Blog November 30, 2021

New Models for Primary Care

A survey by the American Academy of Family Physicians found that 89% of Americans value a close relationship with a primary care physician (PCP) who is familiar with their medical history, background, and family/home environment. The need for PCPs has been growing with the aging population and the increasing number of people that need help managing chronic medical conditions.

How will new models of primary care affect American healthcare?

For many years, primary care medicine has been complicated and often stressful for both patients and physicians. Patients face long waits for appointments and hurried visits, and, in some regions, finding a PCP willing to take new patients – especially for Medicare / Medicaid recipients – has frequently been difficult. PCPs confront long hours, a high administrative burden related to the maintenance of health records, billing and reimbursement, lower pay compared to medical specialty practitioners, and increasing burn-out. Those working in small practices often face even greater stresses resulting from staffing shortages, lack of finances to adopt new technology, and limited expertise for satisfying more frequent questions and demands from patients who, with a growing medical literacy and use of personal wellness/health apps, are taking more control over their own health. The consolidation of medical practices has also added to the pressures. Many clinicians whose practices have been acquired by large insurers or private equity firms find themselves no longer fully in charge of the care of their patients. They can find themselves with limited options for referring their patients to specialists and may be required to see more patients for shorter appointments in order to meet the productivity targets of their new practice owners.

Recently, however, several new primary care models have arisen with the aim of putting the emphasis back on close doctor-patient relationships and personalized medical care. One common feature of these new models is a subscription-based payment system. Patients pay a monthly or annual fee for a more personalized, concierge-like experience, which brings a steadier income to PCPs and allows them to spend more time on caring for a smaller group of patients, and less on billing and administrative matters. By providing more regular personalized care at an affordable price, these new models are expected to lower overall health care costs by reducing emergency room visits, hospitalizations, urgent care referrals, specialist consultations and unnecessary lab tests. For example, a two-year study by the Society of Actuaries found that these sorts of practices reduced emergency department utilization by 40%. 

Several versions of these new models have been reported to date.

In the Direct Primary Care model, patients pay a low monthly membership fee directly to the PCP without going through an insurer, and memberships can be cancelled at any time. The fee covers the cost of regular doctor visits and most services that high deductible insurance plans might require patients to pay out-of-pocket, such as routine lab tests, annual physicals, etc. Some, such as the rapidly expanding company Forward Health, also offer such additional services as genetic analysis, mental health care, and first fills of prescriptions. Patients can typically schedule same-day or next-day comprehensive appointments with the doctor of their choice and have quick access to their physician by phone, text, email, app or video chat – and in some cases even house calls. Direct Primary Care practices are accepted by the Affordable Care Act as a non-insurance option, so patients are not required to pay state-mandated fees for being uninsured. However, services such as visits with a medical specialist, urgent care, or hospitalization are not covered by Direct Primary Care, and these practices rarely – if ever – accept Medicare or Medicaid patients. As a result, this model may best serve younger, middle-income patients and those in rural communities where PCP shortages exist. 

A second model, the Concierge Medicine model, is also membership-based, with memberships billed as an annual fee and potentially paid as monthly installments. The fee is usually higher than for Direct Primary Care and cannot be cancelled mid-year. Unlike Direct Primary Care, the Affordable Care Act does not accept Concierge Medicine as a non-insurance option, so patients must also have a health insurance policy to help pay for services which are not fully covered by the membership fee. This requirement gives the PCPs a second source of revenue from the insurer and allows them to spend more time to actively support their patients’ needs when referring them to specialists, hospitals, or other health providers. The Concierge Medicine model typically benefits patients ages 50 or older, as the cost of membership plus a high deductible insurance policy is often lower than the cost of traditional insurance for this age group. One Medical is an example of the Concierge Medicine model. The company charges a membership of around $200 per year. This membership does not cover visits or services, which are charged to a patient’s insurer. However, patients can quickly and easily book appointments, wait less than five minutes for visits with their chosen PCP, and have 24/7 access to their doctor via email and telemedicine. One Medical can coordinate care with the hospital of a patient’s choice and patients can visit One Medical providers in any office across the country. One Medical accepts health care plans from most insurers as well as original Medicare, but not Medicare Advantage.

The difficulty for these new models to accept Medicare patients comes in part from current law that restricts Medicare providers from entering private payment arrangements with patients. However, the Centers for Medicare and Medicaid Services (CMS) recently instituted a program of risk-sharing between the agency and 53 value-based, direct-care organizations aimed at reducing expenses and enhancing the quality of care for Medicare and Medicaid recipients. 

Among the 53 participating organizations is Oak Street Health, which specializes in primary care for adults on Medicare and Medicare Advantage. The company currently operates more than 100 centers in 18 states. Oak Street says that since its founding in 2012, the company has reduced patient hospital admissions compared to Medicare benchmarks by approximately 51%, 30-day hospital readmission rates by 42%, and emergency room visits by 51%, while maintaining a high degree of patient satisfaction.

While these new primary care businesses are on the rise, other policy changes could further aid the shift towards more personalized, value-based care models. Currently, the U.S. Internal Revenue Service (IRS) considers such membership-based practices as payment for insurance, thus prohibiting patients from using their tax-advantaged Health Savings Accounts (HSAs) to pay for memberships. Shifting the Treasury Department’s stance to recognizing Direct Primary Care as direct payment for diagnosis, treatment and prevention of disease would negate this limitation, making care financially manageable for more patients. 

Direct care models would also benefit from policy changes to rules governing HSAs and their use. Currently, HSAs only allow the use of one health plan, which must be a high-deductible health insurance plan. Changing the requirement to clarify that that direct payment models are not health plans or insurance would further resolve IRS confusion over whether HSAs can be used to pay for such care.