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

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: 

1. 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. 
2. 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. 
3. Insurance is never billed on top of monthly fees. 

Current Situation 

1. An estimated $375 billion is wasted on billing and health insurance related paperwork annually
2. 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 
3. Up to 15% of claims have to be reworked and resubmitted with average cost of $3.32 per claim 
4. 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