Many business leaders would say that a goal to providing a health benefit is access to healthcare. Typically, medical insurance funnels all healthcare expenses and claims through the insurance plan. With the right plan design, employers can buy less insurance while delivering high quality healthcare services to their employees through direct contracting. This approach is more efficient and higher value than traditional design. A great place to start direct contracting is with a service called, Direct Primary Care (DPC).
FINANCIAL MISALIGNMENT IN HEALTHCARE
The Journal of American Medical Association identifies 6 domains of waste attributing to about 25% of total spending, including administrative complexity, poor care coordination, and low value care (JAMA, 2019). The healthcare system (waste - JAMA Video), as currently constructed in the fully-insured market, is financially misaligned throughout the supply chain opposing the idea of premiums ever consistently decreasing. The players in the system often make more money, the more frequent the claims, the more expensive the claims, and the more people in the system. The examples include how drug manufacturers contract with insurers (via pharmacy benefits managers), how hospitals contract with insurers, broker commission structures, hospital merger and acquisition, publicly traded companies, and fee-for-service pay models.
In 2018, about 70% of the insurance-based (centric) model, physicians are paid for office visits with a menu of codes that are based on complexity of the visit, not time. They are also incentivized by the carriers to follow protocols within the recently emerged "value-based reimbursement" (VBR) programs many insurers implement. These programs can be competitive (physician to physician) and based on their compliance with these programs increase or decrease their reimbursement.
The combination of these can result in 2 outcomes:
1. Physicians schedule and see more patients per day.
2. Physicians follow the "herd" protocol rather than dig deeper on an individual basis.
A gentleman, just after his 65th birthday, went to his annual physical and completed bloodwork. The bloodwork and physical exam showed relatively healthy cardiovascular condition. Just after reviewing the results, the physician said, "so let's put you on a statin (heart disease drug)". The patient was surprised, asking "didn't you just say everything looks good?". The physician explained that since the patient just crossed his 65th birthday plus his family history puts him at risk for heart attack. The preventative protocol is statin. The patient clarified again, "based on my results, am I at risk? And if I had been in here at 64, would you be making this recommendation?". The doctor responded, "no, probably not".
This example is consistent with a value-based reimbursement protocol. The protocol is designed to speed up the patient visit, funnel patients to a more predictable treatment (lower variation) while increasing utilization of prescription drugs, and ultimately increasing the cost for a patient who may not fit the protocol norm.
Is this a "bad doctor" story? Not necessarily. It's a professional working within the constraints of the system. The doctor actually gets financially penalized for not following the protocol and individualizing care either in the value-based reimbursement model, population health incentives, and/or pay-for-performance employed models (AMA, 2014).
PRIMARY CARE'S CURRENT CHALLENGE
In 2018, employed physicians (hospital/health system) out-numbered independent physicians (AMA, 2018). Those employment arrangements put additional pressure on physicians to see more patients, and follow VBR payment models. That pressure degrades the patient-physician relationship and de-emphasizes the role of primary care in the system.
Eighty-four percent of physician visits average less than 30 minutes in 2016 (NAMC, 2016). Then, 89% of visits were under 25 minutes in 2018 (Statistica, 2018). For efficient utilization of healthcare services, this is going the wrong way.
With shorter visits, higher patient volumes, and more administrative work (to meet VBR requirements) patient-physician relationships have changed. The patient experience has become transactional. If a patient makes the effort and increasing out-of-pocket spending to visit the doctor (NPR, 2020), they are expecting something in return. This is often in the form of a prescription/treatment, diagnostics, or a referral. The idea of "take two aspirin and call me in the morning" has all but vanished.
WHAT IS DIRECT PRIMARY CARE?
According to the Direct Primary Care Coalition, "Direct Primary Care is an innovative alternative payment model improving access to high functioning healthcare with a simple, flat, affordable membership fee. No fee-for-service payments. No third party billing. The defining element of DPC is an enduring and trusting relationship between a patient and his or her primary care provider. Patients have extraordinary access to a physician of their choice, often for as little as $70 per month, and physicians are accountable first and foremost their patients."
By unhitching from the insurance-based model, the physician is freed up to holistically treat patients. The doctors in this model are more accessible, not tied to health system or insurance incentives, not inhibited by insurance rules (e.g. phone, email, text communication), and carry a lower patient panel. It is not uncommon for visits to be 45-90 minutes in duration. Just the time and attention that allows can increase the patient satisfaction. The physician is not bouncing in and out of the exam room with 2-4 patients in adjacent rooms.
The value for both patient and employer-sponsored health plan is treatment discussions include cost. The DPC model is considerably cost conscious and often have pre-arranged, negotiated rates with local radiology and surgical groups to assist patients.
WHAT DPC CAN DO FOR EMPLOYERS
Embedded in the right strategy and plan design, DPC can be a game-changer in the the employer sponsored plan. This service addresses 2 key parts of a high performing plan, literacy and navigation. The DPC physician can be a partner of both the employer and employee, addressing education and preventative care, treat pre-dispositions before they become more serious/expensive conditions, and navigation of the healthcare system.
To unlock the full potential of DPC:
1. Re-align incentives/pay models of service providers with plan design.
2. Evaluate risk: The right broker should be evaluating the risk and presenting options to evaluate risk to build in greater value, lower spend.
3. Design plans to prevent, then contain cost of claims.
4. Direct contract: DPC is a great place to start. Some employer groups might expand into other highly utilized services by their employees
There is at least 25% waste in healthcare (aka most employer plans) to squeeze out through design.
Learn more about DPC and how it can drive down healthcare spending in employee benefits:
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