Value-Based Care > Direct Primary Care

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Hello friends,

For those unfamiliar with the Healthcare Huddle newsletter, it’s a great read. It lands in my inbox and I open it right up. The author, Jared Dashevsky, MD, published this article on Direct Primary Care on January 21, 2024. It’s linked below and a great read:

Jared’s hypothesis is a fear that payers should take seriously, starting with the Center for Medicare and Medicaid Services. And as Congress continues to come up with appropriations dollars year after year to “fix” physician payment cuts and address quality incentives so CMS can update payment regulations in a budget neutral way, there are long-term solutions that will have to be considered.

Below is a Brief Policy Update from this Week:

Right now, a primary care provider choosing to practice in Direct Primary Care can leave the work of caring for larger patient panels in primary care teams and pivot their career outside of payers who cover both medical/outpatient care and hospital-level and other inpatient, high-cost care. Since fee-for-service is not the way to pay for primary care and expect providers to be satisfied and patients to be managed longitudinally and in a whole-person, individualized, coordinated way, can you blame them?

There are several excellent links in the above Healthcare Huddle article that take you to additional resources. I followed a link trail to this blog article by the American Academy of Family Physicians, which broke down DPC vs. Concierge Medicine like this:

It’s easy to see the appeal for primary care providers of these niche models

• More time with patients

• Small patient panel (450-500 vs. 1500-3000)

• No insurance headaches (or in the case of Concierge, fewer)

• Reliable and consistent reimbursement with less administrative hassle

One major difference between DPC and Concierge is Concierge may continue to bill insurance for covered services. Why I like this a bit more as opposed to the DPC model? DPC reduces the number of physicians able to see Medicare and Medicaid patients. There’s already a shortage, and a shortage that’s worse in rural and underserved areas.

What I like about these models:

There are some facets of these primary care delivery options that look like advanced primary care:

• A more streamlined experience with a provider may mean a more likely advocate when you need it and a trusted relationship (when the model is a direct provider/patient relationship) between provider and patient

• Offers an option for primary care providers who would otherwise leave the practice of medicine and who don’t manage Medicare beneficiaries (in the case of DPC)

• Simplifies primary care into something younger individuals are comfortable with—subscriptions

• May reduce the likelihood of a hospitalization by improving access to a provider that you know and trust, early detection of conditions, etc.

What concerns me about Direct Primary Care and Concierge Practices:

Note these are generalizations and themes and speak of this only at a high level 

• They don’t incentivize of reimburse for team-based care. The physician is receiving payments to provide services. Yes, they have more time to provide services. But are they addressing behavioral health in-house? Are they using e-consult options and high-value providers in the community? Are they building teams to work with community based organizations?

• This one relates the first bullet: because DPC providers don’t accept Medicare, they are serving a younger, generally healthier population that’s easier to manage and generally has fewer chronic conditions and

• Lower patient panel sizes in DPC add to the PCP shortage. In advanced primary care for complex Medicare beneficiaries, lower panel sizes address the need to manage a greater level of complexity and care coordination.

  • But in DPC, which manages non-Medicare and Medicaid beneficiaries, a panel of 500 patients per provider will exacerbate the problem further, and addresses provider needs but not the population’s primary care needs

• It’s primarily geared towards younger, healthier, and higher-income individuals, however, it may give individuals a false sense of not needing coverage for managing a high-cost disease (like cancer) or unexpected hospitalizations

In this small study in the Journal of Patient Experience, 51% of the patients of this DPC practice were uninsured. No coverage for specialty care, no coverage for hospitalizations, only medications available in the practice are covered, etc. One patient quoted mentioned that her Obamacare (Marketplace) coverage went up 300%, so she chose this instead.

This hit home.

Many think of Direct Primary Care as an add-on option for those already insured or for those who want more access and convenience, for example. But DPC is also being used as an alternative to comprehensive insurance coverage—coverage with “maximum out of pocket” or “MOOP” structures that can be critical in preventing financial devastation from an illness or injury.

Here’s a quote from one of the transcripts of a conversation the authors had with one of the patients in the sample study

This is alarming! Again, direct primary care is being used as an alternative to comprehensive coverage in some cases. There seems to be some misconception that DPC will prevent a catastrophic event.

Please don’t misunderstand me—of course a high-quality preventive program is a key ingredient to improve long-term health outcomes and prevent use of the emergency room when it’s unnecessary and/or avoidable. Access to care and convenience of scheduling are also important, and for many younger people who roll the dice, this will be enough. But it’s a false sense of security.

