Direct primary care is proven to be superior for health care

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January 5, 2021

Direct primary care is proven to be superior for health care

Primary care is a vital component of any health system, the foundational front line of health care and often the entry point for patients needing services. The access to and quality of early primary care can have significant impacts on downstream costs and patient health outcomes.

Primary care physicians (PCPs) are universally acknowledged as being essential to achieving the health care Triple Aim of providing high-quality care, at lower cost, with improved patient experience. However, many experts describe the current state of primary care as being in crisis, and that was even before the COVID-19 pandemic, which has exacerbated underlying problems and increased financial burdens.

The crisis is characterized by physician burnout, large PCP patient panels, low pay for PCPs relative to other physician specialties, more administrative challenges, longer work hours without commensurate reimbursement, an increased risk of mental health conditions and suicide and, ultimately, a PCP shortage relative to market demand. All of this results in less time to actually care for patients.  The average PCP needs to see 30 patients per day to simply “break even”.  This results in a rushed experience – and today’s traditional PCP being used as a triage resource to more expensive specialty care, imaging and prescription drugs.  There simply isn’t the time to  impact outcomes.

Direct primary care (DPC) is an approach to delivering and financing primary care that attempts to respond to many of these issues. The practice model is less than a decade old and still evolving, with some organizations unsure of how it works and unsure of how it integrates with their current healthcare plan. This is causing resistance to adding direct primary care to an overall benefits plan, but DPC has proven successful in numerous case studies involving employers, unions, school systems and municipalities of all sizes across the U.S., and it can be a solution to the industry’s primary care predicament.

Indeed, a compelling new study provides actuarial evidence of the cost effectiveness and superior health outcomes that characterize most DPC models.

What is direct primary care?

There is no single, accepted definition of what constitutes direct primary care, but generally DPC physician practices are those that:

  1. Charge patients a recurring — typically monthly — membership fee to cover most or all primary care-related services.
  2. Do not charge patients per-visit, out-of-pocket amounts greater than the monthly equivalent of the retainer fee.
  3. Do not bill third parties on a fee-for-service (FFS) basis for services provided.

There are several other key features that characterize the DPC delivery model.

  • Contracting: DPC practices typically do not contract with insurers, government payers, or third-party administrators, but rather directly with patients or self-insured employers.
  • Recurring fee: The majority of DPC practice revenues typically come from monthly or annual DPC membership fees, generally ranging from $40 to $85 per person per month.
  • Smaller patient panels: DPC practices usually have fewer patients than traditional primary care practices, typically less than 1,000 and often between 200 to 600.
  • Expanded patient access: Members have better access to their PCP and therefore tend to receive longer-duration office visits, same-day or next-day appointments, text or phone-based provider contact and occasionally home visits.
  • Reduced patient cost sharing: Most DPC practices do not charge any cost sharing for services covered under the membership fee, which improves care because financial barriers are often the cause of patients missing important follow-up visits.

The DPC financing and delivery model provides an alternative to traditional FFS-based primary care models, and proponents claim that it greatly improves the patient-doctor relationship, reduces the fragmentation of patient care and improves both personal and professional satisfaction for physicians. DPC advocates also argue that this arrangement generates system-wide reductions in health care utilization, including hospitalization rates, emergency department usage and unnecessary radiology and diagnostic tests and specialist care, leading to broad-based health care cost savings.

The Milliman study

Despite its apparent advantages, DPC has its critics, who contend that any observed reductions in utilization or health care costs are insignificant, based on small study sizes or driven by patient selection (i.e., healthier patients choose DPCs and they have lower costs than traditional patients). Critics also claim that the model is not scalable to the public at large and aggravates the physician shortages issue.

But that is what makes a new health care cost study, “Direct Primary Care: Evaluating a New Model of Delivery and Financing,” so exciting and persuasive. Conducted by consulting actuary Milliman, Inc., and released in May 2020, the two-year, in-depth report involved a robust literature review, hundreds of surveys and one-on-one interviews with 10 DPC practices, as well as an employer case study of a Paladina Health client.

The research found that enrollment in DPC is associated with a reduction in overall member demand for health care services outside primary care. Specifically, DPC members experienced:

  • 19.9% lower claims costs for employers
  • 40% fewer ER visits than those in traditional plans
  • 53.6% reduction in ER claims costs
  • 25.5% lower hospital admissions

The study demonstrated that virtual care and telehealth are at the core of DPC service offerings. Two years prior to coronavirus hitting the United States and transforming daily life, nearly all DPC practices (99%) were conducting virtual consults via text or phone as a part of the membership, with 88% saying they provided telemedicine benefits like expanded video or additional digital communications.

Employees also reported having greater access to their health care professionals. In surveys conducted with Paladina Health clients, employees frequently cited the DPC plan as a key factor that kept them working for the company.

An employer case study

Paladina Health’s Union County client, the employer case study featured in the Milliman report, also prospered from adopting the direct primary care model.

Union County taxpayers saved $1.28 million in employee health care costs, a 23% decrease in medical expenses over those two years. They enjoyed a 36% reduction in prescription expenses compared to employees not using DPC, yielding annual savings of $239,000. Notably, electing the DPC option produced significant improvement in employees’ overall health, by a nearly 3 to 1 margin.

A valid solution

The Society of Actuaries commissioned Milliman to develop the direct primary care report to provide health care stakeholders — patients, payers, policymakers and actuaries — with a comprehensive description of DPC, as well as an objective evaluation of certain claims made about the model of care.

With such positive documented results, and especially considering the added financial strain from COVID-19, employers simply cannot afford not to integrate direct primary care into their health care offering. If you’re interested in learning more about how DPC services might fit into your organization’s benefits plan, contact Paladina Health today.

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