Direct Primary Care - Defined
Direct Primary Care is a direct-to-consumer approach to medicine. In this model, medical practices contract directly to patients bypassing any third parties and insurance plans. The Direct Primary Care model typically takes the form of periodic payments (monthly, quarterly, annually, etc.) in exchange for a broad range of primary care services. This revenue model is capable of improving the access and availability of healthcare services for patients and simultaneously stabilizing the revenue of medical practices. The model is particularly well suited for those without insurance or who have high-deductible catastrophic-level insurance plans.
How Direct Primary Care Works
Direct Primary Care at a fundamental level works by changing the dynamic between a patient and a provider to something that is more streamlined and straightforward. In general, patients will sign a contract directly with a healthcare provider. This contract will state the payment arrangement and what services, if any, are included in that contract. The exact scope and nature of the Direct Primary Care contract vary from practice to practice depending on the values and resources available to them. Unlike the traditional healthcare system that has vast networks where you can expect comparable costs and services at every practice, Direct Primary Care was built with personalization and customization in mind. No two Direct Primary Care clinics are alike and the services offered are typically extremely individualized making the decision to choose one Direct Primary Care clinic over another a very personal decision.
The business of medicine
At its core, Direct Primary Care starts with a change in the business model. While there are some who simply have cash-only practices for Fee-For-Service items, most DPC clinics utilize a periodic membership fee. This periodic fee is the foundation of what makes the model successful and underlines the entire operation. The goal of a DPC practice is two-fold: Stabilize the income for the practice and improve the quality of care for the patient.
In a traditional Fee-For-Service system such as our insurance-based system, medical practices will bill you per visit, and additional charges apply depending on services rendered. On average this requires providers to see approximately 25 patients per day to be profitable in this model. Given the cost of care and various other factors, the average patient is seen anywhere from once every 2 years to 4 times a year. To sustain seeing 25 patients per day, every day given the variation of visit volumes… the average medical practice needs a caseload of anywhere between 2,000 - 3,000 patients.. per provider. Simple math tells us that for a provider to see 25 patients in an 8-hour day they can only spend 19.2 minutes with each of them. That includes time with the patient, physical exams, documentation, making orders, referrals, and more. With insurance, this often will require an entire back-end support staff to deal with prior authorizations, billing, managing denials, claims, and more. With all of the support staff, billing staff, and other requirements for traditional medical practices, the average overhead of these practices nationwide is approximately 70%.
In a Direct Primary Care membership program there is a fixed fee that is charged regardless of whether or not a patient shows up or needs care. Additionally, this step can be automated without any need for accounts receivables, claims handling, or other common business requirements in an insurance-based system. When you remove all of the requirements from dealing with insurance and managing large panel sizes, the average Direct Primary Care practice can operate with minimal overhead - usually around 35%. With the substantially decreased operating costs, Direct Primary Care practices do not require as many patients to be profitable. On average, the typical DPC panel size is approximately 345 patients - compared to upwards of 3,000 in a traditional practice. The key part here again, is that these patients do not need to be in the clinic in order for the practice to be paid. This separation of business, from practice means that many options become available to patients that were not present before.
ramifications of a low panel size
Most Direct Primary Care practices utilize a simple formula and make a few assumptions in determining how their business will operate. First, how many patients do they even want on their panel? Next, how much do they want to make? These two questions will dictate how the practice will proceed. Most DPC practices operate on the assumption that most patients will utilize telehealth / digital communications that can efficiently manage problems that do not require a visit. The second assumption is that most patients will need to be seen in person at most up to 4 times per year. Now we get into the nuts and bolts, If you take 345 patients X 4 visits per year = 1,380 Appointments in a year. If you take 1,380 Appointments DIVIDED BY 52 weeks = 26 appointments per week. 26 Divided by 4 days per week is 5 patients per day. This math is what makes all the difference for patients. When only needing to see 5 patients per day instead of 25, each individual appointment can easily be increased to 30, 60, or even 90 minutes spent with each patient. Additionally, in this example, there is a built-in buffer of several empty extra appointment slots in a day. Most Direct Primary Care practices will advertise “unlimited” access to their clinic. And while true, most patients only need to be seen in person around 4 times a year. The open availability and extra appointment slot availability are how patients can be seen quickly or more often should the need arise. We have found that spending more time with patients, educating them, and taking the time to truly help patients when problems arise eventually leads to a healthier patient who once stabilized often falls back into a standard maintenance schedule.
