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Part 3/3: Direct care and ACA together is the perfect solution

11/14/2016

In this final blog post as part of this series, I feel the need to start with illustrating the difference between Direct Primary Care and Concierge Medicine. It is very important for my readers to understand the terms we are using in explaining how Direct Primary Care in combination with the Affordable Care Act (ACA) is the best solution for our healthcare system.

In addition, I refer to direct primary care as well as direct medical care in general. I strongly believe, as many specialists, surgical centers, and endoscopy suites do as well, direct pay for medical services is less expensive than billing to insurance companies.

So, in summary, Direct Primary Care:

Is geared towards appealing to the masses. Think of it as "concierge" care for everyone, regardless of income status. Majority of practices offer free charity care.
Monthly fees are kept low with inclusion of office visits, telemedicine, in-clinic procedures, medications, imaging, and labs. The idea is to maximize the patients return on investment (ROI) with a low operating overhead.
Insurance is never billed on top of monthly fees.

Current Situation

An estimated $375 billion is wasted on billing and health insurance related paperwork annually
About 25%-45% of hospital/clinic spending is on administrative costs, where a majority of this cost is spent on managing the growing complexity of health insurance billing
Up to 15% of claims have to be reworked and resubmitted with average cost of $3.32 per claim
As a country, we spend about 31% of our health care spending on administrative costs

In order to really understand the economics of health care spending on a national level, think about this: We spend about 25% of the national budget on four health insurance programs — Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and Affordable Care Act (ACA) marketplace subsidies. How efficient are we with our tax dollars? What is the return on our investment? We spend 17.2% of our GDP on healthcare; more than any other nation in the world. Take a look at the graph below. We spend 49% from public funds on health care. The reason for inefficiency all of a sudden becomes more clear.

What happens when direct care and health insurance programs work together?

It is estimated that about 80-90% of all health issues can be resolved or prevented in the primary care setting. Yes, you read that right, a significant majority of issues can be managed and prevented in the office. Urgent cares, stand alone ER, and now the new trend of small hospitals are feeding off the need for accessible care. Large health systems are trying to reach more patients with multiple "footprints" across the region to bring in more people into their system. People find comfort in that all their information is "in one place."

But, we tend to forget that when physicians are on medical staff or teach at various hospitals, we have access to the EMR and able to coordinate hospital care, like the "old" days. I would argue, when your patient panel is smaller (less than the traditional 6,000 patients) then it becomes easier to coordinate and provide hospital care.

Economics of direct medical care

A. Consumers save and decrease out of pocket expenses

By saving $0.40 on the dollar, practices are able to offer more services, use technology to make themselves available to their patients, while keeping the cost of their services low. The consumer's out of pocket expenses are drastically decreased as majority of direct primary care practices do not charge co-pays or any additional costs for in clinic procedures. In addition, the discounted imaging, labs, and medications are drastically lower than with insurance.

B. Health insurance premiums will decrease drastically

When we take insurance companies out of the outpatient world: all primary care practices, specialty office visits, imaging, laboratory, physical therapy, occupational therapy, speech therapy, and some outpatient procedures, then the insurance companies are purely covering inpatient care and catastrophic care. A large component of insurance premiums are to cover these services. So eliminating the outpatient services will significantly reduce these premiums.

The medical offices, imaging centers, laboratory facilities, and many procedural suites save big when they don't have to bill insurance by reducing their staffing, paperwork, and resubmitting of claims. Thus, the cost of their services will come down and the market is open to competition. Accounts receivables have minimal to zero balance; leaving liquid cash in the bank to offer more services.

Please note, many endoscopy suites, surgical centers (like Surgery Center of Oklahoma) specialty offices, imaging centers, laboratory facilities, and of course primary care offices are moving to a direct model because of these benefits.

C. Cost of hospital care and need for more services will decrease

With accessible and affordable primary care, studies have shown that not only do people visit with their primary care doctor more, but their risk for admission to a hospital is drastically lower (see diagram below from our friends at Qliance). Hospitals have an opportunity to embrace a direct model as seen around the world and surgical centers where there is no insurance billing. But, I fear this will take some more effort and health insurance lobbyists are quite powerful. So, I will push the envelope towards at least getting the outpatient world out of the grasps of health insurance.

