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Research & Commentary: Direct Primary Care

January 21, 2016

One of the lesser known factors contributing to the rapid increase in the cost of health care is the shrinking number of primary care physicians available relative to the size of the population.

stethoscope and insurance docs

One of the lesser known factors contributing to the rapid increase in the cost of health care is the shrinking number of primary care physicians available relative to the size of the population. The Association of American Medical Colleges has estimated the United States will face a shortage of 12,000–31,000 primary care physicians by 2025. Because the demand for primary care physicians is outpacing the supply of these doctors, many of patients are going to emergency rooms or immediate care facilities to obtain routine health care. According to a 2015 survey of emergency room physicians by the American College of Emergency Physicians, the number of emergency room visits by low-income patients has increased since the Affordable Care Act was first passed

Current primary care doctors face myriad restrictions and a reimbursement system that is both slow and costly, creating overhead that can eat up to 60 percent of a typical primary care practice’s revenue. For this reason, many new doctors have chosen to avoid this kind of practice. Direct primary care, also known as retainer medicine, is one health-care-provider model that has become increasingly popular for doctors and patients alike and could serve to revitalize the U.S. primary care system. 

Under a direct primary care program (DPC), patients pay a monthly membership fee, typically ranging from around $50 to $80. As part of the membership, patients receive a more generous allocation of appointments than they would under most traditional plans, even allowing in some instances for same-day appointments or house calls. 

The guarantee of a set monthly fee removes the layers of regulation and bureaucracy created by the traditional insurance system and allows physicians to see fewer patients and focus more on each patient. Routine tests and procedures are also included in most DPC plans, and lower membership fees are often charged for programs that do not provide these additional services. 

DPC plans address many issues currently plaguing health care providers. DPCs eliminate burdensome insurance approvals and paperwork, which typically requires a large staff to navigate. Federal requirements lock doctors into certain treatments in order to receive reimbursement, but DPC’s allow doctors to have more freedom to treat each of their patients based on their concerns and observations. 

According to the Docs4Patient Care Foundation, under a DPC model medical practice overhead can be reduced by as much as 40 percent. Direct primary care has grown rapidly over the past 10 years, and by as much as 25 percent in 2013. According to MarketWatch, there are approximately 4,400 DPC physicians nationwide, a dramatic increase from 150 in 2005. 

Opponents of DPCs argue they give a false sense of security when purchased as standalone health coverage. Proponents of DPC programs agree these services are best used in conjunction with a high-deductible health care insurance plan or another form of catastrophic coverage to handle in-patient health care services. The American Academy of Family Physicians has endorsed the DPC model

The main barrier blocking further expansion of DPC is government interference in the health care marketplace. Several states now define direct primary care providers as “risk bearing entities” when providing care in exchange for a monthly fee, which places these doctors under the same regulatory and licensing system as insurers. According to the Docs4PatientCare Foundation, “14 states [have] thus far [chosen] to clarify that DPC is not a ‘risk bearing entity’ for the purposes of regulation by state insurance commissioners.” For example, Utah passed a law in 2012 that exempts primary care practices from state insurance regulations. 

Direct primary care empowers patients and doctors, giving them more freedom to establish and participate in health-care-provider models that work best for all patients. Lawmakers should consider removing the regulatory barriers to direct primary care, a move that would help revitalize the nation’s primary health care system. 

The following documents examine direct primary care in greater detail.


Direct Primary Care: An Innovative Alternative to Conventional Health Insurance
https://www.heartland.org/policy-documents/direct-primary-care-innovative-alternative-conventional-health-insurance
Insurance-based primary care has grown increasingly complex, inefficient, and restrictive, driving frustrated physicians and patients to seek alternatives. Direct primary care is a rapidly growing form of health care that alleviates such frustrations and offers increased access and improved care at an affordable cost. State and federal policymakers can improve access to direct primary care by removing prohibitive laws and enacting laws that encourage this innovative model to flourish. As restrictions are lifted and awareness expands, direct primary care will likely continue to proliferate as a valuable and viable component of the health care system.