Pros & Cons of Direct Primary Care
As with all things, Direct Primary Care is not a perfect solution. There are many benefits but also potential drawbacks that patients should be aware of to fully make their decision.
benefits of direct primary care
Enhanced Access and Availability: Direct Primary Care provides patients with increased access to their primary care physicians. With longer appointment times, same-day or next-day appointments, and the ability to communicate with doctors through digital platforms, patients can receive timely and personalized care.
Cost-Effective: Direct Primary Care often offers a transparent and affordable payment structure. Instead of relying on insurance for every visit, patients pay a periodic fee, which covers a wide range of services. This can be more cost-effective, especially for those without comprehensive insurance coverage or high deductibles.
Holistic and Preventive Approach: Direct Primary Care providers prioritize preventive care and focus on building strong provider-patient relationships. With longer appointment times, providers can perform thorough check-ups, offer comprehensive health screenings, and provide personalized health guidance, emphasizing overall well-being.
Reduced Administrative Hassles: With Direct Primary Care, providers can minimize time spent on administrative tasks and focus more on patient care. By opting out of insurance billing and reducing paperwork, providers can enhance efficiency, streamline operations, and offer a more personalized experience.
Flexibility and Convenience: Direct Primary Care often incorporates telehealth services, enabling patients to communicate with providers virtually for consultations, follow-ups, and minor health concerns. For certain complaints, this can eliminate the need for unnecessary in-person visits and offers greater convenience for patients. Especially those with busy schedules or limited transportation options. Additionally, mobile visits/house calls can be called on as needed
Cons of Direct Primary Care
Limited Insurance Coverage: Direct Primary Care covers primary care services but does not include specialist consultations, hospitalization, or emergency care. Patients who require extensive specialized care or have chronic illnesses may still need additional insurance coverage to access these services, which can be an added expense. While most of the time patients do see cost savings if a patient were to have a catastrophic event that maxed out their deductible that year they could find themselves spending more that year for medical expenses than would have otherwise occurred.
Lack of Provider Network: Direct Primary Care practices may have limited provider networks, as they typically consist of a smaller team of primary care providers. This can be a disadvantage for patients who prefer to have access to a wide range of specialists or have a complex medical condition that requires multi-specialty care. Depending on specific insurance carriers it can be difficult for referrals to take place without going through appropriate channels.
Dependency on a Single Provider: Many Direct Primary Care practices have a sole provider who is responsible for a patient’s care. This is both a benefit and a curse. The benefit occurs because you have one person you know, like, and trust to handle your case. However, sole providers are humans too, they go on vacations, they get sick, and when they are not at the clinic working, the entire practice effectively shuts down. Larger practices with multiple team members can continue functioning if one provider is out for a week.
Catastrophic Options with Direct Primary Care
It is an important concept in DPC that the membership is to a Primary Care practice and does not cover hospitalizations, surgeries, or any other expenses that are unrelated to that specific practice. It is for that reason that it is always recommended to patients that they consider their options carefully and decide what they are going to do for catastrophic events. By their nature, catastrophic events are usually unexpected and happen at the worst possible time. Having a plan in place to protect you in case of something happens is the first step.
option 1: No insurance
Going without insurance is an option that many patients of Direct Primary Care practices will take. Many patients make this decision because they are healthy, have no chronic needs, and haven’t had any major medical expenses in years or in some cases - ever. For these patients, they tend to scoff at the idea of paying hundreds of dollars a month on insurance and getting nothing in return. While we do not recommend this approach, we certainly understand it and try our best to support it. If a patient does opt for the approach of not using insurance, it is important to take steps to ensure it is done properly. The entire purpose of insurance is to protect against catastrophic events. This can be done on your own without insurance if you have the financial resources for it. A simple approach to doing this is to take the money you would have spent on insurance each month and put it into a savings account, investment account, high-yield interest account, or something similar. By retaining control over your money you have much more options over what you can do with it than just simply spending it on insurance. If done right this will likely protect you for things like surgery, a couple of ER visits, and other major expenses but not particularly catastrophic in nature. The caution here is of a catastrophic event with the potential of 6 or 7 figures worth of medical bills. Medical bankruptcy is a very real risk that is normally avoidable.