D. Federal health spending and taxes (Federal and State) will decrease

Medicare and Medicaid are government sponsored health insurance programs that will also be focusing on inpatient and catastrophic care in this new model. Folks who are paying lower premiums can fund their Health Savings Accounts (HSA) or Flexible Spending Accounts (FSA) to pay for direct medical services. These are pre-tax dollars and funding them is more realistic as the consumer will be paying less out of pocket for their health insurance premiums.

Even the $50 monthly fee for direct primary care can become difficult for some Americans. This is where practices should be given a tax incentive to provide free charity care. The more they do, the more they save. Currently, tax laws place a cap on how much they can claim as charity care. Each practice can also be allowed to set up a charitable foundation and reduce the complexities of forming of 501(c)(3) organization. This will enrich a community feel of delivering health care and bring all Americans together in providing quality care for one another.

States can expand Medicaid without having to increase their state taxes as much. The IRS and the ACA must agree on terms, as they currently have different definitions for HSA and FSA as to what qualifies as a medical service. This will happen soon, but in aligning the definitions, this will incentivize more development of direct medical practices across the country.

So, what does it look like for the consumer purchasing medical services?

To answer this question, lets put ourselves into the shoes of a imaginary 40 year old man named Tommy.

Tommy is a car parts salesman and recently took over his fathers business. He is very energetic and overweight. He has diabetes, heart disease, and some kidney disease. He starts searching for a direct primary care doctor in his area. After spending time meeting the doctors and their staff at different practices, he settles on one. We can call it LiveActive Primary Care www.liveactivepc.com

He then looks for a health insurance product that has his hospital of choice in their network and co-incidentally his new direct primary care doctor also provides hospital care at that same hospital. What a find! His premiums are much lower and he gets a plan with a HSA account so he can fund his card with pre-tax dollars.

His first visit with his direct primary care doctor is 60 minutes where all his health issues are discussed and a plan of care is developed. He walks out with all his labs done for less than $35, medications that are significantly less, and plans to see his kidney specialist soon.

Since his kidney specialist does not bill insurance, they are able to see him same day or next day. All his doctors are a text message away. When he arrives at the kidney specialists office, his case has already been discussed by his primary care doctor and the specialist. This is a real possibility as both of these doctors have the time to discuss cases instead of seeing 30 patients a day with unnecessary paperwork. They discuss the case and he is on his way home with a plan.

When Tommy goes to the hospital, both of his physicians come to take care of him. The nurses and hospital staff are ready to take care of him upon his arrival.

How about the consumer with no health issues?

So for this part, we meet Elon. He researches a direct primary care practice just as Tommy did and signs up. His health insurance product is just as cheap as Tommy.

Elon is playing with electric cars and hurts his hand. He texts his direct primary care doctor with a picture of his swollen hand. His doctor takes a look at the picture and calls him to discuss his symptoms via video chat. After assessing his mobility, Elon is told to get a hand X-ray, which costs less than $40. Elon walks into the imaging center, gets his X-ray done, and within minutes his direct primary care doctor calls him to say that they saw the images and he needs a cast placed. Elon is told to come the office that same day and a cast is placed for $40. Elon goes back home to play with rockets.

How will hospitals save money in this health care system?

The ACA attempts to improve quality of care by penalizing re-admission rates, in hospital infections, and pushes for a medical home model. With the development of various direct care practices, the consumer is able to create their medical home: pick their direct primary care doctor, pick which specialist they like, and hospital. The hospitals should see less readmissions as the care in the outpatient setting is more accessible and affordable. There is a reduction in risk for hospital acquired infections with decrease length of stay.

The Emergency Rooms will not be overflowing as patients are able to be seen by their direct primary care doctor quickly or in their home as needed. If someone does have to go to the ER, then the process is much more efficient. The primary care doctor and the ER physician have already talked about the case so upon arrival of the patient, care is started immediately.

