"David Clause" in Obamacare

Greenbeard

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Jun 20, 2010
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Writing in Forbes today, Microsoft veteran and now health care-themed tech startup founder Dave Chase waxes poetic about Direct Primary Care (DPC), something he calls “concierge medicine for the masses.” More like a gym membership than an insurance plan, its boosters describe it as the antidote to what they consider to be a system that currently overinsures people:

Direct primary care practices offer a membership-based approach to routine and preventive care that can dramatically reduce health care costs for individuals, families and businesses.
Direct primary care practices serve as a patient's "primary care medical home" (D-PCMH) where they go for all routine primary, preventive and chronic care management types of care. Patients pay one low monthly fee-sometimes as low as $49-directly to their direct primary care facility for all of their everyday health needs. Like a health club membership, this fee gives patients unrestricted access for visits and care, so patients can use the services as much or as little as they want. Many direct primary care practices are open seven days per week and offer same-day or next-day appointments. At many clinics, physicians are on call 24/7.

There is none of the paperwork and expense required today by insurance reimbursement - no procedure or billing approval, deductibles or co-payments. With a lower business overhead and dramatically less paperwork, primary care providers are no longer forced to squeeze in an unmanageable number of patients and can instead take the time necessary with each patient to deliver high-quality, personalized care.

Accidents and the unexpected do happen, so the typical patient in a direct primary care practice keeps an insurance plan to cover emergencies and serious illnesses. Because this insurance doesn't need to cover routine care, many patients choose a less comprehensive plan with a higher deductible and lower premium.

Chase obviously is a firm believer in the notion that most health insurance plans pay for too much, like car insurance covering your gas (in the past he's compared it to a hypothetical homeowner's insurance policy that covers the routine servicing of household appliances). Given his faith in this DPC approach, he apparently sees a light at the end of the tunnel: "What looks like a very minor part of Obamacare may prove to be the most important clause to slaying the healthcare cost giant that has crushed family, business and government budgets."

His piece is: "David Clause" in Obamacare Ready to Slay the Healthcare Cost Beast:
Proponents of DPC state that the best way to pay for healthcare is to pair DPC with a high-deductible wraparound policy. The idea is you use insurance what it’s best for — rare items (house fires, cancer, major car accident). For day-to-day healthcare, DPC is paid for in a model that is akin to a gym membership — a flat monthly fee regardless of how much one uses it (though some have co-pays mainly due to state insurance regulations).

As an observer of the evolution of health plans, I’ve been stunned by how slow insurance companies have been to capitalize on the DPC opportunity. Perhaps they were waiting for the Supreme Court ruling. For several months, I’ve said that it’s clear how the insurance exchange marketplace will play out. Before long, insurance companies will realize a key way to win in the insurance exchanges is price. Low price wins. There’s no better path to a lower price than pairing a DPC model with a high deductible wraparound policy which is explicitly what Section 1301 (a)(3) of Obamacare allows. Given how game-changing this is, surprisingly few insurance companies even know about this clause given the threat and opportunity it poses. DPC’s other notable advantage for insurance companies is the Medical Loss Ratio requirements (read the bunker buster article for more). In a nutshell, insurance companies have to keep overhead low and DPC allows them to eliminate most of the bureaucracy associated with day-to-day healthcare that would be like getting an EOB for your visit to Jiffy Lube.

I'm not convinced his argument is particularly strong, but it's an interesting perspective. I suppose we'll see if those arrangements take off.
 
For a family of four at the lowest rate of 49 bucks ( most likely per person ) thats 200 bucks a month. Thats cheaper than what Im paying now but with my high deductable, Im paying for all visits out of pocket.

Because my family doesnt need to go every month, it would be more cost effective for us to pay out of pocket as we do currently than to join a "health care club"

However, the concept may have some merit.

Thanks for the article. Its interesting.
 
I have to say, I'm not very familiar with the details of how the Direct Primary Care model works. I gather it's a way to fill in the gaps, so to speak, of a world that's more reliant on high-deductible plans. Insomuch as high-deductible plans are only going to get more popular, these DPC medical homes could be a good thing.

They seem to be hybrids of the notions that (1) insurance shouldn't pay for "routine" (however that's defined) care, and (2) folks are better off having a regular source of care and a real connection to their primary care provider. So why not make the primary care experience more health clubby?

That second point there is presumably why they're called "medical homes," since there are existing models of primary care called patient-centered medical homes (PCMHs) that really do seek to build a coordinated, patient-centered system around the patient.

However, there are accrediting bodies for PCMHs that make sure providers who want to be PCMHs (or market themselves as PCMHs or collect bonus payments for being PCMHs, etc) are walking the walk: enhancing access and continuity of care for patients, managing their patient populations and their care, helping to connect them to community resources and coordinate their care with other doctors, and measuring and improving their own performance. So, for instance, the National Committee for Quality Assurance has a program in place that accredits primary care practices that seek this designation.

I was curious whether these Direct Primary Care medical homes would be held to any such standards so, as I'm wont to do, I looked at the regulations on the ACA's health insurance exchanges that came out from the feds earlier this year. And the answer is no:

Comment: Multiple commenters recommended that direct PCMHs described in proposed § 156.245 be accredited, or comply with existing industry standards such as the Joint Principles of the Patient-Centered Medical Home developed by the Patient Centered Primary Care Collaborative. Other commenters expressed general support for PCMHs or provided data on the effectiveness of the PCMH model.

Response: We believe that Exchanges offer an opportunity to advance innovative models of delivery that can improve the care experience for patients and providers. Consistent with this overall goal, we have structured the direct PCMH provision to encourage, rather than limit, innovative care models. While we recognize the importance of accreditation and quality assurance, we are not establishing that direct PCMHs be accredited in order to participate in QHP networks.

There's the need for innovation and experimentation (clearly their preference on this one), and there's the need for accountability and quality assurance--it's a balancing act not to stray too far from either one. I guess we'll be able to assess in a few years whether they've done that with regard to Direct Primary Care.
 

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