Additionally, if a person were to opt not to save the money each month and instead spend it without building an emergency fund, they could have problems with smaller unexpected medical costs and get themselves into financial situations that could have been avoided.
option 2: ACA marketplace plan
If you are a patient looking for coverage for yourself / family without any employer-sponsored benefit the first place to check is the healthcare marketplace. These plans typically will come in different tiers such as Bronze, Silver, Gold, etc… ACA plans are comprehensive in nature with a large scope of included services. The different tiers of plans typically revolve around the out-of-pocket costs associated with them such as the monthly premium, the size of the deductible, if any co-pays / co-insurance is required, etc. Remember, the purpose of Direct Primary Care is to offer a vast array of services at discounted rates outside of the insurance infrastructures. You won’t be using your insurance in a traditional way and therefore you do not need the same type of insurance coverage. If you elect to use a marketplace plan we recommend patients to only look at bronze-level plans. These are the closest you will find to true catastrophic-level plans. They have high deductibles, lower premiums, and are usually a solid option for a member of a DPC practice.
ACA Marketplace options can be found by going to the healthcare.gov website, or if you are in Colorado - by going to the Colorado Connect website.
option 3: catastrophic plan
True catastrophic level plans are still a thing but are not as common since the affordable care act was introduced. We recommend treating anyone offering a “catastrophic” plan with a critical eye for the fine print. To give an example we once had a patient who was extremely excited about finding an affordable Catastrophic plan. The plan promised hospital coverage, ER visits, and more for around ~$150 per month. On the surface, it sounded great. When we actually read the fine print what it really offered was “Up to $500 per day coverage in a hospital for a max of 10 days”. The problem here is patients can easily rack up thousands, even hundreds of thousands of dollars per day in a hospital. Making this plan effectively useless for a major event. Similarly, catastrophic plans are often offered by smaller less reputable companies and many patients have been stuck with a bill. Unfortunately, we do not currently have any solid recommendations at this time for catastrophic plans. If speaking with an insurance agent ask to see the actual plan details before signing anything. Of note, most Catastrophic plans do not cover any kind of primary care/outpatient services which is why they can be a great compliment to a DPC membership (if you can find a quality catastrophic plan).
option 4: employer plan
Employer-sponsored plans are a major benefit and are often the source of some of the best health insurance options in our country. Unfortunately, they are expensive for employers and employees alike to maintain. The quality of the plan really depends on the resources and financial abilities of the employer. Many patients have gold or platinum-level plans sponsored completely by their employer to be a solution that covers all of their needs. These types of patients do not typically fit well into a Direct Primary Care practice because they can get essentially free care elsewhere. More commonly however are cases where employees have to pay 50% of the insurance cost, or where the employer can only offer a low-tier plan. In this case, we recommend patients get the lowest tier plan and then use DPC as a wrap-around just like a patient with an ACA or Catastrophic plan would do.
option 5: Accident plan
Injury and accident plans are all the rage in today’s marketplace. Companies like Aflac have low-cost accident insurance plans that can cover specific needs and have gotten excellent reviews. They are of course not comprehensive medical plans but are considered “supplemental insurance”. They can serve as a layer of protection for many patients with more common needs. They should not be relied on for a comprehensive solution but when finances are tight having something like this at an affordable cost is a great option for care.