Summary

The ACA has more than 33,000 pages of regulations. Remember this famous photograph in the Washington Post:

But there are several benefits that should be continued:

No denial of coverage based on pre-existing conditions
Full coverage of screening procedures
No time limits on care
Reducing prescription drug coverage

Changes that need to be made to the ACA:

IRS and ACA must agree on HSA and FSA eligible medical services
Take health insurance out of outpatient services
Eliminate the employer mandate and provide a tax incentive for employers to partner with direct care practices
Allow more cost sharing programs to be ACA certified as these programs are great partners of direct primary care practices - they subsidize monthly membership fees for their members (Liberty Direct)
All federal programs: Medicare, Medicaid, CHIP will provide catastrophic care as well as home care, rehab, and long term care. No outpatient care. There is a projected increased need to cover retirement services and nursing home care with our aging population
ACA subsidies can still exist to help folks afford health insurance for medical services outside of primary care

Now, this solution is a key ingredient in decreasing our national expenditures quickly. But, it is not complete on its own. We must make continued efforts in reducing pharmaceutical cost as well as medical devices. This will take some aggressive regulations and encouragement of free market. As the insurance companies remain involved in hospital care, long term care, and some other services under the model, there must be efforts to make billing more efficient and decrease the amount of waste we produce as discussed above.

Finally, as a country, each American must make a commitment to improving their health. We can open several doors for the American people, but as many direct primary care physicians will tell you, despite all these resources and at times FREE medical services, we still have trouble maintaining compliance in some of our patients. This must change.

It will take comprehensive effort to improve our national health care. President Obama, despite your opinion of his presidency, has ignited the push towards better health care for all of us. It is on us to keep pushing, improving, and supporting programs that have intentions of providing accessible and affordable care for all.

Dedicated to my beloved fellow Americans,
Dr. Ahmed

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Part 2/3: ACA needs a reality check

11/14/2016

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This is part 2/3 of My prescription for better health care for ALL Americans.

With the new president-elect nominated by the American electoral college, there are increasing worries about repealing the Affordable Care Act (ACA). Is it possible to repeal such significant legislation of our time? Will millions of Americans lose their insurance coverage?

Since its inception in 2010, an estimated 20 million of the estimated 47 million uninsured Americans gained health insurance coverage with surveys pointing towards many satisfied customers not only with their plan but also their chosen doctors. Studies, as cited by the Common Wealth Fund, also suggest an improvement in quality of care as a result of ACA implementation. In the last 6 years, there has been increasing interest in multi-payer initiatives to promote quality primary care by reimbursing physicians a set fee per member of their practice (sounds like the government likes direct care but won't admit it).

All this sounds great, right? So what is all the fuss about?

Well lets look at what this "coverage" means for the average ACA enrollee:

Average deductible range $5,000 to $6,000
From 2015 to 2016 premiums on average have increased 10-16%
Many had to change physicians and many physicians stopped accepting many insurances, including Medicare and Medicaid
Large number of health systems across the country stopped taking Medicaid and Bronze plans
Longer wait times to see a primary care physician as the volume increased and the supply decreased

Most Americans do not care about the impact ACA has on the business of medicine as most people care more about how much they have to pay and what the ACA means to them. But what people fail to realize is that all Americans are INDIRECTLY affected by the increased regulations and policies that came into effect as a result of the ACA. Readmission penalties, hospital acquired infection penalties, Medicare reimbursement cuts, and other policies incentivize refusal of care of patients at high risk for readmission, triaging these patients to other facilities, and delayed discharges because of the fear of readmissions. These regulations mean less time to see patients, refer them to specialty care quickly, additional testing given the lack of time in the exam room, and hospitals are placing more burden on the clinics to continue care after discharge to decrease their length of stay.

Think about this: When a person gets admitted, the hospital staff runs them through a myriad of exams and tests quickly to maximize their revenue (initial evaluation is highest paid with decreasing reimbursement for follow up visits), and then discharge them to the clinic setting where the wait times are long and the patient has little time with the doctor. The social workers and case managers will be the first to tell you there are several moments during a hospital discharge, we can predict someone will likely come back (called LACE score). To add to all this chaos, add the fact that the insurance companies will deny medications that at discharge might be needed or imaging that is needed for follow up. Hey, but I have coverage, right? Delay in care with prior authorization and denial of medications is what only the American who experiences this in some way truly understands.

