Insurance and Emerging Practice Models: What You Should Know

April 17, 2014

When it comes to healthcare, new practice models seem to be cropping up daily. Some of these models are bumping into a seemingly intransigent force - large insurance companies. Before you embark on a practice overhaul, it's critical to consider which model will work best for your practice, your patients, and oddly enough, your payers.

Direct pay

It's no wonder physicians are looking for ways to circumvent the administrative costs and time associated with insurance programs. Not only is there a shifting set of requirements and processes, there is also a stream of costly denials and resubmissions.

One example of how practice-model choice can affect insurance can be seen in the growth of direct-pay models.  While this model, that incorporates some basic fee-for-service principles, does address many of the insurance challenges that practices face today, it also creates some challenges.

Physicians are paid directly by patients. Therefore, a direct pay model takes away all of the costs and burdens, right?

Not quite; the argument for a direct-pay model, based on a reduction of expenses, is overshadowed by other operational realities. For example, it's true that many patients already have high-deductable plans and are accustomed to paying directly for their primary care. The challenge lies in whether the tests and referrals to specialists, that you - an out of network physician - order, will be covered by the patients' insurance.  This presents a problem for many patients.

While they may be able to afford a few visits with you a year, if your referrals and tests won't be covered by their plans, they can't afford to keep seeing you.  Physicians who are considering opting out of insurance plans need to have a very clear understanding of their patient base and be keenly aware of insurance regulations.

Concierge and insurance

With those concerns in mind, some physicians think that full-model concierge programs may offer the solution. Physicians need to tread carefully when setting up a full-model concierge program as well. Insurers are not always supportive of programs that disenfranchise thousands of their members. They are already grappling with a shortage of primary-care and some specialty-care physicians. Models that reduce patient panel size place greater burdens on an already strained system.

To discourage full concierge models, insurers may drop physicians from their plans who only care for patients willing to pay a membership fee. If that happens, a physician essentially shifts the burden of cost to his patients, who can no longer submit bills to the insurance company for reimbursement.

Hybrid-concierge programs are different, however.  Hybrid programs allow a physician to continue the plans she likes, or drop plans that don't meet the practice's needs. Most importantly, physicians continue to see all patients, including those who are not interested in a membership model, because of their age, their ability to pay, or their medical needs.

As a result, historically, insurance programs have been more comfortable with hybrid models.  Hybrid concierge practices don't reduce physician productivity or panel size. Doctors continue to see all their patients as before. The hybrid-concierge program offers options to patients who elect to pay directly for a portion of their care. Hybrid models also enable physicians to continue to care for their Medicare patients, as this model provides the revenue stability that many practices are seeking.

Insurers appreciate this feature, as they know when physicians' professional and economic needs are met they generally continue their participation in insurance plans. Most physicians who open hybrid programs stay with plans, thus ensuring their participation in the networks.

Participation in any plans or government programs should continue to be an option for physicians. There is certainly a niche for direct-pay and full-concierge models. However, when making such decisions, be sure to think about how your insurers will react, your own needs, and what is going to be best for your patients.