Where Obamacare Leaves Questions, Direct Primary Care May Offer Answers
https://www.heartland.org/policy-documents/where-obamacare-leaves-questions-direct-primary-care-may-offer-answers
Proponents of the Affordable Care Act (ACA) set out to remake American health care with the law’s passage in 2010, but in many respects the ACA didn’t change the health care paradigm at all; it simply doubled-down on a broken, decades-old status quo that makes health “coverage” a national priority, rather than focusing on limiting health care costs and enhancing health care access. Patrick Ishmael of the Show-Me Institute explores in this essay a promising medical practice model, direct primary care, which he says could deliver on the promises made by proponents of the ACA to lower costs and improve access to quality health care. 

Direct Primary Care: Practice Distribution and Cost Across the Nation
https://www.heartland.org/policy-documents/direct-primary-care-practice-distribution-and-cost-across-nation 
Philip M. Eskew and Kathleen Klink describe the direct primary care (DPC) model; identify DPC practices across the United States; distinguish it from other practice arrangements, such as the “concierge” practice; and evaluate data compiled from existing DPC practices across the United States to determine the cost advantages associated with this model. Eskew and Klink confirmed DPC practices’ lower price points and broad distribution, but data about quality are lacking. 

Direct Primary Care: A Legal and Regulatory Review of an Emerging Practice Model
https://www.heartland.org/policy-documents/direct-primary-care-legal-and-regulatory-review-emerging-practice-model
Philip M. Eskew examines concerns related to the “business of insurance” (BOI) encountered by DPC physicians. He analyzes recommended contractual provisions used to minimize BOI risk; compares state laws written chiefly to address risks related to BOI; considers the DPC provisions in the Affordable Care Act; and briefly considers the tax and scope-of-practice policy implications of the DPC model.

Ten Principles of Health Care Policy
http://heartland.org/policy-documents/ten-principles-health-care-policy
This pamphlet in The Heartland Institute’s Legislative Principles series describes the proper role of government in financing and delivering health care and provides reform suggestions to remedy current health care policy problems. 

Direct Primary Care: Restoring The Doctor-Patient Relationship
http://www.forbes.com/sites/katherinerestrepo/2015/10/23/direct-primary-care-restoring-the-doctor-patient-relationship/
Katherine Restrepo writes about direct primary care and how it could lower costs and improve the relationship between doctors and patients in this article in Forbes. “The beauty of practices like Doctor Direct is that the traditional doctor-patient relationship is restored. By cutting 40 percent of overhead that is normally spent on getting paid by insurance companies, primary care providers can devote hour-long appointments to their patients and deliver care at a fraction of the cost.” 

The Obamacare Evaluation Project: Access to Care and the Physician Shortage
http://heartland.org/policy-documents/obamacare-evaluation-project-access-care-and-physician-shortage
Paul Howard and Yevgeniy Feyman of the Manhattan Institute find population growth, demographic changes, and an expansion of insurance spurred by Obamacare will contribute to a significant shortage in primary care physicians over the coming decade. 

Obamacare’s Impact on Doctors—An Update
http://www.heritage.org/research/reports/2013/08/obamacares-impact-on-doctors-an-updat
In this Heritage Foundation Issue Brief, Alyene Senger outlines several effects of Obamacare on doctors: “Specifically, physicians will be subject to more government regulation and oversight, and will be increasingly dependent on unreliable government reimbursement for medical services. Doctors, already under tremendous pressure, will only see their jobs become more difficult.” 

Studies Show: Medicaid Patients Have Worse Access and Outcomes than the Privately Insured
http://heartland.org/policy-documents/studies-show-medicaid-patients-have-worse-access-and-outcomes-privately-insured
In this Heritage Foundation Backgrounder, Kevin Dayaratna states it is becoming increasingly difficult for Medicaid patients to find access to primary and specialty care physicians. As a result, when Medicaid patients are admitted to hospitals, they often arrive with more serious conditions than those with private insurance. By expanding this broken program, Obamacare will only exacerbate the problem. Policymakers should reform Medicaid to allow recipients access to private insurance in a consumer-driven market, Dayaratna writes. 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News at https://www.heartland.org/topics/health-care/index.html, The Heartland Institute’s website at http://heartland.org, and PolicyBot, Heartland’s free online research database at www.policybot.org.  

If you have any questions about this issue or The Heartland Institute’s website, contact Heartland Institute Director of Government Relations John Nothdurft at jnothdurft@heartland.org or 312/377-4000.

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Author
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance. In 2012, Glans was named senior policy analyst.
mglans@heartland.org @HeartlandGR