Health care is a $3 trillion industry. Each change in policy means millions of dollars worth of changes in staffing and organizational structure for hospitals. Like any other business, these costs will need to be recovered in some way. Thus, the rising hospital bills, avoiding certain payers completely, and entertaining providing services in a cash basis without involving insurance; it's so much cheaper!

Health insurance adds about 5 staff members for each physician with denial of claims about 15-20%. Accounts receivables increase as the facilities await payment while continuing to pay for billing services to resubmit and submit new claims. This is the single largest cost and waste in our health system. From direct costs of paper, printing, software and hardware, billing services, to indirect costs of time wasted, prior authorizations, insurance denials and requests for more forms, less patients seen due to paperwork, and burn out. This is the foundation for the need to see 20-30 patients daily to capture a reasonable revenue stream to keep the business running. More on this in the final blog post.

Enter direct care.

The American Academy of Family Physicians (AAFP) proudly supports direct primary care and holds the single largest conference in Kansas City, MO every year. This single event has grown from a few 100 to over thousands of attendees, including physicians, medical students, medical residents, technology vendors, and others who are eager to partner with direct care practices across the nation.

Their tremendous support stems from the growing national shortage of primary care physicians, increasing prescription medication costs, poor access to care, and unaffordable medical care despite insurance coverage.

The American College of Physicians (ACP) has also written a white paper on practices contracting with their patients instead of insurance companies. This paper has increased the conversation differentiating direct primary care from concierge care. A social media storm was lead by yours truly. Sorry ACP, but I cannot tolerate poor research prior to writing a paper.

Summary

Here is the reality:

Many Americans cannot afford paying for several plans under the ACA.
If they are able to get coverage, the out of pocket expenses, high deductibles, long wait times, and short visits lead to reactive behavior rather than proactive. This leads to rising costs of medical care personally and nationally.
Short visits or poor access to care lands people in the ER with higher expenses.
Cost of medications conflict with household budgets constantly leading to poor compliance of medications and follow up care.
Many health care providers do not take Medicaid, Medicare, and various private insurances in order to stay in business. This illustrates the common mantra "health insurance does not equal health care."
Premiums and deductibles are outpacing earnings and inflation. Offering quality coverage is clearly becoming impossible. So many plans will provide "coverage" to an American, but the details of the plan will illustrate that it barely pays for basic medical services.

Solution

Privatize all outpatient services that are office-based. This would include primary care, all specialty follow up care, small office procedures which can include endoscopy, bronchoscopy, ENT procedures, some urological procedures, and other services. No insurance billing in these facilities.
Outpatient laboratory, imaging, and medications should also be where services are rendered without involving insurance companies. The cost of these services are significantly lower on a cash only basis than they are with hospitalizations.
Insurance companies should be involved only with inpatient services. This is important: Just because you are admitted to a hospital does not automatically qualify as inpatient stay. There is a status call observation status where insurance companies will say that the admission is like a outpatient visit on steroids where you don't need full admission, but not safe for you to go home. Under observation status, the patient is responsible for the entire bill. The American public has no idea the amount of arguing insurance companies do behind the curtain and threaten to deny services.

So as much as that plastic card may seem all warm and cozy in your wallet, realize that their interest is not paying for anything and will threaten or deny care for you the minute it is possible. It is your doctors, case managers, and social workers who are fighting to continue to provide you the care you need.

How would this new health system look like? I discuss this in my final blog post for this 3 part series.

Cheers!
Dr. Ahmed

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My prescription for better health care for ALL Americans. Part 1/3: Top 5 factors raising premiums

11/7/2016

1 Comment

Introduction
Those of you who follow my blog know the foundation of my leadership philosophy. Empower your team with tools and resources they need to solve problems creatively; ultimately bringing success to the entire group. First step in solving any complex issue is to first understand the problem. And so, we start by looking at the problem in the economics of delivering care by understanding the cause for rising insurance premiums. I hope to raise your awareness in this 3 part series to illustrate the real issues with the Affordable Care Act and propose a solution which I think will propel us to being the most innovative and efficient health care system in the world.

