patient satisfaction, connected to their delivery, and incentivized to deliver improved care. Is that not exactly what the U.S. healthcare reimbursement reforms want?

NAVIGATING MEDICARE COMPLIANCE
The powerful simplicity of DPC models face the following legal compliance challenges:

 • Physician Medicare participation means private fees must be allocated to non-covered services to avoid violating Medicare assignment, and cannot be a private charge to "access" the practice;

• Alternatively, DPC physicians electing to formally opt out of Medicare to simplify the subscription offering must comply with opt-out patient agreement requirements;

• Private plan contract compliance can be difficult, leading many DPC models to entirely avoid private plan integration;

• State laws may impact whether DPC models can charge a flat monthly fee for unlimited primary-care services (triggering insurance or consumer law issues);

• Data privacy regulations triggered by DPC models' typically more robust electronic communication and education amenities require compliance with HIPAA and other similar state and federal laws; and

• Affordable Care Act and IRS requirements impact employer funding of DPC models and whether patient contributions can be funded via Health Savings Accounts or Flexible Spending Accounts.

Navigating Medicare compliance remains a central consideration. Medicare participatory practices must not establish subscription payments for amenities covered by Medicare. HHS' Office of the Inspector General (OIG) published the results of three investigations into the overcharging of Medicare patients; each of which are generally helpful guides for DPC compliance. In 2003, a settlement of $53,400 was reached for fees levied by a physician to patients for services covered by Medicare. The same charges were made against a North Carolina physician in 2007, and resulted in a settlement of $106,600. Most recently, in 2013, a medical group in South Carolina agreed to a settlement of $170,260, again for mandating relatively small annual payments from Medicare beneficiaries for "administrative" services that were deemed covered services (constituting an "access" fee). Failure to develop a Medicare compliant model can lead to significant financial and legal ramifications. We want to avoid physicians opting of Medicare to avoid this exposure. Solid compliance work can avoid Medicare compliance exposure without necessitating opting out of Medicare.

DPC shows terrific potential to invigorate an otherwise discouraged primary care physician population to deliver better patient-connected and coordinated care, aligning financial incentives with desired behaviors of patients and physicians. The U.S. technology economy can generate 1,000 new technology solutions for healthcare that we only read about and never see implemented unless and until both patients and physicians are integrated and incentivized to adopt and use them. When plans embrace and guide DPC implementation, they will promote: a) incentivized primary-care physicians to captain better management of patient populations with value and data tracking elements; and b) reduced plan utilization with improved chronic condition avoidance and management. And that will positively impact the fiscal condition of the US, health plans, and all Americans.

James J. Eischen is a partner with Higgs Fletcher & Mack, LLP and advises in matters connected to reimbursement, contracts, interdisciplinary health professional employment and labor issues, HIPAA compliance, and the fast growing membership-based direct primary care (DPC) service approach targeting employers and individuals. Eischen is a frequent speaker and noted expert for the American Academy of Family Physicians. He can be reached at eischenj@higgslaw.com.

Michael J. Campbell is an associate with Higgs, Fletcher & Mack LLP in the litigation, healthcare, and private medicine practice groups. He is an experienced healthcare litigator who works with Eischen with private direct medicine business planning and compliance. Campbell can be reached at campbellm@higgslaw.com.