
Direct Primary Care - Mz
http://micheleincalifornia.blogspot.com/2017/01/direct-primary-care.html
======
chimeracoder
The premise of this post is straightforward once you remember how insurance
works from an economic standpoint.

One thing that people often overlook when talking about health insurance is
that, economically, "health insurance" is really the combination of two
completely separate products, only one of which is actually insurance.

Insurance is about pooling risk. It smooths risk across states of the world
(e.g. the universe in which your house burned down, and the universe in which
it didn't but your neighbor's house did instead). It reduces the variance
between those states, and in exchange, it charges a premium for making the
outcome more predictable. _It is not there to save you money_. The expected
value of all insurance is negative, and that's intentional.

By a true insurance model, routine care and elective surgery would be priced
the same with insurance as it would without, because there is no risk
involved. The reason it isn't it because we want to subsidize these, to enable
people to obtain care they otherwise wouldn't be able to afford. We use
"insurance" as a vehicle for this, but really, that's not insurance at all.
It's a redistribution.

So it's perfectly understandable that a primary physician who is dealing with
routine care and doesn't accept insurance would be able to charge patients
less (and still walk away with more money) than one who uses insurance.

The reason you don't see this everywhere, though, is that policies are making
it harder and harder for physicians to run private practices entirely (whether
they accept insurance or not). The majority of physicians are now employed,
largely by hospital networks which are required to accept insurance (in some
cases legally, and in others by virtue of the fact that they need to cover
their Medicare losses[0]).

So, the place you are most likely to see the direct care model are with
physicians who are catered to the incredibly wealthy. That's not to say that a
direct care model couldn't work for people who aren't, but the way our system
is set up doesn't facilitate it.

[0]
[https://news.ycombinator.com/item?id=13356442](https://news.ycombinator.com/item?id=13356442)

~~~
pdonis
_> The expected value of all insurance is negative_

Only if you ignore non-monetary costs and benefits. Risk reduction/mitigation
is a benefit and has a value. If it had no value, people would not bother
buying insurance. When that benefit is taken into account, the net expected
value of insurance is positive for both parties: the insurer makes money
(assuming it has done its actuarial statistics properly) and the insured buys
risk reduction/mitigation at a cost that is less than its value.

Your point about "health insurance" combining two separate products, only one
of which is actually insurance, is valid, though, and very important.

~~~
Ntrails
I'm not sure it holds for all health insurance products though - you're very
specifically talking about the US model.

For the first part you're assigning a value to a thing beyond it's market cost
and saying everyone is in fact a winner, and that's a little strange. Risk
pooling via a private insurance company is negative sum because someone makes
a profit beyond their costs. That should not then be taken to mean it's a bad
deal (it isn't).

~~~
pdonis
_> you're assigning a value to a thing beyond it's market cost and saying
everyone is in fact a winner_

Of course. If that weren't true, people would not buy insurance.

 _> Risk pooling via a private insurance company is negative sum_

If you only consider monetary costs and benefits, yes. But this ignores the
(non-monetary) value to the insured of not being exposed to the risk (because
that risk exposure has been transferred to the insurer).

 _> That should not then be taken to mean it's a bad deal (it isn't)._

I agree that it's not a bad deal; I'm just saying that the reason it's not a
bad deal is that people consider more than just monetary costs and benefits.

------
mrfusion
I don't think this is a loop hole. Can anyone point me to a reference?

Source: I just spent months trying to figure out how to buy truly catastrophic
insurance and avoid the aca penalty with no luck.

~~~
vyrotek
Many are combining Direct Health Care with a Healthcare Share. It's a co-op
model that's not really "insurance" and is meant to be drawn from for only
serious issues. So kind of what you'd expect to cover with a high-deductible
plan. It works more like a community who reviews and decides whether they want
to contribute to your bills.

One of the biggest advantages of these healthcare shares is that they're ACA
exempt. Meaning, no fine. But there are other requirements to be accepted.
Especially with the religious healthcare ministry ones. But they are very
affordable.