Not all emergencies can be prevented. Not all hospitalizations can be avoided.

Now if you have been reading my posts, you know my passion for payment models that incentivize avoidable inpatient care. The key is avoidable.

I don’t need to list out examples of unpredictable and unavoidable hospitalizations. You know what I mean.

Direct primary care should not be used in a silo and as an alternative to comprehensive health insurance because of what health insurance is meant to protect us from in America.

Is it a great option, potentially, in a country with baseline hospital coverage that can prevent financial ruin? Certainly.

Direct Primary Care has at least partially been born out of:

• Burnt out primary care providers with huge patient panels, burdened by administrative responsibilities and maintaining salaries through volumes of billable visits rather than providing the comprehensive set of services needed for high-quality population health management

  which has been partially born out of:

• The type of health “care” that’s been covered through billable codes, with some prevention services added to coverage only recently and specialist interventions weighted heavily in reimbursement methodologies

  and

• Limited provider types able to care for patients at the top of their license in primary care roles, along with overall slow adoption of advanced primary care practices because of inadequate incentives and payment structures

  and

• Insufficient numbers of educational programs for some primary care provider types, such as nurse practitioners, who are also needed in women’s health/midwifery, anesthesia, and other areas

  among other reasons.

Direct primary care also essentially discourages all care and services that are provided outside their clinic, as the patients then incur often high-cost services that are usually in fee-for-service models (providers being reimbursed based on volume of care provide) and not incentivized to ensure billable services are what’s truly needed and medically necessary.

When someone has comprehensive health insurance, the disincentives are reduced to varying degrees. But when DPC is the only coverage someone has, they may not be able to make the best, even informed decisions about when care outside the clinic is important.

For example, if a patient needs a medication not covered in the practice’s available medications that are part of the practice and subscription, they may have to cross their fingers it’s a low-cost generic they can pick up at a local pharmacy.

But if they are choosing Direct Primary Care instead of health insurance because of cost, is it likely the patient will be eager to purchase a high-cost prescribed medication at full price?

Now, I’m not an actuary.

I can’t tell you what level of risk one incurs of needing care they can’t afford or of an unavoidable, financially-devastating hospitalization (since the cost of hospitalizations for uninsured individuals defies all logic in America), and the differences between various PCP patient care structures and changes in that level of risk.

But it IS a risk. And even the PERCEPTION of even a medically necessary service being high-cost and out-of-reach is sufficient discouragement for many when they have to pay the full, out-of-pocket price, not even the price negotiated through something like a high deductible health plan.

Should health insurance just be for hospitalizations and catastrophic care?

That’s certainly debatable. The way healthcare is paid for and delivered in America doesn’t lend itself to that. Would it significantly lower the cost of insurance? I doubt it. Would it leave the poor uninsured, burdening lower-income Americans? How could it not?

Why Advanced Primary Care Practices Taking Full Financial Risk and Accountability for Patients is the Better Option (VBC instead of DPC):

Provider/payer alignment is the hallmark of this type of practice. The practice is given a large percent of the total premium paid to the insurer for a given population, and the practice is responsible for managing the patients’ longitudinal care for less than the total premiums paid. Quality, evidence-based care and care management is incentivized because well-engaged patients are less likely to use avoidable and/or unnecessary emergency room and hospital-level of care.

Therein lie the key differences. Avoidable. Unnecessary.

Most of the high spend that uses up insurance premiums allotted to a payer is on inpatient care, so preventing that hospital care directly is what incentivizes an at-risk practice and its care teams to do whatever it takes to keep patients out of the hospital.

Here’s what you can commonly find in an advanced primary care practice paid to manage the total cost of care of a population:

On-site behavioral health (and hopefully physical therapy)? Check

Social workers or others who identify social determinants of health? Check

A strong network of the highest-value specialists (identified by data) when a patient needs a specialist? Check

Navigators who function as patient advocates, ensuring they are getting the care most likely to lead to the best outcome? Check

Not driven by billable codes but by interactions that lead to patient engagement, compliance with care plans, trust in providers? Check

Incentivized to manage primary specialty care and work at the top of their license? Check

Incentivized to adhere to evidence-based care? Check

Systems and technology in place that simplify provider workflows, improve providers’ experiences, and help keep these providers in the workforce? Check

So what do you think? Agree, disagree, other perspective? I’d love to hear from you, just reply to the email!

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Talk soon,

Dana