If you are like most Americans, the open enrollment season is confusing, nerve-wrecking, frustrating, and quite honestly, an overwhelming time. How do you choose which insurance is right for you? All the language and terminology is so confusing that making sense of a single plan is a daunting task. Insurance brokers are there to help, but the industry is changing for individuals at least as the insurance companies are not paying these brokers commission for selling their product; leading to less brokers out there helping individuals and families.

Naturally, we wonder why the premiums are so high and why they keep rising? Here are the top reasons why insurance premiums are rising and will continue to rise until we finally agree to privatize primary care and other outpatient services; keeping health insurance out of these basic services.

Top 5 factors

Increased use of specialty care (hospital care, specialists, other advanced services)
Rise in chronic illnesses
Growth of administrators and staffing which raise fees
Consolidation of insurance carriers leading to decrease in networks
Rising cost of prescription medications

How has the rise in insurance premiums compared to median household income or earnings?

So, to put this in perspective, workers are not earning enough to keep pace with rising insurance premiums. This leads to either the employer spending more on health care coverage, letting go of some employees in order to provide coverage for others, downsize the business, or stay less than 50 employees to prevent having to require health insurance. This de-incentivizes economic growth. How does this make any economic sense?

Higher premiums mean less out of pocket? Wrong!

Your analysis is correct: rising premiums and deductibles are outpacing inflation. This is why earnings are not keeping pace with premiums or deductibles, causing Americans to hold onto their wallets even tighter.

Rising Chronic Illness leading to higher costs of care

This is the reason why investing in primary care is so critical to keep costs down. More chronic illnesses does not necessarily mean more specialty care. Primary care is built, conditioned, and positioned to be fully capable of managing these illnesses at a low cost. The problem arises when the system does not allow primary care to do what it is capable of offering. Instead, the system encourages more specialty care.

Even with value based purchasing and the movement towards rewarding value rather than volume, the cost of doing business in health care favors larger health systems instead of small private practices. Ultimately, making no progress in making the delivery of health less complicated, more personal, accessible, and affordable.

Will the demand be met with a supply of primary care physicians?

The current health care market is ripe for future primary care physicians. Many may look at the current state of primary care and run away. But the informed and astute medical student will understand the industry and market trends illustrated in this blog and realize this is the best time to be a primary care physician. It is also a wonderful opportunity for investors and innovators to assimilate modern technology with quality primary care. No, not telemedicine by itself. The human touch and relationship must never be obliterated. Imagine the patient experience with modern technology and medicine that focuses on building strong, long lasting, relationships.

That is the future of primary care. That is the future of the United States Health Care System.

If you are a investor, innovator, or someone in the community who wants to support my vision, please support our growing practice. Health care will be much different and more efficient for the next generation.

Dr. Ahmed

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Part 3/3: Direct care and ACA together is the perfect solution

Current Situation

What happens when direct care and health insurance programs work together?

Economics of direct medical care

So, what does it look like for the consumer purchasing medical services?

How about the consumer with no health issues?

How will hospitals save money in this health care system?

Summary

Part 2/3: ACA needs a reality check

All this sounds great, right? So what is all the fuss about?

Summary

Solution

My prescription for better health care for ALL Americans. Part 1/3: Top 5 factors raising premiums

Top 5 factors

Higher premiums mean less out of pocket? Wrong!

Author

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Categories

We are passionate about practicing medicine
the way it should be.

Contact Us

Part 3/3: Direct care and ACA together is the perfect solution

Current Situation

What happens when direct care and health insurance programs work together?

Economics of direct medical care

So, what does it look like for the consumer purchasing medical services?

How about the consumer with no health issues?

How will hospitals save money in this health care system?

Summary

Part 2/3: ACA needs a reality check

All this sounds great, right? So what is all the fuss about?

Summary

Solution

My prescription for better health care for ALL Americans. Part 1/3: Top 5 factors raising premiums

Top 5 factors

Higher premiums mean less out of pocket? Wrong!

Author

Archives

Categories

​We are passionate about practicing medicine​ the way it should be.

Contact Us

We are passionate about practicing medicine
the way it should be.