For example, I know people who use
[http://www.chministries.org](http://www.chministries.org) with a local (AZ in
this case) DHC such as
[https://www.arkfamilyhealth.com](https://www.arkfamilyhealth.com)

~~~
mrfusion
I came across those before. If I could feel confident t they would be
garunteed to cover serious issues I'd do it. But it seems like there's no
garuntee so you're taking a big risk?

Other issues I didn't like is that they're not eligible for an hsa? And what's
the Guarantee you get the Aca exception?

------
ilaksh
My understanding is that one of the biggest issues that we can actually
improve is inflated billing. It seems that something like direct primary care
could help with that issue.

But maybe we could just create a law that resets things so that they cannot
simply inflate the bill and then certain groups pay only a small percentage of
the amount? Because it makes it so we can't tell what the real costs are at
all, and then people who don't have insurance or the right insurance are
screwed by these giant basically fraudulent bills.

That is the really stupid part about it.

Then another idea is, I think that some health care costs just really are
quite high. This is because of scarcity of high-tech medical machines or
doctors or specialists. Maybe the solution to that is to push for greater
volume of high tech medical machinery or medicines and a greater volume of
medical professionals.

Maybe by supplementing with advanced AI we can relax requirements for certain
types of more general physicians or nurses rather than researchers, etc. Maybe
just finding ways to reduce medical education could help.

Then one other idea is the realization that more and more mainstream
researchers are having that A) the majority of medical problems have some
significant component that is related to aging, or where aging increases risk,
etc. and B) we are now in fact able to start investigating and have hope for
treating the actual causes of the various system degradations referred to as
aging.

------
massysett
This is not particularly novel. There are already integrated HMOs, like Kaiser
Permanente and Group Health Cooperative, that function in a similar way.
Kaiser is a little more complicated (there is a "Kaiser Foundation Health
Plan" that acts as insurer, while physicians work for the "Permanente Medical
Group") but they have integrated systems so physicians are not spending time
dealing with claims--and besides, the physicians do all their work for this
one health plan, so there's no web of insurance companies.

~~~
chimeracoder
> This is not particularly novel. There are already integrated HMOs, like
> Kaiser Permanente and Group Health Cooperative, that function in a similar
> way

Integrated practice is distinct from HMOs, though they might appear to be
similar. Kaiser us an integrated practice and also provides and manages an
HMO, but not all Kaiser patients belong to the HMO

> they have integrated systems so physicians are not spending time dealing
> with claims--and besides, the physicians do all their work for this one
> health plan, so there's no web of insurance companies.

Not exactly. Kaiser physicians still have to do all the work of coding and
billing, except for them, the billing is all reconciled by a single entity and
managed internally.

That's different from direct care, in which the billing step literally does
not happen, because the patient self-pays, usual in-person.

~~~
eridius
Kaiser does have a PPO plan, but it must not be very common because the one
Kaiser doctor I mentioned this to was very surprised and had never heard of
Kaiser offering a non-HMO plan before.

------
padobson
I'm curious how it would work at the hospital level, or even at the hospital
network level. Pay the network a monthly fee, and then when you get sick, all
of your care is already paid for. I suppose this is the idea behind HMOs, but
the execution hasn't been there.

~~~
ceejayoz
All the little hospitals and clinics in our area have been bought up by one of
the two healthcare networks in the five-county region, and I'm fairly shocked
they haven't done this.

Maybe it's illegal for a hospital system to offer insurance in NY? I don't
know. You'd think they'd be happy to cut out all the fuss around handling
insurance approvals/rejections and pocket the 20% middleman cut.

~~~
whafro
I don't have a ton of first-hand knowledge, but I know that being licensed to
provide health insurance in NY specifically is no joke. Todd Park (former US
CTO, AthenaHealth founder) once told me that he didn't pay much attention to
Oscar early on until he found out they had gained an NY license, at which
point he dove into it.

More broadly, many hospitals and hospital are getting involved in the ACO
(accountable care org), which gets at some of these goals, but it's not 100%
clear that an ACO model can be successful (financially or for patients), and
it doesn't cut out all the relevant middle-men.

------
dnewms
For anecdotes: I've had a HDHP before ACA, started at about $45/mo now up to
about $60/mo with an outrageously high $12.5k or so deductible.

I've had two different DPC, one about $45/mo, now with one about $30/mo.

Both combined are still less than I would pay in any marketplace.

It's nice to be able to just see your doctor without worrying what it might
cost. A large list of simple procedures are covered, and tests cost next to
nothing. It's a health subscription to an actual doctor who can be just as
cost-conscious as you are while still incredibly knowledgable and invested in
your health.

~~~
daxorid
I pay 780$/mo for a plan with a $13k max out of pocket. Where on earth are you
getting 45$ ?

~~~
dnewms
UnitedHealthcare -- though my plan may have been grandfathered in to be
acceptable under ACA.

~~~
koolba
What state and how old are you? That seems insanely cheap compared every plan
I've seen (high deductible or otherwise).

~~~
dnewms
<30 midwest

~~~
lotsofpulp
Is this health insurance purchased via your employer? If so, is your employer
subsidizing it?

