Fed Up With Obamacare, Doctors Increasingly Prefer Cash For Care
Obamacare’s most intrusive changes to the healthcare marketplace — including the individual mandate whereby Americans must secure health insurance or pay a fine and its massive expansion of Medicaid — are less than a year from taking effect.
Many doctors have decided that they’re not interested in seeing how those changes play out in their own practices. Nearly two-thirds of doctors say that they or their colleagues will retire earlier than planned over the next few years, according to a survey conducted by consulting firm Deloitte.
Others are considering a departure from the current system of third-party payment. Instead, they’re exploring direct payment, with patients paying for care on their own.
Patients should welcome this development. Not only does the move toward direct payment have the potential to reduce health costs — it could also yield higher-quality care.
Even before Obamacare, direct-pay practices were growing in popularity. According to the Center for Studying Health System Change, direct-payment practices increased from 9.2 percent of the market in 2001 to 12.4 percent by 2008.
Nearly 7 percent of doctors say they are planning to change to some form of direct-pay care in the next three years, according to a survey of 13,000 doctors done for the Physicians Foundation. The consulting firm Accenture projects that one in three doctors in independent practice will adopt “subscription-based care models.”
One direct payment model that’s growing in popularity is “concierge” care, whereby doctors charge a monthly or annual fee for care — and bypass the administrative headaches associated with insurance and government programs altogether. The American Academy of Private Physicians — which represents cash-only doctors — estimates that the number of concierge doctors has shot up 30 percent in just the last year.
Examples of these practices abound.
Qliance, for instance, offers primary and preventive care for less than $90 a month in several cities in Washington state. In January, the company raised $8.6 million to expand beyond its home state.
One Medical in San Francisco charges patients between $150 and $200 a year for same-day appointments, online prescriptions, and email access to doctors. And in Portland, Oregon, patients at the Multnomah Family Care Center can pay a one-time enrollment fee and then monthly membership and provider fees that average less than $60 a month for preventative care. Others include Atlas MD, MedLion, Simple Care, and Paladina Health.
The direct-pay model does force patients to shoulder more of the upfront cost of their care. But the long-term savings it can generate are substantial. Qliance, for example, says it can trim as much as 30 percent off health costs by combining its services with a high-deductible plan for major medical bills.
High-deductible plans are usually paired with health savings accounts (HSAs), which allow consumers to set aside money tax-free for health expenses. HSAs empower patients to take charge of their care — and can make visits to direct-payment practices even more affordable.
At Access Healthcare, a cash-only practice, fees can be lower than the co-pays a patient would otherwise cover under a traditional insurance plan. The cost-lowering potential of direct-payment practices is heartening because the current third-party payment system has failed to stem our burgeoning health cost crisis.
Indeed, third-party payment is largely to blame for the untamed growth of health costs. Back in 1960, only about half the nation’s health spending was paid for by a third party, according to the Centers for Medicare and Medicaid Services. By 1980 that had risen to 77 percent. Today, it’s 88 percent. Not surprisingly, as consumers’ out-of-pocket share of health costs has declined, their demand for care has exploded.
Our tax regime encourages such over-consumption. Employer-sponsored insurance benefits are not taxed. So a worker receives a full dollar’s worth of health benefits for every dollar his employer pays for insurance — compared to less than 85 cents for every dollar his boss spends on wages. As a result, health costs have grown at double the rate of inflation elsewhere in the economy.
That’s not sustainable. Direct-payment could check that cost growth, particularly in the primary care realm, by empowering doctors and patients to negotiate mutually agreeable prices, free of interference from insurers or the government.
Reason magazine recently profiled Dr. Ryan Neuhofel, a Kansas doctor who posts his prices online and doesn’t accept insurance. A 30-minute house call runs $100. That may seem high to those used to $30 co-pays. But that $100 house call may end up being cheaper, after taking into account sky-high monthly insurance premiums, steadily rising annual deductibles, and out-of-pocket maximums — not to mention the time and expense that both doctors and patients have to devote to filing claims.
Obamacare will only add to the cost-inflating administrative burden that third-party payment places on doctors. Direct-payment allows physicians to reject that burden and focus on what they do best — treating patients.
Dr. Samir Qamar had a “concierge” practice in Monterey, California, where he charged a few very wealthy patients as much as $30,000 a month to keep him on retainer. But last year he changed his business model drastically, taking advantage of what he saw happening to healthcare in the United States. In an interview with Mary Pat Whaley, Qamar explained:
I became obsessed with finding other models that would not necessitate daily high-volume traffic which, in my opinion, led to poorer quality care....
I wanted to design an affordable membership model for those [patients] with little or no health insurance.... I realized that this model [also] appealed to employers as well, and our company began to grown.
His company, MedLion, now has 16 offices located in five states, and is negotiating a contract with a large employer with 9,000 employees to open a facility close by to serve as its primary care physician. Qamar explained his “model”:
“Direct Primary Care” is when individuals or employers pay “directly” for “primary care.” Because of this “direct” care, excessive overhead, such as insurance claim processing costs, prior authorizations, billing and coding, extra office space, and unnecessary staff is removed from the business equation.
The savings attained are passed on to the patients in the form of lower fees. Doctors are less dependent on third party payers, and end up working in the best interests of patients, not insurance companies…
Direct Primary Care is able to make primary care relatively affordable, and thus eliminate the need for costly insurance. Health insurance is reserved for rare, expensive events, like in all other industries.... [As a result] costs are driven down.
Just the costs of managing the paperwork involved in insurance claims, billing and obtaining approval for procedures can run up to 40 percent of a practice's revenues. It’s a treadmill that the traditional physician finds himself on: running harder and harder just to stay in place. With ObamaCare, the treadmill is speeding up and many physicians are falling behind, leaving patients with more delays, poorer care, and a lower overall quality of medical care.
Business is so good for Scott Borden’s Direct Pay Consulting business which helps doctors make the transition from traditional treadmill practices to direct pay that he is limiting himself to helping just 20 practices at a time. He is on the cutting edge of dissatisfaction with medical care in the United States, driven by at least three forces: decreasing reimbursements, more and more time spent writing letters and filing claims rather than practicing medicine, and increasing demand from more and more patients. What Borden is finding is that more and more people are willing to pay a little extra to get a lot more.
The potential market is large and could be immense. As ObamaCare falters and ultimately fails to cover the millions originally promised back in 2009, citizens will be more and more willing to pay a little more for direct access to a doctor who can now spend more time with them. When they are forced to buy insurance through one of the ObamaCare exchanges, the low-premium high-deductible plans will likely make the most sense. With a $5,000 annual deductible that most citizens might face, they will promptly discover that rather than paying that deductible out of pocket, it makes more economic sense to pay $100 a month or so to cover ordinary medical costs such as office visits, blood tests, urinalysis, and the like.
Last year there were an estimated 4,400 physicians who had already made that jump to direct pay, while current estimates place that number at more than 5,500 — an increase of 25 percent in just one year. But making that jump can be unnerving for the doctor, who could face a serious, although temporary, decline in his income