option 6: health share
Health Shares are an interesting commodity in health care. Essentially, health shares work by “pooling” the monthly fees from their members together and then dispersing them to those with needs that month. They can be a great option to provide full catastrophic-level coverage at far more affordable rates compared to traditional insurance and for many individuals and even businesses are an attractive option. There are some potential drawbacks to be aware of, however. First, health shares are an unregulated entity. There are multiple reports of fraud and abuse in several companies in the market. Second, the concept was originally created by Christian Health ministries. Because of the faith-based backgrounds - health shares are often tied to strict religious or moral agreements when signing up. Straying from any of the agreements (such as smoking, drinking, having premarital relations, etc..) could potentially mean a claim denial. It is for this reason that we also approach Health Shares with an air of caution depending on a patient’s lifestyle and religious background. For those who wish to pursue them and explore the option more thoroughly, there are two that we would recommend as a practice which are Zion Healthshare, and Sedera Healthshare. Both of these companies have positive reputations and do not require any religious affiliations which allows us as a practice to feel comfortable recommending them to any of our patients. Sedera also comes with the benefit of offering discounts to those who have a membership to certain Direct Primary Care practices like ours.
Medicare, Medicaid, Etc…
This guide to Direct Primary Care would not be complete without mentioning the problems that are associated with Medicare, Medicaid, Tricare, and other federal programs. As we’ve discussed in previous sections, the entire premise of how DPC works is by privately contracting with individual patients or even employer groups. The problem when it comes to federal & state level health programs is that there are often laws in place that specifically prevent healthcare practices from doing this. Medicare for example states that you must bill Medicare for any Medicare-covered services. What’s a medicare covered service? Basically everything. Office visits, injections, stitches, you name it. Medicaid is typically a state-funded program and also has similar rules depending on the state that you live in.
Question: So does that mean that you can’t be a patient in Direct Primary Care if you have Medicare or Medicaid?
Answer: It’s complicated.
Let’s start with Medicare. The original statement above of “must bill Medicare for any Medicare-covered services” has an additional clause that is referencing providers who have opted-in to Medicare. Opting into Medicare isn’t really a choice, it happens automatically when providers get their first job and credentialed. It is a nationwide opt-in that allows doctors and providers to navigate the Medicare system. The problem is, to see a Medicare patient two factors must take place: 1) the patient must sign a Medicare opt-out that states they will not attempt to bill Medicare for any services provided by the DPC practice and 2) The provider in the DPC practice must opt-out of medicare.
While a patient opting out of Medicare is as simple as signing a form and carrying on with their day, a provider opting out of Medicare is a major process. To do so requires submitting a form to the Federal system and the provider is pulled from the system nationwide for a period of 2 years. Many DPC providers have second jobs that require them to work elsewhere while building the DPC practice and to do so is not feasible. As a result, many DPC practices will simply state that they do not accept Medicare Patients at all.
A similar problem exists when it comes to Medicaid. In many states patients and providers can go through the opt-out process and still join the practice. In states like Colorado, however, even that is prohibited. There are state-level rules that make it illegal to the point of jail time for privately billing a Medicaid patient.
Finally, there’s the Employer-sponsored route. This is when an employer is fully sponsoring a patient’s DPC membership as an employee benefit. When a third party such as a business is paying the fees and not the patient themselves, it is possible to be a member of a DPC practice and remain inside both of the Medicare / Medicaid systems. It gets a little tricky depending on the state you are in but this can potentially be a route that some practices can go.
Conclusion
DPC is a wonderful program that provides options to patients that did not previously exist. It is a great option for reducing the cost of care while simultaneously improving the quality of care for most patients. It can have drawbacks however for some patients depending on their circumstances. Some patients with major medical needs and expenses, catastrophic events, or certain insurances can come with extra expenses that they would not have ordinarily had. Deliberate decision-making and understanding of the intricacies are important when deciding to join a Direct Primary Care practice.
To find out more and to see if there is a DPC practice in your area we recommend checking out the DPC Frontier Mapper. This contains an organized list of most DPC practices across the nation. We encourage you to consult with the practices in your area and see if they are right for you. If at any time you have questions, simply reach out to our office for help
Thank you for reading and have a wonderful day.
Jason Rogers, PA-C
President
Starlight Health