Double digit premiums sound ridiculous, even for a male in their 20s. As a
data point, I'm a <30 male, never been to a doctor with no health issues that
I can tell, and my HDHP premium is $310ish, last year it was $275ish, but
that's using healthcare.gov so completely unsubsidized, and I have a
deductible of $1,500/$2,500 and out of pocket max of $3,600/$6,550 for their
tier 1/tier 2 providers, respectively (whatever that means).

~~~
jessaustin
Note that GP had a _much_ higher deductible.

------
ljoshua
So I'm a little confused, because it states that you can combine DPC care with
an HDHP to satisfy basic coverage and skip the penalty, but wouldn't the HDHP
plan satisfy that? Or is the simple possession of an HSA combined with DPC
good enough? (The second case would seem weird, since there's no "insurance"
for high risk situations; it's just a savings account. And in most cases you
wouldn't have an HSA unless you already were on an HDHP.)

Nothing against DPC, I'm just unclear how this works in with the individual
mandate.

~~~
jschwartzi
IANAL, but the HDHP would be your ACA plan and the DPC would eliminate a lot
of the expense of the HDHP for routine visits.

~~~
rootusrootus
I can appreciate the appeal of DPC, but in my experience routine visits (at
least anything that qualifies as preventative) are generally 100% covered by
the high deductible plans. Maybe that's a requirement from ACA?

Maybe the DPC cost savings is in the non-preventative minor occurrences which
are almost routine. Like a kid's broken bone for example, things you don't
expect to happen but aren't exactly a surprise either, and not catastrophic.

~~~
secabeen
Right, the HDHPs have to cover preventative care for in-network doctors.
However, you still have to be careful. I have seen doctors bill for a non-
preventative visit if you ask any questions at all about specific ailments
during a preventative care visit.

------
DanBC
> They see their patients more frequently

This is strongly linked to several forms of harm. Over-testing, over-
diagnosing, and over-treatment are dangerous. (And, in some places,
expensive.)

[http://www.cancerresearchuk.org/about-us/cancer-
news/press-r...](http://www.cancerresearchuk.org/about-us/cancer-news/press-
release/2016-04-06-public-dont-understand-overdiagnosis)

~~~
Mz
In the US, it is a huge problem that physicians spend so much time dealing
with insurance, they have to churn through patients and can't establish a real
relationship to them. It actively undermines the quality of care. DPC allows
physicians to escape a horrifying hamster wheel of running faster to just stay
in place. It allows them to take the time to get to know their patients in a
way that was normal when I was growing up, but is very rare these days.

It allows them to see the same patient for thirty minutes or an hour a few
times a year and actually remember who they are instead of having some
insanely low amount of time per patient per year, like seven or ten minutes.
It has a track record in this country of stopping the insanity and improving
care.

[http://medicaleconomics.modernmedicine.com/medical-
economics...](http://medicaleconomics.modernmedicine.com/medical-
economics/news/physicians-chart-new-path-direct-primary-care)

[http://aapp.org/2016/01/08/why-you-should-transition-to-
dire...](http://aapp.org/2016/01/08/why-you-should-transition-to-direct-
primary-care-and-how-you-can-make-the-process-easier/)

[http://www.dpceugene.com/single-post/2016/07/06/Why-
choose-t...](http://www.dpceugene.com/single-post/2016/07/06/Why-choose-the-
direct-primary-care-model)

------
tptacek
What happens when your appendix bursts?

~~~
vishbar
I think this is applying a "car insurance model" (sorry in advance for the car
analogy) to healthcare. Ignore third-party insurance for the moment as it's
not really applicable to health. You don't generally make an insurance claim
for something like an oil change, 30/60/90k mile checkup, or something like
that. On the other hand, if a tree fell on your car and smashed the engine,
that's when insurance kicks in: for the catastrophes.

~~~
michaelt
I understand what would happen for routine check-ups and serious accidents.

How would such a model handle predictable-but-expensive medical needs, like
hip replacements for the elderly and monthly prescriptions for HIV and cancer
patients?

~~~
virmundi
The hip replacement can be covered under another policy like a home warranty.
At the same time, without coverage, the prices have to come down. If they
don't, all of those expensive doctors are bringing in near $0. Such an
economic position is untenable.

The other two are probably going to be fixed through direct market forces. If
the people of America can only pay $X, then the makers of the drugs can only
charge $X + small premium to have a market. Since they would face a similar
price pinch abroad, they'd have to adjust their prices.

We've seen the inverse of the price pinch with the epi-pen scandal. The makers
knew the price could go up since insurance would absorb the cost.

