Trends and innovations in primary care payment, delivery models

Many practices are looking to the flexibility of direct primary care.

Primary care is truly the heart of our country’s healthcare system for its role in triaging, testing, treating, and educating patients – leading to better, more equitable health outcomes and significantly reducing the total cost of care. Too often though, primary care is overlooked and underappreciated as a key cornerstone in the healthcare ecosystem. The consequences extend far beyond just patient care, with primary care physicians experiencing burnout and anxiety more than any other healthcare professionals.

As a result, an innovative provider-led movement has emerged with the potential to transform the primary care landscape for both providers and patients alike. Direct Primary Care (DPC) is giving physicians the ability to escape the fee-for-service treadmill and operate outside of today’s burdensome insurance-based system by fundamentally restructuring how healthcare is paid for and delivered. DPC providers do that by collecting a monthly fee directly from their patients, or their employer sponsors, for a predetermined list of services.

While COVID-19 had a profound impact on the delivery of primary care services, the past two years haven’t slowed down the rapid growth of DPC practices, which are poised to emerge from the pandemic stronger than ever before. There’s a few reasons why.

Patients and providers are seeking more value

The healthcare industry is largely built on top of a fee-for-service (FFS), insurance-based model — a system that lacks price transparency, has perverse incentives, and is encumbered by tremendous administrative burdens. This complexity is largely responsible for today’s healthcare crisis.

DPC, however, represents the exact opposite for physicians who are seeking out “value over volume.” The difference is a big shift away from the FFS system to one that provides complete transparency for patients and offers no guessing games, no copayments, no insurance claims submitted, and no third-party billing of any kind. It removes limits on primary care and helps patients avoid unexpected out-of-pocket payments while providing a steady means of income for physicians.

During times of financial uncertainty and hardship experienced during the pandemic, DPC continued to grow. According to research conducted by Harvard Medical School and the Commonwealth Fund, FFS adult primary care visits, and in turn insurance reimbursements, decreased 60 percent during the month of June 2020 and 10 percent over the course of the year of 2020. DPC memberships increased by 21 percent in 2020, demonstrating the true value of the model to both patients and providers.

Employer-sponsored DPC plans are growing in popularity

Employer-sponsored health plans have experienced the highest annual increase in per-employee costs since 2010 (jumping 6.3 percent in 2021), which is largely driven by employees and their families resuming the care delayed throughout the pandemic. As companies look for alternative options to help lower costs, DPC is standing out as a more affordable alternative that can also improve health outcomes among the patient population. For example, in one instance an advanced primary care model saved an employer 11 percent per employee each month, while another employer experienced annual savings of $913 per member compared to their existing PPO Choice plan (not including additional savings from improved recruitment and retention, and decreased absenteeism).

Consequently, more and more companies added DPC as an employee health benefit during the pandemic and beyond. While both retail and employer-sponsored members grew significantly throughout the pandemic, employer-supported members increased by 43 percent from pre-COVID to Sept 2022, compared to a 26 percent growth in “retail” or individual membership growth.

Employees themselves are ready and waiting for this shift with the vast majority of consumers (83 percent) expressing interest in joining a DPC plan if it was offered by their current or future employer, according to a recent survey. This popularity is likely to continue as employers drive employee education and awareness around the benefits of this all-inclusive primary care program such as lower costs, improved health outcomes, and higher patient satisfaction.

Additionally, new solutions are being introduced to help brokers and employers overcome the biggest barrier to evaluating the benefits of DPC: the time (or in many cases, even the ability) to research providers. Networks are emerging to help aggregate DPC providers into one contracting entity to support employers as they search within their communities for better healthcare options.

DPC practices are well-equipped for virtual care delivery

During the onset of the pandemic, many FFS practices were forced overnight to adopt telehealth, resulting in both physician and patient frustration as each attempted to navigate this new reality. In contrast, DPC practices already had virtual services available or could quickly add and sustain them after COVID-19 hit.

Recent research found virtual outpatient visits among FFS patients dramatically increased during the first 12 weeks of the pandemic but later decreased around June 2020, translating into an overall increase of 7 percent in virtual services. Better able to meet demand, virtual DPC services increased 144 percent in the same time period and have continued at this level.

Despite telehealth having grown in popularity among consumers throughout the pandemic, it will continue to be a challenge for FFS practices to provide it on top of navigating the myriad of challenges inherent in the U.S. healthcare system, such as insurance copayments and variable reimbursement from federal assistance programs including Medicare and Medicaid.

A promising future for DPC

As primary care’s transformation continues, DPC is becoming increasingly common among practices. The healthcare industry is beginning to recognize its potential and support those making the transition to this model.

As this provider-led movement continues to gain traction, more and more physicians will continue to realize just how exhausted they are with the often dystopian way in which they’re forced to practice medicine today. With nearly every state across the country having DPC practices, clinicians can look to their neighbors to hear firsthand how DPC is allowing them to focus on what matters most: their patients.

Aimee Leidich is director of business operations and data analytics at Hint Health.