Why Direct Primary Care Should be Part of Your 2021 Benefits Plan

June 30, 2020

Why Direct Primary Care Should be Part of Your 2021 Benefits Plan

direct primary care | benefits plan | employer-sponsored healthcare

About The Author

As Chief People Officer, Allison oversees the development and execution of the organization’s people and talent strategy in support of the overall business plan.

Meet Allison Velez

By Allison Velez, Chief People Officer

New research shows that employer-sponsored direct primary care leads to lower claims costs, fewer ER visits and ER cost claims, and a lower rate of hospital admissions.  

As many states approach the mid-point of summer, HR departments across the country begin the annual task of evaluating healthcare plan alternatives in advance of year-end renewal deadlines. The current COVID-19 crisis complicates decision making this year, as it is expected to add up to $556 billion to healthcare costs over the next two years according to the American Health Insurance Plans (AHIP). This is on top of healthcare costs which were already considered out of control.

Throughout all the uncertainty and failed attempts to reign in skyrocketing healthcare costs, one option remains a highly viable and attractive solution–direct primary care (DPC). Although still categorized as a somewhat new and evolving concept, DPC has a sufficient track record that documents its success in lowering healthcare costs while improving patient health outcomes and access to quality care.

Even though different models of DPC exist, some common characteristics of DPC plans include:

  • A recurring monthly fee charged to cover most primary care services
  • Elimination of per-visit fees or out-of-pocket expenses
  • Little to no billing to third parties on a fee-for-service (FFS) basis
  • Usually fewer patients, longer patient visits and greater access to medical professionals

Direct primary care, more than anything, is positioned as a smarter alternative to the traditional FFS model. It addresses many of the challenges that have plagued FFS primary care practices for years, including physician burnout from having large patient loads, as well as financial instability.

In many ways, the coronavirus pandemic has exacerbated the financial problems inherent to the FFS model. Numerous news stories have already documented the financial struggles of traditional primary care practices during the COVID-19 outbreak. In contrast, DPC practices, for the most part, are holding their own financially, largely because of the way they are reimbursed. Without being tied to a FFS payment protocol, DPC practices are able to treat patients without payment concerns. That is one reason why so many DPC practices were able to offer virtual care (which has become so prevalent during the current pandemic) at least two years before anyone had ever heard of COVID-19.

Despite the documented success of DPC and the numerous case studies involving employers, unions, school systems and municipalities of all sizes across the U.S., there are still those who doubt the model's effectiveness and have resisted adding DPC to their overall benefits plan offering. That's why a new healthcare cost study sponsored by the Society of Actuaries and conducted by consulting actuary Milliman, Inc., is so exciting and persuasive. It provides objective evidence of the cost effectiveness and superior health outcomes that characterize most DPC models. The two-year, in-depth study is based on literature review, as well as surveys and one-on-one interviews with hundreds of DPC practices. The study additionally includes an employer case study involving a Paladina Health client.

Read The Full Study

Among other things, the study entitled "Direct Primary Care: Evaluating a New Model of Delivery and Financing” finds that DPC achieves the following:

  • 19.9% lower claims costs for employers
  • 40% fewer ER visits than with traditional plans
  • 53.6% reduction in ER claims costs
  • 25.54% lower hospital admissions

Equally important is that employees appreciate having greater access to their healthcare professionals. In a number of employee surveys conducted with Paladina Health clients, employees frequently cite the DPC plan as a key benefit that keeps them working for the company.

With such documented results, and especially considering the added financial burden coming as a result of COVID-19, can your company or organization afford to not integrate DPC into your healthcare offering next year?

Interested in exploring how Paladina Health’s direct primary care services might fit into your organization’s benefits offering? Contact us today to start the conversation. 

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