------
codingdave
Except that if you have a HDHP, your costs towards routine care also go
towards your deductible, so if you have emergency care that year, you only get
hit with your max out-of-pocket for the year. Instead of paying your max for
the year AND whatever your paid directly to your direct pay provider.

So these types of services are a gamble - you come out ahead if you have no
emergencies. And come out behind if you do. For a family with kids, I'll pass.
If you are young and healthy and do not have kids, and do not do a lot of
outdoor activities that risk injuries, this might make more sense.

~~~
lotsofpulp
Wouldn't you hit the out of pocket max if you have an emergency? As long as
you have that much cash, HDHP makes sense to me.

~~~
atlasmd
That is a fair point - any major hospitalization and you're over your
deductible anyways. But the insurance statistic is that about 87% of people
with a 3k deductible will reach that in a given year and <95% of people with a
5k deductible will reach that in a given year.

Which means, families are paying more than $1000/mo or 12k/year for a risk
thats rarely over 5k. Which means they can decrease their insurance coverage,
save $500/mo on their premiums, and save more money each year than their
increased deductibles would be.

Plus, our direct care models saves them on the majority of care most people
need in a year.

i've been a direct care doc since 9/2010 and happy to answer any questions. to
(quickly) define the model: $10-100/patient/month for unlimited
home/work/office/technology visits, no copays, any procedure we can do in the
office is included free, and wholesale savings on medicines, labs, imaging,
pathology of up to 95% (yes!)

We can then take all of this value and go back to an employer and help
decrease insurance costs by 30-60%.

------
ceejayoz
> It achieves lower costs in large part by cutting out the middle man of
> health insurance for basic services.

Is it _actually_ lower cost? The cash fee for a PCP visit and what insurance
_actually_ pays are drastically different. If you're paying a membership fee
just to get the same sort of rates insurance pays out at, there's no win here.

> A little known provision of the ACA makes Direct Primary Care a kind of
> legal loophole. When combined with a high deductible health plan or health
> savings account, Direct Primary Care can meet the requirements for basic
> coverage, thus getting you out of the tax penalty for not being properly
> covered.

That's not a loophole. That's "pay extra". You'd still need at least a Bronze
plan, and any visits that bill against your DPC won't count towards your
annual deductible or out-of-pocket caps.

~~~
chimeracoder
> The cash fee for a PCP visit and what insurance actually pays are
> drastically different. If you're paying a membership fee just to get the
> same sort of rates insurance pays out at, there's no win here.

You don't want to get the same rates that insurers pay - those are actually
the inflated rates.

Billing is complicated. In short, part of the problem is that doctors who take
public insurance (Medicare/Medicaid) actually take a loss on those patients,
because Medicare reimburses about 7% less than the direct costs of services,
in the aggregate. It's one of the reasons you see very few private practices
which cater solely, or even primarily, to Medicare patients.

The way providers make this work, since they can't negotiate rates with
Medicare, is to charge higher rates for private insurers. This ends up as an
effective subsidy from private insurers to Medicare.

A doctor who doesn't accept any insurance whatsoever doesn't have to manage
this indirect subsidy, so the amount they charge a self-paying patient could
be a lot less than what another doctor would bill a private insurer for.

~~~
rootusrootus
I would like to learn more about this. Some people here (who claim to be
intimately involved with the actual financial aspects of running a clinic) say
it's the opposite -- that Medicare actually pays the bills so the clinic stays
open because the private insurers are so effective at getting out of paying
anything.

Surely there is a reliable source that can confirm one way or another how this
works in practice? I get that it is probably arcane and difficult to
understand, but in a country as vast as the US there is probably someone who
understands it well enough to summarize for a layman.

~~~
maxerickson
Medicare reimburses some smaller facilities at a higher rate than other
facilities.

"critical access hospital" is a good search term. Basically every small town
hospital that has an ER.

Another term is "rural health clinic"

~~~
atlasmd
to help clarify this -- they pay 1% more than the normal rate. to CAH's

[https://www.ruralhealthinfo.org/topics/critical-access-
hospi...](https://www.ruralhealthinfo.org/topics/critical-access-
hospitals#benefits)

~~~
maxerickson
The 101% of cost reimbursement is a different payment model than used for
bigger hospitals (Prospective Payment Systems
[https://www.cms.gov/medicare/medicare-fee-for-service-
paymen...](https://www.cms.gov/medicare/medicare-fee-for-service-
payment/prospmedicarefeesvcpmtgen/index.html) ).

And no one else pays anywhere near 100% of 'reasonable costs' (they pay more,
or in the case of Medicaid, less). So I wouldn't call it the normal rate.

